TIDM96ES
RNS Number : 6773Q
Barclays Bank PLC
21 February 2019
21 February 2019
Barclays Bank PLC
Annual Report and Accounts 2018
UK Listing Authority submission
In compliance with Disclosure Guidance & Transparency Rule
(DTR) 4.1, Barclays Bank PLC announces that its Annual Report 2018
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 may also be accessed via Barclays PLC's website at
http://home.barclays/investorrelations
Additional information
The following information is extracted from the Barclays Bank
PLC Annual Report 2018 (page references are to pages in the Annual
Report) which can be found at
http://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 PLC Annual Report
2018 in full.
Strategic Report
Performance review
The Strategic Report was approved by the Board of Directors on
20 February 2019 and signed on their behalf by the Chairman.
Overview
Barclays Bank PLC is the non-ring-fenced bank of Barclays PLC
and consists of the Corporate and Investment Bank (CIB), Consumer,
Cards and Payments (CCP) and the Head Office.
Whereas Barclays Bank PLC is the legal entity non-ring-fenced
bank of Barclays PLC, Barclays International is the managed
division of Barclays PLC, representing CIB and CCP.
Following the court approval of the ring-fencing transfer scheme
in March 2018, the UK banking business largely comprising Personal
Banking, Barclaycard Consumer UK and Business Banking was
transferred from Barclays Bank PLC to Barclays Bank UK PLC, the
ring-fenced bank, on 1 April 2018 to meet the regulatory
ring-fencing requirement in accordance with the Financial Services
(Banking Reform) Act 2013 and related legislation.
The net assets transferred from Barclays Bank PLC to Barclays
Bank UK PLC amounted to GBP15.9bn comprising all the assets and
liabilities of the Barclays UK division. From that point, Barclays
Bank UK PLC ceased to be a subsidiary of Barclays Bank PLC and
became a direct subsidiary of the ultimate parent, Barclays
PLC.
The consolidation of the parent entity, Barclays Bank PLC and
its subsidiaries, is referred to as Barclays Bank Group.
Strategy
Barclays Bank Group has a unique transatlantic footprint
anchored in the world's deepest and most sophisticated capital
markets, London and New York. With relentless focus on delivering
for customers and clients in our UK and US home markets and around
the world, Barclays Bank Group's diversified business portfolio
provides balance, resilience and exciting growth opportunities.
Barclays Bank PLC has strong global market positions, and continues
to invest in people and technology in order to deliver sustainably
improved returns.
We are making strategic investments to seize the clear growth
prospects each business presents. Similarly, we continue to build a
great culture where our strong conduct and rigorous controls
environment enable us to deliver the right outcomes for all our
stakeholders.
Business Model
Barclays Bank Group's diversified business model offers products
and services designed for larger corporate, wholesale and
international banking customers and clients around the world, and
provides Barclays PLC's shareholders a mix of revenue streams that
benefit from different stages of the economic cycle.
The business structure comprises the Corporate and Investment
Bank, Consumer, Cards and Payments and the Head Office. CIB
includes Banking, Corporate Banking and Markets businesses which
aid institutions, governments and corporate clients in managing
their funding, financing, and risk management needs. CCP includes
Cards & Payments and Private Bank & Overseas Services
offering consumer credit cards and banking, and private banking,
investment and wealth management services, in addition to payment
solutions to clients. The Head Office function contains the central
operations of Barclays Bank Group.
Market and operating environment
The markets in 2018 were characterised by US economic
outperformance, including further labour market improvements and
on-target inflation rates. Against this backdrop, short-term US
interest rates increased further, ahead of other core markets, and
the US dollar strengthened. While market volatility remained
generally low, isolated bouts of volatility resulted in a more
uneven equity performance. In the UK, growth softened further amid
heightened uncertainty around Brexit developments, reflected in a
volatile and depreciating sterling.
Alongside establishing the ring fenced bank and non-ringfenced
bank in April 2018 in response to the UK government's ring-fencing
legislation, we have also been working on plans with respect to the
UK's departure from the European Union (EU) in 2019. Our plans are
driven by an overriding commitment to preserve seamless ongoing EU
market access for Barclays Bank PLC and our customers and clients.
A key element of our plans was to seek regulatory authorisations
from the Central Bank of Ireland and the European Central Bank to
expand the operations of Barclays Bank Ireland PLC: Barclays PLC
has had a banking licence in Ireland for almost 40 years. During
2018, we received the necessary authorisations, scaled up our
presence in Ireland, and began the transfer of our European
branches from Barclays Bank PLC to Barclays Bank Ireland PLC. We
remain confident in our ability to serve our customers and clients
once the UK's withdrawal is complete.
Our US Intermediate Holding Company (IHC) received positive
feedback from the US Federal Reserve on the IHC's first-ever public
stress test submissions, indicating the strength of the IHC's
capital position. The IHC, which we established in 2016, is an
umbrella holding company for our US subsidiaries including the US
broker-dealer that operates key investment banking businesses and
the entity that operates Cards & Payments in the US.
Risks to the operating model
Geopolitical and macroeconomic uncertainty in some markets
remain a risk, while the volume and reach of regulatory change
continues to require significant attention.
The potential impact of longer term uncertainty is a sustained
low rate environment predominately impacting revenues and driving
cautious market activity. This was evident in 2018, and created a
challenging operating environment for corporate and investment
banking activities in particular.
As we accelerated our growth efforts in 2018, we increased our
focus on ensuring that new revenue opportunities do not compromise
our prudent approach to risk, or our ability to generate
sustainable returns. Coupled with our cost efficiency programmes,
this balanced approach is designed to deliver a more attractive
bottom line.
We have a conservative risk profile, and continue to work to
maintain the quality of our lending book. The quality of our US
credit card portfolios has been consistent with the overall
industry and key competitors. After an increase in delinquency
rates in 2017, rates moderated for both the industry and Barclays
in 2018. Loss and arrears rates are still below the long term
average and below pre-recession levels, driven in part by
favourable US GDP growth and low unemployment rates. We continue to
monitor overall growth in unsecured debt across the industry,
particularly relative to wage growth, and during 2018 unsecured
debt growth slowed to 4.9% compared with 6.7% in 2017.
We continue to invest to ensure our infrastructure is resilient
to cyber-crime, conducting comprehensive penetration testing,
supported by the deployment of a number of best-in-class malware
detection tools.
Key highlights of the year
Barclays Bank Group delivered profit before tax across all four
quarters in CIB and CCP, while absorbing in the Head Office the
GBP1.4bn settlement with the US Department of Justice (DoJ)
relating to Residential Mortgage-Backed Securities (RMBS). This
demonstrates the increasing ability of our diversified portfolio of
businesses to deliver sustainable growth.
We continually evaluate our entire portfolio of businesses for
capital, leverage, risk assets and funding across all jurisdictions
and legal entities. This helps us to further enhance both our
operational discipline and precision in our capital allocation to
deliver stronger returns.
Identifying the right talent to execute on our ambitions remains
fundamental to our growth strategy. Over the course of the year, we
hired several experienced professionals to bring complementary
skills to our leadership team, and made strategic appointments in
areas where we see opportunities for growth, including a
significant number of internal promotions.
To enable our people to deliver the best outcomes for our
customers and clients, we focused our technology investment on
commercially impactful enhancements, and this focus remains a
hallmark of our strategy for the year ahead. Key initiatives ranged
from new data science and algorithmic capabilities, to an enhanced
digital experience for our customers and clients.
We are already seeing results of investing in our businesses.
For example, our Equities franchise delivered a standout
performance this year, with revenue growth outpacing competitors.
Similarly, we are seeing growth in our newly launched US consumer
loans product, which complements our US cards business.
During the year, we also continued to contribute to society,
from launching a new housing development fund to creating pathways
to employment, and from mentoring entrepreneurs to structuring
sustainability-linked loans.
Building on our progress is the mission of every colleague in
Barclays Bank Group. We are confident in our ability to build on
the commercial focus we demonstrated in 2018, and to deliver the
right outcomes for all our stakeholders.
Corporate and Investment Bank
The Corporate and Investment Bank comprises principally of the
Banking, Corporate Banking and Markets businesses which aid money
managers institutions, governments and corporate clients in
managing their funding, financing, and risk management needs.
Banking
Banking provides clients with long-term strategic advice on
mergers and acquisitions (M&A), corporate finance and financial
risk management solutions, as well as equity and debt capital
raising services.
In 2018 across the industry, fees were down approximately 4%
globally, with some products and regions down double digits.
Barclays' global investment banking fee share was 4.2%, consistent
with our performance in 2017.
In Europe and the Middle East, we ranked fifth for all Banking
products, our highest ever full-year ranking. In the Americas we
ranked sixth, and remain the highest-ranked European investment
bank. Our Asia Pacific franchise continues to perform well.
Our performance was bolstered by a standout year in M&A,
where we attained our highest global fee share in four years and
ranked top five in Americas M&A for the third consecutive year.
In Debt Underwriting we ranked in the top four in global fee share
for the third consecutive year, driven by a continued strong
presence in both the leveraged finance and investment grade primary
debt markets. Our Equity Underwriting business performed well in a
very challenging market environment, winning our highest ever
ranking in European rights offerings, and continued to demonstrate
momentum in initial public offerings (IPOs), where we book-ran five
of the year's ten largest IPOs from the Americas, Europe and the
Middle East.
During 2018 our new Social Impact Banking group structured the
first sustainability-linked loans in the US. More than 100 of our
Banking colleagues mentored entrepreneurs as part of the third
annual Unreasonable Impact programme, the world's first
international network of accelerators focused on scaling up
entrepreneurial businesses that will help employ thousands
worldwide while solving some of society's most pressing
challenges.
Barclays Bank Group was the recipient of multiple industry
awards in 2018, including being named by Euromoney as the UK's Best
Investment Bank for the third consecutive year (and sixth time in
the last seven years), and as Western Europe's Best Bank for
Financing. In addition, Global Capital ranked Barclays Bank Group
as the Best Corporate Broker in the UK for the third year running,
and IFR magazine named Barclays Bank Group its North America
Asset-Backed Securitisation House of the Year.
In the year ahead, we see opportunities to improve further the
performance of Banking by investing in talent in key products and
sectors and continuing to build on our historical strength in debt
underwriting.
Corporate Banking
Our Corporate Banking business provides GBP and EUR working
capital and transaction banking services, including trade and
payments, for multinational corporates and institutions, and UK
large and medium size corporate clients.
Our new Corporate Banking leadership is focused on enhancing our
offering. During the year, we developed a new multi-country digital
banking platform, primarily supporting Corporate and Investment
Bank clients, which was most recently rolled out in Ireland and
Germany. In Q3 2018 Corporate Banking and the UK government
launched a GBP1bn housing development fund to boost the delivery of
new housing in England, and also launched a GBP300m ENABLE
Guarantee cashback scheme with the British Business Bank to boost
asset finance lending to SMEs.
Corporate Banking has also driven stronger client relationships
through innovative programmes like Connect with Work, which builds
bridges between people who face barriers to getting into work and
businesses that are recruiting but struggling to find suitable
candidates.
Through significant investments in our technology, we are
increasing the resiliency and performance of our digital client
experience. These investments will continue to be a focus for the
year ahead, alongside enhancing our competitive position in the UK,
and growing our transaction banking revenues globally, expanding
our European cash management platform, and continuing to enhance
the commercial effectiveness of our lending book.
Markets
Our Markets business provides a broad range of clients with
market insight, execution services, and tailored risk management
and financing solutions across equities, credit, rates and foreign
exchange (FX) products.
We made good progress in 2018 on our strategy to rebuild our
franchise and transform performance over the long term. Supported
by our investments in financial resources, technology, and human
capital, our business this year increased market share across each
asset class and delivered five consecutive quarters of
outperformance vs. our peers. In a year of challenging market
conditions, our Credit and Macro (Rates and FX) businesses - which
we report as FICC (Fixed Income, Credit and Commodities) - produced
steady performances, driven by revenue diversification in Credit
and market share gains in Macro. Revenue growth in our Equities
franchise outperformed our competitors, driven by strong
performances in derivatives and equity financing. We also made
significant progress in building out our electronic platform
capabilities across all asset classes enabling best-in-class
execution for clients.
We continued to help clients navigate market events and
volatility, and maintained or improved our position in a number of
markets. For example, Barclays was one of three banks chosen to
execute the first-ever bond issue and the first-ever asset backed
commercial paper transaction, based on the new Secured Overnight
Financing Rate (SOFR). Additionally, we are a top-three ranked
broker by traded notional on the Tokyo Stock Exchange (TSE) with
over 100 trillion yen traded for our clients in 2018, equating to a
more than 10% market share.
The clients who generate the highest returns for market-making
businesses consistently allocate the greatest and most profitable
share of their activity to full service markets franchises. To
better meet the needs of these clients - typically the world's
largest money managers - and therefore to improve returns, in 2019
we plan to pursue targeted growth and diversification
opportunities. Our dialogue with clients regarding these
initiatives gives us confidence that these investments will drive
the right commercial outcomes.
Research
Our Research team's mission is to affect clients'
decision-making through independent, thought-leading,
differentiated insights on equity and debt, as well as on the macro
trends shaping the global economy.
To enhance our relevance to clients, particularly after the
implementation of MiFID II, we continue to invest in our analysts
and the digital capabilities supporting their work, as well as in
best-in-class platforms to disseminate their insights. The Research
Data Science Platform we are building will become an increasingly
important differentiator for us, with state-of-the-art data
infrastructure operated by leading data scientists and leveraging
alternative data sets in innovative ways. Partnerships with
research aggregators and new multimedia capabilities are helping
clients interact with us in the channels of their choice, and
report enhanced categorisation is bringing our best content to a
broader audience.
The insights generated by our analysts drive connectivity with
clients across the Investment Bank, with particularly strong client
engagement on cross-asset, cross-regional perspectives, and our
teams' industry rankings demonstrate their relevance in helping
clients understand the markets in a challenging year.
Consumer, Cards and Payments
Consumer, Cards and Payments includes Cards & Payments, and
Private Bank & Overseas Services. Cards & Payments provides
branded and co-branded consumer credit cards, lending and deposit
accounts to our customers in the US and Germany, and payment
solutions to our customers and clients in the UK. Private Bank
& Overseas Services provides banking, credit and investment
services to retail, high-net worth and ultra-high net worth
clients, family offices, businesses, corporates and fiduciaries
internationally.
Cards & Payments
Our Cards & Payments business operates across five business
units: US Consumer Bank, Barclaycard Payment Solutions, Barclays
Partner Finance, Barclaycard Commercial Payments and Barclaycard
Germany.
US Consumer Bank offers co-branded and branded credit cards in
the US, along with consumer loans and online retail deposits.
Across all credit card products, US Consumer Bank added over two
million new accounts in 2018 while growing our consumer retail
deposits to over US$14bn. We are among the top-ten credit card
issuers in the market by total outstandings as at the end of 2018.
Our strong position in the travel and entertainment industry
continued with the launch of a new Frontier Airlines co-brand
credit card. Our Uber Visa card and our JetBlue Plus Card appeared
in U.S. News & World Report's list of Best Travel Rewards
Credit Cards. We also maintained our number three position in the
2018 J.D. Power US Credit Card Satisfaction Study. Driving
continued strong growth in our US Consumer Bank - across online
consumer banking and our partner cards franchise - is a strategic
priority for us in 2019.
Barclaycard Payment Solutions provides merchant acquiring,
payments integration and acceptance, and payment gateway products
in the UK. In 2018, we processed over GBP250bn in payments, making
us one of the largest payment acceptance providers in Europe.
During the year, we successfully migrated over 100,000 clients from
across our small business and corporate client base onto our new
BankWORKS platform. Clients now enjoy better and more resilient
service, including new and improved statements and simplified and
flexible pricing.
Barclays Partner Finance provides point of sale finance products
to consumers in the UK through a network of retailers and car
dealerships. In 2018, we grew our existing partnerships, built
relationships with new clients, won a number of industry awards,
and retained our position as the market leader in the UK retail
market.
Barclaycard Commercial Payments provides commercial cards and
virtual payment products in the UK. In 2018 we launched the UK's
first co-branded trade credit card partnership with Travis Perkins
Group, and strengthened our presence in the travel industry by
signing new partnerships with Amadeus, Paxport and Voxel.
Barclaycard Germany is now over a quarter of a century old and
serves over 1.3 million credit card, deposit and loan customers. We
are the leading issuer of revolving credit cards in the country by
outstanding balances. We also have a growing instalment loans
business as well as an online deposit product. In 2018 we launched
a new Barclaycard Visa credit card, and expanded our unique Equal
Payment Plan (EPP) offering by enabling credit card customers to
repay their credit card balance in fixed instalments. Barclaycard
Germany continues to drive exceptional customer satisfaction
rankings (RNPS), with the business ranking in the top two for both
cards and loans.
Barclays Bank Group is also a leading provider of credit cards
and lending in Norway, Sweden and Denmark via our EnterCard joint
venture with Swedbank.
Private Bank & Overseas Services
In the Private Bank we focus on bespoke solutions, ranging from
standard to sophisticated, for our high net worth, ultra-high net
worth and family office clients. Overseas services offers banking,
investment and credit products and services to local residents and
businesses based in Jersey, Guernsey and the Isle of Man, and
serves non-UK based corporates and fiduciaries who have UK banking,
credit and investment requirements. International Banking delivers
banking, savings, mortgages and investment products to affluent
international customers.
Private Bank & Overseas Services delivered a strong
performance during 2018. We continued to enhance our client
offering with new products and services, which drove an underlying
increase in client balances. The business delivered strong revenue
growth year on year, and a good return on equity.
We strive to build long-term value creation with our clients.
Central to our strategy is continually enhancing our investment,
banking and credit propositions. We have been developing
differentiated capabilities in discretionary portfolio management,
foreign exchange and real estate, and in bringing investment
opportunities from our world-class Investment Bank.
Performance Measures
Performance measurement
The performance of Barclays Bank PLC contributes to the Barclays
PLC Group, upon which the delivery of strategy is measured.
Barclays PLC Group benefits from diversification and balance
provided from both Barclays Bank UK PLC and Barclays Bank PLC, and
the performance measures reflect this benefit. For the purposes of
subsidiary reporting, the relevant measures have been isolated and
disclosed below.
Financial performance measures
Barclays Bank PLC Financial Performance measures are calculated
at a specific legal entity basis and disclosed below.
Income Statement
Barclays Bank Group results 2018 2017 2016
For the year ended 31 December GBPm GBPm GBPm
----------------------------------------------------- -------- -------- --------
Total income 13,600 13,730 14,202
Credit impairment charges and other provisions (643) (1,553) (1,477)
----------------------------------------------------- -------- -------- --------
Net operating income 12,957 12,177 12,725
Operating expenses (9,893) (10,230) (11,146)
GMP charge(b) (140) - -
Litigation and conduct (1,706) (448) (321)
----------------------------------------------------- -------- -------- --------
Total operating expenses (11,739) (10,678) (11,467)
Other net income 68 259 636
----------------------------------------------------- -------- -------- --------
Profit before tax 1,286 1,758 1,894
Tax charge (404) (1,526) (302)
----------------------------------------------------- -------- -------- --------
Profit after tax in respect of continuing operations 882 232 1,592
(Loss)/profit after tax in respect of discontinued
operations(a) (47) (1,386) 2,137
Non-controlling interests in respect of continuing
operations - (4) (3)
Non-controlling interests in respect of discontinued
operations(a) - (140) (402)
Other equity instrument holders (647) (639) (457)
----------------------------------------------------- -------- -------- --------
Attributable profit/(loss) 188 (1,937) 2,867
----------------------------------------------------- -------- -------- --------
Notes
a Barclays Bank PLC transferred its UK banking business on 1 April
2018 to Barclays Bank UK PLC. Results relating to the UK banking
business for the three months ended 31 March 2018 and for the years
ended 31 December 2017 and 2016 have been reported as a discontinued
operation. The comparative period also included results relating
to Barclays Africa Group Limited (BAGL) for the five months ended
31 May 2017 and for the year end 2016.
b A GBP140m charge for Guaranteed Minimum Pensions in relation to
the equalisation of obligations for members of the Barclays Bank
UKRF. There was no capital impact of this charge as at 31 December
2018, as the Barclays Bank UKRF remained in accounting surplus.
The financial information above is extracted from the published
accounts. This information should be read together with the
information included in the accompanying consolidated financial
statements.
The following assets and liabilities represent key balance sheet
items for Barclays Bank Group.
Balance Sheet Information
2018 2017
As at 31 December GBPm GBPm
------------------------------------------------------------ ------- -------
Assets
Cash and balances at central banks 136,359 171,036
Loans and advances at amortised cost 136,959 324,590
Trading portfolio assets 104,038 113,755
Financial assets at fair value through the income statement 145,250 116,282
Derivative financial instrument 222,683 237,987
Liabilities
Deposits at amortised cost 199,337 399,189
Financial liabilities designated at fair value 217,741 173,718
Derivative financial instrument 219,592 238,345
------------------------------------------------------------ ------- -------
Barclays Bank PLC is currently regulated by the Prudential
Regulation Authority (PRA) on a solo-consolidated basis. Barclays
Bank PLC solo-consolidated comprises Barclays Bank PLC plus certain
additional subsidiaries, subject to PRA approval. The disclosures
below provide key metrics for Barclays Bank PLC
solo-consolidated.
Other Metrics and Capital(a)
2018 2017
----------------------------------------------------- ---------- ----------
Common equity tier 1 (CET1) ratio 13.5% 13.6%
Total risk weighted assets (RWAs) GBP173.2bn GBP261.4bn
Capital Requirements Regulation (CRR) leverage ratio 4.0% 4.5%
----------------------------------------------------- ---------- ----------
Note
a Capital, RWAs and leverage are calculated applying the transitional
arrangement of the CRR. This includes IFRS 9 transitional arrangements
and the grandfathering of CRR non-compliant capital instruments.
Income Statement commentary
2018 compared to 2017
Profit before tax decreased 27% to GBP1,286m driven by a loss in
Head Office of GBP2,245m (2017: GBP710m) primarily due to the
GBP1.4bn settlement with US Department of Justice (DoJ) relating to
Residential Mortgage-Backed Securities (RMBS). This is partially
offset by 23% increase in Corporate and Investment Bank to
GBP2,394m and a non-recurrence of losses associated with the former
Non-Core division, which was closed on 1 July 2017.
The 3% depreciation of average USD against GBP adversely
impacted profits and income, and positively impacted credit
impairment charges and total operating expenses.
Total Income decreased 1% to GBP13,600m. Corporate and
Investment Bank income decreased 2% to GBP9,741m as Markets income
increased 9%, reflecting gains in market share, offset by a
decrease in Banking income of 6%. Consumer, Cards and Payments
income decreased 5% to GBP4,267m. Excluding material one-off items
in both 2017 and 2018, related to US cards portfolio sales and
revaluation of Barclays preference shares in Visa Inc, underlying
income increased due to growth in US cards.
Head Office income was an expense of GBP408m (2017: GBP148m)
reflecting legacy capital funding costs of GBP351m now charged to
Head Office and hedge accounting. This was partially offset by a
one off gain of GBP155m from the settlement of receivables relating
to the Lehman Brothers acquisition in Q2 2018 and higher Absa Group
Limited (formerly known as BAGL) dividend income.
Credit impairment charges decreased 59% to GBP643m. Corporate
and Investment Bank credit impairment charges decreased to a
release of GBP152m (2017: charge of GBP213m) primarily due to
single name recoveries, improved consensus based macroeconomic
forecasts and single name charges in 2017, partially offset by Q4
2018 GBP50m specific charge for economic uncertainty in the UK.
Consumer, Cards and Payments credit impairment charges decreased
38% to GBP808m reflecting non-recurrence of a GBP168m charge in Q3
2017 relating to deferred consideration from Q1 2017 asset sale in
US cards, improved consensus based macroeconomic forecasts in the
US and the impact of repositioning the US cards portfolio towards a
lower risk mix.
Total operating expenses increased 10% to GBP11,739m as Head
Office total operating expenses increased to GBP1,849m (2017:
GBP353m) due to higher litigation and conduct costs including
settlement of GBP1.4bn relating to RMBS with the US DoJ and a
GBP140m charge for the GMP in relation to the equalisation of
obligations for members of the Barclays Bank UKRF. Operating
expenses decreased 3% to GBP9,893m due to lower restructuring and
structural reform costs, and a reduced impact from the change in
compensation awards introduced in Q4 2016.
Other net income decreased to GBP68m (2017: GBP259m) primarily
reflecting the non-recurrence of gains on the sale of Barclays'
share in Vocalink to MasterCard and a joint venture in Japan in Q2
2017.
Loss after tax in respect of discontinued operations of GBP47m
(2017: GBP1,386m) included the results of the three months ended 31
March 2018 relating to the UK banking business that was transferred
to Barclays Bank UK PLC. 2017 included results relating to BAGL and
the UK banking business.
The effective tax rate decreased to 31.4% (2017: 86.8%). This
rate includes the impact of litigation and conduct and, in 2017, a
one-off net charge due to the re-measurement of US deferred tax
assets (DTAs).
2017 compared to 2016
Profit before tax decreased 7% to GBP1,758m driven by a 3%
reduction in income and lower other net income, partially offset by
a 7% reduction in total operating expenses. Results were impacted
by the appreciation of average USD and EUR against GBP of 5% and 7%
respectively, compared to 2016, which positively impacted income
and adversely affected impairment and total operating expenses.
Following the closure of Barclays Non-Core on 1 July 2017,
Barclays Bank Group results for 2017 included a Barclays Non-Core
loss before tax for the six months ended 30 June 2017 of GBP639m,
compared to a loss before tax of GBP2,809m for the full year in
2016. From 1 July 2017, residual Barclays Non-Core assets and
liabilities were reintegrated into, and associated financial
performance subsequently reported in Corporate and Investment Bank,
Head Office and Barclays Bank UK PLC.
Total income decreased to GBP13,730m (2016: GBP14,202m)
reflecting a GBP651m reduction in Corporate and Investment Bank and
a GBP502m decrease in Head Office, partially offset by a reduction
in losses related to Non-Core.
Credit impairment charges increased 5% to GBP1,553m primarily
due to an increase in Consumer, Cards and Payments offset by a
reduction in Corporate and Investment Bank and impairment charges
related to Non-Core.
Total operating expenses decreased 7% to GBP10,678m driven
primarily by lower Non-Core related operating expenses.
Other net income of GBP259m (2016: GBP636m) primarily reflected
a gain of GBP109m on the sale of Barclays' share in VocaLink to
MasterCard and a gain of GBP76m on the sale of a joint venture in
Japan.
Balance Sheet commentary
2018 compared to 2017
Cash and balances at central banks decreased GBP35bn to GBP136bn
as a result of the disposal of Barclays UK business to Barclays
Bank UK PLC.
Loans and advances at amortised cost decreased GBP187.6bn to
GBP137.0bn (December 2017: GBP324.6n) following the transfer of the
UK banking business from Barclays Bank PLC to Barclays Bank UK PLC
as part of structural reform, and the impact of the transition to a
new accounting standard.
Derivative financial instrument assets and liabilities decreased
GBP15.3bn to GBP222.7bn and GBP18.8bn to GBP219.6bn respectively,
due to a decrease in interest rate derivatives driven by increase
in major interest rate forward curves and the adoption of daily
settlement under the London Clearing House (LCH) rules, partially
offset by increased foreign exchange and equity derivative
volumes.
Financial assets at fair value through the income statement
increased GBP29.0bn to GBP145.3bn primarily due to the impact of
the transition to a new accounting standard and increased reverse
repurchase agreements activity, partially offset by the transfer of
the UK banking business from Barclays Bank PLC to Barclays Bank UK
PLC as part of structural reform.
Deposits at amortised cost decreased GBP199.9bn to GBP199.3bn
following the transfer of the UK banking business from Barclays
Bank PLC to Barclays Bank UK PLC as part of structural reform and
impact of the transition to a new accounting standard, offset
partially by a strong and targeted increase in deposits.
Financial liabilities designated at fair value increased GBP44bn
to GBP218bn primarily as a result of the effects of transition to a
new accounting standard and additional client margin deposits from
the growth of the Equities business.
Non-financial performance measures
Our performance measurement framework builds on our stakeholder
engagement to align Barclays performance to their ambitions.
We reflect a balance of key financial performance metrics and
broader strategic non-financial measures which focus on the impact
we have on our customers and clients, colleagues, and the benefit
we bring to society via our citizenship activity. These measures
are underpinned by how we behave towards all our stakeholders,
through our conduct and our culture.
To assess our performance, we use a number of sources including
dashboards of our performance metrics and measures, regular
management reporting and external measures to provide a balanced
review of performance during the year, while additionally
monitoring for emerging trends.
Below we focus on the Customer and Client measures specific to
Barclays Bank PLC as contained in the Barclays PLC Group key
performance indicators. Colleague and Citizenship are reviewed in
Barclays Group PLC Annual Report.
Barclays Bank 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 44 to 46.
Customer and client
Key outcomes we will look to achieve include:
-- Building trust with our customers and clients, such that they are
happy to recommend us to others
-- Successfully innovating and developing products and services that
meet their needs
-- Offering suitable products and services in an accessible way, ensuring
excellent customer and client experience.
How we measure success
Measures used in our evaluation include, but are not limited
to:
-- Client rankings and market shares
-- Digital engagement
-- Conduct indicators
How we are doing
Areas of encouragement:
Client rankings and market shares
The Banking franchise maintained its 6th rank by fee share in
our UK and US home market (2017: 6th) and retained its top 3
position in the UK.
Our Markets franchise delivered strong results: it maintained
its 4th position in Global Fixed Income (Greenwich) and improved
its Coalition franchise ranka to 7th (2017 FY: 8th) strengthening
its position in all individual asset classes.
95% of our largest UK corporate clients considered the service
they receive from Barclays Bank Group to be good, very good or
excellent, up from 88% in 2017 (Charterhouseb).
Digital engagement
In 2018, 69% of the US Consumer Bank customers are now digitally
active (vs. 66% in 2017), and 57% now receive paperless statements.
Our strategy and customer centricity is encouraged by the
prestigious 3rd place in J.D. Power's 2018 Credit Card Satisfaction
Survey. To maintain and improve this position, we continue to work
on building our single, integrated native app to provide our
customers an effortless experience. The app will allow customers to
apply for products, manage their accounts, and track rewards earned
all in one convenient place.
Areas of continued focus:
Conduct Indicators
Barclays Bank Group has operated at the overall set tolerance
for Conduct Risk throughout 2018. The tolerance is assessed by the
business through Key Indicators which are aggregated and provide an
overall rating which is reported to the Board Reputation Committee
as part of the Conduct Dashboard. We remain focused on the
continuous improvement being made to manage Conduct Risk
effectively, with an emphasis on enhancing governance and
management information to facilitate the identification of risks at
earlier stages. For further information on the management and
performance of Conduct Risk, please refer to the Risk Review
section on page 57 in Barclays Bank PLC Annual Report.
a Markets ranking and share source: Coalition, FY18 Preliminary Competitor
Analysis based on the Coalition Index and Barclays' internal business
structure
b Charterhouse Research based on 683 interviews (173 Barclays GBP25m+)
with companies turning over between GBP25m and GBP1bn carried out
in year end 2018. Survey data is weighted by turnover and region
to be representative of the total market in Great Britain. % Responses
- Excellent, Very Good and Good.
Colleague
Our Colleague agenda is set at the Barclays PLC level, and
implemented throughout the subsidiaries, regardless of legal
entity. Further information on our people at Barclays Bank Group on
page 29 of Barclays Bank PLC Annual report.
Citizenship
Our Citizenship agenda is set at the Barclays PLC level, and
implemented throughout the subsidiaries, regardless of legal
entity. Further information on our Citizenship and Environmental
Social Governance (ESG) activity available in the Barclays PLC 2018
Annual Report pages 22 to 27. Barclays PLC also publishes an annual
ESG Report, where additional detail on material ESG themes are
available. Reports are available at home.barclays/annualreport
Risk Review
Material existing and emerging risks
Material existing and emerging risks to Barclays Bank Group's
future performance
Material risks are those to which senior management pay
particular attention and which could cause the delivery of Barclays
Bank Group's strategy, results of operations, financial condition
and/or prospects to differ materially from current
expectations.
Emerging risks are those which have largely unknown components,
the impact of which could crystallise over a longer time horizon.
These could currently be considered immaterial but over time may
individually or cumulatively affect Barclays Bank Group's strategy
and cause the same outcomes as material risks. In addition, certain
factors beyond Barclays Bank Group's control, including escalation
of terrorism or global conflicts, natural disasters and similar
calamities, although not detailed below, could have a similar
impact on Barclays Bank Group.
The risks described below are material existing and emerging
risks which senior management has identified with respect to
Barclays Bank Group.
Material existing and emerging risks potentially impacting more
than one principal risk
i) Business conditions, general economy and geopolitical issues
Barclays Bank Group's business mix spreads across multiple
geographies and client types. The breadth of these operations means
that deterioration in the economic environment, or an increase in
political instability in countries where Barclays Bank Group is
active, or in any systemically important economy, could adversely
affect Barclays Bank Group's operating performance, financial
condition and prospects.
Although economic activity continued to strengthen globally in
2018, a change in global economic conditions and the reversal of
the improving trend may result in lower client activity in Barclays
Bank Group, including lower demand for borrowing from creditworthy
customers, and/or a reduction in the value of related collateral
and/or an increase of Barclays Bank Group's default rates,
delinquencies, write-offs, and impairment charges, which in turn
could adversely affect Barclays Bank Group's performance and
prospects. Deteriorating economic conditions could also impact the
ability of Barclays Bank Group to raise funding from external
investors. In addition, a shift in the forward looking consensus
view of economic conditions may materially impact the models used
to calculate expected credit losses (ECL), where an increase in
ECLs could adversely affect Barclays Bank Group's
profitability.
In several countries, reversals of capital inflows, as well as
fiscal austerity, have already caused deterioration in political
stability. This could be exacerbated by a renewed rise in asset
price volatility or sustained pressure on government finances. In
addition, geopolitical tensions in some areas of the world are at
risk of further deterioration, thus potentially increasing market
uncertainties and causing adverse global economic and market
conditions, which in turn could adversely affect Barclays Bank
Group's profitability in certain geographical locations.
In the UK, the vote in favour of leaving the European Union
(EU), see ii) Process of UK withdrawal from the European Union
below, has given rise to political uncertainty with potential
consequences for investment and market confidence. The initial
impact was a depreciation of Sterling resulting in higher costs for
companies exposed to imports and a more favourable environment for
exporters. Rising domestic costs resulting from higher import
prices may impact household incomes and the affordability of
consumer loans and mortgages. In turn this may affect businesses
dependent on consumers for revenue, exacerbated by current
pressures on businesses dependent on discretionary purchases,
potentially resulting in increased impairment in Barclays Bank
Group's portfolios. There has also been a reduction in activity in
both commercial and residential real estate markets which has the
potential to impact the value of real estate assets and adversely
affect mortgage assets.
Furthermore, continued uncertainty in the withdrawal process
could have a detrimental effect in the economic environment in
continental Europe, which may negatively impact Barclays Bank
Group's business in specific Eurozone countries.
In the US, where the economy outperformed other key markets in
2018, there is the possibility of significant continued changes in
policy in sectors including trade, healthcare and commodities which
may have an impact on associated Barclays Bank Group portfolios. A
significant proportion of Barclays Bank Group's portfolio is
located in the US, including a major credit card portfolio and a
range of corporate and investment banking exposures. Stress in the
US economy, weakening GDP and the associated exchange rate
fluctuations, heightened trade tensions, an unexpected rise in
unemployment and/or an increase in interest rates could lead to
increased levels of impairment, resulting in a negative impact on
Barclays Bank Group's profitability.
As anticipated, most major central banks have started tightening
their monetary policies in 2018 and there remains a possibility
that this will continue. The risk of large capital flows spawned by
divergent or differently timed policies remains, and this will
continue to provide financial market turbulence, in particular in
emerging market economies. This may negatively impact Barclays Bank
Group's business in the affected regions, under both profiles of
credit and market risk.
Sentiment towards emerging markets as a whole continues to be
driven in large part by developments in China, where there is some
concern around the ability of authorities to manage growth while
transitioning from manufacturing towards services. Although the
Chinese government's efforts to stably increase the weight of
domestic demand have had some success, the pace of credit growth
remains a concern, given the high level of leverage and despite
regulatory action. A stronger than expected slowdown could result
if authorities fail to appropriately manage the end of the
investment and credit-led boom. Deterioration in emerging markets
could affect Barclays Bank Group if it results in higher impairment
charges for Barclays Bank Group via sovereign or counterparty
defaults.
More broadly, a deterioration of conditions in the key markets
where Barclays Bank Group operates could affect performance in a
number of ways including, for example: (i) deteriorating business,
consumer or investor confidence indirectly having a material
adverse impact on GDP growth in significant markets and therefore
on Barclays Bank Group's performance; (ii) mark to market losses in
trading portfolios resulting from changes in factors such as credit
ratings, share prices and solvency of counterparties; (iii) reduced
ability to obtain capital from other financial institutions for
Barclays Bank Group's operations; and (iv) lower levels of fixed
asset investment and productivity growth overall.
ii) Process of UK withdrawal from the European Union
The uncertainty around Brexit spanned the whole of 2018, and
intensified in the second half of the year. The full impact of the
withdrawal may only be realised in years to come, as the economy
adjusts to the new regime, but Barclays Bank Group continues to
monitor the most relevant risks, including those that may have a
more immediate impact, for its business:
* Market volatility, including in currencies and
interest rates, might increase which could have an
impact on the value of Barclays Bank Group's trading
book positions.
* Potential UK financial institutions credit spread
widening could lead to reduced investor appetite for
Barclays Bank Group's debt securities; this could
negatively impact the cost of, and/or access to,
funding. There is potential for continued market and
interest rate volatility. This volatility could
affect underlying interest rate risk value of the
assets in the banking book, and securities held by
Barclays Bank Group for liquidity purposes.
* A credit rating agency downgrade applied directly to
Barclays Bank Group, or indirectly as a result of a
credit rating agency downgrade to the UK Government,
could significantly increase Barclays Bank Group's
borrowing costs, credit spreads and materially
adversely affect Barclays Bank Group's interest
margins and liquidity position.
* Changes in the long-term outlook for UK interest
rates may adversely affect pension liabilities and
the market value of investments funding those
liabilities.
* Increased risk of a UK recession with lower growth,
higher unemployment and falling UK house prices. This
would likely negatively impact a number of Barclays
Bank Group's portfolios.
* The implementation of trade and customs barriers
between the UK and EU could lead to delays and
increased costs in the passage of goods for corporate
banking customers. This could negatively impact the
levels of customer defaults and business volumes
which may result in an increase in Barclays Bank
Group's impairment charges and a reduction in
revenues.
* Changes to current EU 'Passporting' rights may
require further adjustment to the current model for
Barclays Bank Group's cross-border banking operation
which could increase operational complexity and/or
costs.
* 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 Barclays' access to the
EU talent pool.
* The legal framework within which Barclays Bank 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 perform 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 lose automatic qualification to be part
of Single Euro Payments Area there could be a
resultant impact on the efficiency of, and access to,
European payment systems. In addition, loss of
automatic qualification to the European Economic Area
(EEA) or access to Financial Markets Infrastructure
including exchanges, central counterparties and
payments services could impact service provision for
clients, likely resulting in reduced market share and
revenue and increased operating costs for Barclays
Bank Group.
* There are certain execution risks relating to the
transfer of Barclays Bank Group's European businesses
to Barclays Bank Ireland. Technology change could
result in outages or operational errors leading to
delays in the transfer of assets and liabilities to
Barclays Bank Ireland, and delayed delivery could
lead to European clients losing access to products
and service and increased reputational risk.
iii) Interest rate rises adversely impacting credit conditions
To the extent that central banks increase interest rates
particularly in Barclays Bank Group's main markets, in the UK and
the US, there could be an impact on consumer debt affordability and
corporate profitability.
While interest rate rises could positively impact Barclays Bank
Group's profitability, as retail and corporate business income may
increase due to margin de-compression, future interest rate
increases, if larger or more frequent than expectations, could
cause stress in the lending portfolio and underwriting activity of
Barclays Bank Group. Higher credit losses driving an increased
impairment allowance would most notably impact retail unsecured
portfolios and wholesale non-investment grade lending.
Changes in interest rates could also have an adverse impact on
the value of high quality liquid assets which are part of Barclays
Bank Group Treasury function's investment activity. Consequently,
this could create more volatility than expected through Barclays
Bank Group's FVOCI reserves.
iv) Regulatory change agenda and impact on business model
Barclays Bank Group remains subject to ongoing significant
levels of regulatory change and scrutiny in many of the countries
in which it operates (including, in particular, the UK and the US).
As a result, regulatory risk will remain a focus for senior
management and consume significant levels of business resources.
Furthermore, a more intensive regulatory approach and enhanced
requirements together with the uncertainty (particularly in light
of the UK's withdrawal from the EU) and potential lack of
international regulatory co-ordination as enhanced supervisory
standards are developed and implemented may adversely affect
Barclays Bank Group's business, capital and risk management
strategies and/or may result in Barclays Bank 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.
Barclays Bank UK Group was established on 1 April 2018 as the
ring-fenced entity under Barclays Group. The transfer of the assets
and liabilities of the Barclays UK division from Barclays Bank
Group means that the Barclays Bank Group is less diversified than
Barclays as a whole. Barclays Bank Group is not the parent of
Barclays Bank UK Group and thus does not have recourse to the
assets of Barclays Bank UK Group. Relative to Barclays Group,
Barclays Bank Group is, amongst other things:
-- more focused on businesses outside the UK, particularly in the US, and thus more exposed to
the US economy and more affected by movements in the US Dollar (and other non-Sterling currencies)
relative to Sterling, with a relatively larger portion of its business exposed to US regulation.
-- more focused on wholesale businesses, such as corporate and investment banking and capital
markets, which expose Barclays Bank Group to a broader range of market conditions, and to
counterparty and operational risks. As such, the financial performance of Barclays Bank Group
may be subject to greater fluctuations relative to that of Barclays as a whole or that of
Barclays Bank UK Group.
-- more dependent on wholesale funding sources, as the UK retail deposit base has been transferred
to the Barclays Bank UK Group. The UK retail mortgage assets have also been transferred to
Barclays Bank UK Group, which reduces Barclays Bank Group's access to funding sources reliant
on residential mortgage collateral. Barclays Bank Group may therefore experience more difficult
financing conditions and/or higher costs of funding including in situations of stress. As
a result of the implementation of ring-fencing, different Barclays Group entities, such as
Barclays Bank Group, may be assessed differently by credit rating agencies, which may result
in different, and possibly more negative, assessments of Barclays Bank Group's credit and
thus in lower credit ratings than the credit ratings of Barclays Group, which in turn could
adversely affect the sources and costs of funding for Barclays Bank Group.
-- potentially subject to different regulatory obligations, including different liquidity requirements
and capital buffers.
There are several other significant pieces of legislation and
areas of focus which will require significant management attention,
cost and resource, including:
-- Changes in prudential requirements (including the risk reduction
measures package recently adopted in the EU to amend the Capital
Requirements Directive (CRD IV) and the Bank Recovery and Resolution
Directive (BRRD)) 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
Barclays Bank Group's business mix or exiting other businesses;
and/or undertaking other actions to strengthen Barclays Bank Group's
position. (See Treasury and capital risk on pages 99 to 116 and
Supervision and regulation on pages 123 to 132 for more information
in Barclays Bank PLC Annual Report).
-- The derivatives market has been the subject of particular focus
for regulators in recent years across the G20 countries and beyond,
with regulations introduced which require the reporting and clearing
of standardised over the counter (OTC) derivatives and the mandatory
margining of non-cleared OTC derivatives. Other regulations applicable
to swap dealers, including those promulgated by the US Commodity
Futures Trading Commission, have imposed significant costs on Barclays
Bank Group's derivatives business. The increased regulation of
swaps and security-based swaps may also result in other increases
in costs for market participants, as well as reduced liquidity
in the markets for such instruments, which could cause further
increases in costs and volatility. These and any future requirements,
including the US SEC's regulations relating to security-based swaps
and the possibility of overlapping and/or contradictory requirements
imposed on derivative transactions by regulators in different jurisdictions,
are expected to continue to impact such business in the same manner.
More broadly, compliance with the evolving regulatory framework
entails significant costs for market participants and is having
a significant impact on certain markets in which Barclays Bank
Group operates. The recast Markets in Financial Instruments Directive
in Europe (MiFID II), which came into force in January 2018, has
fundamentally changed the European regulatory framework entailing
significant operational changes for market participants in a wide
range of financial instruments as well as changes in market structures
and practices. In addition, the EU Benchmarks Regulation, which
also came into force in January 2018, regulates the use of benchmarks
in the EU. In particular, after 1 January 2020 certain Barclays
Bank Group entities will not be permitted to use benchmarks unless
the relevant administrator is authorised, registered or qualifies
under a third party regime. This may necessitate adapting processes
and systems to transition to new alternative benchmarks, which
would be a very time consuming and costly process.
Separately, the transition to risk-free rates as part of a wider
benchmark reform is also expected to be impactful to Barclays Bank
Group in respect of the timing of the development of a robust risk
free rate market, an unfavourable market reaction and/or inconsistencies
in the adoption of products using the new risk free rates, and
also in respect of the costs and uncertainties involved in managing
and/or changing historical products to reference risk free rates
as a result of the proposed discontinuation of certain existing
benchmarks.
-- Barclays Bank Group and certain of its members are subject to supervisory
stress testing exercises in a number of jurisdictions. These exercises
currently include the programmes of the BoE, the EBA, the FDIC
and the FRB. These exercises are designed to assess the resilience
of banks to adverse economic or financial developments and enforce
robust, forward looking capital and liquidity management processes
that account for the risks associated with their business profile.
Assessment by regulators is on both a quantitative and qualitative
basis, the latter focusing on Barclays Bank Group's or certain
of its members' business model, data provision, stress testing
capability and internal management processes and controls. The
stress testing requirements to which Barclays Bank Group and its
members are subject are becoming increasingly stringent. Failure
to meet requirements of regulatory stress tests, or the failure
by regulators to approve the stress test results and capital plans
of Barclays Bank Group, could result in Barclays Bank Group being
required to enhance its capital position, limit capital distributions
or position additional capital in specific subsidiaries. For more
information on stress testing, please see Supervision and regulation
on page 124 in the Barclays Bank PLC Annual Report.
-- The introduction and implementation of Payments Service Directive
2 (PSD2) with delivery across 2019 provides third parties and banks
with opportunities to change and enhance the relationship between
a customer and their bank. It does this by providing customers
with the ability to share their transactional data with authorised
third party service providers either for aggregation or payment
services. It is anticipated that payment services will be offered
by third parties to Barclay Bank Group's customers. PSD2 will also
introduce new requirements to the authentication process for a
number of actions customers take, including ecommerce transactions.
A failure to comply with PSD2 could expose Barclays Bank Group
to regulatory sanction. Further, the regime could mean that actions
or omissions by third party service providers could expose Barclays
Bank Group to potential financial loss from third party fraud,
misuse of customer data, litigation and reputational detriment,
amongst other things. The changes to authentication may change
the fraud environment across the industry as providers implement
different approaches to comply.
Material existing and emerging risks impacting individual
principal risks
i) Credit risk
a) Impairment
The introduction of the impairment requirements of IFRS 9
Financial Instruments, implemented on 1 January 2018, results in
impairment loss allowances that are recognised earlier, on a more
forward looking basis and on a broader scope of financial
instruments than has been the case under IAS 39 and has had, and
may continue to have, a material impact on Barclays Bank Group's
financial condition.
Measurement involves increased complex judgement and impairment
charges will tend to be more volatile, particularly under stressed
conditions. Unsecured products with longer expected lives, such as
revolving 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 regulatory capital
ratios.
In addition, the move from incurred to expected credit losses
has the potential to impact Barclays Bank Group's performance under
stressed economic conditions or regulatory stress tests. For more
information, please refer to Note 1.
b) Specific sectors and concentrations
Barclays Bank Group is subject to risks arising from changes in
credit quality and recovery rate of loans and advances due from
borrowers and counterparties in a 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 Barclays Bank Group's portfolio which could
have a material impact on performance:
-- UK retailers. Softening demand, rising costs and a structural shift
to online is fuelling pressure on the UK High Street. Whilst we
have not seen any material impact, as the UK retailer market repositions
itself the trend represents a potential risk in our UK corporate
portfolio.
-- Consumer affordability has remained a key area of focus for regulators,
particularly in unsecured lending, driven by the growth in levels
of borrowing. 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 Barclays Bank Group corporate credit exposure. In
2018, property price growth across the UK continued, however, this
growth has slowed in London and the South East where the Barclays
Bank Group exposure has high concentration. Barclays Bank Group
is at risk of increased impairment from a material fall in property
prices due to the depreciation in value of the underlying loan
security.
-- Leverage finance underwriting. Barclays Bank Group takes on sub-investment
grade underwriting exposure, including single name risk, particularly
in the US and Europe. Barclays Bank Group is exposed to credit
events and market volatility during the underwriting period. Any
adverse events during this period may potentially result in loss
for Barclays Bank Group or an increased capital requirement should
there be a need to hold the exposure for an extended period.
-- Italian portfolio. Barclays Bank Group is exposed to a decline
in the Italian economic environment through a mortgage portfolio
in run-off and positions to wholesale customers. The Italian economy
tipped into an official recession at the end of 2018 and should
the economy deteriorate further, there could be a material adverse
effect on Barclays Bank Group's results including, but not limited
to, increased credit losses and higher impairment charges.
Barclays Bank Group also has large individual exposures to
single name counterparties, both in its lending activities and in
its financial services and trading activities, including
transactions in derivatives and transactions with brokers, central
clearing houses, dealers, other banks, mutual and hedge funds and
other institutional clients. The default of such counterparties
could have a significant impact on the carrying value of these
assets. In addition, where such counterparty risk has been
mitigated by taking collateral, credit risk may remain high if the
collateral held cannot be realised, or has to be liquidated at
prices which are insufficient to recover the full amount of the
loan or derivative exposure. Any such defaults could have a
material adverse effect on Barclays Bank Group's results due to,
for example, increased credit losses and higher impairment
charges.
c) Environmental risk
Barclays Bank Group is exposed to credit risks arising from
energy and climate change. Indirect risks may be incurred as a
result of environmental issues impacting the credit worthiness of
the borrower resulting in higher impairment.
ii) Market risk
Market volatility
An uncertain outlook for the direction of monetary policy, the
US-China trade conflict, slowing global growth and political
concerns in the US and Europe (including Brexit) are some of the
factors that could heighten market risks for Barclays Bank Group's
portfolios.
In addition, Barclays Bank Group's trading business is generally
exposed to a prolonged period of elevated asset price volatility,
particularly if it negatively affects the depth of marketplace
liquidity. Such a scenario could impact Barclays Bank Group's
ability to execute client trades and may also result in lower
client flow-driven income and/or market-based losses on its
existing portfolio of market risks. These can include having to
absorb higher hedging costs from rebalancing risks that need to be
managed dynamically as market levels and their associated
volatilities change.
iii) Treasury and capital risk
Barclays Bank Group may not be able to achieve its business
plans due to: a) inability to maintain appropriate capital ratios;
b) inability to meet its obligations as they fall due; c) rating
agency downgrades; d) adverse changes in foreign exchange rates on
capital ratios; e) adverse movements in the pension fund; f)
non-traded market risk/interest rate risk in the banking book.
a) Inability to maintain prudential ratios and other regulatory requirements
This could lead to Barclays Bank Group's inability to support
business activity; a failure to meet regulatory capital
requirements including any additional capital add-ons or the
requirements set for 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 Barclays Bank Group's capital or leverage
position.
b) Inability to manage liquidity and funding risk effectively
This may result in Barclays Bank Group either not having
sufficient financial resources to meet its payment obligations as
they fall due or, although solvent, only being able to meet these
obligations at excessive cost. This could cause Barclays Bank Group
to fail to meet regulatory liquidity standards or be unable to
support day-to-day banking activities.
The stability of Barclays Bank 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 Barclays
Bank Group failing to preserve the current level of customer and
investor confidence. Barclays Bank Group also regularly accesses
the capital markets to provide short-term and long-term funding to
support its operations. Several factors, including adverse
macroeconomic conditions, adverse outcomes in legal, regulatory or
conduct matters and loss of confidence by investors, counterparties
and/or customers in Barclays Bank Group, can affect the ability of
Barclays Bank Group to access the capital markets and/or the cost
and other terms upon which Barclays Bank Group is able to obtain
market funding.
c) Credit rating changes and the impact on funding costs
Any potential or actual credit rating agency downgrades could
significantly increase Barclays Bank Group's borrowing costs,
credit spreads and materially adversely affect Barclays Bank
Group's interest margins and liquidity position. Consequently, this
may result in reduced profitability for Barclays Bank Group.
d) Adverse changes in FX rates impacting capital ratios
Barclays Bank Group has capital resources, risk weighted assets
and leverage exposures denominated in foreign currencies. Changes
in foreign currency exchange rates may adversely impact the
Sterling equivalent value of these items. As a result, Barclays
Bank Group's regulatory capital ratios are sensitive to foreign
currency movements. Failure to appropriately manage Barclays Bank
Group's balance sheet to take account of foreign currency movements
could result in an adverse impact on regulatory capital and
leverage ratios.
e) Adverse movements in the pension fund
Adverse movements in pension assets and liabilities for defined
benefit pension schemes could result in deficits on a funding
and/or accounting basis. This could lead to Barclays Bank Group
making substantial additional contributions to its pension plans
and/or a deterioration in its capital position. Under IAS 19 the
liabilities discount rate is derived from the yields of high
quality corporate bonds.
Therefore, the valuation of Barclays Bank Group's defined
benefits schemes would be adversely affected by a prolonged fall in
the discount rate due to a persistent low rate and/or credit spread
environment. Inflation is another significant risk driver to the
pension fund as the liabilities are adversely impacted by an
increase in long-term inflation expectations.
f) Non-traded market risk/interest rate risk in the banking book
A shortfall in the liquidity pool investment return could
increase Barclays Bank Group's cost of funds and impact the capital
ratios. Barclays Bank Group's structural hedge programmes for
interest rate risk in the banking book rely on behavioural
assumptions, as a result, the success of the hedging strategy is
not guaranteed. A potential mismatch in the balance or duration of
the hedge assumptions could lead to earnings deterioration.
iv) Operational risk
a) Cyber threat
The frequency of cyber-attacks continues to grow and is a global
threat which is inherent across all industries, including the
financial sector and is a key area of focus for Barclays Bank
Group. The financial sector remains a primary target for cyber
criminals. There is an increasing level of sophistication in both
criminal and nation state 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,
supply chain and vulnerability exploitation. Other events have a
compounding impact on services and customers, e.g. data breaches in
social networking sites, retail companies and payments
networks.
Failure to adequately manage this threat could result in
increased fraud losses, inability to perform critical economic
functions, customer detriment, potential regulatory censure or
penalties, legal liability, reduction in shareholder value and
reputational damage.
b) 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 threats could lead to customer detriment, loss of
business, regulatory censure, missed business opportunity and
reputational damage.
c) Operational resilience
The loss of or disruption to Barclays Bank Group's business
processing is a material inherent risk theme within Barclays Bank
Group and across the financial services industry, whether arising
through impacts on technology systems, real estate services,
personnel availability or the support of major suppliers.
Failure to build resilience into business processes or into the
services of technology, real estate or suppliers on which Barclays
Bank Group business processes depend may result in significant
customer detriment, costs to reimburse losses incurred by our
customers, potential regulatory censure or penalties, and
reputational damage.
d) Supplier exposure
Barclays Bank Group depends on suppliers, including Barclays
Services Limited, for the provision of many of its services and the
development of technology. Even though Barclays Bank Group depends
on suppliers, it continues to be accountable for risk arising from
the actions of such suppliers.
Failure to monitor and control Barclays Bank Group's suppliers
could potentially lead to client information, or critical
infrastructures and services, not being adequately protected or
available when required. The dependency on suppliers and
sub-contracting of outsourced services introduces concentration
risk where the failure of specific suppliers could have an impact
on our ability to continue to provide services that are material to
Barclays Bank Group.
Failure to adequately manage outsourcing risk could result in
increased losses, inability to perform critical economic functions,
customer detriment, potential regulatory censure, legal liability
and reputational damage.
e) Processing error
As a large, complex bank, Barclays Bank Group faces the risk of
material errors in operational processes, including payments and
client transactions.
Material operational or payment errors could disadvantage
Barclays Bank Group's customers, clients or counterparties and
could result in regulatory censure, legal liability, reputational
damage and financial loss for Barclays Bank Group.
f) New and emergent technology
Technological advancements present opportunities to develop new
and innovative ways of doing business across Barclays Bank 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 lead to
customer detriment, loss of business, regulatory censure, missed
business opportunity and reputational damage.
g) Ability to hire and retain appropriately qualified employees
As a regulated financial institution, Barclays Bank Group
requires diversified and specialist skilled colleagues. Barclays
Bank 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 negatively impact our
financial performance, control environment and level of employee
engagement. Additionally, this may result in disruption to service
which could in turn lead to disenfranchising certain customer
groups, customer detriment and reputational damage.
h) Tax risk
Barclays Bank Group is required to comply with the domestic and
international tax laws and practice of all countries in which it
has business operations. The Tax Cuts and Jobs Act has introduced
substantial changes to the US tax system, including the
introduction of a new tax, the Base Erosion Anti-Abuse Tax. These
changes have increased Barclays Bank Group's tax compliance
obligations and require a number of system and process changes
which introduce additional operational risk. In addition,
increasing customer tax reporting requirements around the world and
the digitisation of the administration of tax has potential to
increase Barclays Bank Group's tax compliance obligations further.
In light of the above, there is a risk that Barclays Bank 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, with much of this risk attributable to the
international structure of Barclays Bank Group.
i) 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, pensions and post-retirement benefits, 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 significant loss to Barclays Bank Group, beyond
what was anticipated or provided for.
The further development of standards and interpretations under
IFRS could also significantly impact the financial results,
condition and prospects of Barclays Bank Group.
j) Data management and information protection
Barclays Bank Group holds and processes large volumes of data,
including personally identifiable information, intellectual
property, and financial data. Failure to accurately collect and
maintain this data, protect it from breaches of confidentiality and
interference with its availability exposes Barclays Bank Group to
the risk of loss or unavailability of data (including customer data
covered under vi), c) Data protection and privacy, below) or data
integrity issues. This could result in regulatory censure, legal
liability and reputational damage, including the risk of
substantial fines under the General Data Protection Regulation
(GDPR), which strengthens the data protection rights for customers
and increases the accountability of Barclays Bank Group in its
management of that data.
k) Unauthorised or Rogue Trading
Unauthorised trading, such as a large unhedged position, which
arises through a failure of preventative controls or deliberate
actions of the trader, may result in large financial losses for
Barclays Bank Group, loss of business, damage to investor
confidence and reputational damage.
l) Algorithmic Trading
In some areas of the investment banking business, trading
algorithms are used to price and risk manage client and principal
transactions. An algorithmic error could result in increased market
exposure and subsequent financial losses for Barclays Bank Group
and potential loss of business, damage to investor confidence and
reputational damage.
v) Model risk
Enhanced model risk management requirements
Barclays Bank 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 Barclays Bank Group has a material impact on the
accuracy and completeness of our risk and financial metrics.
Models may also be misused. Model errors or misuse may result in
Barclays Bank Group making inappropriate business decisions and
being subject to financial loss, regulatory risk, reputational risk
and/or inadequate capital reporting.
vi) Conduct risk
There is the risk of detriment to customers, clients, market
integrity, effective competition or Barclays Bank 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) Product governance and life cycle
Ineffective product governance, including design, approval and
review of products, inappropriate controls over internal and third
party sales channels and post sales services, such as complaints
handling, collections and recoveries, could lead to poor customer
outcomes, as well as regulatory sanctions, financial loss and
reputational damage.
b) Financial crime
Barclays Bank 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 concerning financial institutions
continue to focus on combating financial crime. Failure to comply
may lead to enforcement action by Barclays Bank Group's regulators
together with severe penalties, affecting Barclays Bank Group's
reputation and financial results.
c) Data protection and privacy
Proper handling of personal data is critical to sustaining
long-term relationships with our customers and clients and to
meeting privacy laws and obligations. Failure to protect personal
data can lead to potential detriment to our customers and clients,
reputational damage, regulatory sanctions and financial loss, which
under the GDPR may be substantial (see iv (j) Data management and
information protection, above).
d) Regulatory focus on culture and accountability
Regulators around the world continue to emphasise the importance
of culture and personal accountability and the adoption and
enforcement of adequate internal reporting and whistleblowing
procedures in helping to promote appropriate conduct and drive
positive outcomes for customers, colleagues, clients and markets.
Failure to meet the requirements and expectations of the UK Senior
Managers Regime, Certification Regime and Conduct Rules may lead to
regulatory sanctions, both for the individuals and Barclays Bank
Group.
vii) Reputation risk
Barclays' association with sensitive sectors and its impact on
reputation
A risk arising in one business area can have an adverse effect
upon Barclays Bank Group's overall reputation; any one transaction,
investment or event that, in the perception of key stakeholders
reduces their trust in Barclays Bank Group's integrity and
competence.
Barclays Bank Group's association with sensitive topics and
sectors is an area of concern for stakeholders, including:
-- Disclosure of climate risks and opportunities, including the activities
of certain sections of the client base, which has become the subject
of increased scrutiny from regulators, NGOs and other stakeholders.
-- The risks of association with human rights violations through the
perceived indirect involvement in human rights abuses committed
by clients and customers.
-- The manufacture and export of military and riot control goods and
services by clients and customers.
These associations have the potential to give rise to reputation
risk for Barclays Bank Group and may result in loss of business,
regulatory censure and missed business opportunity.
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 Barclays Bank Group (see iv a) Cyber threat, iv j)
Data management and information protection, and vi) Conduct risk,
above).
viii) Legal risk and legal, competition and regulatory matters
Legal disputes, regulatory investigations, fines and other
sanctions relating to conduct of business and breaches of
legislation and/or regulations may negatively affect Barclays Bank
Group's results, reputation and ability to conduct its
business.
Barclays Bank Group conducts diverse activities in a highly
regulated global market and therefore is exposed to the risk of
fines and other sanctions. Authorities have continued to
investigate past practices, pursued alleged breaches and imposed
heavy penalties on financial services firms. A breach of applicable
legislation and/or regulations could result in Barclays Bank Group
or its staff being subject to criminal prosecution, regulatory
censure, fines and other sanctions in the jurisdictions in which it
operates. Where clients, customers or other third parties are
harmed by Barclays Bank Group's conduct, this may also give rise to
legal proceedings, including class actions. Other legal disputes
may also arise between Barclays Bank Group and third parties
relating to matters such as breaches, enforcement of legal rights
or obligations arising under contracts, statutes or common law.
Adverse findings in any such matters may result in Barclays Bank
Group being liable to third parties or may result in Barclays Bank
Group's rights not being enforced as intended.
Details of legal, competition and regulatory matters to which
Barclays Bank Group is currently exposed are set out in Note 28 in
the Barclays Bank PLC Annual report. In addition to matters
specifically described in Note 28, Barclays Bank Group is engaged
in various other legal proceedings which arise in the ordinary
course of business. Barclays Bank 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 Barclays Bank Group is, or has been,
engaged.
The outcome of legal, competition and regulatory matters, both
those to which Barclays Bank Group is currently exposed and any
others which may arise in the future, is difficult to predict. In
connection with such matters, Barclays Bank Group may incur
significant expense, regardless of the ultimate outcome, and any
such matters could expose Barclays Bank 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 Barclays Bank Group's
business operations including the withdrawal of authorisations;
increased regulatory compliance requirements; suspension of
operations; public reprimands; loss of significant assets or
business; a negative effect on Barclays Bank 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 be material to Barclays Bank
Group's results of operations or cash flow for a particular
period.
In January 2017, Barclays Group was sentenced to serve three
years of probation from the date of the sentencing order in
accordance with the terms of its May 2015 plea agreement with the
Department of Justice (DOJ). During the term of probation Barclays
Group must, among other things, (i) commit no crime whatsoever in
violation of the federal laws of the US, (ii) implement and
continue to implement a compliance program designed to prevent and
detect the conduct that gave rise to the plea agreement, and (iii)
strengthen its compliance and internal controls as required by
relevant regulatory or enforcement agencies. Potential consequences
of Barclays Group, including Barclays Bank Group, breaching the
plea agreement include the imposition of additional terms and
conditions on Barclays Group, an extension of the agreement, or the
criminal prosecution of Barclays Group, which could, in turn,
entail further financial penalties and collateral consequences and
have a material adverse effect on Barclays Group's business,
operating results or financial position.
There is also a risk that the outcome of any legal, competition
or regulatory matters in which Barclays Bank Group is involved may
give rise to changes in law or regulation as part of a wider
response by relevant law makers and regulators. A decision in any
matter, either against Barclays Bank Group or another financial
institution facing similar claims, could lead to further claims
against Barclays Bank Group.
Directors' Responsibility Statement
The Directors have responsibility for ensuring that the Company
keeps accounting records which disclose with reasonable accuracy
the financial position of the Company and which enable them to
ensure that the accounts comply with the Companies Act 2006.
The Directors are also responsible for preparing a Strategic
Report and Directors' Report 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 are set out below, confirm to the
best of their knowledge that:
-- 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
-- The management report on pages 4 to 15 which is incorporated in
the Directors' Report in the Barclays Bank PLC Annual 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
Jason Wright
Company Secretary
20 February 2019
Barclays Bank PLC
Registered in England. Company No. 1026167
Tim Throsby Steven Ewart
Barclays Bank Group Chief Executive Barclays Bank Group Chief Financial
Officer Officer
Barclays Bank PLC Board of Directors:
Chairman Executive Directors Non-executive Directors
Sir Gerry Grimstone Steven Ewart Peter Bernard
Tim Throsby Helen Keelan
Maria Richter
Jeremy Scott
Alexander Thursby
Helene Vletter-van Dort
Financial Statements
Consolidated income statement
2018 2017(a) 2016(a)
For the year ended 31 December Notes GBPm GBPm GBPm
------------------------------------------------------------------ ----- -------- -------- --------
Continuing operations
Interest income 5 7,459 6,917 6,891
Interest expense 5 (4,329) (3,041) (2,115)
------------------------------------------------------------------ ----- -------- -------- --------
Net interest income 3,130 3,876 4,776
------------------------------------------------------------------ ----- -------- -------- --------
Fee and commission income 6 7,392 7,424 7,215
Fee and commission expense 6 (1,785) (1,726) (1,626)
------------------------------------------------------------------ ----- -------- -------- --------
Net fee and commission income 5,607 5,698 5,589
------------------------------------------------------------------ ----- -------- -------- --------
Net trading income 7 4,364 3,396 2,716
Net investment income 8 394 699 1,077
Other income 105 61 44
------------------------------------------------------------------ ----- -------- -------- --------
Total income 13,600 13,730 14,202
Credit impairment charges and other provisions 9 (643) (1,553) (1,477)
------------------------------------------------------------------ ----- -------- -------- --------
Net operating income 12,957 12,177 12,725
------------------------------------------------------------------ ----- -------- -------- --------
Staff costs 33 (4,874) (4,393) (6,832)
Infrastructure costs 10 (935) (1,696) (2,339)
Administration and general expenses(b) 10 (4,224) (4,141) (1,975)
Litigation and conduct(b) (1,706) (448) (321)
------------------------------------------------------------------ ----- -------- -------- --------
Operating expenses (11,739) (10,678) (11,467)
------------------------------------------------------------------ ----- -------- -------- --------
Share of post-tax results of associates and joint ventures 68 75 71
Profit on disposal of subsidiaries, associates and joint ventures - 184 565
------------------------------------------------------------------ ----- -------- -------- --------
Profit before tax 1,286 1,758 1,894
Taxation 11 (404) (1,526) (302)
------------------------------------------------------------------ ----- -------- -------- --------
Profit after tax in respect of continuing operations 882 232 1,592
(Loss)/profit after tax in respect of discontinued operations 3 (47) (1,386) 2,137
------------------------------------------------------------------ ----- -------- -------- --------
Profit/(loss) after tax 835 (1,154) 3,729
------------------------------------------------------------------ ----- -------- -------- --------
Attributable to:
------------------------------------------------------------------ ----- -------- -------- --------
Equity holders of the parent 188 (1,937) 2,867
Other equity instrument holders 647 639 457
------------------------------------------------------------------ ----- -------- -------- --------
Total equity holders of the parent 835 (1,298) 3,324
Non-controlling interests in respect of continuing operations 32 - 4 3
Non-controlling interests in respect of discontinued operations 32 - 140 402
------------------------------------------------------------------ ----- -------- -------- --------
Profit/(loss) after tax 835 (1,154) 3,729
------------------------------------------------------------------ ----- -------- -------- --------
Note
a Following the sale of the UK banking business on 1 April 2018 by
the Group, the continuing operations for 2016 and 2017 have been
restated to disclose the UK banking business as a discontinued
operation. Further detail on the discontinued operations can be
found in Note 3.
b The presentation of administration and general expenses has been
amended to include litigation and conduct as a separate line item.
The prior year comparatives within administration and general expenses
categories have been adjusted accordingly.
Consolidated statement of comprehensive income
2018 2017(a) 2016(a)
For the year ended 31 December GBPm GBPm GBPm
--------------------------------------------------------------------------------------------- ----- ------- -------
Profit/(loss) after tax 835 (1,154) 3,729
Profit after tax in respect of continuing operations 882 232 1,592
(Loss)/profit after tax in respect of discontinuing operations (47) (1,386) 2,137
--------------------------------------------------------------------------------------------- ----- ------- -------
Other comprehensive income/(loss) that may be recycled to profit or loss from continuing
operations:
Currency translation reserve
Currency translation differences(b) 844 (1,310) 3,027
Available for sale reserve(c)
Net gains from changes in fair value - 404 2,178
Net (gains) transferred to net profit on disposal - (294) (912)
Net losses transferred to net profit due to impairment - 3 20
Net losses/(gains) transferred to net profit due to fair value hedging - 283 (1,677)
Changes in insurance liabilities and other liabilities - 60 53
Tax - (27) (18)
Fair value through other comprehensive income reserve(c)
Net losses from changes in fair value (475) - -
Net losses transferred to net profit on disposal 74 - -
Net losses transferred to net profit due to impairment 4 - -
Net losses transferred to net profit due to fair value hedging 165 - -
Other movements (25) - -
Tax 53 - -
Cash flow hedging reserve
Net (losses)/gains from changes in fair value (197) (428) 689
Net gains transferred to net profit (213) (602) (431)
Tax 103 256 (59)
Other 27 (7) 47
--------------------------------------------------------------------------------------------- ----- ------- -------
Other comprehensive income/(loss) that may be recycled to profit or loss from continuing
operations 360 (1,662) 2,917
Other comprehensive income/(loss) not recycled to profit or loss from continuing operations:
--------------------------------------------------------------------------------------------- ----- ------- -------
Retirement benefit remeasurements 412 115 (1,309)
Fair value through other comprehensive income reserve(c) (141) - -
Own credit 77 (7) -
Tax (118) (66) 329
--------------------------------------------------------------------------------------------- ----- ------- -------
Other comprehensive income/(loss) not recycled to profit or loss from continuing operations 230 42 (980)
--------------------------------------------------------------------------------------------- ----- ------- -------
Other comprehensive income/(loss) for the year from continuing operations 590 (1,620) 1,937
--------------------------------------------------------------------------------------------- ----- ------- -------
Other comprehensive (loss)/income for the year from discontinued operation (3) 1,301 1,520
--------------------------------------------------------------------------------------------- ----- ------- -------
Total comprehensive income/(loss) for the year
--------------------------------------------------------------------------------------------- ----- ------- -------
Total comprehensive income/(loss) for the year, net of tax from continuing operations 1,472 (1,388) 3,529
Total comprehensive (loss)/income for the year, net of tax from discontinued operation (50) (85) 3,657
--------------------------------------------------------------------------------------------- ----- ------- -------
Total comprehensive income/(loss) for the year 1,422 (1,473) 7,186
--------------------------------------------------------------------------------------------- ----- ------- -------
Attributable to:
Equity holders of the parent 1,422 (1,585) 5,947
Non-controlling interests - 112 1,239
--------------------------------------------------------------------------------------------- ----- ------- -------
Total comprehensive income/(loss) for the year 1,422 (1,473) 7,186
--------------------------------------------------------------------------------------------- ----- ------- -------
Note
a Following the sale of the UK banking business on 1 April 2018 by
the Group, the continuing operations for 2016 and 2017 have been
restated to disclose the UK banking business as a discontinued
operation. Further detail on the discontinued operations can be
found in Note 3.
b Includes GBP41m loss (2017: GBP189m loss) on recycling of currency
translation differences.
c Following the adoption of IFRS 9, Financial Instruments on 1 January
2018, the fair value through other comprehensive income reserve
was introduced replacing the available for sale reserve.
Consolidated balance sheet
2018 2017(a)
As at 31 December Notes GBPm GBPm
------------------------------------------------------------------ ----- ------- ---------
Assets
Cash and balances at central banks 136,359 171,036
Cash collateral and settlement balances 74,352 77,172
Loans and advances at amortised cost 20 136,959 324,590
Reverse repurchase agreements and other similar secured lending 1,613 12,546
Trading portfolio assets 13 104,038 113,755
Financial assets at fair value through the income statement 14 145,250 116,282
Derivative financial instruments 15 222,683 237,987
Financial investments 16 - 58,963
Financial assets at fair value through other comprehensive income 16 44,994 -
Investments in associates and joint ventures 38 762 718
Goodwill and intangible assets 23 1,327 4,885
Property, plant and equipment 22 947 1,519
Current tax assets 11 1,713 376
Deferred tax assets 11 2,970 3,352
Retirement benefit assets 35 1,768 966
Other assets 1,965 4,003
Assets included in disposal groups classified as held for sale - 1,193
------------------------------------------------------------------ ----- ------- ---------
Total assets 877,700 1,129,343
------------------------------------------------------------------ ----- ------- ---------
Liabilities
Deposits at amortised cost 199,337 399,189
Cash collateral and settlement balances 67,736 68,143
Repurchase agreements and other similar secured borrowing 7,378 40,338
Debt securities in issue 39,063 69,386
Subordinated liabilities 29 35,327 24,193
Trading portfolio liabilities 13 36,614 37,352
Financial liabilities designated at fair value 17 217,741 173,718
Derivative financial instruments 15 219,592 238,345
Current tax liabilities 11 621 494
Retirement benefit liabilities 35 283 287
Other liabilities 25 5,170 8,862
Provisions 26 1,127 3,302
------------------------------------------------------------------ ----- ------- ---------
Total liabilities 829,989 1,063,609
------------------------------------------------------------------ ----- ------- ---------
Equity
Called up share capital and share premium 30 2,348 14,453
Other equity instruments 30 7,595 8,982
Other reserves 31 3,361 3,808
Retained earnings 34,405 38,490
------------------------------------------------------------------ ----- ------- ---------
Total equity excluding non-controlling interests 47,709 65,733
Non-controlling interests 32 2 1
------------------------------------------------------------------ ----- ------- ---------
Total equity 47,711 65,734
------------------------------------------------------------------ ----- ------- ---------
Total liabilities and equity 877,700 1,129,343
------------------------------------------------------------------ ----- ------- ---------
The Board of Directors approved the financial statements on
pages 145 to 284 in Barclays Bank PLC Annual Report on 21 February
2019.
Sir Gerry Grimstone
Barclays Bank Group Chairman
Tim Throsby
Barclays Bank Group Chief Executive
Steven Ewart
Barclays Bank Group Chief Financial Officer
Note
a Barclays introduced changes to the balance sheet presentation as
at 31 December 2017 as a result of the adoption of new accounting
policies on 1 January 2018. Further detail on the adoption of new
accounting policies can be found in Note 1 and in Barclays Bank
PLC Annual Report Note 43 on pages 267 to 280 and the Credit risk
disclosures on pages 60 to 94.
Consolidated statement of changes in equity
Called up Fair value Other
share through other Cash reserves Total equity
capital Other Available comprehensive flow Currency and other excluding Non-
and share equity for sale income hedging translation share-holders' Own credit Retained non-controlling controlling Total
premium(a) instruments(a) reserve(b) reserve reserve(b) reserve(b) equity(a) reserve(a) earnings interests interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------- ---------- -------------- ---------- ------------- ---------- ----------- -------------- ---------- -------- --------------- ----------- --------
Balance as at 31
December 2017 14,453 8,982 396 - 184 3,084 323 (179) 38,490 65,733 1 65,734
Effects of changes
in accounting
policies(d) - - (396) 260 - - - - (2,014) (2,150) - (2,150)
-------------------- ---------- -------------- ---------- ------------- ---------- ----------- -------------- ---------- -------- --------------- ----------- --------
Balance as at 1
January 2018 14,453 8,982 - 260 184 3,084 323 (179) 36,476 63,583 1 63,584
Profit after tax - 647 - - - - - - 235 882 - 882
Currency translation
movements - - - - - 844 - - - 844 - 844
Fair value through
other comprehensive
income reserve - - - (345) - - - - - (345) - (345)
Cash flow hedges - - - - (307) - - - - (307) - (307)
Pension
remeasurement - - - - - - - - 313 313 - 313
Own credit reserve - - - - - - - 58 - 58 - 58
Other - - - - - - - - 27 27 - 27
-------------------- ---------- -------------- ---------- ------------- ---------- ----------- -------------- ---------- -------- --------------- ----------- --------
Total comprehensive
income net of tax
from continuing
operations - 647 - (345) (307) 844 - 58 575 1,472 - 1,472
Total comprehensive
income net of tax
from discontinued
operations - - - (3) - - - - (47) (50) - (50)
-------------------- ---------- -------------- ---------- ------------- ---------- ----------- -------------- ---------- -------- --------------- ----------- --------
Total comprehensive
income for the year - 647 - (348) (307) 844 - 58 528 1,422 - 1,422
-------------------- ---------- -------------- ---------- ------------- ---------- ----------- -------------- ---------- -------- --------------- ----------- --------
Issue and exchange
of other equity
instruments - 683 - - - - - - (312) 371 - 371
Capital
reorganisation (12,092) - - - - - - - 12,092 - - -
Other equity
instruments coupons
paid - (647) - - - - - - 175 (472) - (472)
Redemption of
preference shares (13) - - - - - 21 - (2,048) (2,040) - (2,040)
Equity to debt
reclassification(c) - - - - - - (272) - - (272) - (272)
Equity settled share
schemes - - - - - - - - 373 373 - 373
Vesting of Barclays
PLC shares under
share-based payment
schemes - - - - - - - - (418) (418) - (418)
Dividends on
ordinary shares - - - - - - - - (14,585) (14,585) - (14,585)
Dividends on
preference shares
and other
shareholders equity - - - - - - - - (204) (204) - (204)
Capital contribution
from Barclays Plc - - - - - - - - 3,000 3,000 - 3,000
Net equity impact of
intra-group
transfers - (2,070) - (210) - (1) (96) - (638) (3,015) - (3,015)
Other reserve
movements - - - - - - - - (34) (34) 1 (33)
-------------------- ---------- -------------- ---------- ------------- ---------- ----------- -------------- ---------- -------- --------------- ----------- --------
Balance as at 31
December 2018 2,348 7,595 - (298) (123) 3,927 (24) (121) 34,405 47,709 2 47,711
-------------------- ---------- -------------- ---------- ------------- ---------- ----------- -------------- ---------- -------- --------------- ----------- --------
Notes
a For further details refer to Note 30.
b For further details refer to Note 31.
c Following a review of certain equity instruments, certain instruments
have been deemed to have characteristics that would qualify them
as debt and have subsequently been reclassified.
d Following the adoption of IFRS 9 Financial Instruments on 1 January
2018, the fair value through other comprehensive income reserve
was introduced replacing the available for sale reserve. GBP260m
was reclassified to the fair value through other comprehensive
income reserve; GBP139m reclassified to retained earnings and an
impairment charge of GBP3m through to retained earnings.
Consolidated statement of changes in equity
Called up Fair value Other
share through other Cash reserves Total equity
capital Other Available comprehensive flow Currency and other excluding Non-
and share equity for sale income hedging translation shareholders' Own credit Retained non-controlling controlling Total
premium(a) instruments(a) reserve(b) reserve reserve(b) reserve(b) equity(a) reserve(a) earnings interests interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ---------- -------------- ---------- ------------- ---------- ----------- ------------- ---------- -------- --------------- ----------- -------
Balance as at
31 December
2016 14,462 6,486 (22) - 954 3,054 309 - 42,190 67,433 3,522 70,955
Effects of
changes in
accounting
policies(c) - - - - - - - (175) 175 - - -
-------------- ---------- -------------- ---------- ------------- ---------- ----------- ------------- ---------- -------- --------------- ----------- -------
Balance as at
1 January
2017 14,462 6,486 (22) - 954 3,054 309 (175) 42,365 67,433 3,522 70,955
Profit after
tax - 639 - - - - - - (411) 228 4 232
Currency
translation
movements - - - - - (1,309) - - - (1,309) (1) (1,310)
Available for
sale
investments - - 429 - - - - - - 429 - 429
Cash flow
hedges - - - - (774) - - - - (774) - (774)
Pension
remeasurement - - - - - - - - 53 53 - 53
Own credit
reserve - - - - - - - (11) - (11) - (11)
Other - - - - - - - - (7) (7) - (7)
-------------- ---------- -------------- ---------- ------------- ---------- ----------- ------------- ---------- -------- --------------- ----------- -------
Total
comprehensive
income net of
tax from
continuing
operations - 639 429 - (774) (1,309) - (11) (365) (1,391) 3 (1,388)
Total
comprehensive
income net of
tax from
discontinued
operations - - (11) - 4 1,339 - - (1,526) (194) 109 (85)
-------------- ---------- -------------- ---------- ------------- ---------- ----------- ------------- ---------- -------- --------------- ----------- -------
Total
comprehensive
income for
the year - 639 418 - (770) 30 - (11) (1,891) (1,585) 112 (1,473)
-------------- ---------- -------------- ---------- ------------- ---------- ----------- ------------- ---------- -------- --------------- ----------- -------
Issue and
exchange of
other equity
instruments - 2,496 - - - - - - - 2,496 - 2,496
Other equity
instruments
coupons paid - (639) - - - - - - 174 (465) - (465)
Redemption of
preference
shares (9) - - - - - 14 - (1,343) (1,338) - (1,338)
Equity settled
share schemes - - - - - - - - 550 550 - 550
Vesting of
Barclays PLC
shares under
share-based
payment
schemes - - - - - - - - (78) (78) - (78)
Dividends on
ordinary
shares - - - - - - - - (674) (674) (173) (847)
Dividends on
preference
shares and
other
shareholders
equity - - - - - - - - (242) (242) - (242)
Net equity
impact of
partial BAGL
disposal - - - - - - - - (359) (359) (3,462) (3,821)
Other reserve
movements - - - - - - - 7 (12) (5) 2 (3)
-------------- ---------- -------------- ---------- ------------- ---------- ----------- ------------- ---------- -------- --------------- ----------- -------
Balance as at
31 December
2017 14,453 8,982 396 - 184 3,084 323 (179) 38,490 65,733 1 65,734
-------------- ---------- -------------- ---------- ------------- ---------- ----------- ------------- ---------- -------- --------------- ----------- -------
Notes
a For further details refer to Note 30.
b For further details refer to Note 31.
c As a result of the early adoption of the own credit provisions
of IFRS 9 on 1 January 2017, own credit which was previously recorded
in the income statement is now recognised within other comprehensive
income. The cumulative unrealised own credit net loss of GBP175m
has therefore been reclassified from retained earnings to a separate
own credit reserve, within other reserves. During 2017 a GBP3m
loss (net of tax) on own credit has been booked in the reserve.
Consolidated cash flow statement
2018 2017(a) 2016(a)
For the year ended 31 December Notes GBPm GBPm GBPm
-------------------------------------------------------------------------------- ----- --------- -------- --------
Continuing operations
Reconciliation of profit before tax to net cash flows from operating activities:
Profit before tax 1,286 1,758 1,894
Adjustment for non-cash items:
Allowance for impairment 643 1,553 1,461
Depreciation, amortisation and impairment of property, plant, equipment and
intangibles 397 663 1,073
Other provisions, including pensions 2,274 770 463
Net profit on disposal of investments and property, plant and equipment - (314) (708)
Other non-cash movements including exchange rate movements (3,877) 1,565 (24,732)
Changes in operating assets and liabilities
Net (increase)/decrease in cash collateral and settlement balances (5,606) (3,912) 503
Net decrease/(increase) in loans and advances (3,890) 26,062 (19,204)
Net (increase)/decrease in reverse repurchase agreements and other similar
lending (434) (1,827) 14,733
Net increase in deposits and debt securities in issue 16,330 938 54,629
Net increase/(decrease) in repurchase agreements and other similar borrowing 2 16,978 (4,852)
Net (increase)/decrease in derivative financial instruments (6,419) 6,770 (2,370)
Net decrease/(increase) in trading assets 10,102 (33,179) (5,531)
Net increase in trading liabilities 1,688 2,665 880
Net (increase)/decrease in financial assets and liabilities at fair value
through income statement (6,284) 39,507 854
Net decrease/(increase) in other assets 949 (721) (9,805)
Net (decrease)/increase in other liabilities (6,099) (2,014) 925
Corporate income tax paid 11 (409) 59 (254)
-------------------------------------------------------------------------------- ----- --------- -------- --------
Net cash from operating activities 653 57,321 9,959
-------------------------------------------------------------------------------- ----- --------- -------- --------
Net cash disposed of due to the disposal of the UK banking business - - -
Purchase of available for sale investments - (83,233) (65,086)
Purchase of financial assets at fair value through other comprehensive income (106,330) - -
Proceeds from sale or redemption of available for sale investments - 88,298 102,384
Proceeds from sale or redemption of financial assets at fair value through other
comprehensive
income 108,038 - -
Purchase of property, plant and equipment and intangibles (422) (714) (1,718)
Proceeds from sale of property, plant and equipment and intangibles 35 2,150 7
Disposal of discontinued operation, net of cash disposed (39,703) (1,060) -
Disposal of subsidiaries, net of cash disposed - 358 595
Other cash flows associated with investing activities 1,191 693 32
-------------------------------------------------------------------------------- ----- --------- -------- --------
Net cash from investing activities (37,191) 6,492 36,214
-------------------------------------------------------------------------------- ----- --------- -------- --------
Dividends paid (1,142) (1,427) (1,186)
Issuance of subordinated debt 29 221 3,041 857
Redemption of subordinated debt 29 (3,246) (1,378) (1,143)
Net issue of shares and other equity instruments 1,925 2,495 1,125
Redemption of shares and other equity instruments (3,588) (1,339) (1,378)
Capital contribution from Barclays PLC 2,000 - 114
Vesting of shares under employee share schemes (418) - -
-------------------------------------------------------------------------------- ----- --------- -------- --------
Net cash from financing activities (4,248) 1,392 (1,611)
-------------------------------------------------------------------------------- ----- --------- -------- --------
Effect of exchange rates on cash and cash equivalents 4,159 (4,773) 10,468
-------------------------------------------------------------------------------- ----- --------- -------- --------
Net (decrease)/increase in cash and cash equivalents from continuing operations (36,627) 60,432 55,030
-------------------------------------------------------------------------------- ----- --------- -------- --------
Net cash from discontinued operation 3 (468) 88 2,346
-------------------------------------------------------------------------------- ----- --------- -------- --------
Net (decrease)/ increase in cash and cash equivalents (37,095) 60,520 57,376
-------------------------------------------------------------------------------- ----- --------- -------- --------
Cash and cash equivalents at beginning of year 204,452 143,932 86,556
-------------------------------------------------------------------------------- ----- --------- -------- --------
Cash and cash equivalents at end of year 167,357 204,452 143,932
-------------------------------------------------------------------------------- ----- --------- -------- --------
Cash and cash equivalents comprise:
Cash and balances at central banks 136,359 171,036 102,328
Loans and advances to banks with original maturity less than three months 7,404 8,050 9,073
Cash collateral and settlement balances with banks with original maturity less
than three
months 22,677 24,656 29,026
Available for sale treasury and other eligible bills with original maturity less
than three
months 917 682 356
Trading portfolio assets with original maturity less than three months - 28 -
Cash and cash equivalents held for sale - - 3,149
-------------------------------------------------------------------------------- ----- --------- -------- --------
167,357 204,452 143,932
-------------------------------------------------------------------------------- ----- --------- -------- --------
Note
a Following the sale of the UK banking business on 1 April 2018 by
the Group, the continuing operations for 2016 and 2017 have been
restated to disclose the UK banking business as a discontinued
operation. Further detail on the discontinued operations can be
found in Note 3.
Interest received by Barclays Bank Group was GBP18,990m (2017:
GBP21,783m) and interest paid by Barclays Bank Group was GBP14,800m
(2017: GBP10,388m).
Barclays Bank Group is required to maintain balances with
central banks and other regulatory authorities and these amounted
to GBP4,716m (2017: GBP3,360m).
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.
Barclays Bank PLC Balance sheet
2018 2017(b)
As at 31 December Notes GBPm GBPm
------------------------------------------------------------------ ----- ------- ---------
Assets
Cash and balances at central banks 126,002 165,713
Cash collateral and settlement balances 66,196 70,960
Loans and advances at amortised cost 20 156,764 355,255
Reverse repurchase agreements and other similar secured lending 5,766 22,964
Trading portfolio assets 13 73,480 79,836
Financial assets at fair value through the income statement 14 179,365 117,182
Derivative financial instruments 15 221,247 232,288
Financial investments 16 - 54,583
Financial assets at fair value through other comprehensive income 16 43,706 -
Investments in associates and joint ventures 38 140 165
Investment in subsidiaries 14,958 14,614
Goodwill and intangible assets 23 123 3,498
Property, plant and equipment 22 103 565
Current tax assets 11 1,439 115
Deferred tax assets 11 1,249 1,863
Retirement benefit assets 35 1,748 959
Other assets 1,110 4,440
Total assets 893,396 1,125,000
------------------------------------------------------------------ ----- ------- ---------
Liabilities
Deposits at amortised cost 231,017 425,902
Cash collateral and settlement balances 56,358 60,541
Repurchase agreements and other similar secured borrowing 11,113 49,883
Debt securities in issue 26,391 55,874
Subordinated liabilities 29 35,085 24,203
Trading portfolio liabilities 13 46,626 41,542
Financial liabilities designated at fair value 17 216,966 169,044
Derivative financial instruments 15 221,590 229,227
Current tax liabilities 11 376 242
Retirement benefit liabilities 35 124 149
Other liabilities 25 3,295 7,331
Provisions 26 818 3,028
------------------------------------------------------------------ ----- ------- ---------
Total liabilities 849,759 1,066,966
------------------------------------------------------------------ ----- ------- ---------
Equity
Called up share capital and share premium 30 2,348 14,453
Other equity instruments 30 10,361 8,982
Other reserves 31 383 1,093
Retained earnings 30,545 33,506
------------------------------------------------------------------ ----- ------- ---------
Total equity 43,637 58,034
------------------------------------------------------------------ ----- ------- ---------
Total liabilities and equity 893,396 1,125,000
------------------------------------------------------------------ ----- ------- ---------
Notes
a As permitted by section 408 of the Companies Act 2006 an income
statement for the parent company has not been presented. Included
in shareholders' equity for Barclays Bank PLC is a profit after
tax for the year ended 31 December 2018 of GBP693m (2017: GBP608m).
b Barclays introduced changes to the balance sheet presentation as
at 31 December 2017 as a result of the adoption of new accounting
policies on 1 January 2018. Further detail on the adoption of new
accounting policies can be found in Note 1 and in Barclays Bank
PLC Annual Report Note 43 on pages 267 to 280 and the Credit risk
disclosures on pages 60 to 94.
Barclays Bank PLC Statement of changes in equity
Called up Fair value Other
share through other Cash reserves
capital Other Available comprehensive flow Currency and other
and share equity for sale income hedging translation shareholders' Own credit Retained Total
premium(a) instruments reserve(b) reserve(b) reserve(b) reserve(b) equity(b) reserve(b) earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------- ---------- ----------- ---------- ------------- ---------- ----------- ------------- ---------- -------- --------
Balance as at 31
December 2017 14,453 8,982 (19) - 185 719 386 (178) 33,506 58,034
Effects of changes
in accounting
policies(e) - - 19 (136) - - - - (1,335) (1,452)
-------------------- ---------- ----------- ---------- ------------- ---------- ----------- ------------- ---------- -------- --------
Balance as at 1
January 2018 14,453 8,982 - (136) 185 719 386 (178) 32,171 56,582
Profit after tax - 647 - - - - - - 82 729
Currency translation
movements - - - - - 138 - - - 138
Fair value through
other comprehensive
income reserve - - - (179) - - - - - (179)
Cash flow hedges - - - - (308) - - - - (308)
Pension
remeasurement - - - - - - - - 290 290
Own credit reserve - - - - - - - 57 - 57
Other - - - - - - - - 18 18
-------------------- ---------- ----------- ---------- ------------- ---------- ----------- ------------- ---------- -------- --------
Total comprehensive
income net of tax
from continuing
operations - 647 - (179) (308) 138 - 57 390 745
Total comprehensive
income net of tax
from discontinued
operations - - - (3) - - - - (36) (39)
-------------------- ---------- ----------- ---------- ------------- ---------- ----------- ------------- ---------- -------- --------
Total comprehensive
income for the year - 647 - (182) (308) 138 - 57 354 706
-------------------- ---------- ----------- ---------- ------------- ---------- ----------- ------------- ---------- -------- --------
Issue and exchange
of other equity
instruments - 3,449 - - - - - - (312) 3,137
Capital
reorganisation (12,092) - - - - - - 12,092 -
Other equity
instruments coupons
paid(d) - (647) - - - - - - 175 (472)
Redemption of
preference shares (13) - - - - - 21 - (2,048) (2,040)
Equity to debt
reclassification(c) - - - - - (335) - - (335)
Equity settled share
schemes - - - - - - - - 373 373
Vesting of Barclays
PLC shares under
share-based payment
schemes - - - - - - - - (418) (418)
Dividends paid on
ordinary shares - - - - - - - - (14,585) (14,585)
Dividends paid on
preference shares
and other
shareholders'
equity - - - - - - - - (204) (204)
Capital contribution
from Barclays Plc - - - - - - - - 3,000 3,000
Net equity impact of
intra-group
transfers - (2,070) - 16 - - - - (46) (2,100)
Other reserve
movements - - - - - - - - (7) (7)
-------------------- ---------- ----------- ---------- ------------- ---------- ----------- ------------- ---------- -------- --------
Balance as at 31
December 2018 2,348 10,361 - (302) (123) 857 72 (121) 30,545 43,637
-------------------- ---------- ----------- ---------- ------------- ---------- ----------- ------------- ---------- -------- --------
Notes
a For further details refer to Note 30.
b For further details refer to Note 31.
c Following a review of certain equity instruments, certain instruments
have been deemed to have characteristics that would qualify them
as debt and have subsequently been reclassified.
d Other equity instruments include AT1 securities issued by Barclays
Bank PLC and borrowings of $3.5bn from a wholly-owned, indirect
subsidiary of BBPLC. The borrowings have been recorded as equity
since, under their terms, interest payments are non-cumulative
and discretionary whilst repayment of principal is perpetually
deferrable by BBPLC. Should BBPLC make a discretionary dividend
payment on its ordinary shares in the 6 months preceding the date
of an interest payment, it will be obliged to make that interest
payment.
e Following the adoption of IFRS 9 Financial Instruments on 1 January
2018, the fair value through other comprehensive income reserve
was introduced replacing the available for sale reserve. GBP136m
was reclassified to the fair value through other comprehensive
income reserve; GBP139m reclassified to retained earnings and an
impairment charge of GBP3m through to retained earnings.
Barclays Bank PLC Statement of changes in equity
Called up Other
share Cash reserves
capital Other Available flow Currency and other
and share equity for sale hedging translation shareholders' Own credit Retained Total
premium(a) instruments reserve(b) reserve(b) reserve(b) equity(b) reserve(b) earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ---------- ----------- ---------- ---------- ----------- ------------- ---------- -------- -------
Balance as at
31 December
2016 14,462 6,486 (131) 962 896 373 - 34,950 57,998
Effects of
changes in
accounting
policies(c) - - - - - - (175) 175 -
-------------- ---------- ----------- ---------- ---------- ----------- ------------- ---------- -------- -------
Balance as at
1 January
2017 14,462 6,486 (131) 962 896 373 (175) 35,125 57,998
Profit after
tax - 639 - - - - - (817) (178)
Currency
translation
movements - - - - (177) - - - (177)
Available for
sale
investments - - 112 - - - - - 112
Cash flow
hedges - - - (777) - - - - (777)
Pension
remeasurement - - - - - - - 44 44
Own credit
reserve - - - - - - (10) - (10)
Other - - - - - - - (3) (3)
-------------- ---------- ----------- ---------- ---------- ----------- ------------- ---------- -------- -------
Total
comprehensive
income net of
tax from
continuing
operations - 639 112 (777) (177) - (10) (776) (989)
Total
comprehensive
income net of
tax from
discontinued
operations - - - - - - - 786 786
-------------- ---------- ----------- ---------- ---------- ----------- ------------- ---------- -------- -------
Total
comprehensive
income for
the year - 639 112 (777) (177) - (10) 10 (203)
-------------- ---------- ----------- ---------- ---------- ----------- ------------- ---------- -------- -------
Issue and
exchange of
other equity
instruments - 2,496 - - - - - - 2,496
Other equity
instruments
coupons paid - (639) - - - - - 174 (465)
Redemption of
preference
shares (9) - - - - 13 - (1,343) (1,339)
Equity settled
share schemes - - - - - - - 556 556
Vesting of
Barclays PLC
shares under
share-based
payment
schemes - - - - - - - (78) (78)
Dividends paid
on ordinary
shares - - - - - - - (242) (242)
Dividends paid
on preference
shares and
other
shareholders'
equity - - - - - - - (675) (675)
Other reserve
movements - - - - - - 7 (21) (14)
-------------- ---------- ----------- ---------- ---------- ----------- ------------- ---------- -------- -------
Balance as at
31 December
2017 14,453 8,982 (19) 185 719 386 (178) 33,506 58,034
-------------- ---------- ----------- ---------- ---------- ----------- ------------- ---------- -------- -------
Notes
a For further details refer to Note 30.
b For further details refer to Note 31.
c As a result of the early adoption of the own credit provisions
of IFRS 9 on 1 January 2017, own credit which was previously recorded
in the income statement is now recognised within other comprehensive
income. The cumulative unrealised own credit net loss of GBP175m
has therefore been reclassified from retained earnings to a separate
own credit reserve, within other reserves. During 2017 a GBP3m
loss (net of tax) on own credit has been booked in the reserve.
Barclays Bank PLC Cash flow statement
2018 2017(a) 2016(a)
For the year ended 31 December Notes GBPm GBPm GBPm
-------------------------------------------------------------------------------- ----- --------- -------- --------
Continuing operations
Reconciliation of profit before tax to net cash flows from operating activities:
Profit before tax 697 192 2
Adjustment for non-cash items:
Allowance for impairment (123) 258 476
Depreciation, amortisation and impairment of property, plant, equipment and
intangibles 41 289 430
Other provisions, including pensions 1,312 766 574
Net profit on disposal of investments and property, plant and equipment - (255) 204
Other non-cash movements including exchange rate movements (6,339) 934 (24,160)
Changes in operating assets and liabilities - - -
Net (increase)/decrease in cash collateral and settlement balances (4,049) 7,407 1,558
Net decrease/(increase) in loans and advances 8,246 31,575 (6,353)
Net (increase)/decrease in reverse repurchase agreements and other similar
lending 2,870 (11) 5,862
Net increase in deposits and debt securities in issue 18,100 666 28,262
Net (decrease)/increase in repurchase agreements and other similar borrowing (6,034) 16,946 3,062
Net decrease/(increase) in derivative financial instruments 9,242 6,452 (3,484)
Net decrease/(increase) in trading assets 6,751 (43,284) (3,612)
Net increase in trading liabilities 7,509 9,838 8,432
Net (increase)/decrease in financial assets and liabilities at fair value
through income statement (30,019) 30,892 2,301
Net decrease/(increase) in other assets 2,444 2,703 (398)
Net decrease in other liabilities (4,235) (4,125) (5,781)
Corporate income tax paid 11 (150) 462 247
-------------------------------------------------------------------------------- ----- --------- -------- --------
Net cash from operating activities 6,263 61,705 7,622
-------------------------------------------------------------------------------- ----- --------- -------- --------
Net cash disposed of due to the disposal of the UK banking business - - -
Purchase of available for sale investments - (78,524) (64,086)
Purchase of financial assets at fair value through other comprehensive income (101,046) - -
Proceeds from sale or redemption of available for sale investments - 84,927 100,438
Proceeds from sale or redemption of financial assets at fair value through other
comprehensive
income 101,683 - -
Purchase of property, plant and equipment and intangibles (235) (406) (714)
Proceeds from sale of property, plant and equipment and intangibles 63 2,074 (139)
Disposal of discontinued operation, net of cash disposed (39,679) - -
Disposal of subsidiaries and/or branches, net of cash disposed (2,189) 1,880 595
Net (increase)/decrease in investment in subsidiaries (859) (183) 3,344
Other cash flows associated with investing activities - 569 (13)
-------------------------------------------------------------------------------- ----- --------- -------- --------
Net cash from investing activities (42,262) 10,337 39,425
-------------------------------------------------------------------------------- ----- --------- -------- --------
Dividends paid (1,142) (1,428) (982)
Issuance of subordinated debt 29 - 3,041 857
Redemption of subordinated debt 29 (3,246) (1,371) (1,105)
Net issue of shares and other equity instruments 4,691 2,495 1,255
Redemption of shares and other equity instruments (3,588) (1,339) (1,378)
Capital contribution from Barclays PLC 2,000 - 114
Vesting of shares under employee share schemes (418) - -
-------------------------------------------------------------------------------- ----- --------- -------- --------
Net cash from financing activities (1,703) 1,398 (1,239)
-------------------------------------------------------------------------------- ----- --------- -------- --------
Effect of exchange rates on cash and cash equivalents 3,580 (2,501) 7,400
-------------------------------------------------------------------------------- ----- --------- -------- --------
Net (decrease)/increase in cash and cash equivalents from continuing operations (34,122) 70,939 53,208
-------------------------------------------------------------------------------- ----- --------- -------- --------
Net cash from discontinued operation 3 (528) 604 2,004
-------------------------------------------------------------------------------- ----- --------- -------- --------
Net (decrease)/increase in cash and cash equivalents (34,650) 71,543 55,212
-------------------------------------------------------------------------------- ----- --------- -------- --------
Cash and cash equivalents at beginning of year 193,693 122,150 66,938
-------------------------------------------------------------------------------- ----- --------- -------- --------
Cash and cash equivalents at end of year 159,043 193,693 122,150
-------------------------------------------------------------------------------- ----- --------- -------- --------
Cash and cash equivalents comprise:
Cash and balances at central banks 126,002 165,713 97,466
Loans and advances to banks with original maturity less than three months 10,648 8,996 8,014
Cash collateral and settlement balances with banks with original maturity less
than three
months 21,476 18,313 16,314
Available for sale treasury and other eligible bills with original maturity less
than three
months 917 643 356
Trading portfolio assets with original maturity less than three months - 28 -
Cash and cash equivalents held for sale - - -
-------------------------------------------------------------------------------- ----- --------- -------- --------
159,043 193,693 122,150
-------------------------------------------------------------------------------- ----- --------- -------- --------
Note
a Following the sale of the UK banking business on 1 April 2018 by
the Group, the continuing operations for 2016 and 2017 have been
restated to disclose the UK banking business as a discontinued
operation. Further detail on the discontinued operations can be
found in Note 3.
Interest received by Barclays Bank PLC was GBP18,020m (2017:
GBP13,536m) and interest paid by Barclays Bank PLC was GBP16,610m
(2017: GBP5,651m).
Barclays Bank PLC was required to maintain balances with central
banks and other regulatory authorities of GBP2,261m (2017:
GBP1,207m).
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 Financial Statements
1. Significant accounting policies
1. Reporting entity
Barclays Bank PLC is a public limited company, registered in
England under company number 1026167.
These financial statements are prepared for Barclays Bank PLC
and its subsidiaries (the Barclays Bank Group) under Section 399 of
the Companies Act 2006. The Barclays Bank Group is a major global
financial services provider engaged in credit cards, wholesale
banking, investment banking, wealth management and investment
management services. In addition, individual financial statements
have been presented for the holding company.
2. Compliance with International Financial Reporting Standards
The consolidated financial statements of the Barclays Bank
Group, and the individual financial statements of Barclays Bank
PLC, have been prepared in accordance with International Financial
Reporting Standards (IFRS) and interpretations (IFRICs) issued by
the Interpretations Committee, as published by the International
Accounting Standards Board (IASB). They are also in accordance with
IFRS and IFRIC interpretations endorsed by the European Union. The
principal accounting policies applied in the preparation of the
consolidated and individual financial statements are set out below,
and in the relevant notes to the financial statements. These
policies have been consistently applied with the exception of the
adoption of IFRS 9 Financial Instruments including the early
adoption of Prepayment Features with Negative Compensation
(Amendments to IFRS 9), IFRS 15 Revenue from Contracts with
Customers and the amendments to IFRS 2 Share-based Payment from 1
January 2018.
3. Basis of preparation
The consolidated and individual financial statements have been
prepared under the historical cost convention modified to include
the fair valuation of investment property, and particular financial
instruments, to the extent required or permitted under IFRS as set
out in the relevant accounting policies. They are stated in
millions of pounds Sterling (GBPm), the functional currency of
Barclays Bank 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 Group prepares financial statements in
accordance with IFRS. The Barclays Bank 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 Group applies IFRS 10 Consolidated financial
statements.
The consolidated financial statements combine the financial
statements of Barclays Bank PLC and all its subsidiaries.
Subsidiaries are entities over which Barclays Bank PLC has control.
The Barclays Bank Group has control over another entity when the
Barclays Bank 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 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 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.
As the consolidated financial statements include partnerships
where the Barclays Bank Group member is a partner, advantage has
been taken of the exemption under Regulation 7 of the Partnership
(Accounts) Regulations 2008 with regard to preparing and filing of
individual partnership financial statements.
Details of the principal subsidiaries are given in Note 36, and
a complete list of all subsidiaries is presented in Note 44.
(ii) Foreign currency translation
The Barclays Bank 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.
The Barclays Bank Group's foreign operations (including
subsidiaries, joint ventures, associates and branches) based mainly
outside the UK may have different functional currencies. The
functional currency of an operation is the currency of the main
economy to which it is exposed.
Prior to consolidation (or equity accounting) the assets and
liabilities of non-Sterling operations are translated at the period
end exchange rate and items of income, expense and other
comprehensive income are translated into Sterling at the rate on
the date of the transactions. Exchange differences arising on the
translation of foreign operations are included in currency
translation reserves within equity. These are transferred to the
income statement when the Barclays Bank Group disposes of the
entire interest in a foreign operation, when partial disposal
results in the loss of control of an interest in a subsidiary, when
an investment previously accounted for using the equity method is
accounted for as a financial asset, or on the disposal of an
autonomous foreign operation within a branch.
(iii) Financial assets and liabilities
The Barclays Bank 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 Group applies the requirements
of IAS 39 Financial Instruments: Recognition and Measurement for
hedge accounting purposes.
Recognition
The Barclays Bank 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 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 will be 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 will be 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 impairment is not recognised in the income statement.
The accounting policy for each type of financial asset or
liability is included within the relevant note for the item. The
Barclays Bank Group's policies for determining the fair values of
the assets and liabilities are set out in Note 18.
Derecognition
The Barclays Bank Group derecognises a financial asset, or a
portion of a financial asset, from its balance sheet where the
contractual rights to cash flows from the asset have expired, or
have been transferred, usually by sale, and with them either
substantially all the risks and rewards of the asset or significant
risks and rewards, along with the unconditional ability to sell or
pledge the asset.
Financial liabilities are de-recognised when the liability has
been settled, has expired or has been extinguished. An exchange of
an existing financial liability for a new liability with the same
lender on substantially different terms - generally a difference of
10% in the present value of the cash flows 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 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 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 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 Group obtains such loans or cash collateral, in
exchange for the transfer of collateral.
The Barclays Bank 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 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 at fair value through profit and loss.
The Barclays Bank 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 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 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 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
9 Financial Instruments including the early adoption of Prepayment
Features with Negative Compensation (Amendments to IFRS 9), IFRS 15
Revenue from Contracts with Customers and the amendments to IFRS 2
Share-based Payment from 1 January 2018.
IFRS 9 - Financial Instruments
IFRS 9 Financial Instruments replaces IAS 39 Financial
Instruments: Recognition and Measurement. IFRS 9 introduces key
changes in the following areas:
-- Classification and measurement - requiring asset classification
and measurement based upon both business model and product characteristics
-- Impairment - introducing an expected credit loss model using forward
looking information which replaces an incurred loss model. The
expected credit loss model introduces a three-stage approach to
impairment as follows:
Stage the recognition of 12 month expected credit losses (ECL), that
1 is the portion of lifetime expected credit losses from default
events that are expected within 12 months of the reporting date,
if credit risk has not increased significantly since initial
recognition;
Stage lifetime expected credit losses for financial instruments for
2 which credit risk has increased significantly since initial
recognition; and
Stage lifetime expected credit losses for financial instruments which
3 are credit impaired.
Refer to note 9 for further details regarding the impairment
requirements of IFRS 9.
As required by IFRS 9 the Barclays Bank Group applied IFRS 9
retrospectively by adjusting the opening balance sheet at the date
of initial application, and comparative periods have not been
restated; for more detail refer to Note 43.
IFRS 15 - Revenue from Contracts with Customers
IFRS 15 Revenue from Contracts with Customers replaces IAS 18
Revenue and IAS 11 Construction Contracts. IFRS 15 establishes a
more systematic approach for revenue measurement and recognition by
introducing a five-step model governing revenue recognition. The
five-step model includes: 1) identifying the contract with the
customer, 2) identifying each of the performance obligations
included in the contract, 3) determining the amount of
consideration in the contract, 4) allocating the consideration to
each of the identified performance obligations and 5) recognising
revenue as each performance obligation is satisfied. The Barclays
Bank Group elected the cumulative effect transition method with a
transition adjustment calculated as of 1 January 2018, and
recognised in retained earnings without restating comparative
periods. There were no significant impacts from the adoption of
IFRS 15 in relation to the timing of when the Barclays Bank Group
recognises revenues or when revenue should be recognised gross as a
principal or net as an agent; for more detail refer to Note 43.
IFRS 2 - Share-based Payment - Amendments to IFRS 2
The IASB issued amendments to IFRS 2 Share-based Payment that
address three main areas: the effects of vesting conditions on the
measurement of a cash-settled share-based payment transaction; the
classification of a share-based payment transaction with net
settlement features for withholding tax obligations; and accounting
where a modification to the terms and conditions of a share-based
payment transaction changes its classification from cash settled to
equity settled. The amendments are effective for annual periods
beginning on or after 1 January 2018. Adoption of the amendments
did not have a significant impact on the Barclays Bank Group.
Future accounting developments
There have been and are expected to be a number of significant
changes to the Barclays Bank Group's financial reporting after 2018
as a result of amended or new accounting standards that have been
or will be issued by the IASB. The most significant of these are as
follows:
IFRS 16 - Leases
In January 2016 the IASB issued IFRS 16 Leases, which was
subsequently endorsed by the EU in November 2017, and will replace
IAS 17 Leases for period beginning on or after 1 January 2019. IFRS
16 will apply to all leases with the exception of licenses of
intellectual property, rights held by licensing agreement within
the scope of IAS 38 Intangible Assets, service concession
arrangements, leases of biological assets within the scope of IAS
41 Agriculture, and leases of minerals, oil, natural gas and
similar non-regenerative resources. A lessee may elect not to apply
IFRS 16 to remaining assets within the scope of IAS 38 Intangible
Assets.
IFRS 16 will not result in a significant change to lessor
accounting; however for lessee accounting there will no longer be a
distinction between operating and finance leases. Lessees will be
required to recognise both:
-- a lease liability, measured at the present value of remaining cash
flows on the lease, and;
-- a right of use (ROU) asset, measured at the amount of the initial
measurement of the lease liability, plus any lease payments made
prior to commencement date, initial direct costs, and estimated
costs of restoring the underlying asset to the condition required
by the lease, less any lease incentives received.
There is a recognition exception for leases with a term not
exceeding 12 months which allows the lessee to apply similar
accounting as an operating lease under IAS 17.
Subsequently the lease liability will increase for the accrual
of interest, resulting in a constant rate of return throughout the
life of the lease, and reduce when payments are made. The right of
use asset will amortise to the income statement over the life of
the lease.
The Barclays Bank Group IFRS 16 implementation and governance
programme has been led by Finance with representation from all
impacted departments. The project has identified the contracts
impacted by IFRS 16, which are predominantly existing property
leases. Other lease types are not material. The project has also
established appropriate accounting policies, determined the
appropriate transition options to apply, and updated Finance
systems and processes to reflect the new accounting and disclosure
requirements.
As permitted by the standard, the Barclays Bank Group intends to
apply IFRS 16 on a retrospective basis but to take advantage of the
option not to restate comparative periods by applying the modified
retrospective approach. The Barclays Bank Group intends to take
advantage of 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 Group will adjust the carrying amount of the
ROU asset at the date of initial application by the previous carrying
amount of its onerous lease provision;
-- Apply the recognition exception for leases with a term not exceeding
12 months; and
-- Use hindsight in determining the lease term if the contract contains
options to extend or terminate the lease.
The expected impact of adopting IFRS 16 is an increase in assets
of GBP0.4bn, an increase in liabilities of GBP0.4bn with no
material impact on retained earnings. This impact assessment has
been estimated under an interim control environment. The
implementation of the comprehensive end state control environment
will continue as the Barclays Bank Group introduces business as
usual controls through 2019.
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. The standard is
currently effective from 1 January 2021, and the standard has not
yet been endorsed by the EU. The Barclays Bank Group is currently
assessing the expected impact of adopting this standard.
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. The
effective date is 1 January 2019. The Barclays Bank Group has
considered the guidance included within the interpretation and
concluded that the prescribed approach under IFRIC 23 is not
expected to have a material impact on the Barclays Bank Group's
financial position.
IAS 12 - Income Taxes - Amendments to IAS 12
In December 2017, as part of the Annual Improvements to IFRS
Standards 2015-2017 Cycle, the IASB amended IAS 12 in order to
clarify the accounting treatment of the income tax consequences of
dividends. Effective from 1 January 2019 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. Refer to note 11 for the expected
impact of adopting the amendments of IAS 12.
IAS 19 - Employee Benefits - Amendments to IAS 19
In February 2018 the IASB issued amendments to the guidance in
IAS 19 Employee Benefits, in connection with accounting for plan
amendments, curtailments and settlements. The amendments must be
applied to plan amendments, curtailments or settlements occurring
on or after the beginning of the first annual reporting period that
begins on or after 1 January 2019. The amendments have not yet been
endorsed by the EU. Adoption of the amendments is not expected to
have significant impact on the Barclays Bank Group.
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
the Barclays Bank PLC Annual Report in:
-- Credit impairment charges on pages 173 to 178
-- Tax on pages 178 to 184
-- Fair value of financial instruments on pages 199 to 215
-- Pensions and post-retirement benefits - obligations on pages 249
to 254
-- Provisions including conduct and legal, competition and regulatory
matters on pages 227 to 236.
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 in the
Barclays Bank PLC Annual Report as follows:
-- Credit risk on pages 45 to 47 and on pages 60 to 94
-- Market risk on pages 48 to 49 and on pages 95 to 97
-- Treasury and capital risk - liquidity on pages 50 to 51 and on
pages 99 to107
-- Treasury and capital risk - capital on pages 51 to 52 and pages
108 to 115.
These disclosures are covered by the Audit opinion (included on
pages 133 to 144) where referenced as audited.
2. Disposal of business and transfer of ownership of subsidiary
Following the court approval of the ring-fencing transfer scheme
on 9 March 2018, the UK banking business largely comprising
Personal Banking, Barclaycard Consumer UK and Business Banking
customers, and related assets and liabilities was transferred to
Barclays Bank UK PLC on 1 April 2018, to meet the regulatory
ring-fencing requirement under the Financial Services (Banking
Reform) Act 2013 and related legislation.
The net assets transferred to Barclays Bank UK PLC on 1 April
2018 amounted to GBP15.9bn of which GBP12.9bn was transferred in
exchange for one ordinary share with the remaining net assets
transferred for no consideration. Following the transfer of the UK
banking business on 1 April 2018, Barclays Bank PLC transferred the
equity ownership in Barclays Bank UK PLC to Barclays PLC through a
dividend in specie on the same day. The equity ownership in
Barclays Bank UK PLC comprised net assets of GBP16.2bn, of which
GBP0.3bn was already held by Barclays Bank UK PLC prior to the
transfer of the UK banking business. Accordingly, Barclays Bank UK
PLC ceased to be a subsidiary of Barclays Bank PLC and became a
direct subsidiary of the ultimate parent, Barclays PLC.
The consolidated financial statements of Barclays Bank Group as
at 31 December 2018 include the results of Barclays Bank UK PLC and
its subsidiaries for the three months ended 31 March 2018, the date
prior to the transfer of ownership to Barclays PLC.
The transfer of the ownership of Barclays Bank UK PLC to
Barclays PLC has resulted in a material change to the consolidated
financial position and results of Barclays Bank Group in comparison
to the prior period. The impact on the individual balance sheet
line items as a result of the transfer of ownership is explained
below:
Barclays Bank Group Disposal of Barclays Bank UK PLC(a) Other disposals(b) Total
Assets GBPm GBPm GBPm
---------------------------------------------------- ----------------------------------- ------------------ -------
Cash and balances at central banks 37,380 - 37,380
Cash collateral and settlement balances 2,317 - 2,317
Loans and advances at amortised cost 184,634 - 184,634
Reverse repurchase agreements and other similar
secured lending 415 - 415
Financial assets at fair value through the income
statement 5,616 536 6,152
Derivative financial instruments 108 - 108
Financial assets at fair value through other
comprehensive income 5,544 1,261 6,805
Goodwill and intangible assets 3,537 - 3,537
Property, plant and equipment 510 - 510
Current tax assets - 15 15
Deferred tax assets 747 - 747
Other assets 1,402 6 1,408
Total assets 242,210 1,818 244,028
---------------------------------------------------- ----------------------------------- ------------------ -------
Liabilities
---------------------------------------------------- ----------------------------------- ------------------ -------
Deposits at amortised cost 192,087 643 192,730
Repurchase agreements and other similar secured
borrowing 11,567 - 11,567
Debt securities in issue 12,303 - 12,303
Subordinated liabilities 3,001 - 3,001
Trading portfolio liabilities 1,765 - 1,765
Financial liabilities designated at fair value - 18 18
Derivative financial instruments 6 - 6
Current tax liabilities 677 3 680
Other liabilities 1,642 5 1,647
Provisions 2,305 1 2,306
Total liabilities 225,353 670 226,023
---------------------------------------------------- ----------------------------------- ------------------ -------
Notes
a The movement in net assets relating to the disposal of Barclays
Bank UK PLC of GBP16,865m is stated after the elimination of internal
balances between Barclays Bank PLC and Barclays Bank UK PLC on
1 April 2018 of GBP615m.
b The movement in net assets relating to the disposal of BAGHL is
presented in Other disposals. The movement is stated after the
elimination of internal balances of GBP88m.
The narrative below provides further granularity of the items
transferred as part of the disposal of the UK banking business to
Barclays Bank UK PLC. The items transferred included (but were not
limited to):
-- Loans and advances at amortised cost of GBP184,634m related to
the UK banking business. The portfolio transferred included home
loans of GBP133,641m, credit cards and unsecured loans of GBP22,621m,
and corporate loans of GBP27,396m
-- The disposed assets measured at fair value through the income statement
consisted of loans and advances of GBP4,233m, and reverse repurchase
agreements and other similar secured lending of GBP1,383m
-- Derivative assets and liabilities disposed consisted of those designated
in hedge accounting relationships. The notional amount at the date
of transfer was GBP3,313m, the fair value of the derivative assets
was GBP108m and the fair value of the derivative liabilities was
GBP6m
-- Goodwill relating to the UK banking business with a net book value
of GBP3,526m and licences and other intangible assets with a net
book value amounting to GBP11m (gross cost of GBP90m and accumulated
amortisation and impairment of GBP79m)
-- Property, plant and equipment with a net book value of GBP510m
(gross cost of GBP971m and accumulated depreciation of GBP461m)
-- Deferred tax asset balances of GBP747m and current tax liabilities
of GBP677m relating to the UK banking business
-- Other assets of GBP1,402m included prepayments of GBP106m, items
in the course of collection of GBP588m, sundry receivables of GBP535m
and accrued income of GBP146m
-- Deposits at amortised cost of GBP192,087m consisted of current,
savings and time deposits of UK banking business customers and
deposits with banks
-- Debt securities in issue transferred consisted of covered bonds
of GBP8,302m and other debt securities of GBP4,001m
-- Other liabilities of GBP1,642m included accruals and deferred income
of GBP278m, and sundry creditors of GBP1,160m
The transfer of equity ownership in Barclays Bank UK PLC had no
impact on the share capital and share premium of Barclays Bank
Group. Other equity instruments reduced by GBP2,070m relating to
additional tier 1 (AT1) securities transferred to Barclays Bank UK
PLC. The fair value through other comprehensive income reserve
increased GBP16m and retained earnings reduced GBP14,187m.
On 1 August 2018 Barclays Bank PLC transferred the equity
ownership of its subsidiary Barclays Africa Group Holdings Limited
(BAGHL) to Barclays PLC through a dividend in specie. Accordingly,
BAGHL ceased to be a subsidiary of Barclays Bank PLC and became a
direct subsidiary of the ultimate parent, Barclays PLC. The value
of this dividend, representing the historic cost of investment of
Barclays Bank PLC in BAGHL was GBP269m. The movement is presented
within Other disposals.
Barclays Bank PLC Disposal of Barclays Bank UK PLC(a) Other disposals(b) Total
Assets GBPm GBPm
---------------------------------------------------- ----------------------------------- ------------------ -------
Cash and balances at central banks 37,299 2,503 39,802
Cash collateral and settlement balances 2,338 - 2,338
Loans and advances at amortised cost 184,732 3,287 188,019
Reverse repurchase agreements and other similar
secured lending 423 - 423
Financial assets at fair value through the income
statement 5,616 - 5,616
Derivative financial instruments 24 - 24
Financial assets at fair value through other
comprehensive income 5,539 - 5,539
Investment in subsidiaries 246 269 515
Goodwill and intangible assets 3,390 36 3,426
Property, plant and equipment 510 10 520
Deferred tax assets 747 62 809
Other assets 1,166 48 1,214
---------------------------------------------------- ----------------------------------- ------------------ -------
Total assets 242,030 6,215 248,245
---------------------------------------------------- ----------------------------------- ------------------ -------
Liabilities
---------------------------------------------------- ----------------------------------- ------------------ -------
Deposits at amortised cost 193,247 5,418 198,665
Repurchase agreements and other similar secured
borrowing 11,567 - 11,567
Debt securities in issue 11,552 - 11,552
Subordinated liabilities 3,001 - 3,001
Trading portfolio liabilities 1,765 - 1,765
Derivative financial instruments 6 - 6
Current tax liabilities 676 - 676
Retirement benefit liabilities - 25 25
Other liabilities 1,341 184 1,525
Provisions 2,230 8 2,238
---------------------------------------------------- ----------------------------------- ------------------ -------
Total liabilities 225,385 5,635 231,020
---------------------------------------------------- ----------------------------------- ------------------ -------
Notes
a The movement in net assets relating to the disposal of Barclays
Bank UK PLC of GBP16,645m is stated after the elimination of internal
balances between Barclays Bank PLC and Barclays Bank UK PLC on
1 April 2018 of GBP519m.
b The movement relating to the disposal of BAGHL and the BBPLC German
branch is presented in Other disposals.
Following a decision to move all European operations to Barclays
Bank Ireland PLC, the German business largely comprising of
Barclaycard and Corporate Banking customers was acquired from
Barclays Bank PLC on 1 December 2018. The assets and liabilities
were recognised by Barclays Bank Ireland PLC at their predecessor
book values in the consolidated financial statements of Barclays
Bank PLC on the date of transfer. The total net assets transferred
to Barclays Bank Ireland PLC were GBP312m. The net assets were
transferred in exchange for 350m ordinary shares issued by Barclays
Bank Ireland PLC and GBP1.3m of cash. The movement in net assets
related to this transfer is presented within Other disposals.
3. Discontinued operations and assets included in disposal groups
classified as held for sale and associated liabilities
Accounting for non-current assets held for sale and associated
liabilities
The Barclays Bank Group applies IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations.
Non-current assets (or disposal groups) are classified as held
for sale when their carrying amount is to be recovered principally
through a sale transaction rather than continuing use. In order to
be classified as held for sale, the asset must be available for
immediate sale in its present condition subject only to terms that
are usual and customary and the sale must be highly probable.
Non-current assets (or disposal groups) held for sale are measured
at the lower of carrying amount and fair value less cost to
sell.
A component of the Barclays Bank Group that has either been
disposed of or is classified as held for sale is presented as a
discontinued operation if it represents a separate major line of
business or geographical area of operations, is part of a single
coordinated plan to dispose of the separate major line or
geographical area of operations, or if it is a subsidiary acquired
exclusively with a view to re-sale.
Barclays Bank Group
--------------------------------------------------------------------- ---- -----
Assets included in disposal groups classified as held for sale
--------------------------------------------------------------------- ---- -----
2018 2017
GBPm GBPm
--------------------------------------------------------------------- ---- -----
Financial assets at fair value through the income statement - 3
Loans and advances at amortised cost - 1,164
Property, plant and equipment - 26
--------------------------------------------------------------------- ---- -----
Total assets included in disposal groups classified as held for sale - 1,193
--------------------------------------------------------------------- ---- -----
During the period year the non-current assets held for sale
balance decreased from GBP1,193m to GBPnil driven by the disposal
of Barclaycard US receivables portfolio of GBP1,164m.
Discontinued operations
The loss or profit in respect of discontinued operations for
each of the years comprises as follows: for 2018 discontinued
operations relating to the UK banking business incurred a loss
after tax of GBP47m; for 2017 discontinued operations incurred a
loss after tax of GBP1,386m made up from a GBP2,195 loss relating
to BAGL partially offset by a profit of GBP809m relating to the UK
banking business; and for 2016 discontinued operations incurred a
profit after tax of GBP2,137m made up from a GBP1,546m profit
relating to UK banking business and a profit of GBP591m relating to
BAGL.
UK banking business
As noted in Note 2, following the court approval of the
ring-fencing transfer scheme on 9 March 2018, the UK banking
business largely comprising Personal Banking, Barclaycard Consumer
UK and Business Banking customers, and related assets and
liabilities was transferred to Barclays Bank UK PLC on 1 April
2018, to meet the regulatory ring-fencing requirement under the
Financial Services (Banking Reform) Act 2013 and related
legislation. Barclays Bank PLC transferred the equity ownership in
Barclays Bank UK PLC to Barclays PLC through a dividend in specie
on the same day. Accordingly, Barclays Bank UK PLC ceased to be a
subsidiary of Barclays Bank PLC and became a direct subsidiary of
the ultimate parent, Barclay PLC.
Upon disposal of those shares on 1 April 2018, the UK banking
business met the requirements for presentation as a discontinued
operation. As such, the results, which have been presented as the
profit after tax in respect of the discontinued operation on the
face of the Barclays Bank Group income statement, are analysed in
the income statement below. The income statement, statement of
other comprehensive income and cash flow statement below represent
three months of results as a discontinued operation to 31 March
2018, compared to the full years ended 31 December 2017 and 31
December 2016.
UK banking business disposal group income statement
----------------------------------------------------------- ------- ------- -------
2018 2017 2016
For the year ended 31 December GBPm GBPm GBPm
----------------------------------------------------------- ------- ------- -------
Net interest income 1,449 5,872 6,681
Net fee and commission income 296 1,176 1,247
Net trading income (5) (9) 79
Net investment income 6 160 247
Other income 2 8 13
----------------------------------------------------------- ------- ------- -------
Total income 1,748 7,207 8,267
Credit impairment charges and other provisions (201) (783) (896)
----------------------------------------------------------- ------- ------- -------
Net operating income 1,547 6,424 7,371
----------------------------------------------------------- ------- ------- -------
Staff costs (321) (2,052) (2,379)
Administration and general expenses (1,135) (2,959) (2,502)
----------------------------------------------------------- ------- ------- -------
Operating expenses (1,456) (5,011) (4,881)
----------------------------------------------------------- ------- ------- -------
Share of post-tax results of associates and joint ventures - (5) (1)
----------------------------------------------------------- ------- ------- -------
Profit before tax 91 1,408 2,489
----------------------------------------------------------- ------- ------- -------
Taxation (138) (599) (943)
----------------------------------------------------------- ------- ------- -------
(Loss)/profit after tax (47) 809 1,546
----------------------------------------------------------- ------- ------- -------
Attributable to:
----------------------------------------------------------- ------- ------- -------
Equity holders of the parent (47) 809 1,546
Non-controlling interests - - -
----------------------------------------------------------- ------- ------- -------
(Loss)/profit after tax (47) 809 1,546
----------------------------------------------------------- ------- ------- -------
Other comprehensive loss relating to UK banking business discontinued operations is as follows:
2018 2017 2016
For the year ended 31 December GBPm GBPm GBPm
------------------------------------------------------------------------------------------------ ---- ---- ----
Available for sale assets - - -
Fair value through other comprehensive income reserve (3) - -
Currency translation reserves - - -
Cash flow hedge reserves - - -
------------------------------------------------------------------------------------------------ ---- ---- ----
Other comprehensive loss, net of tax from discontinued operations (3) - -
------------------------------------------------------------------------------------------------ ---- ---- ----
The cash flows attributed to the UK banking business discontinued operation are as follows:
2018 2017 2016
For the year ended 31 December GBPm GBPm GBPm
-------------------------------------------------------------------------------------------- ----- ----- -----
Net cash flows from operating activities (522) (355) 1,319
Net cash flows from investing activities 54 470 22
Net cash flows from financing activities - (128) 600
-------------------------------------------------------------------------------------------- ----- ----- -----
Net (decrease)/increase in cash and cash equivalents (468) (13) 1,941
-------------------------------------------------------------------------------------------- ----- ----- -----
The following table contains a reconciliation between the
Barclays Bank Group continuing operations income statement for 2017
and 2016, which has been restated to show the UK banking business
as a discontinued operation, and the equivalent income statement as
published in the prior periods.
Reconciliation of consolidated income statement to prior periods
------------------------------------------------------------------------------------ --------------- ---------------
UK banking UK banking
business Restated business Restated
Published discontinued continuing Published discontinued continuing
annual report operations(a) operations annual report operations(a) operations
2017 2017 2017 2016 2016 2016
For the year
ended 31
December GBPm GBPm GBPm GBPm GBPm GBPm
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Interest income 13,631 6,714 6,917 14,423 7,532 6,891
Interest expense (3,883) (842) (3,041) (2,966) (851) (2,115)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net interest
income 9,748 5,872 3,876 11,457 6,681 4,776
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Fee and
commission
income 8,775 1,351 7,424 8,625 1,410 7,215
Fee and
commission
expense (1,901) (175) (1,726) (1,789) (163) (1,626)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net fee and
commission
income 6,874 1,176 5,698 6,836 1,247 5,589
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net trading
income 3,387 (9) 3,396 2,795 79 2,716
Net investment
income 859 160 699 1,324 247 1,077
Other income 69 8 61 57 13 44
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total income 20,937 7,207 13,730 22,469 8,267 14,202
Credit
impairment
charges and
other
provisions (2,336) (783) (1,553) (2,373) (896) (1,477)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net operating
income 18,601 6,424 12,177 20,096 7,371 12,725
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Staff costs (6,445) (2,052) (4,393) (9,211) (2,379) (6,832)
Infrastructure
costs (2,068) (372) (1,696) (2,937) (598) (2,339)
Administration
and general
expenses(b) (5,969) (1,828) (4,141) (2,837) (862) (1,975)
Litigation and
conduct(b) (1,207) (759) (448) (1,363) (1,042) (321)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Operating
expenses (15,689) (5,011) (10,678) (16,348) (4,881) (11,467)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Share of
post-tax
results of
associates and
joint ventures 70 (5) 75 70 (1) 71
Profit on
disposal of
subsidiaries,
associates and
joint ventures 184 - 184 565 - 565
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Profit before
tax 3,166 1,408 1,758 4,383 2,489 1,894
Tax charge (2,125) (599) (1,526) (1,245) (943) (302)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Profit after tax 1,041 809 232 3,138 1,546 1,592
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Notes
a Adjustment for restatement of UK banking business as discontinued
operation.
b The presentation of administration and general expenses has been
amended to include litigation and conduct as a separate line item.
The prior year comparatives within administration and general expenses
categories have been adjusted accordingly.
Barclays Africa Group Limited
Following the reduction of the Barclays Bank Group's interest in
BAGL in 2017, Barclays Bank Groups remaining interest in BAGL was
reported as a financial asset at fair value through other
comprehensive income. On 1 August 2018 Barclays Bank PLC
transferred the equity ownership of its subsidiary Barclays Africa
Group Holdings (BAGHL) to Barclays PLC through a dividend in
specie.
Prior to the disposal of shares on 1 June 2017, BAGL met the
requirements for presentation as a discontinued operation. As such,
the results, which have been presented as the profit after tax and
non-controlling interest in respect of the discontinued operation
on the face of the Barclays Bank Group income statement, are
analysed in the income statement below. The income statement,
statement of other comprehensive income and cash flow statement
below represent five months of results as a discontinued operation
to 31 May 2017, compared to the full year ended 31 December
2016.
Barclays Africa disposal group income statement
----------------------------------------------------------- ---- ------- -------
2018 2017 2016
For the year ended 31 December GBPm GBPm GBPm
----------------------------------------------------------- ---- ------- -------
Net interest income - 1,024 2,169
Net fee and commission income - 522 1,072
Net trading income - 149 281
Net investment income - 30 45
Net premiums from insurance contracts - 161 362
Other income - (16) 8
----------------------------------------------------------- ---- ------- -------
Total income - 1,870 3,937
Net claims and benefits incurred on insurance contracts - (84) (191)
----------------------------------------------------------- ---- ------- -------
Total income net of insurance claims - 1,786 3,746
Credit impairment charges and other provisions - (177) (445)
----------------------------------------------------------- ---- ------- -------
Net operating income - 1,609 3,301
----------------------------------------------------------- ---- ------- -------
Staff costs - (586) (1,186)
Administration and general expenses(a) - (1,634) (1,224)
----------------------------------------------------------- ---- ------- -------
Operating expenses - (2,220) (2,410)
----------------------------------------------------------- ---- ------- -------
Share of post-tax results of associates and joint ventures - 5 6
----------------------------------------------------------- ---- ------- -------
(Loss)/profit before tax - (606) 897
Taxation - (154) (306)
----------------------------------------------------------- ---- ------- -------
(Loss)/profit after tax(b) - (760) 591
----------------------------------------------------------- ---- ------- -------
Attributable to:
----------------------------------------------------------- ---- ------- -------
Equity holders of the parent - (900) 189
Non-controlling interests - 140 402
----------------------------------------------------------- ---- ------- -------
(Loss)/profit after tax(b) - (760) 591
----------------------------------------------------------- ---- ------- -------
Notes
a Includes impairment of GBPnil (2017: GBP1,090m; 2016: GBPnil).
b Total loss in respect of the discontinued operation was GBP2,195m
which included the GBP60m loss on sale and GBP1,375m loss on recycling
of other comprehensive loss on reserves.
Other comprehensive income relating to Barclays
Africa discontinued operations is as follows:
2018 2017 2016
For the year ended 31 December GBPm GBPm GBPm
------------------------------------------------ ---- ---- -----
Available for sale assets - (3) (9)
Currency translation reserves - (38) 1,451
Cash flow hedge reserves - 19 89
------------------------------------------------ ---- ---- -----
Other comprehensive (loss)/income, net of tax
from discontinued operations - (22) 1,531
------------------------------------------------ ---- ---- -----
The cash flows attributed to the Barclays Africa discontinued operation are as follows:
2018 2017 2016
For the year ended 31 December GBPm GBPm GBPm
---------------------------------------------------------------------------------------- ---- ----- -----
Net cash flows from operating activities - 540 1,164
Net cash flows from investing activities - (245) (691)
Net cash flows from financing activities - (165) (105)
Effect of exchange rates on cash and cash equivalents - (29) 37
---------------------------------------------------------------------------------------- ---- ----- -----
Net increase in cash and cash equivalents - 101 405
---------------------------------------------------------------------------------------- ---- ----- -----
4. Segmental reporting
Presentation of segmental reporting
The Barclays Bank 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.
Following the transfer of the UK banking business which largely
comprised of Personal Banking, Barclaycard Consumer UK and Business
Banking to Barclays Bank UK PLC on 1 April 2018 and the subsequent
transfer of ownership of Barclays Bank UK PLC to Barclays PLC on
the same day, the Barclays Bank Group divisions have been for
segmental reporting purposes defined as Corporate and Investment
Bank and Consumer, Cards and Payments. Comparatives have been
restated to reflect the new segmentation.
-- Corporate and Investment Bank which includes the international
Corporate business and the Investment Bank.
-- Consumer, Cards and Payments which includes Barclays US Consumer
Bank, Barclaycard Germany, Barclays Partner Finance, Barclaycard
Commercial Payments, Barclaycard Payment Solutions and the international
Wealth business.
The below table also includes Head Office which comprises head
office and central support functions.
The segment results below reflect the continuing operations of
Barclays Bank Group and hence the UK banking business is excluded
as it meets the requirement to be presented as a discontinued
operation under IFRS 5, Non-current Assets Held for Sale and
Discontinued Operations.
Analysis of results by business
-------------------------------------------------------------------------------------------- --------- -------------
Corporate and Consumer, Cards Head Barclays Bank
Investment Bank and Payments Office Group
GBPm GBPm GBPm GBPm
--------------------------------------------------------- ---------------- --------------- --------- -------------
For the year ended 31 December 2018
Total income(a) 9,741 4,267 (408) 13,600
Credit impairment releases/(charges) and other provisions 152 (808) 13 (643)
--------------------------------------------------------- ---------------- --------------- --------- -------------
Net operating income/(expenses) 9,893 3,459 (395) 12,957
Operating expenses (7,459) (2,304) (130) (9,893)
GMP charge - - (140) (140)
Litigation and conduct (68) (59) (1,579) (1,706)
--------------------------------------------------------- ---------------- --------------- --------- -------------
Total operating expenses (7,527) (2,363) (1,849) (11,739)
Other net income/(expenses)(b) 28 41 (1) 68
--------------------------------------------------------- ---------------- --------------- --------- -------------
Profit/(loss) before tax from continuing operations 2,394 1,137 (2,245) 1,286
--------------------------------------------------------- ---------------- --------------- --------- -------------
Total assets GBP792.5bn GBP71.6bn GBP13.6bn GBP877.7bn
--------------------------------------------------------- ---------------- --------------- --------- -------------
Number of employees (full time equivalent) 9,100 3,300 10,000 22,400
--------------------------------------------------------- ---------------- --------------- --------- -------------
Corporate and Investment Consumer, Cards Head Barclays
Bank and Payments Office Non-Core(c) Barclays Bank Group
GBPm GBPm GBPm GBPm GBPm
--------------------------- -------------------------- --------------- --------- ------------ -------------------
For the year ended 31
December 2017
Total income 9,901 4,504 (148) (527) 13,730
Credit impairment charges
and other provisions (213) (1,293) (17) (30) (1,553)
--------------------------- -------------------------- --------------- --------- ------------ -------------------
Net operating
income/(expenses) 9,688 3,211 (165) (557) 12,177
Operating expenses (7,610) (2,167) (202) (251) (10,230)
Litigation and conduct (267) (2) (151) (28) (448)
--------------------------- -------------------------- --------------- --------- ------------ -------------------
Total operating expenses (7,877) (2,169) (353) (279) (10,678)
Other net
income/(expenses)(b) 133 121 (192) 197 259
--------------------------- -------------------------- --------------- --------- ------------ -------------------
Profit/(Loss) before tax
from continuing operations 1,944 1,163 (710) (639) 1,758
--------------------------- -------------------------- --------------- --------- ------------ -------------------
Total assets(d) GBP788.7bn GBP67.4bn GBP35.8bn - GBP1,129.3bn
--------------------------- -------------------------- --------------- --------- ------------ -------------------
Number of employees (full
time equivalent) 8,800 2,700 10,300 - 21,800
--------------------------- -------------------------- --------------- --------- ------------ -------------------
Notes
a GBP351m of certain capital instrument funding costs are now charged
to Head Office, the impact of which would have been materially
the same if the charges had been included in full year 2017.
b Other net income/(expenses) represents the share of post-tax results
of associates and joint ventures, profit (or loss) on disposal
of subsidiaries, associates and joint ventures, and gains on acquisitions.
c Barclays Non-Core segment was closed on 1 July 2017, with financial
performance subsequently reported in CIB, Head Office and Barclays
Bank UK PLC.
d Total assets for UK banking business are included within Barclays
Bank Group for 2017.
Corporate and Consumer, Cards Head Barclays
Investment Bank and Payments Office Non-Core Barclays Bank Group
GBPm GBPm GBPm GBPm GBPm
--------------------------------------- ---------------- --------------- --------- ---------- -------------------
For the year ended 31 December 2016
Total income 10,552 4,462 354 (1,166) 14,202
Credit impairment charges and other
provisions (260) (1,095) - (122) (1,477)
--------------------------------------- ---------------- --------------- --------- ---------- -------------------
Net operating income/(expenses) 10,292 3,367 354 (1,288) 12,725
Operating expenses (7,588) (1,828) (124) (1,606) (11,146)
Litigation and conduct (45) (3) (27) (246) (321)
--------------------------------------- ---------------- --------------- --------- ---------- -------------------
Total operating expenses (7,633) (1,831) (151) (1,852) (11,467)
Other net income(a) 1 31 273 331 636
--------------------------------------- ---------------- --------------- --------- ---------- -------------------
Profit before tax from continuing
operations 2,660 1,567 476 (2,809) 1,894
--------------------------------------- ---------------- --------------- --------- ---------- -------------------
Total assets(b,c) GBP589.3bn GBP58.5bn GBP76.8bn GBP279.7bn GBP1,214.0bn
--------------------------------------- ---------------- --------------- --------- ---------- -------------------
Number of employees (full time
equivalent) 28,800 8,100 100 5,500 42,500
--------------------------------------- ---------------- --------------- --------- ---------- -------------------
Notes
a Other net income represents the share of post-tax results of associates
and joint ventures, profit (or loss) on disposal of subsidiaries,
associates and joint ventures, and gains on acquisitions.
b Africa Banking assets held for sale are reported in Head Office
2016.
c Total assets for UK banking business are included within Barclays
Bank Group for 2016.
Income by geographic region
2018 2017 2016
For the year ended 31 December GBPm GBPm GBPm
--------------------------------------------------------------------------------- ------ ------ ------
Continuing operations
United Kingdom 4,532 3,844 3,856
Europe 1,434 1,663 2,078
Americas 6,936 7,443 7,278
Africa and Middle East 142 251 419
Asia 556 529 571
--------------------------------------------------------------------------------- ------ ------ ------
Total 13,600 13,730 14,202
--------------------------------------------------------------------------------- ------ ------ ------
Income from individual countries which represent more than 5% of total income(a)
--------------------------------------------------------------------------------- ------ ------ ------
2018 2017 2016
For the year ended 31 December GBPm GBPm GBPm
--------------------------------------------------------------------------------- ------ ------ ------
Continuing operations
United Kingdom 4,532 3,844 3,856
United States 6,676 6,871 6,876
--------------------------------------------------------------------------------- ------ ------ ------
Note
a Total income is based on counterparty location. Income from each
single external customer does not amount to 10% or greater of the
Barclays Bank Group total income.
5. Net fee and commission income
Accounting for net fee and commission income under IFRS 15
effective from 1 January 2018
The Barclays Bank Group applies IFRS 15 Revenue from Contracts
with Customers. The standard establishes a five-step model
governing revenue recognition. The five-step model requires
Barclays Bank 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.
Barclays Bank Group recognises fee and commission income charged
for services provided by the Barclays Bank Group as the services
are provided, for example on completion of the underlying
transaction.
Accounting for net fee and commission income under IAS 18 for
2017 and 2016
The Barclays Bank Group applies IAS 18 Revenue. Fees and
commissions charged for services provided or received by the
Barclays Bank Group are recognised 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 Group and operating segments, in accordance with IFRS 15. It
includes a total for fees in scope of IFRS 15. Refer to Note 4 for
more detailed information about operating segments.
2018
---------------------------------------------------------------------------------
Corporate and Investment Bank Consumer, Cards and Payments Head Office Total
GBPm GBPm GBPm GBPm
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Fee type
Transactional 366 2,248 - 2,614
Advisory 772 78 - 850
Brokerage and execution 1,002 71 - 1,073
Underwriting and syndication 2,462 - - 2,462
Other 24 222 29 275
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Total revenue from contracts with
customers 4,626 2,619 29 7,274
Other non-contract fee income 114 4 - 118
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Fee and commission income 4,740 2,623 29 7,392
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Fee and commission expense (657) (1,128) - (1,785)
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Net fee and commission income 4,083 1,495 29 5,607
----------------------------------- ----------------------------- ---------------------------- ----------- -------
2017(a) 2016(a)
GBPm GBPm
----------------------------------------------------------------------- ------- -------
Fee and commission income
Banking, investment management and credit related fees and commissions 7,352 7,161
Foreign exchange commission 72 54
----------------------------------------------------------------------- ------- -------
Fee and commission income 7,424 7,215
----------------------------------------------------------------------- ------- -------
Fee and commission expense (1,726) (1,626)
----------------------------------------------------------------------- ------- -------
Net fee and commission income 5,698 5,589
----------------------------------------------------------------------- ------- -------
Note
a The Barclays group elected the cumulative effect transition method
on adoption of IFRS 15 from 1 January 2018, and recognised in retained
earnings without restating comparative periods. The comparative
figures are reported under IAS 18.
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 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 incurs certain card related costs including those
related to cardholder reward programmes and various payments made
to co-brand partners. 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
customers who continuously carry an outstanding balance (revolvers)
are included in the effective interest rate of the receivable
(refer to note 5 in the Barclays Bank PLC Annual Report). Payments
to partners for new cardholder account originations for transactor
accounts are deferred as costs to obtain a contract under IFRS 15
while those costs related to revolver accounts are included in the
effective interest rate of the receivable (refer to note 5 in the
Barclays Bank PLC Annual Report). Those costs deferred under IFRS
15 are capitalised and amortised over the estimated cardholder
relationship. Payments to co-brand partners based on revenue
sharing are presented as a reduction of fee and commission income
while payments based on profitability are presented in fee and
commission expense.
Advisory
Advisory fees are generated from wealth management services and
investment banking advisory services related to mergers,
acquisitions and financial restructurings. 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. Investment banking
advisory fees are recognised at the point in time when the services
related to the transaction have been completed under the terms of
the engagement. Investment banking advisory costs are recognised as
incurred in fee and commission expense if direct and incremental to
the advisory services or otherwise recognised in operating
expenses.
Brokerage and execution
Brokerage and execution fees are earned for executing client
transactions with various exchanges and over-the-counter markets
and assisting clients in clearing transactions. Brokerage and
execution fees are recognised at the point in time the associated
service has been completed which is generally the trade date of the
transaction.
Underwriting and syndication
Underwriting and syndication fees are earned for the
distribution of client equity or debt securities and the
arrangement and administration of a loan syndication. This includes
commitment fees to provide loan financing. Underwriting fees are
generally recognised on trade date if there is no remaining
contingency, such as the transaction being conditional on closing
of an acquisition or other transaction. Underwriting costs are
deferred and recognised in fee and commission expense when the
associated underwriting fees are recorded. Syndication fees are
earned for arranging and administering a loan syndication; however,
the associated fee may be subject to variability until the loan has
been syndicated to other syndicate members or until other
contingencies (such as a successful M&A closing) have been
resolved and therefore the fee revenue is deferred until the
uncertainty is resolved.
Underwriting and syndication fees were previously reported on a
net basis in the income statement. Following the adoption of IFRS
15, expenses associated with underwriting and syndication of GBP38m
are now reported in fee and commission expense.
Including in the underwriting and syndication, commitment fees
to provide loan financing includes fees which are not presented as
part of the effective interest rate of a loan in accordance with
IFRS 9. Loan commitment fees included as IFRS 15 revenues are fees
for loan commitments that are not expected to fund, fees received
as compensation for unfunded commitments and the applicable portion
of fees received for a revolving loan facility, which for that
period, are undrawn. Such commitment fees are recognised over time
through to the contractual maturity of the commitment.
Contract assets and contract liabilities
The Barclays Bank Group had no material contract assets or
contract liabilities as at 31 December 2018.
Impairment on fee receivables and contract assets
During 2018, there have been no material impairments recognised
in relation to fees receivable and contract assets. 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 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 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 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 GBP125.4m at 31 December 2018.
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 2018, the amount of
amortisation was GBP30.4m and there was no impairment loss
recognised in connection with the capitalised contract costs.
6. Dividends on ordinary shares
The 2018 financial statements include GBP14,585m (2017: GBP674m)
of dividends paid. This includes the final dividend declared in
relation to the prior year of GBP142m (2017: GBP165m), half year
dividends of GBP149m (2017: GBP208m) and dividends in specie of
GBP14,294m primarily relating to the holding in Barclays Bank UK
PLC. These result in a total dividend for the year of GBP6.23
(2017: 29p) per ordinary share.
Dividends paid on preference shares amounted to GBP204m (2017:
GBP242m). Dividends paid on the 4.75% EUR100 preference shares
amounted to GBP421.16 per share (2017: GBP415.65). Dividends paid
on the 6.278% US$100 preference shares amounted to GBP446.17 per
share (2017: GBP483.37). Dividends paid on the 8.125% US$0.25
preference shares amounted to GBP1.54 per share (2017:
GBP1.58).
Dividends paid on other equity instruments amounted to GBP647m
(2017: GBP639m). For further detail on other equity instruments,
please refer to Note 30 of Barclays Bank PLC Annual Report.
7. 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 classification of the 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 Group's financial assets and liabilities, especially
derivatives, quoted prices are not available and valuation models
are used to estimate fair value. The models calculate the expected
cash flows under the terms of each specific contract and then
discount these values back to a present value. These models use as
their basis independently sourced market inputs including, for
example, interest rate yield curves, equities and commodities
prices, option volatilities and currency rates.
For financial liabilities measured at fair value, the carrying
amount reflects the effect on fair value of changes in own credit
spreads derived from observable market data such as in primary
issuance and redemption activity for structured notes.
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
below in the section 'Significant unobservable inputs' of this
note.
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 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
------------------------------------ --------------------------------------- ---------------------------------------
2018 2017
--------------------------------------- ---------------------------------------
Valuation technique using Valuation technique using
--------------------------------------- ---------------------------------------
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Barclays Bank Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
Trading portfolio assets 51,029 49,396 3,613 104,038 63,925 47,853 1,977 113,755
Financial assets at fair value
through the income statement 8,918 131,682 4,650 145,250 4,347 104,188 7,747 116,282
Derivative financial assets 6,813 210,655 5,215 222,683 3,786 228,867 5,334 237,987
Available for sale investments - - - - 22,841 30,618 395 53,854
Financial assets at fair value
through other comprehensive income 15,751 28,888 355 44,994 - - - -
Investment property - - 9 9 - - 116 116
Assets included in disposal groups
classified as held for sale(a) - - - - - - 29 29
------------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
Total assets 82,511 420,621 13,842 516,974 94,899 411,526 15,598 522,023
------------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
Trading portfolio liabilities (19,401) (17,210) (3) (36,614) (20,905) (16,443) (4) (37,352)
Financial liabilities designated at
fair value (76) (217,404) (261) (217,741) - (173,238) (480) (173,718)
Derivative financial liabilities (6,152) (208,697) (4,743) (219,592) (3,631) (229,517) (5,197) (238,345)
------------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
Total liabilities (25,629) (443,311) (5,007) (473,947) (24,536) (419,198) (5,681) (449,415)
------------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
Note
a Disposal groups held for sale and measured at fair value less cost
to sell are in included in the fair value table.
The following table shows Barclays Bank 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
------------------------------------ --------------------------------------- ---------------------------------------
2018 2017
--------------------------------------- ---------------------------------------
Valuation technique using Valuation technique using
--------------------------------------- ---------------------------------------
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Barclays Bank PLC GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
Trading portfolio assets 33,925 36,093 3,462 73,480 41,795 36,113 1,928 79,836
Financial assets at fair value
through the income statement 3,971 171,381 4,013 179,365 3 110,381 6,798 117,182
Derivative financial assets - 216,033 5,214 221,247 - 226,956 5,332 232,288
Available for sale investments - - - - 16,302 32,895 277 49,474
Financial assets at fair value
through other comprehensive income 14,571 28,780 355 43,706 - - - -
------------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
Total assets 52,467 452,287 13,044 517,798 58,100 406,345 14,335 478,780
------------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
Trading portfolio liabilities (30,425) (16,201) - (46,626) (26,068) (15,474) - (41,542)
Financial liabilities designated at
fair value - (216,715) (251) (216,966) - (168,834) (210) (169,044)
Derivative financial liabilities - (216,792) (4,798) (221,590) - (223,878) (5,349) (229,227)
------------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
Total liabilities (30,425) (449,708) (5,049) (485,182) (26,068) (408,186) (5,559) (439,813)
------------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
The following table shows Barclays Bank Group's assets and
liabilities that are held at fair value disaggregated by valuation
technique (fair value hierarchy) and product type:
Assets and liabilities held at fair value by product type
----------------------------------------------------------------------------------------------------------------------
Assets Liabilities
Valuation technique using Valuation technique using
----------------------------- -----------------------------
Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Barclays Bank Group GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------------------------- --------- -------- -------- --------- --------- -------
As at 31 December 2018
Interest rate derivatives - 122,975 2,478 - (118,231) (2,456)
Foreign exchange derivatives - 63,960 192 - (63,897) (185)
Credit derivatives - 9,374 1,381 - (9,188) (331)
Equity derivatives 6,813 12,933 1,136 (6,152) (16,001) (1,743)
Commodity derivatives - 1,413 28 - (1,380) (28)
Government and government sponsored debt 38,910 47,882 14 (8,143) (11,154) -
Corporate debt - 14,529 456 - (5,085) -
Certificates of deposit, commercial paper and other
money market instruments - 1,135 - - (8,556) (10)
Margin lending - 10,388 - - (26,875) -
Reverse repurchase and repurchase agreements - 118,623 768 - (139,361) -
Non-asset backed loans - 7,378 4,452 - - -
Asset backed securities - 2,265 688 - (245) -
Issued debt - - - - (42,104) (251)
Equity cash products 36,705 7,195 698 (11,258) (1,181) (3)
Private equity investments 7 - 190 - - -
Assets and liabilities held for sale - - - - - -
Other(a) 76 571 1,361 (76) (53) -
-------------------------------------------------------- --------- -------- -------- --------- --------- -------
Total 82,511 420,621 13,842 (25,629) (443,311) (5,007)
-------------------------------------------------------- --------- -------- -------- --------- --------- -------
As at 31 December 2017
Interest rate derivatives - 150,325 2,718 - (143,890) (2,867)
Foreign exchange derivatives - 54,907 160 - (53,346) (124)
Credit derivatives - 11,357 1,386 - (11,312) (240)
Equity derivatives 3,786 9,848 1,064 (3,631) (18,527) (1,961)
Commodity derivatives - 2,430 6 - (2,442) (5)
Government and government sponsored debt 34,782 49,853 49 (13,079) (13,116) -
Corporate debt - 15,098 871 - (3,580) (4)
Certificates of deposit, commercial paper and other
money market instruments - 1,491 - - (7,377) (250)
Reverse repurchase and repurchase agreements - 100,038 - - (126,691) -
Non-asset backed loans - 5,710 6,657 - - -
Asset backed securities - 1,837 626 - (221) -
Issued debt - - - - (38,177) (214)
Equity cash products (b) 56,323 7,733 502 (7,826) (388) -
Private equity investments 8 1 817 - - (16)
Assets and liabilities held for sale - - 29 - - -
Other(a, b) - 898 713 - (131) -
-------------------------------------------------------- --------- -------- -------- --------- --------- -------
Total 94,899 411,526 15,598 (24,536) (419,198) (5,681)
-------------------------------------------------------- --------- -------- -------- --------- --------- -------
Notes
a Other includes commercial real estate loans, funds and fund-linked
products, asset backed loans, physical commodities and investment
property.
b Level 3 preference shares of GBP390m were reclassified from others
to equity cash products.
Valuation techniques and sensitivity analysis
Sensitivity analysis is performed on products with significant
unobservable inputs (Level 3) to generate a range of reasonably
possible alternative valuations. The sensitivity methodologies
applied take account of the nature of the valuation techniques
used, as well as the availability and reliability of observable
proxy and historical data and the impact of using alternative
models.
Sensitivities are dynamically calculated on a monthly basis. The
calculation is based on range or spread data of a reliable
reference source or a scenario based on relevant market analysis
alongside the impact of using alternative models. Sensitivities are
calculated without reflecting the impact of any diversification in
the portfolio.
The valuation techniques used for the material products within
Levels 2 and 3, and observability and sensitivity analysis for
products within Level 3, are described below.
Interest rate derivatives
Description: Derivatives linked to interest rates or inflation
indices. The category includes futures, interest rate and inflation
swaps, swaptions, caps, floors, inflation options, balance
guaranteed swaps and other exotic interest rate derivatives.
Valuation: Interest rate and inflation derivatives are generally
valued using curves of forward rates constructed from market data
to project and discount the expected future cash flows of trades.
Instruments with optionality are valued using volatilities implied
from market inputs, and use industry standard or bespoke models
depending on the product type.
Observability: In general, inputs are considered observable up
to liquid maturities which are determined separately for each input
and underlying. Unobservable inputs are generally set by
referencing liquid market instruments and applying extrapolation
techniques or inferred via another reasonable method.
Level 3 sensitivity: Sensitivity to unobservable valuation
inputs is based on the dispersion of consensus data services where
available, or alternatively it is based on stress scenarios or
historic data.
Foreign exchange derivatives
Description: Derivatives linked to the foreign exchange (FX)
market. The category includes FX forward contracts, FX swaps and FX
options. The majority are traded as over the counter (OTC)
derivatives.
Valuation: FX derivatives are valued using industry standard and
bespoke models depending on the product type. Valuation inputs
include FX rates, interest rates, FX volatilities, interest rate
volatilities, FX interest rate correlations and others as
appropriate.
Observability: FX correlations, forwards and volatilities are
generally observable up to liquid maturities which are determined
separately for each input and underlying. Unobservable inputs are
set by referencing liquid market instruments and applying
extrapolation techniques, or inferred via another reasonable
method.
Level 3 sensitivity: Sensitivity relating to unobservable
valuation inputs is primarily based on the dispersion of consensus
data services.
Credit derivatives
Description: Derivatives linked to the credit spread of a
referenced entity, index or basket of referenced entities or a pool
of referenced assets (e.g. a securitised product). The category
includes single name and index credit default swaps (CDS) and asset
backed CDS.
Valuation: CDS are valued on industry standard models using
curves of credit spreads as the principal input. Credit spreads are
observed directly from broker data, third party vendors or priced
to proxies.
Observability: CDS contracts referencing entities that are
actively traded are generally considered observable. Other
valuation inputs are considered observable if products with
significant sensitivity to the inputs are actively traded in a
liquid market. Unobservable valuation inputs are generally
determined with reference to recent transactions or inferred from
observable trades of the same issuer or similar entities.
Level 3 sensitivity: Sensitivity to unobservable CDS contracts
is determined by applying a shift to credit spread curves based on
the average range of pricing observed in the market for similar
CDS.
Equity derivatives
Description: Exchange traded or OTC derivatives linked to equity
indices and single names. The category includes vanilla and exotic
equity products.
Valuation: Equity derivatives are valued using industry standard
models. Valuation inputs include stock prices, dividends,
volatilities, interest rates, equity repurchase curves and, for
multi-asset products, correlations.
Observability: In general, valuation inputs are observable up to
liquid maturities which are determined separately for each input
and underlying. Unobservable inputs are set by referencing liquid
market instruments and applying extrapolation techniques, or
inferred via another reasonable method.
Level 3 sensitivity: Sensitivity is generally estimated using
the dispersion of consensus data services.
Commodity derivatives
Description: Exchange traded and OTC derivatives based on
underlying commodities such as metals, crude oil and refined
products, agricultural, power and natural gas.
Valuation: Commodity swaps and options are valued using models
incorporating discounting of cash flows and other industry standard
modelling techniques. Valuation inputs include forward curves,
volatilities implied from market observable inputs and
correlations.
Observability: Commodity correlations, forwards and volatilities
are generally observable up to liquid maturities which are
determined separately for each input and underlying. Unobservable
inputs are set with reference to similar observable products, or by
applying extrapolation techniques to observable inputs.
Level 3 sensitivity: Sensitivity is determined primarily by
measuring historical variability over a period of years. Where
historical data is unavailable or uncertainty is due to volumetric
risk, sensitivity is measured by applying appropriate stress
scenarios or using proxy bid-offer spread levels.
Complex derivative instruments
Valuation estimates made by counterparties with respect to
complex derivative instruments, for the purpose of determining the
amount of collateral to be posted, often differ, sometimes
significantly, from Barclays Bank Group's own estimates. In almost
all cases, Barclays Bank Group has been able to successfully
resolve such differences or otherwise reach an accommodation with
respect to collateral posting levels, including in certain cases by
entering into compromise collateral arrangements. Due to the
ongoing nature of collateral calls, Barclays Bank Group will often
be engaged in discussion with one or more counterparties in respect
of such differences at any given time. Valuation estimates made by
counterparties for collateral purposes are considered, like any
other third party valuation, when determining Barclays Bank Group's
fair value estimates.
Government and government sponsored debt
Description: Government bonds, supra sovereign bonds and agency
bonds.
Valuation: Liquid bonds that are actively traded through an
exchange or clearing house are marked to the levels observed in
these markets. Other actively traded bonds are valued using
observable market prices sourced from broker quotes, inter-dealer
prices or other reliable pricing sources.
Observability: Prices for actively traded bonds are considered
observable. Unobservable bonds prices are generally determined by
reference to bond yields for actively traded bonds from the same
(or a similar) issuer.
Level 3 sensitivity: Sensitivity is generally determined by
using a range of observable alternative prices.
Corporate debt
Description: Primarily corporate bonds.
Valuation: Corporate bonds are valued using observable market
prices sourced from broker quotes, inter-dealer prices or other
reliable pricing sources.
Observability: Prices for actively traded bonds are considered
observable. Unobservable bonds prices are generally determined by
reference to bond yields or CDS spreads for actively traded
instruments issued by or referencing the same (or a similar)
issuer.
Level 3 sensitivity: Sensitivity is generally determined by
applying a shift to bond yields using the average ranges of
external levels observed in the market for similar bonds.
Certificates of deposit, commercial paper and other money market
instruments
Description: Certificates of deposit, commercial paper and other
money market instruments.
Valuation: Instruments are valued using observable market prices
sourced from broker quotes, inter-dealer prices or other reliable
pricing services.
Observability: Prices for actively traded instruments are
considered observable. Unobservable instrument prices are generally
determined by reference to bond yields or CDS spreads for actively
traded instruments issued by or referencing the same (or a similar)
issuer.
Level 3 sensitivity: Sensitivity is generally calculated by
using a range of observable alternative prices.
Margin Lending
Description: Includes Prime Brokerage Margin lending, and other
similar secured lending agreements. The agreements are primarily
short-term in nature.
Valuation: Prime Brokerage Margin Lending transactions are
generally valued by discounting the expected future cash flows
using industry standard models that incorporate market interest
rates and repurchase rates, based on the specific details of the
transaction.
Observability: Inputs are deemed observable up to liquid
maturities, and are determined based on the specific features of
the transaction. Unobservable inputs are generally set by
referencing liquid market instruments and applying extrapolation
techniques, or inferred via another reasonable method.
Level 3 sensitivity: Sensitivity is generally estimated using
the dispersion of consensus data services, or historic trade data.
In general, the sensitivity of unobservable inputs is not
significant to the overall valuation given the predominantly
short-term nature of the agreements.
Reverse repurchase and repurchase agreements
Description: Includes securities purchased under resale
agreements, securities sold under repurchase agreements, and other
similar secured lending agreements. The agreements are primarily
short-term in nature.
Valuation: Repurchase and reverse repurchase agreements are
generally valued by discounting the expected future cash flows
using industry standard models that incorporate market interest
rates and repurchase rates, based on the specific details of the
transaction.
Observability: Inputs are deemed observable up to liquid
maturities, and are determined based on the specific features of
the transaction. Unobservable inputs are generally set by
referencing liquid market instruments and applying extrapolation
techniques, or inferred via another reasonable method.
Level 3 sensitivity: Sensitivity is generally estimated using
the dispersion of consensus data services, stress scenarios or
historic data. In general, the sensitivity of unobservable inputs
is not significant to the overall valuation given the predominantly
short-term nature of the agreements.
Non-asset backed loans
Description: Largely made up of fixed rate loans.
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.
Asset backed securities
Description: Securities that are linked to the cash flows of a
pool of referenced assets via securitisation. The category includes
residential mortgage backed securities, commercial mortgage backed
securities, CDOs, collateralised loan obligations (CLOs) and other
asset backed securities.
Valuation: Where available, valuations are based on observable
market prices sourced from broker quotes and inter-dealer prices.
Otherwise, valuations are determined using industry standard
discounted cash flow analysis that calculates the fair value based
on valuation inputs such as constant default rate, conditional
prepayment rate, loss given default and yield. These inputs are
determined by reference to a number of sources including proxying
to observed transactions, market indices or market research, and by
assessing underlying collateral performance.
Proxying to observed transactions, indices or research requires
an assessment and comparison of the relevant securities' underlying
attributes including collateral, tranche, vintage, underlying asset
composition (historical losses, borrower characteristics and loan
attributes such as loan to value ratio and geographic
concentration) and credit ratings (original and current).
Observability: Where an asset backed product does not have an
observable market price and the valuation is determined using a
discounted cash flow analysis, the instrument is considered
unobservable.
Level 3 sensitivity: The sensitivity analysis for asset backed
products is based on externally sourced pricing dispersion or by
stressing the inputs of discount cash flow analysis.
Issued debt
Description: Debt notes issued by Barclays Bank Group.
Valuation: Issued debt is valued using discounted cash flow
techniques and industry standard models incorporating various
inputs observed for each instrument.
Observability: Barclays Bank Group issued notes are generally
observable. Structured notes are debt instruments containing
embedded derivatives. Where either an input to the embedded
derivative or the debt instrument is deemed unobservable and
significant to the overall valuation of the note, the structured
note is classified as Level 3.
Level 3 sensitivity: Sensitivity to the unobservable input in
the embedded derivative is calculated in line with the method used
for the derivative instrument concerned.
Equity cash products
Description: Includes listed equities, Exchange Traded Funds
(ETF) and preference shares.
Valuation: Valuation of equity cash products is primarily
determined through market observable prices.
Observability: Prices for actively traded equity cash products
are considered observable. Unobservable equity prices are generally
determined by reference to actively traded instruments that are
similar in nature, or inferred via another reasonable method.
Level 3 sensitivity: Sensitivity is generally calculated based
on applying a shift to the valuation of the underlying asset.
Private equity investments
Description: Includes private equity holdings and principal
investments.
Valuation: Private equity investments are valued in accordance
with the 'International Private Equity and Venture Capital
Valuation Guidelines' which require the use of a number of
individual pricing benchmarks such as the prices of recent
transactions in the same or similar entities, discounted cash flow
analysis and comparison with the earnings multiples of listed
companies. While the valuation of unquoted equity instruments is
subjective by nature, the relevant methodologies are commonly
applied by other market participants and have been consistently
applied over time.
Observability: Inputs are considered observable if there is
active trading in a liquid market of products with significant
sensitivity to the inputs. Unobservable inputs include earnings
estimates, multiples of comparative companies, marketability
discounts and discount rates.
Level 3 sensitivity: Private equity valuation models are each
sensitive to a number of key assumptions, such as projected future
earnings, comparator multiples, marketability discounts and
discount rates. Valuation sensitivity is generally estimated by
shifting assumptions to reasonable alternative levels.
Assets and liabilities held for sale
Description: Assets and liabilities held for sale consist of
disposal groups Barclays Bank Group intend to sell.
Valuation: Assets and liabilities held for sale are valued at
the lower of carrying value and fair value less costs to sell.
Level 3 sensitivity: The disposal groups that are measured at
fair value less cost to sell are valued at the agreed price less
costs to sell and are not expected to display significant
sensitivity. The sensitivity of the assets and liabilities measured
at carrying value is explained within the relevant product
descriptions.
Other
Description: Other includes commercial real estate loans, funds
and fund-linked products, asset backed loans, physical commodities
and investment property.
Assets and liabilities reclassified between Level 1 and Level
2
During the period, there were no material transfers between
Level 1 to Level 2 (2017: GBP3,807m of government bond assets, and
GBP1,023m/GBP(950)m of commodity derivative assets and liabilities
transferred from Level 1 to Level 2).
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.
Assets and liabilities included in disposal groups classified as
held for sale and measured at fair value less cost to sell are not
included as these are measured at fair value on a non-recurring
basis.
Asset and liability transfers between Level 2 and Level 3 are
primarily due to 1) an increase or decrease in observable market
activity related to an input or 2) a change in the significance of
the unobservable input, with assets and liabilities classified as
Level 3 if an unobservable input is deemed significant.
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
2018(a) Purchases Sales Issues Settlements income income in OCI In Out 2018
Barclays Bank
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------- --------- -------- ------ ----------- ------- ------ ---------- ----- ----- --------
Government and
government
sponsored debt 49 14 (49) - - - - - - - 14
Corporate debt 871 108 (88) - (23) 9 - - 39 (528) 388
Non-asset
backed loans 166 5,514 (3,480) - - - - - 71 (8) 2,263
Asset backed
securities 627 205 (168) - (2) (21) - - 58 (35) 664
Equity cash
products 68 18 (9) - - (16) - - 107 (32) 136
Other 196 4 (6) - (20) (32) - - 145 (139) 148
--------------- ------- --------- -------- ------ ----------- ------- ------ ---------- ----- ----- --------
Trading
portfolio
assets 1,977 5,863 (3,800) - (45) (60) - - 420 (742) 3,613
Non-asset
backed loans 6,073 364 (4,432) - (194) 25 - - - - 1,836
Private equity
investments 688 188 (7) - (231) 2 (10) - 60 (499) 191
Equity cash
products 398 87 (1) - - 1 74 - - - 559
Other 360 6,624 (4,920) - (47) 29 18 - - - 2,064
--------------- ------- --------- -------- ------ ----------- ------- ------ ---------- ----- ----- --------
Financial
assets at fair
value through
the income
statement 7,519 7,263 (9,360) - (472) 57 82 - 60 (499) 4,650
Equity cash
products 36 - (16) - - - - - - (18) 2
Private equity
investments 129 - - - - - - - - (129) -
Other 40 - - - - - - (1) 314 - 353
--------------- ------- --------- -------- ------ ----------- ------- ------ ---------- ----- ----- --------
Financial
assets at fair
value through
other
comprehensive
income 205 - (16) - - - - (1) 314 (147) 355
Investment
property 116 9 (115) - - - (1) - - - 9
Trading
portfolio
liabilities (4) - - - - (3) - - - 4 (3)
Certificates of
deposit,
commercial
paper and
other money
market
instruments (250) - - - 5 - (3) - - 238 (10)
Issued debt (214) - - (4) 9 33 - - (225) 150 (251)
Other (16) - - - - - - - - 16 -
--------------- ------- --------- -------- ------ ----------- ------- ------ ---------- ----- ----- --------
Financial
liabilities
designated at
fair value (480) - - (4) 14 33 (3) - (225) 404 (261)
Interest rate
derivatives (150) 1 (1) - 196 (25) - - (71) 72 22
Foreign
exchange
derivatives 37 - - - (9) 5 - - (13) (13) 7
Credit
derivatives 1,146 (6) 3 - (12) (85) - - 7 (3) 1,050
Equity
derivatives (896) 72 (570) - 125 73 1 - 128 460 (607)
Commodity
derivatives - - - - - - - - - - -
--------------- ------- --------- -------- ------ ----------- ------- ------ ---------- ----- ----- --------
Net derivative
financial
instruments(b) 137 67 (568) - 300 (32) 1 - 51 516 472
Total 9,470 13,202 (13,859) (4) (203) (5) 79 (1) 620 (464) 8,835
--------------- ------- --------- -------- ------ ----------- ------- ------ ---------- ----- ----- --------
Notes
a Balances as at 1 January 2018 include the IFRS 9 transition impact.
Balances as at 31 December 2017 have been presented on an IAS 39
basis.
b The derivative financial instruments are represented on a net basis.
On a gross basis, derivative financial assets are GBP5,215m (2017:
GBP5,334m) and derivative financial liabilities are GBP4,743m (2017:
GBP5,197m).
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
2017 Purchases Sales Issues Settlements income income in OCI In Out 2017
Barclays Bank
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Government and
government
sponsored
debt 3 46 - - - - - - - - 49
Corporate debt 969 73 (47) - (98) 21 - - 6 (53) 871
Non-asset
backed loans 151 435 (187) - (221) (8) - - 1 (5) 166
Asset backed
securities 515 195 (78) - (9) 9 - - - (5) 627
Equity cash
products 77 24 (11) - - (19) - - - (3) 68
Other 350 2 (77) - (97) 25 (1) - 3 (9) 196
Trading
portfolio
assets 2,065 775 (400) - (425) 28 (1) - 10 (75) 1,977
Non-asset
backed loans 8,616 - - - (2,284) 159 - - - - 6,491
Asset backed
loans 201 27 (25) - (3) (17) (3) - 6 (31) 155
Private equity
investments 562 26 (127) - (1) (1) 29 - 21 (11) 498
Equity cash
products(a) 185 - - - (1) (7) 205 - 16 - 398
Other(a) 383 4,675 (4,646) - (247) 41 (8) - 16 (9) 205
Financial
assets at
fair value
through the
income
statement 9,947 4,728 (4,798) - (2,536) 175 223 - 59 (51) 7,747
Equity cash
products 73 - - - - - 1 2 5 (45) 36
Private equity
investments 294 15 (78) - - - (5) 37 60 (4) 319
Other 5 36 - - (2) - - 1 - - 40
Available for
sale
investments 372 51 (78) - (2) - (4) 40 65 (49) 395
Investment
property 81 114 (69) - - - (10) - - - 116
Trading
portfolio
liabilities (7) (4) 1 - - 2 - - (1) 5 (4)
Certificates
of deposit,
commercial
paper and
other money
market
instruments (319) - 69 - - - 9 - (104) 95 (250)
Issued debt (298) - 84 - - - - - - - (214)
Other (223) - - - 204 - (6) - - 9 (16)
Financial
liabilities
designated at
fair value (840) - 153 - 204 - 3 - (104) 104 (480)
Interest rate
derivatives 899 58 (1) - (208) (166) - - (11) (721) (150)
Foreign
exchange
derivatives 81 - - - (12) 27 - - (13) (46) 37
Credit
derivatives 1,370 5 (2) - (29) (128) - - (69) (1) 1,146
Equity
derivatives (970) (220) (14) - 374 (43) - - (16) (7) (896)
Commodity
derivatives (5) - - - - 4 - - 1 - -
Net derivative
financial
instruments 1,375 (157) (17) - 125 (306) - - (108) (775) 137
Assets and
liabilities
held for sale 574 - (574) - - - - - - - -
Total 13,567 5,507 (5,782) - (2,634) (101) 211 40 (79) (841) 9,888
Net assets
held for sale
measured at
fair value on
non-recurring
basis 29
Total 13,567 5,507 (5,782) - (2,634) (101) 211 40 (79) (841) 9,917
Note
a Preference shares of GBP390m were reclassified from others to equity
cash products
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
2018(a) Purchases Sales Issues Settlements income income in OCI In Out 2018
Barclays Bank
PLC GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------
Trading
portfolio
assets 1,929 5,722 (3,724) - (44) (45) - - 354 (730) 3,462
Financial
assets at fair
value through
the income
statement 7,404 6,867 (9,356) - (78) (6) 73 - 12 (903) 4,013
Fair value
through other
comprehensive
income 187 - (16) - - - - (1) 314 (129) 355
Financial
liabilities
designated at
fair value (226) - - (4) 6 33 - - (225) 165 (251)
Net derivative
financial
instruments(b) (16) 67 (568) - 354 11 1 - 51 516 416
Total 9,278 12,656 (13,664) (4) 238 (7) 74 (1) 506 (1,081) 7,995
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
2017 Purchases Sales Issues Settlements income income in OCI In Out 2017
Barclays Bank
PLC GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------ --------
Trading
portfolio
assets 2,003 534 (214) - (383) 36 - - 11 (59) 1,928
Financial
assets at fair
value through
the income
statement 9,135 4,657 (4,666) - (2,502) (34) 193 - 15 - 6,798
Available for
sale
investments 250 14 (24) - - - (4) 28 54 (41) 277
Investment
property 16 - (16) - - - - - - - -
Trading
portfolio
liabilities - (5) - - - (1) - - (1) 7 -
Financial
liabilities
designated at
fair value (467) - 3 - 238 16 - - (7) 7 (210)
Net derivative
financial
instruments(b) 1,226 (159) (12) - 124 (312) - - (110) (774) (17)
Total 12,163 5,041 (4,929) - (2,523) (295) 189 28 (38) (860) 8,776
Notes
a Balances as at 1 January 2018 include the IFRS 9 transition impact.
Balances as at 31 December 2017 have been presented on an IAS 39
basis.
b The derivative financial instruments are represented on a net basis.
On a gross basis, derivative financial assets are GBP5,214m (2017:
GBP5,332m) and derivative financial liabilities are GBP4,798m (2017:
GBP5,349m).
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
2018 2017
Income statement Income statement
Other
Other compre- compre-
Barclays Bank Trading hensive Trading hensive
Group income Other income income Total income Other income income Total(a)
As at 31
December GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Trading
portfolio
assets (60) - - (60) (34) - - (34)
Financial
assets at
fair value
through the
income
statement 44 68 - 112 147 200 - 347
Available for
sale
investments - - - - - (4) 29 25
Fair value
through other
comprehensive
income - - (1) (1) - - - -
Investment
property - (1) - (1) - (10) - (10)
Trading
portfolio
liabilities (3) - - (3) 3 - - 3
Financial
liabilities
designated at
fair value 55 - - 55 58 10 - 68
Net derivative
financial
instruments (14) - - (14) (301) - - (301)
Total 22 67 (1) 88 (127) 196 29 98
Unrealised gains and losses recognised during the period on Level 3 assets and liabilities
held at year end
----------------------------------------------------------------------------------------------------------------------
2018 2017
Income statement Income statement
Other Other
Barclays Bank Trading compre-hensive Trading compre-hensive
PLC income Other income income Total income Other income income Total(a)
As at 31
December GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Trading
portfolio
assets (45) - - (45) (20) - - (20)
Financial
assets
designated at
fair value 40 58 - 98 158 217 - 375
Available for
sale assets - - - - - (4) 28 24
Fair value
through other
comprehensive
income - - (1) (1) - - - -
Financial
liabilities
designated at
fair value 55 - - 55 58 - - 58
Net derivative
financial
instruments 29 - - 29 (307) - - (307)
Total 79 58 (1) 136 (111) 213 28 130
Sensitivity analysis of valuations using unobservable inputs
2018 2017
------------------------------------------------ --------------------------------------------------
Favourable changes Unfavourable changes Favourable changes Unfavourable changes
Income Income
statement Equity statement Equity Income statement Equity Income statement Equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------ --------------- ------ ---------------- ------ ---------------- ------
Interest rate
derivatives 80 - (162) - 114 - (138) -
Foreign exchange
derivatives 7 - (10) - 6 - (6) -
Credit
derivatives 126 - (73) - 106 - (79) -
Equity
derivatives 110 - (112) - 99 - (99) -
Commodity
derivatives 1 - (1) - 3 - (3) -
Corporate debt 10 - (2) - 4 - (3) -
Non asset backed
loans 141 - (210) - 243 - (468) -
Asset backed
securities - - - - 1 - - -
Equity cash
products 121 - (155) - 12 24 (8) (24)
Private equity
investments - - (10) - 133 13 (138) (13)
Other(a) 2 - (2) - 5 - (5) -
---------------- --------------- ------ --------------- ------
Total 598 - (737) - 726 37 (947) (37)
--------------- ------ --------------- ------
Note
a Other includes commercial real estate loans, funds and fund-linked
products, asset backed loans, physical commodities and investment
property.
The effect of stressing unobservable inputs to a range of
reasonably possible alternatives, alongside considering the impact
of using alternative models, would be to increase fair values by up
to GBP598m (2017: GBP763m) or to decrease fair values by up to
GBP737m (2017: GBP984m) with all the potential effect impacting
profit and loss.
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:
2018 2017
Range Range
Significant unobservable
Valuation technique(s) (a) inputs Min Max Min Max Units(b)
Derivative financial
instruments(c)
Interest rate derivatives Discounted cash flows Inflation forwards 1 2 1 3%
Credit spread 6 897 45 1,320 bps
Yield 0.1 0.2 0.1 0.1 bps
Comparable pricing Price - 100 - 100 points
Option model Inflation volatility 33 174 35 201 bps vol
IR - IR correlation (26) 100 (24) 99%
FX - IR correlation (30) 78 (30) 24%
Interest rate volatility 10 199 5 353 bps vol
Credit derivatives Discounted cash flows Credit spread 142 209 122 190 bps
Comparable pricing Price 10 96 97 97 points
Equity derivatives Option model Equity volatility 2 81 3 92%
Equity - equity correlation (100) 100 (100) 100%
Discounted cash flow Discounted margin (171) 301 (105) 301 bps
Non-derivative financial
instruments
Non-asset backed loans Discounted cash flows Loan spread 30 196 30 596 bps
Credit spread 25 800 300 726 bps
Price - 118 - 50 points
Comparable pricing Price - 100 - 100 points
Reverse repurchase and
repurchase agreements Discounted cash flows Funding spread (20) 139 - - bps
Asset backed securities Comparable pricing Price - 102 - 99 points
Other(d) Discounted cash flows Credit spread 143 575 152 299 bps
Notes
a A range has not been provided for Net Asset Value as there would
be a wide range reflecting the diverse nature of the positions.
b 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%.
c Certain derivative instruments are classified as Level 3 due to
a significant unobservable credit spread input into the calculation
of the Credit Valuation Adjustment for the instruments. The range
of significant unobservable credit spreads is between 6-897bps
(2017: 31-596bps).
d Other includes commercial real estate loans, funds and fund-linked
products, asset backed loans, physical commodities and investment
property.
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.
Forwards
A price or rate that is applicable to a financial transaction
that will take place in the future.
In general, a significant increase in a forward in isolation
will result in a fair value increase for the contracted receiver of
the underlying (currency, bond, commodity, etc.), but the
sensitivity is dependent on the specific terms of the
instrument.
Credit spread
Credit spreads typically represent the difference in yield
between an instrument and a benchmark security or reference rate.
Credit spreads reflect the additional yield that a market
participant demands for taking on exposure to the credit risk of an
instrument and form part of the yield used in a discounted cash
flow calculation.
In general, a significant increase in credit spread in isolation
will result in a movement in a fair value decrease for a cash
asset.
For a derivative instrument, a significant increase in credit
spread in isolation can result in a fair value increase or decrease
depending on the specific terms of the instrument.
Volatility
Volatility is a measure of the variability or uncertainty in
return for a given derivative underlying. It is an estimate of how
much a particular underlying instrument input or index will change
in value over time. In general, volatilities are implied from
observed option prices. For unobservable options the implied
volatility may reflect additional assumptions about the nature of
the underlying risk, and the strike/maturity profile of a specific
contract.
In general, a significant increase in volatility in isolation
will result in a fair value increase for the holder of a simple
option, but the sensitivity is dependent on the specific terms of
the instrument.
There may be interrelationships between unobservable
volatilities and other unobservable inputs (e.g. when equity prices
fall, implied equity volatilities generally rise) but these are
generally specific to individual markets and may vary over
time.
Correlation
Correlation is a measure of the relationship between the
movements of two variables. Correlation can be a significant input
into valuation of derivative contracts with more than one
underlying instrument. Credit correlation generally refers to the
correlation between default processes for the separate names that
make up the reference pool of a CDO structure.
A significant increase in correlation in isolation can result in
a fair value increase or decrease depending on the specific terms
of the instrument.
Comparable price
Comparable instrument prices are used in valuation by
calculating an implied yield (or spread over a liquid benchmark)
from the price of a comparable observable instrument, then
adjusting that yield (or spread) to account for relevant
differences such as maturity or credit quality. Alternatively, a
price-to-price basis can be assumed between the comparable and
unobservable instruments in order to establish a value.
In general, a significant increase in comparable price in
isolation will result in an increase in the price of the
unobservable instrument. For derivatives, a change in the
comparable price in isolation can result in a fair value increase
or decrease depending on the specific terms of the instrument.
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
extremely low credit risk, and have a history of zero defaults
since inception. While the overall loan spread range is from 30bps
to 196bps (2017: 30bps to 596bps), 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.
Loss given default
Loss given default represents the expected loss upon liquidation
of the collateral as a percentage of the balance outstanding.
In general, a significant increase in the loss given default in
isolation will translate to lower recovery and lower projected cash
flows to pay to the securitisation, resulting in a movement in fair
value that is unfavourable for the holder of the securitised
product.
EBITDA multiple
EBITDA multiple is the ratio of the valuation of the investment
to the earnings before interest, taxes, depreciation and
amortisation.
In general, a significant increase in the multiple will result
in a fair value increase for an investment.
Fair value adjustments
Key balance sheet valuation adjustments are quantified
below:
2018 2017
GBPm GBPm
Exit price adjustments derived from market bid-offer spreads (451) (391)
Uncollateralised derivative funding (47) (45)
Derivative credit valuation adjustments (125) (103)
Derivative debit valuation adjustments 237 131
-----
Exit price adjustments derived from market bid-offer spreads
Barclays Bank Group uses mid-market pricing where it is a market
maker and has the ability to transact at, or better than, mid-price
(which is the case for certain equity, bond and vanilla derivative
markets). For other financial assets and liabilities, bid-offer
adjustments are recorded to reflect the exit level for the expected
close out strategy. The methodology for determining the bid-offer
adjustment for a derivative portfolio involves calculating the net
risk exposure by offsetting long and short positions by strike and
term in accordance with the risk management and hedging
strategy.
Bid-offer levels are generally derived from market quotes such
as broker data. Less liquid instruments may not have a directly
observable bid-offer level. In such instances, an exit price
adjustment may be derived from an observable bid-offer level for a
comparable liquid instrument, or determined by calibrating to
derivative prices, or by scenario or historical analysis.
Exit price adjustments derived from market bid-offer spreads
have increased by GBP60m to GBP451m as a result of movements in
market bid offer spreads.
Discounting approaches for derivative instruments
Collateralised
In line with market practice, the methodology for discounting
collateralised derivatives takes into account the nature and
currency of the collateral that can be posted within the relevant
credit support annex (CSA). The CSA aware discounting approach
recognises the 'cheapest to deliver' option that reflects the
ability of the party posting collateral to change the currency of
the collateral.
Uncollateralised
A fair value adjustment of GBP47m is applied to account for the
impact of incorporating the cost of funding into the valuation of
uncollateralised and partially collateralised derivative portfolios
and collateralised derivatives where the terms of the agreement do
not allow the rehypothecation of collateral received. This
adjustment is referred to as the Funding Fair Value Adjustment
(FFVA). FFVA has increased by GBP2m to GBP47m mainly as a result of
change in Barclays funding spreads and trading activity.
FFVA is determined by calculating the net expected exposure at a
counterparty level and applying a funding rate to the exposure that
reflects the market cost of funding. Barclays Bank Group's internal
Treasury rates are used as an input to the calculation. The
approach takes into account the probability of default of each
counterparty, as well as any mandatory break clauses.
FFVA incorporates a scaling factor which is an estimate of the
extent to which the cost of funding is incorporated into observed
traded levels. On calibrating the scaling factor, it is with the
assumption that Credit Valuation Adjustments (CVA) and Debit
Valuation Adjustments (DVA) are retained as valuation components
incorporated into such levels. The effect of incorporating this
scaling factor at 31 December 2018 was to reduce FFVA by GBP141m
(2017: GBP138m).
The approach outlined above has been in use since 2012 with no
significant changes.
Barclays Bank Group continues to monitor market practices and
activity to ensure the approach to uncollateralised derivative
valuation remains appropriate.
Derivative credit and debit valuation adjustments
CVA and DVA are incorporated into derivative valuations to
reflect the impact on fair value of counterparty credit risk and
Barclays Bank Group's own credit quality respectively. These
adjustments are calculated for uncollateralised and partially
collateralised derivatives across all asset classes. CVA and DVA
are calculated using estimates of exposure at default, probability
of default and recovery rates, at a counterparty level.
Counterparties include (but are not limited to) corporates,
sovereigns and sovereign agencies and supranationals.
Exposure at default is generally estimated through the
simulation of underlying risk factors through approximating with a
more vanilla structure, or by using current or scenario-based mark
to market as an estimate of future exposure.
Probability of default and recovery rate information is
generally sourced from the CDS markets. Where this information is
not available, or considered unreliable, alternative approaches are
taken based on mapping internal counterparty ratings onto
historical or market-based default and recovery information. In
particular, this applies to sovereign related names where the
effect of using the recovery assumptions implied in CDS levels
would imply a GBP50m (2017: GBP50m) increase in CVA.
Correlation between counterparty credit and underlying
derivative risk factors, termed 'wrong-way,' or 'right-way' risk,
is not systematically incorporated into the CVA calculation but is
adjusted where the underlying exposure is directly related to the
counterparty.
CVA increased by GBP22m to GBP125m because of widening of
counterparty credit spreads, changes in non-credit factors
impacting CVA and trading activity. DVA increased by GBP106m to
GBP237m, primarily as a result of Barclays' credit spreads
widening.
Portfolio exemptions
Barclays Bank 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, Barclays Bank 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 GBP141m
(2017: GBP109m) for financial instruments measured at fair value
and GBP31m (2017: GBP253m) for financial instruments carried at
amortised cost. The increase in financial instruments measured at
fair value of GBP32m was driven by additions GBP65m (2017: GBP34m)
offset by a transfer out of GBP15m (December 2017: GBPnil) to
Barclays Bank UK PLC and GBP18m (2017: GBP104m) of amortisation and
releases. The decrease of GBP222m in financial instruments carried
at amortised cost was driven by the transfer out of GBP222m
(December 2017: GBPnil) to Barclays Bank UK PLC and GBP2m (2017:
GBP22m) of amortization and releases offset by additions of GBP2m
(2017: GBP119m).
Third party credit enhancements
Structured and brokered certificates of deposit issued by
Barclays Bank Group are insured up to $250,000 per depositor by the
Federal Deposit Insurance Corporation (FDIC) in the US. The FDIC is
funded by premiums that Barclays Bank Group and other banks pay for
deposit insurance coverage. The carrying value of these issued
certificates of deposit that are designated under the IFRS 9 fair
value option includes this third party credit enhancement. The
on-balance sheet value of these brokered certificates of deposit
amounted to GBP4,797m (2017: GBP4,070m).
Comparison of carrying amounts and fair values
The following tables summarises the fair value of financial
assets and liabilities measured at amortised cost on Barclays Bank
Group's and Barclays Bank PLC's balance sheet:
Barclays Bank
Group 2018 2017
Carrying Fair Carrying Fair
amount value Level 1 Level 2 Level 3 amount 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
- Home loans 13,160 12,592 - - 12,592 147,002 145,262 - - 145,262
- Credit cards,
unsecured and
other retail
lending 31,921 33,115 - - 33,115 55,767 55,106 655 - 54,451
- Finance lease
receivables(a) 1,886 2,057 2,854 2,964
- Corporate
loans 89,992 89,671 223 66,703 22,745 124,076 122,209 8,986 64,472 48,751
Reverse
repurchase
agreements and
other similar
secured
lending 1,613 1,613 - 1,613 - 12,546 12,546 - 12,546 -
Assets included
in disposal
groups
classified as
held for
sale(b) - - - - - 1,164 1,195 - - 1,195
Financial
liabilities
Deposits at
amortised cost
- Banks (15,569) (15,569) (4,623) (10,946) - (12,335) (12,341) (4,375) (7,966) -
- Current and
demand
accounts (77,264) (77,264) (77,264) - - (146,255) (146,232) (146,232) - -
- Savings
accounts (26,980) (26,980) (26,980) - - (134,339) (134,369) (134,369) - -
- Other time
deposits (79,524) (79,524) (48,573) (30,951) - (106,260) (106,325) (62,750) (37,724) (5,851)
Repurchase
agreements and
other similar
secured
lending (7,378) (7,378) - (7,378) - (40,338) (40,338) - (40,338) -
Debt securities
in issue (39,063) (39,083) - (36,967) (2,116) (69,386) (70,824) - (68,503) (2,321)
Subordinated
liabilities (35,327) (36,174) - (36,174) - (24,193) (25,451) - (25,451) -
Notes
a The fair value hierarchy for finance lease receivables is not required
as part of the standard.
b Disposal groups held for sale and measured at fair value less cost
to sell are included in the fair value table.
Barclays Bank
PLC 2018 2017
Carrying Carrying
amount Fair 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
- Home loans 12,229 11,679 - - 11,679 146,052 144,311 - - 144,311
- Credit
cards,
unsecured
and other
retail
lending 4,716 4,716 - - 4,716 31,542 30,972 655 - 30,317
- Corporate
loans 139,819 139,617 223 118,005 21,389 182,770 180,964 5,532 127,794 47,638
Reverse
repurchase
agreements
and other
similar
secured
lending 5,766 5,766 - 5,766 - 22,964 22,964 - 22,964 -
Financial
liabilities
Deposits at
amortised
cost
- Banks (17,524) (17,524) (4,581) (12,943) - (13,494) (13,494) (4,047) (9,447) -
- Current and
demand
accounts (70,942) (70,942) (70,942) - - (203,347) (203,325) (140,143) (63,106) (76)
- Savings
accounts (17,440) (17,440) (17,440) - - (126,794) (126,824) (126,824) - -
- Other time
deposits (125,111) (125,111) (48,573) (76,538) - (82,267) (82,281) (60,615) (15,812) (5,854)
Repurchase
agreements
and other
similar
secured
lending (11,113) (11,113) - (11,113) - (49,883) (49,883) - (49,883) -
Debt
securities
in issue (26,391) (26,428) - (26,249) (179) (55,874) (56,758) - (56,580) (178)
Subordinated
liabilities (35,085) (35,894) - (35,894) - (24,203) (25,222) - (25,222) -
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
(including loans and advances to banks and customers, and other
lending such as reverse repurchase agreements and cash collateral
on securities borrowed) is determined in accordance with the
relevant accounting policy in Note 20 in Barclays Bank PLC Annual
Report.
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.
For retail lending (i.e. Home loans and Credit cards) tailored
discounted cash flow models are predominantly used to estimate the
fair value of different product types. For example, for home loans
different models are used to estimate fair values of tracker,
offset and fixed rate mortgage products. Key inputs to these models
are the differentials between historic and current product margins
and estimated prepayment rates.
The fair value of Corporate loans is calculated by the use of
discounted cash flow techniques where the gross loan values are
discounted at a rate of difference between contractual margins and
hurdle rates or spreads where Barclays Bank Group charges a margin
over LIBOR depending on credit quality and loss given default and
years to maturity.
Reverse repurchase agreements
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.
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.
Repurchase agreements
The fair value of repurchase agreements approximates carrying
amounts as these balances are generally short dated.
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.
8. Subordinated liabilities
Accounting for subordinated liabilities
Subordinated liabilities are measured at amortised cost using
the effective interest method under IFRS 9.
Barclays Bank Group Barclays Bank PLC
2018 2017 2018 2017
GBPm GBPm GBPm GBPm
Opening balance as at 1 January 24,193 23,871 24,203 23,878
Issuances 221 3,041 - 3,041
Redemptions (3,246) (1,378) (3,246) (1,371)
Other 14,159 (1,341) 14,128 (1,345)
Total subordinated liabilities 35,327 24,193 35,085 24,203
Issuances of USD floating rate notes totalling GBP221m.
Redemptions totalling GBP3,246m include GBP500m Fixed/Floating
Rate Subordinated Callable Notes, EUR1,750m 6% Fixed Rate
Subordinated Notes (GBP1,532m), $1,000m 7.75% Contingent Capital
Notes (GBP713m), $99m 7.7% Undated Subordinated Notes (GBP72m),
EUR40m Floating Rate Subordinated Notes 2018 (GBP35m), EUR235m CMS
Linked Subordinated Notes (GBP206m), GBP140m 8.25% Undated
Subordinated Notes and a number of small redemptions by Barclays
Securities Japan Limited totalling GBP48m.
Other movements include an increase of GBP16,987m due to a
change in the level of subordination of certain loans made to
Barclays Bank PLC by Barclays PLC which were previously reported as
debt securities in issue. This was part of amendments made to the
loans to meet internal minimum requirements for own funds and
eligible liabilities (MREL) criteria to ensure they will qualify as
internal MREL resources under MREL requirements applying in 2019.
In addition, there was an increase of GBP294m as a result of a 2018
reclassification of equity to debt. These increases were partially
offset by GBP3,001m relating to the disposal of the UK banking
business.
Subordinated liabilities include accrued interest and comprise
undated and dated subordinated liabilities as follows:
Barclays Bank Barclays Bank
Group PLC
2018 2017 2018 2017
GBPm GBPm GBPm GBPm
Undated subordinated liabilities 4,313 4,192 4,454 4,261
Dated subordinated liabilities 31,014 20,001 30,631 19,942
Total subordinated liabilities 35,327 24,193 35,085 24,203
None of the Barclays Bank Group's subordinated liabilities are
secured.
Undated subordinated liabilities Barclays Bank Group Barclays Bank PLC
2018 2017 2018 2017
Initial call date GBPm GBPm GBPm GBPm
---------- --------- ---------
Barclays Bank PLC externally issued
subordinated liabilities
Tier One Notes (TONs)
6% Callable Perpetual Core Tier One Notes 2032 16 16 16 16
6.86% Callable Perpetual Core Tier One Notes
(USD 179m) 2032 199 197 199 197
Reserve Capital Instruments (RCIs)
6.3688% Step-up Callable Perpetual Reserve
Capital Instruments 2019 34 36 34 36
14% Step-up Callable Perpetual Reserve Capital
Instruments 2019 3,189 3,142 3,189 3,142
5.3304% Step-up Callable Perpetual Reserve
Capital Instruments 2036 51 52 51 52
Undated Notes
7.7% Undated Subordinated Notes (USD 99m) 2018 - 74 - 74
8.25% Undated Subordinated Notes 2018 - 144 - 144
7.125% Undated Subordinated Notes 2020 173 182 173 182
6.125% Undated Subordinated Notes 2027 42 43 42 43
Junior Undated Floating Rate Notes (USD 38m) Any interest payment date 30 28 104 98
Undated Floating Rate Primary Capital Notes
Series 1 (USD 167m)(a) Any interest payment date 95 - 130 -
Undated Floating Rate Primary Capital Notes
Series 2 (USD 295m)(a) Any interest payment date 199 - 231 -
Undated Floating Rate Primary Capital Notes
Series 3 Any interest payment date 21 21 21 21
Bonds
9.25% Perpetual Subordinated Bonds
(ex-Woolwich Plc) 2021 83 87 83 87
9% Permanent Interest Bearing Capital Bonds At any time 44 45 44 45
Loans
5.03% Reverse Dual Currency Undated
Subordinated Loan (JPY 8,000m) 2028 56 51 56 51
5% Reverse Dual Currency Undated Subordinated
Loan (JPY 12,000m) 2028 81 73 81 73
---------
Total undated subordinated liabilities 4,313 4,192 4,454 4,261
---------- ---------
Note
a Following a review, these instruments are deemed to have characteristics
that would qualify them as subordinated liabilities rather than
equity. They have subsequently been reclassified in December 2018
resulting in a GBP294m movement.
Undated subordinated liabilities
Undated subordinated liabilities are issued by Barclays Bank PLC
and its subsidiaries for the development and expansion of their
business and to strengthen their capital bases. The principal terms
of the undated subordinated liabilities are described below:
Subordination
All undated subordinated liabilities rank behind the claims
against the bank of depositors and other unsecured unsubordinated
creditors and holders of dated subordinated liabilities in the
following order: Junior Undated Floating Rate Notes; other issues
of Undated Notes, Bonds and Loans ranking pari passu with each
other; followed by TONs and RCIs ranking pari passu with each
other.
Interest
All undated subordinated liabilities bear a fixed rate of
interest until the initial call date, with the exception of the 9%
Bonds which are fixed for the life of the issue, and the Junior and
Series 1, Series 2 and Series 3 Undated Notes which are floating
rate at rates fixed periodically in advance based on the related
interbank rate.
After the initial call date, in the event that they are not
redeemed, the 7.125%, 6.125% Undated Notes, and the 9.25% Bonds
will bear interest at rates fixed periodically in advance for
five-year periods based on market rates. All other undated
subordinated liabilities will bear interest at rates fixed
periodically in advance based on London interbank rates.
Payment of interest
Barclays Bank PLC is not obliged to make a payment of interest
on its Undated Notes, Bonds and Loans excluding the 9.25% Bonds if,
in the preceding six months, a dividend has not been declared or
paid on any class of shares of Barclays PLC or, in certain cases,
any class of preference shares of Barclays Bank PLC. Barclays Bank
PLC is not obliged to make a payment of interest on its 9.25%
Perpetual Subordinated Bonds if, in the immediately preceding 12
month interest period, a dividend has not been paid on any class of
its share capital. Interest not paid becomes payable in each case
if such a dividend is subsequently paid or in certain other
circumstances. During the year, Barclays Bank PLC declared and paid
dividends on its ordinary shares and on all classes of preference
shares
No payment of principal or any interest may be made unless
Barclays Bank PLC satisfies a specified solvency test.
Barclays Bank PLC may elect to defer any payment of interest on
the RCIs. Any such deferred payment of interest must be paid on the
earlier of: (i) the date of redemption of the RCIs, (ii) the coupon
payment date falling on or nearest to the tenth anniversary of the
date of deferral of such payment, and (iii) in respect of the 14%
RCIs only, substitution. Whilst such deferral is continuing,
neither Barclays Bank PLC nor Barclays PLC may declare or pay a
dividend, subject to certain exceptions, on any of its ordinary
shares or preference shares.
Barclays Bank PLC may elect to defer any payment of interest on
the TONs if it determines that it is, or such payment would result
in it being, in non-compliance with capital adequacy requirements
and policies of the PRA. Any such deferred payment of interest will
only be payable on a redemption of the TONs. Until such time as
Barclays Bank PLC next makes a payment of interest on the TONs,
neither Barclays Bank PLC nor Barclays PLC may (i) declare or pay a
dividend, subject to certain exceptions, on any of their respective
ordinary shares or Preference Shares, or make payments of interest
in respect of Barclays Bank PLC's Reserve Capital Instruments and
(ii) certain restrictions on the redemption, purchase or reduction
of their respective share capital and certain other securities also
apply.
Repayment
All undated subordinated liabilities are repayable, at the
option of Barclays Bank PLC generally in whole at the initial call
date and on any subsequent coupon or interest payment date or in
the case of the 7.125%, 6.125% Undated Notes and the 9.25% Bonds on
any fifth anniversary after the initial call date. In addition,
each issue of undated subordinated liabilities is repayable, at the
option of Barclays Bank PLC, in whole for certain tax reasons,
either at any time, or on an interest payment date. There are no
events of default except non-payment of principal or mandatory
interest. Any repayments require the prior approval of the PRA.
Other
All issues of undated subordinated liabilities are
non-convertible.
Dated subordinated liabilities Barclays Bank Group Barclays Bank PLC
2018 2017 2018 2017
Initial call date Maturity date GBPm GBPm GBPm GBPm
Barclays Bank PLC externally issued
subordinated liabilities
Floating Rate Subordinated Notes (EUR 40m) 2018 - 36 - 36
6% Fixed Rate Subordinated Notes (EUR 1,750m) 2018 - 1,643 - 1,643
CMS-Linked Subordinated Notes (EUR 100m) 2018 - 93 - 93
CMS-Linked Subordinated Notes (EUR 135m) 2018 - 124 - 124
Fixed/Floating Rate Subordinated
Callable Notes 2018 2023 - 533 - 533
7.75% Contingent Capital Notes (USD
1,000m) 2018 2023 - 888 - 888
Floating Rate Subordinated Notes (EUR 50m) 2019 45 44 45 44
5.14% Lower Tier 2 Notes (USD 1,094m) 2020 851 841 851 841
6% Fixed Rate Subordinated Notes (EUR 1,500m) 2021 1,474 1,484 1,474 1,484
9.5% Subordinated Bonds (ex-Woolwich Plc) 2021 256 273 256 273
Subordinated Floating Rate Notes (EUR 100m) 2021 89 88 89 88
10% Fixed Rate Subordinated Notes 2021 2,194 2,261 2,194 2,261
10.179% Fixed Rate Subordinated Notes (USD 1,521m) 2021 1,143 1,118 1,143 1,118
Subordinated Floating Rate Notes (EUR 50m) 2022 45 44 45 44
6.625% Fixed Rate Subordinated Notes (EUR 1,000m) 2022 1,032 1,043 1,032 1,043
7.625% Contingent Capital Notes (USD 3,000m) 2022 2,502 2,429 2,502 2,429
Subordinated Floating Rate Notes (EUR 50m) 2023 45 44 45 44
5.75% Fixed Rate Subordinated Notes 2026 351 366 351 366
5.4% Reverse Dual Currency Subordinated Loan (JPY
15,000m) 2027 107 97 107 97
6.33% Subordinated Notes 2032 61 62 61 62
Subordinated Floating Rate Notes (EUR 68m) 2040 61 60 61 60
External issuances by other subsidiaries 2019-2023 384 59 - -
Barclays Bank PLC notes issued
intra-group to Barclays PLC
2.625% Fixed Rate Subordinated
Callable Notes (EUR 1,250m) 2020 2025 - 1,118 - 1,118
2% Fixed Rate Subordinated Callable
Notes (EUR 1,500m) 2023 2028 1,361 1,314 1,361 1,314
4.375% Fixed Rate Subordinated Notes (USD 1,250m) 2024 - 945 - 945
3.75% Fixed Rate Resetting
Subordinated Callable Notes (SGD
200m) 2025 2030 116 111 116 111
5.20% Fixed Rate Subordinated Notes (USD 1,367m) 2026 1,001 1,424 1,001 1,424
4.836% Fixed Rate Subordinated
Callable Notes (USD 1,200m) 2027 2028 911 1,459 911 1,459
Barclays Bank PLC intra-group loans
from Barclays PLC
Various Fixed Rate Subordinated Loans 10,147 - 10,147 -
Various Subordinated Floating Rate Loans 1,023 - 1,023 -
Various Fixed Rate Subordinated Callable Loans 3,754 - 3,754 -
Various Subordinated Floating Rate Callable Loans 2,061 - 2,061 -
Total dated subordinated liabilities 31,014 20,001 30,631 19,942
Dated subordinated liabilities
Dated subordinated liabilities are issued by Barclays Bank PLC
and respective subsidiaries for the development and expansion of
their business and to strengthen their respective capital bases.
The principal terms of the dated subordinated liabilities are
described below:
Currency and maturity
In addition to the individual dated subordinated liabilities
listed in the table, the GBP16,985m of intra-group loans is made up
of various fixed and floating rate loans from Barclays PLC with
notional amounts denominated in USD (13,994m), EUR (4,024m), GBP
(GBP250m), JPY (213,600m), AUD (775m), SEK (500m), NOK (970m) and
CHF (175m), with maturities ranging from 2020 to 2047. Certain
intra-group loans have a call date one year prior to their
maturity
Subordination
All dated subordinated liabilities, both externally issued and
issued intra-group to Barclays PLC, rank behind the claims against
the bank of depositors and other unsecured unsubordinated creditors
but before the claims of the undated subordinated liabilities and
the holders of their equity. The Barclays Bank PLC intra-group
loans from Barclays PLC rank pari passu amongst themselves but
ahead of the Barclays Bank PLC notes issued intra-group to Barclays
PLC and the Barclays Bank PLC externally issued subordinated
liabilities. The external dated subordinated liabilities issued by
subsidiaries, are similarly subordinated as the external
subordinated liabilities issued by Barclays Bank PLC
Interest
Interest on floating rate notes and loans is set by reference to
market rates at the time of issuance and fixed periodically in
advance, based on the related interbank or local bank rates.
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 subordinated liabilities with a call date are repayable at
the option of the issuer, on conditions governing the respective
debt obligations, some in whole or in part, and some only in whole.
The remaining dated subordinated liabilities outstanding at 31
December 2018 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.
Any repayments prior to maturity may require, in the case of
Barclays Bank PLC, the prior approval of the PRA, or in the case of
the overseas issues, the approval of the local regulator for that
jurisdiction and of the PRA in certain circumstances.
There are no committed facilities in existence at the balance
sheet date which permit the refinancing of debt beyond the date of
maturity.
Other
The 7.625% Contingent Capital Notes will be automatically
transferred from investors to Barclays PLC (or another entity
within the Barclays Group) for nil consideration in the event the
Barclays PLC consolidated CRD IV CET1 ratio (FSA October 2012
transitional statement) falls below 7.0%.
9. Ordinary shares, share premium, and other equity
Called up share
capital, allotted
and fully paid
Ordinary share Preference share Total share capital Other equity
capital capital Share premium and share premium instruments
GBPm GBPm GBPm GBPm GBPm
As at 1 January
2018 2,342 19 12,092 14,453 8,982
AT1 securities
issuance - - - - 1,925
AT1 securities
redemption - - - - (1,242)
Redemption of
preference shares - (13) - (13) -
Capital
reorganisation - - (12,092) (12,092) -
Net equity impact
of intra-group
transfers - - - - (2,070)
As at 31 December
2018 2,342 6 - 2,348 7,595
As at 1 January
2017 2,342 28 12,092 14,462 6,486
AT1 securities
issuance - - - - 2,496
Redemption of
preference shares - (9) - (9) -
As at 31 December
2017 2,342 19 12,092 14,453 8,982
Ordinary shares
The issued ordinary share capital of Barclays Bank PLC, as at 31
December 2018, comprised 2,342m (2017: 2,342m) ordinary shares of
GBP1 each.
Ordinary share capital and share premium constitutes 100% (2017:
60%) of total share capital and share premium issued.
Preference shares
The issued preference share capital of Barclays Bank PLC, as at
31 December 2018, comprised 1,000 Sterling Preference Shares of
GBP1 each (2017: 1,000); 31,856 Euro Preference Shares of EUR100
each (2017: 31,856); and 58,133 US Dollar Preference Shares of $100
each (2017: 58,133). In the last quarter of 2018, 106 million US
Dollar Preference Shares of $0.25 each were redeemed.
Sterling GBP1 Preference Shares
1,000 Sterling cumulative callable preference shares of GBP1
each (the GBP1 Preference Shares) were issued on 31 December 2004
at nil premium.
The GBP1 Preference Shares entitle the holders thereof to
receive Sterling cumulative cash dividends out of distributable
profits of Barclays Bank PLC, semi-annually at a rate reset
semi-annually equal to the Sterling interbank offered rate for
six-month sterling deposits.
Barclays Bank PLC shall be obliged to pay such dividends if: (1)
it has profits available for the purpose of distribution under the
Companies Act 2006 as at each dividend payment date; and (2) it is
solvent on the relevant dividend payment date, provided that a
capital regulations condition is satisfied on such dividend payment
date. The dividends shall not be due and payable on the relevant
dividend payment date except to the extent that Barclays Bank PLC
could make such payment and still be solvent immediately
thereafter. Barclays Bank PLC shall be considered solvent on any
date if: (1) it is able to pay its debts to senior creditors as
they fall due; and (2) its auditors have reported within the
previous six months that its assets exceed its liabilities. If
Barclays Bank PLC shall not pay, or shall pay only in part, a
dividend for a period of seven days or more after the due date for
payment, the holders of the GBP1 Preference Shares may institute
proceedings for the winding-up of Barclays Bank PLC. No remedy
against Barclays Bank PLC shall be available to the holder of any
GBP1 Preference Shares for the recovery of amounts owing in respect
of GBP1 Preference Shares other than the institution of proceedings
for the winding-up of Barclays Bank PLC and/or proving in such
winding-up.
On a winding-up or other return of capital (other than a
redemption or purchase by Barclays Bank PLC of any of its issued
shares, or a reduction of share capital, permitted by the Articles
of Barclays Bank PLC and under applicable law), the assets of
Barclays Bank PLC available to shareholders shall be applied in
priority to any payment to the holders of ordinary shares and any
other class of shares in the capital of Barclays Bank PLC then in
issue ranking junior to the GBP1 Preference Shares on such a return
of capital and pari passu on such a return of capital with the
holders of any other class of shares in the capital of Barclays
Bank PLC then in issue (other than any class of shares in the
capital of Barclays Bank PLC then in issue ranking in priority to
the GBP1 Preference Shares on a winding-up or other such return of
capital), in payment to the holders of the GBP1 Preference Shares
of a sum equal to the aggregate of: (1) an amount equal to the
dividends accrued thereon for the then current dividend period (and
any accumulated arrears thereof) to the date of the commencement of
the winding-up or other such return of capital; and (2) an amount
equal to GBP1 per GBP1 Preference Share. After payment of the full
amount of the liquidating distributions to which they are entitled,
the holders of the GBP1 Preference Shares will have no right or
claim to any of the remaining assets of Barclays Bank PLC and will
not be entitled to any further participation in such return of
capital.
The GBP1 Preference Shares are redeemable at the option of
Barclays Bank PLC, in whole but not in part only, subject to the
Companies Act 2006 and its Articles. Holders of the GBP1 Preference
Shares are not entitled to receive notice of, or to attend, or vote
at, any general meeting of Barclays Bank PLC.
Euro Preference Shares
140,000 Euro 4.75% non-cumulative callable preference shares of
EUR100 each (the 4.75% Preference Shares) were issued on 15 March
2005 for a consideration of EUR1,383.3m (GBP966.7m), of which the
nominal value was EUR14m and the balance was share premium. The
4.75% Preference Shares entitle the holders thereof to receive Euro
non-cumulative cash dividends out of distributable profits of
Barclays Bank PLC, annually at a fixed rate of 4.75% per annum on
the amount of EUR10,000 per preference share until 15 March 2020,
and thereafter quarterly at a rate reset quarterly equal to 0.71%
per annum above the Euro interbank offered rate for three-month
Euro deposits.
The 4.75% Preference Shares are redeemable at the option of
Barclays Bank PLC, in whole but not in part only, on 15 March 2020,
and on each dividend payment date thereafter at EUR10,000 per share
plus any dividends accrued for the then current dividend period to
the date fixed for redemption.
US Dollar Preference Shares
100,000 US Dollar 6.278% non-cumulative callable preference
shares of $100 each (the 6.278% Preference Shares), represented by
100,000 American Depositary Shares, Series 1, were issued on 8 June
2005 for a consideration of $995.4m (GBP548.1m), of which the
nominal value was $10m and the balance was share premium. The
6.278% Preference Shares entitle the holders thereof to receive US
Dollar non-cumulative cash dividends out of distributable profits
of Barclays Bank PLC, semi-annually at a fixed rate of 6.278% per
annum on the amount of $10,000 per preference share until 15
December 2034, and thereafter quarterly at a rate reset quarterly
equal to 1.55% per annum above the London interbank offered rate
for three-month US Dollar deposits.
The 6.278% Preference Shares are redeemable at the option of
Barclays Bank PLC, in whole but not in part only, on 15 December
2034, and on each dividend payment date thereafter at $10,000 per
share plus any dividends accrued for the then current dividend
period to the date fixed for redemption.
106 million US Dollar 8.125% non-cumulative callable preference
shares of $0.25 each (the 8.125% Preference Shares), represented by
106 million American Depositary Shares, Series 5, were issued on 11
April 2008 and 25 April 2008 for a total consideration of $2,650m
(GBP1,345m), of which the nominal value was $26.5m and the balance
was share premium. The 8.125% Preference Shares entitle the holders
thereof to receive US Dollar non-cumulative cash dividends out of
distributable profits of Barclays Bank PLC, quarterly at a fixed
rate of 8.125% per annum on the amount of $25 per preference
share.
The 8.125% Preference Shares were redeemed in full on December
15, 2018, with payment being made on Monday, December 17, 2018.
No redemption or purchase of any 4.75% Preference Shares and the
6.278% Preference Shares (together, the Preference Shares) may be
made by Barclays Bank PLC without the prior approval of the UK PRA
and any such redemption will be subject to the Companies Act 2006
and the Articles of Barclays Bank PLC.
On a winding-up of Barclays Bank PLC or other return of capital
(other than a redemption or purchase of shares of Barclays Bank
PLC, or a reduction of share capital), a holder of Preference
Shares will rank in the application of assets of Barclays Bank PLC
available to shareholders: (1) junior to the holder of any shares
of Barclays Bank PLC in issue ranking in priority to the Preference
Shares; (2) equally in all respects with holders of other
preference shares and any other shares of Barclays Bank PLC in
issue ranking pari passu with the Preference Shares; and (3) in
priority to the holders of ordinary shares and any other shares of
Barclays Bank PLC in issue ranking junior to the Preference
Shares.
The holders of the GBP13m 6% Callable Perpetual Core Tier One
Notes and the $179m 6.86% Callable Perpetual Core Tier One Notes of
Barclays Bank PLC (together, the TONs) and the holders of the
GBP35m 5.3304% Step-up Callable Perpetual Reserve Capital
Instruments, the GBP33m 6.3688% Step-up Callable Perpetual Reserve
Capital Instruments and the GBP3,000m 14% Step-up Callable
Perpetual Reserve Capital Instruments of Barclays Bank PLC
(together, the RCIs) would, for the purposes only of calculating
the amounts payable in respect of such securities on a winding-up
of Barclays Bank PLC, subject to limited exceptions and to the
extent that the TONs and the RCIs are then in issue, rank pari
passu with the holders of the most senior class or classes of
preference shares then in issue in the capital of Barclays Bank
PLC. Accordingly, the holders of the preference shares would rank
equally with the holders of such TONs and RCIs on such a winding-up
of Barclays Bank PLC (unless one or more classes of shares of
Barclays Bank PLC ranking in priority to the preference shares are
in issue at the time of such winding-up, in which event the holders
of such TONs and RCIs would rank equally with the holders of such
shares and in priority to the holders of the preference
shares).
Subject to such ranking, in such event, holders of the
preference shares will be entitled to receive out of assets of
Barclays Bank PLC available for distributions to shareholders,
liquidating distributions in the amount of EUR10,000 per 4.75%
Preference Share and $10,000 per 6.278% Preference Share, plus, in
each case, an amount equal to the accrued dividend for the then
current dividend period to the date of the commencement of the
winding-up or other such return of capital. If a dividend is not
paid in full on any preference shares on any dividend payment date,
then a dividend restriction shall apply.
This dividend restriction will mean that neither Barclays Bank
PLC nor Barclays PLC may (a) declare or pay a dividend (other than
payment by Barclays PLC of a final dividend declared by its
shareholders prior to the relevant dividend payment date, or a
dividend paid by Barclays Bank PLC to Barclays PLC) on any of their
respective ordinary shares, other preference shares or other share
capital or (b) redeem, purchase, reduce or otherwise acquire any of
their respective share capital, other than shares of Barclays Bank
PLC held by Barclays PLC or a wholly owned subsidiary, until the
earlier of: (1) the date on which Barclays Bank PLC next declares
and pays in full a preference dividend; and (2) the date on or by
which all the preference shares are redeemed in full or purchased
by Barclays Bank PLC.
Holders of the preference shares are not entitled to receive
notice of, or to attend, or vote at, any general meeting of
Barclays Bank PLC. Barclays Bank PLC is not permitted to create a
class of shares ranking as regards participation in the profits or
assets of Barclays Bank PLC in priority to the preference shares,
save with the sanction of a special resolution of a separate
general meeting of the holders of the preference shares (requiring
a majority of not less than three-fourths of the holders of the
preference shares voting at the separate general meeting) or with
the consent in writing of the holders of three-fourths of the
preference shares.
Except as described above, the holders of the preference shares
have no right to participate in the surplus assets of Barclays Bank
PLC.
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 PLC, with the balance of GBP12,092m credited to
retained earnings.
Other equity instruments
Other equity instruments of GBP7,595m (2017: GBP8,982m) include
AT1 securities issued by Barclays Bank PLC. The AT1 securities are
perpetual securities with no fixed maturity and are structured to
qualify as AT1 instruments under CRD IV.
In 2018, there was one issuance (2017: two issuances) of Fixed
Rate Resetting Perpetual Subordinated Contingent Convertible
Securities, with principal amount totalling $2.5bn (2017:
GBP2.5bn). There was also one redemption in 2018 (2017: none), with
principal amount totalling $2.0bn. During the year, GBP2,070m of
Additional Tier 1 (AT1) securities issued by Barclays PLC were
transferred from Barclays Bank PLC to Barclays Bank UK PLC.
AT1 equity instruments
2018 2017
Initial call date GBPm GBPm
------------------ -----
AT1 equity instruments - Barclays Bank PLC
8.25% Perpetual Subordinated Contingent Convertible Securities (USD 2,000m) 2018 - 1,242
7.0% Perpetual Subordinated Contingent Convertible Securities 2019 - 698
6.625% Perpetual Subordinated Contingent Convertible Securities (USD 1,211m) 2019 715 715
6.5% Perpetual Subordinated Contingent Convertible Securities (EUR 1,077m) 2019 860 860
8.0% Perpetual Subordinated Contingent Convertible Securities (EUR 1,000m) 2020 836 836
7.875% Perpetual Subordinated Contingent Convertible Securities 2022 1,000 1,000
7.875% Perpetual Subordinated Contingent Convertible Securities (USD 1,500m) 2022 1,136 1,136
7.25% Perpetual Subordinated Contingent Convertible Securities 2023 500 1,250
7.75% Perpetual Subordinated Contingent Convertible Securities (USD 2,500m) 2023 1,925 -
5.875% Perpetual Subordinated Contingent Convertible Securities 2024 623 1,245
-----
Total AT1 equity instruments 7,595 8,982
-----
10. Reserves
Currency translation reserve
The currency translation reserve represents the cumulative gains
and losses on the retranslation of the Barclays Bank Group net
investment in foreign operations, net of the effects of
hedging.
Available for sale reserve
Following the adoption of IFRS 9, accumulated fair value changes
of GBP260m previously recognised in the available for sale reserve
are now recorded in fair value through other comprehensive
income.
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.
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.
Own credit reserve
The own credit reserve reflects the cumulative own credit gains
and losses on financial liabilities at fair value. Amounts in the
own credit reserve are not recycled to profit or loss in future
periods.
Other reserves and other shareholders' equity
Other reserves relate to redeemed ordinary and preference shares
issued by the Barclays Bank Group.
Included in other shareholders' equity are capital notes which
bear interest at rates fixed periodically in advance, based on
London interbank rates. These notes are repayable at the option of
the Barclays Bank PLC, in whole on any interest payment date.
Barclays Bank PLC is not obliged to make a payment of interest on
its capital notes if, in the preceding six months, a dividend has
not been declared or paid on any class of shares of Barclays
PLC.
Barclays Bank Group Barclays Bank PLC
2018 2017 2018 2017
GBPm GBPm GBPm GBPm
---------- --------- ---------
Currency translation reserve 3,927 3,084 857 719
Available for sale reserve - 396 - (19)
Fair value through other comprehensive income reserve (298) - (302) -
Cash flow hedging reserve (123) 184 (123) 185
Own credit reserve (121) (179) (121) (178)
Other reserves and other shareholders' equity (24) 323 72 386
---------- --------- ---------
Total 3,361 3,808 383 1,093
---------- --------- ---------
11. Non-controlling interests
Profit attributable Equity attributable Dividends paid to
to non-controlling to non-controlling non-controlling
interest interest interest
2018 2017 2016 2018 2017 2016 2018 2017 2016
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Barclays Africa
Group Limited - 140 402 - - 3,507 - 173 235
Other non-controlling
interests - 4 3 2 1 15 - - -
Total - 144 405 2 1 3,522 - 173 235
Barclays Bank PLC's shareholding in BAGL has reduced from 50.1%
in 2016 to 14.9% in 2017. Following the disposal BAGL is not
considered as a subsidiary of Barclays Bank Group and has been
deconsolidated for accounting purposes and is accounted for as an
asset available for sale in 2017.
12. Related party transactions and Directors' remuneration
Related party transactions
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the other party in making financial or operational
decisions, or one other party controls both.
The disposal of the UK banking business to Barclays Bank UK PLC
and transfer of ownership of Barclays Bank UK PLC to Barclays PLC
has materially affected the financial position and the performance
of the Barclays Bank Group during this period with regards to its
related party transactions. Refer to Note 2 for further details,
including intra-group balances.
Parent company
The parent company, which is also the ultimate parent company,
is Barclays PLC, which holds 100% of the issued ordinary shares of
Barclays Bank PLC.
Subsidiaries
Transactions between Barclays Bank PLC and its subsidiaries also
meet the definition of related party transactions. Where these are
eliminated on consolidation, they are not disclosed in the Barclays
Bank Group's financial statements. A list of the Barclays Bank
Group's principal subsidiaries is shown in Note 36 in Barclays Bank
PLC Annual Report.
Fellow subsidiaries
Transactions between the Barclays Bank Group and other
subsidiaries of the parent company also meet the definition of
related party transactions.
Associates, joint ventures and other entities
The Barclays Bank Group provides banking services to its
associates, joint ventures and the Barclays Bank Group pension
funds (principally the UK Retirement Fund), providing loans,
overdrafts, interest and non-interest bearing deposits and current
accounts to these entities as well as other services. Barclays Bank
Group companies also provide investment management and custodian
services to the Barclays Bank Group pension schemes. All of these
transactions are conducted on the same terms as third party
transactions. Summarised financial information for the Barclays
Bank Group's investments in associates and joint ventures is set
out in Note 38 in Barclays Bank PLC Annual Report.
Amounts included in the Barclays Bank Group's financial
statements, in aggregate, by category of related party entity are
as follows:
Parent Fellow subsidiaries Associates Joint ventures Pension funds
GBPm GBPm GBPm GBPm GBPm
------ ------------------- ---------- -------------- -------------
For the year ended and as at 31 December 2018
Total income (416) (3) - 7 3
Credit impairment and other provisions - - - - -
Operating expenses (122) (3,630) (1) (7) -
Total assets 727 1,091 12 1,288 3
Total liabilities 21,405 2,058 85 2 139
------ ------------------- ---------- -------------- -------------
For the year ended and as at 31 December 2017
Total income 3 1 (20) 61 4
Credit impairment and other provisions - - 2 - -
Operating expenses (999) (4,009) - (23) -
Total assets 716 163 2 1,048 2
Total liabilities 24,205 1,015 75 2 162
------ ------------------- ---------- -------------- -------------
Guarantees, pledges or commitments given in respect of these
transactions in the year were GBP20m (2017: GBP27m) predominantly
relating to associates. No guarantees, pledges or commitments were
received in the year. Derivatives transacted on behalf of the
pensions funds were GBP3m (2017: GBP3m).
Amounts included in Barclays Bank PLC's financial statements, in
aggregate, by category of related party entity are as follows:
Parent Subsidiaries Fellow subsidiaries Associates Joint ventures Pension funds
GBPm GBPm GBPm GBPm GBPm GBPm
As at 31 December 2018
Total assets 721 178,571 1,069 8 1,282 3
Total liabilities 21,405 122,546 2,000 85 (2) 139
As at 31 December 2017
Total assets 716 148,542 159 2 1,048 2
Total liabilities 24,204 123,795 969 75 2 162
It is the normal practice of Barclays Bank PLC to provide its
subsidiaries with support and assistance by way of guarantees,
indemnities, letters of comfort and commitments, as may be
appropriate, with a view to enabling them to meet their obligations
and to maintain their good standing, including commitment of
capital and facilities. For dividends paid to Barclays PLC see Note
6.
Key Management Personnel
Key Management Personnel are defined as those persons having
authority and responsibility for planning, directing and
controlling the activities of Barclays Bank PLC (directly or
indirectly) and comprise the Directors and Officers of Barclays
Bank PLC, certain direct reports of the Chief Executive Officer and
the heads of major business units and functions.
There were no material related party transactions with entities
under common directorship where a member of Key Management
Personnel (or any connected person) is also a member of Key
Management Personnel (or any connected person) of Barclays Bank
PLC.
The Barclays Bank Group provides banking services to Key
Management Personnel and persons connected to them. Transactions
during the year and the balances outstanding were as follows:
Loans outstanding
2018 2017
GBPm GBPm
----- -----
As at 1 January 4.8 9.2
Loans issued during the year(a) 12.6 0.5
Loan repayments during the year(b) (2.8) (4.9)
----------------------------------- ----- -----
As at 31 December 14.6 4.8
----------------------------------- ----- -----
Notes
a Includes loans issued to existing Key Management Personnel and
new or existing loans issued to newly appointed Key Management
Personnel.
b Includes loan repayments by existing Key Management Personnel and
loans to former Key Management Personnel.
No allowances for impairment were recognised in respect of loans
to Key Management Personnel (or any connected person).
Deposits outstanding
2018 2017
GBPm GBPm
------ ------
As at 1 January 6.9 7.3
Deposits received during the year(a) 17.4 25.7
Deposits repaid during the year(b) (21.4) (26.1)
------------------------------------- ------ ------
As at 31 December 2.9 6.9
------------------------------------- ------ ------
Notes
a Includes deposits received from existing Key Management Personnel
and new or existing deposits received from newly appointed Key
Management Personnel.
b Includes deposits repaid by existing Key Management Personnel and
deposits of former Key Management Personnel.
Total commitments outstanding
Total commitments outstanding refer to the total of any undrawn
amounts on credit card and/or overdraft facilities provided to Key
Management Personnel. Total commitments outstanding as at 31
December 2018 were GBP0.5m (2017: GBP0.3m).
Loans to Directors and other Key Management Personnel (and
persons connected to them), (a) were made in the ordinary course of
business, (b) were generally made on substantially the same terms,
including interest rates and collateral, as those prevailing at the
same time for comparable transactions with other persons and (c)
did not involve more than a normal risk of collectability or
present other unfavourable features.
Remuneration of Key Management Personnel
Total remuneration awarded to Key Management Personnel below
represents the awards made to individuals that have been approved
by the Board Remuneration Committee as part of the latest
remuneration decisions. Costs recognised in the income statement
reflect the accounting charge for the year included within
operating expenses. The difference between the values awarded and
the recognised income statement charge principally relates to the
recognition of deferred costs for prior year awards. Figures are
provided for the period that individuals met the definition of Key
Management Personnel.
2018 2017
GBPm GBPm
----- ------
Salaries and other short-term benefits 50.7 33.9
Pension costs 0.3 0.1
Other long-term benefits 12.6 18.4
Share-based payments 24.8 26.8
Employer social security charges on emoluments 8.5 9.6
---------------------------------------------------------------------------------- ----- ------
Costs recognised for accounting purposes 96.9 88.8
Employer social security charges on emoluments (8.5) (9.6)
Other long-term benefits - difference between awards granted and costs recognised 4.5 (9.8)
Share-based payments - difference between awards granted and costs recognised (2.1) (11.7)
---------------------------------------------------------------------------------- ----- ------
Total remuneration awarded 90.8 57.7
---------------------------------------------------------------------------------- ----- ------
Disclosure required by the Companies Act 2006
The following information regarding the Barclays Bank PLC Board
of Directors is presented in accordance with the Companies Act
2006:
2018 2017
GBPm GBPm
---- ----
Aggregate emoluments(a) 10.5 8.5
Amounts paid under LTIPs(b) 0.6 1.1
---------------------------- ---- ----
11.1 9.6
---- ----
Notes
a The aggregate emoluments include amounts paid for the 2018 year.
In addition, deferred cash and share awards for 2018 with a total
value at grant of GBP5.1m will be made to Directors which will
only vest subject to meeting certain conditions.
b The figure above for 'Amounts paid under LTIPs' for 2018 relates
to an LTIP award that was released to a Director in 2018. Dividend
shares released on the award are excluded.
Pension contributions totalling GBP11,848 were paid to defined
contribution schemes on behalf of Directors (2017: GBPnil). There
were no notional pension contributions to defined contribution
schemes.
As at 31 December 2018, there were no Directors accruing
benefits under a defined benefit scheme (2017: nil).
Of the figures in the table above, the amounts attributable to
the highest paid Director are as follows:
2018 2017
GBPm GBPm
---- ----
Aggregate emoluments(a) 3.6 2.3
Amounts paid under LTIPs - 1.1
------------------------- ---- ----
3.6 3.4
---- ----
Note
a The aggregate emoluments include amounts paid for the 2018 year.
In addition, deferred cash and share awards for 2018 with a total
value at grant of GBP4.1m will be made to the highest paid Director
which will only vest subject to meeting certain conditions.
There were no actual pension contributions paid to defined
contribution schemes (2017: GBPnil). There were no notional pension
contributions to defined contribution schemes.
Advances and credit to Directors and guarantees on behalf of
Directors
In accordance with Section 413 of the Companies Act 2006, the
total amount of advances and credits made available in 2018 to
persons who served as Directors during the year was GBPnil (2017:
GBP0.2m). The total value of guarantees entered into on behalf of
Directors during 2018 was GBPnil (2017: GBPnil).
Notes
The term Barclays Bank Group refers to Barclays Bank PLC
together with its subsidiaries. Unless otherwise stated, the income
statement analysis compares the year ended 31 December 2018 to the
corresponding twelve months of 2017 and balance sheet analysis as
at 31 December 2018 with comparatives relating to 31 December 2017.
The abbreviations 'GBPm' and 'GBPbn' represent millions and
thousands of millions of Pounds Sterling respectively; the
abbreviations '$m' and '$bn' represent millions and thousands of
millions of US Dollars respectively; the abbreviations 'EURm' and
'EURbn' represent millions and thousands of millions of Euros
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/results.
The information in this announcement, which was approved by the
Board of Directors on 20 February 2019, does not comprise statutory
accounts within the meaning of Section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2018, which
contain an unqualified 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.
These results will be filed as a Form 20-F to the SEC as soon as
practicable following their publication. Once filed with the SEC,
copies of the Form 20-F will also be available from the Barclays
Investor Relations website at home.barclays/results and from the
SEC's website at www.sec.gov.
Barclays Bank Group is a frequent issuer in the debt capital
markets and regularly meets with investors via formal road-shows
and other ad hoc meetings. Consistent with its usual practice,
Barclays expects that from time to time over the coming quarter it
will meet with investors globally to discuss these results and
other matters relating to the Barclays Bank Group.
Forward-looking statements
This document contains certain forward-looking statements within
the meaning of Section 21E of the US Securities Exchange Act of
1934, as amended, and Section 27A of the US Securities Act of 1933,
as amended, with respect to the Barclays Bank Group. Barclays
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. Examples of forward-looking statements
include, among others, statements or guidance regarding or relating
to the Barclays Bank 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 9 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. These may be
affected by changes in legislation, the development of standards
and interpretations under International Financial Reporting
Standards including the continuing impact of IFRS 9 implementation,
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; UK, US, Eurozone and global macroeconomic and business
conditions; 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 entities within
the Barclays Bank 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 United Kingdom from the
European Union and the disruption that may subsequently result in
the UK and globally; and the success of future acquisitions,
disposals and other strategic transactions. A number of these
influences and factors are beyond the Barclays Bank Group's
control. As a result, the Barclays Bank Group's actual future
results, dividend payments, and capital and leverage ratios may
differ materially from the plans, goals, expectations and guidance
set forth in the Barclays Bank Group's forward-looking statements.
Additional risks and factors which may impact the Barclays Bank
Group's future financial condition and performance are identified
in our filings with the SEC (including, without limitation, our
Annual Report on Form 20-F for the fiscal year ended 31 December
2018), which are available on the SEC's website at www.sec.gov.
Subject to our obligations under the applicable laws and
regulations of the United Kingdom and the United States 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
Lisa Bartrip Tom Hoskin
+44 (0) 20 77730708 +44 (0) 20 7116 6927
About Barclays
Barclays is a transatlantic consumer and wholesale bank offering
products and services across personal, corporate and investment
banking, credit cards and wealth management, with a strong presence
in our two home markets of the UK and the US.
With over 325 years of history and expertise in banking,
Barclays operates in over 40 countries and employs approximately
83,500 people. Barclays moves, lends, invests and protects money
for customers and clients worldwide.
For further information about Barclays, please visit our website
www.barclays.com
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the use and distribution of this information may apply. For further
information, please contact rns@lseg.com or visit www.rns.com.
ACSTBMMTMBITMPL
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