20-F

SECURITIES AND EXCHANGE COMMISSION

FORM 20-F

o	Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934
	or
þ	Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended December 31, 2004
	or
o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from                      to                     .

Commission file numbers: Barclays PLC                           0-13790
Barclays Bank PLC2-71497-01

BARCLAYS PLC          BARCLAYS BANK PLC

(Exact names of registrants as specified in their charters)

ENGLAND
(Jurisdictions of incorporation)

54 LOMBARD STREET, LONDON, EC3P 4AH, ENGLAND
(Address of principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

	Title of each class	Name of each exchange on which registered
Barclays PLC	25p ordinary shares	New York Stock Exchange*
	American Depositary Shares, each representing
	four 25p ordinary shares	New York Stock Exchange
Barclays Bank PLC	7.4% Subordinated Notes 2009	New York Stock Exchange

* Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuers’ classes of capital or common stock as of the close of the period covered by the annual report.

Barclays PLC	25p ordinary shares	6,453,561,180
	£1 staff shares	875,000
Barclays Bank PLC	£1 ordinary shares	2,309,360,515
	£1 preference shares	1,000
	€100 preference shares	100,000

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports) and (2) have been subject to such filing requirements for the past 90 days.

Yes     þ                    No     o

Indicate by check mark which financial statement item the registrants have elected to follow.

Item 17      o                    Item 18     þ

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrants have filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes     o                    No     o

This document comprises the Annual report on Form 20-F for the year ended December 31, 2004 of Barclays PLC and Barclays Bank PLC (the “2004 Form 20-F”). Reference is made to the Form 20-F cross reference table on page 211 hereof (the “Form 20-F Cross Reference Table”). Only (i) the information in this document that is referenced in the Form 20-F Cross Reference Table, and (ii) the Exhibits, shall be deemed to be filed with the Securities and Exchange Commission for any purpose, including incorporation by reference into the Registration Statements on Form F-3 (File No. 333-85646, 333-12384 and 333-8054) which were filed by Barclays Bank PLC and the Registration Statements on Form S-8 (File No. 333-12818, 333-112796 and 333-112797) which were filed by Barclays Bank PLC, and any other documents, including any documents filed by Barclays PLC or Barclays Bank PLC pursuant to the Securities Act of 1933, as amended, which purport to incorporate by reference the 2004 Form 20-F. Any information herein which is not referenced in the Form 20-F Cross Reference Table, or contained in the Exhibits themselves, shall not be deemed to be so incorporated by reference.

This document contains certain forward-looking statements within the meaning of section 21E of the US Securities Exchange Act of 1934, as amended, and section 27A of the US Securities Act of 1933, as amended, with respect to certain of the Group’s plans and its current goals and expectations relating to its future financial condition and performance. The Group may also make forward-looking statements in other written materials, including other documents filed with or furnished to the SEC. In addition, the Group’s senior management may make forward-looking statements orally to analysts, investors, representatives of the media and others. In particular, among other statements, certain statements in the Financial Review and Business Description with regard to management objectives, trends in results of operations, margins, costs, return on equity, risk management, and competition are forward-looking in nature. Forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as ‘anticipate’, ‘target’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’, or other words of similar meaning. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, UK domestic and global economic and business conditions, market related risks such as changes in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, changes in legislation, the outcome of pending and future litigation and the impact of competition, a number of which are beyond the Group’s control. As a result, the Group’s actual future results and developments may differ materially from the plans, goals, and expectations expressed or implied in the Group’s forward looking statements. For a more detailed discussion of some of the factors that may cause actual future results and developments to differ materially from forward-looking statements, see Risk factors on page 28. Any forward-looking statements made by or on behalf of the Group speak only as of the date they are made. Barclays does not undertake to update forward-looking statements to reflect any changes in the Group’s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any additional disclosures Barclays has made or may make in documents it has filed or may file with the SEC.

This document contains information, including statistical data, about certain of Barclays markets and its competitive position. Except as otherwise indicated, this information is taken or derived from Datastream and other external sources. Barclays cannot guarantee the accuracy of information taken from external sources, or that, in respect of internal estimates, a third party using different methods would obtain the same estimates as Barclays.

Section 1
Impact

2	Directors and Officers of Barclays PLC and Barclays Bank PLC
5	Directors’ report
7	Corporate governance report
13	Barclays report on remuneration
26	Accountability and audit
27	Presentation of information

Risk management
28	Risk factors
30	Risk management and control – overview
35	Credit risk management
38	Loans and advances
39	Loans and advances to customers on the banking book
41	Other credit risks
42	Loan impairment: potential credit risk loans
43	Provisions for bad and doubtful debts
47	Market risk management
51	Capital and liquidity risk management
54	Management of operational risk and business risk
55	Disclosures about certain trading activities including non-exchange traded contracts
57	Derivatives
58	Statistical information

1

Directors and Officers

Directors and Officers of Barclays PLC
and Barclays Bank PLC

1 Matthew William Barrett, Chairman (age 60) was appointed as Chairman on 1st September 2004. He had been Group Chief Executive since October 1999, when he joined the Board. He joined Barclays from Bank of Montreal where he was Chairman and Chief Executive Officer. He joined the Bank of Montreal in 1962. In 1994, he became an Officer of the Order of Canada, the country’s highest civilian honour, and in 1995, he was awarded the title of Canada’s Outstanding CEO of the Year. He is a Member of the International Advisory Board of British American Business Inc., the Federal Reserve Bank of New York’s International Advisory Committee, Institut International D’Etudes Bancaires, the Chartered Management Institute, and the European Financial Services Round Table. He chairs the Board Corporate Governance and Nominations Committee.

2 Thomas David Guy Arculus^(a) (age 58) joined the Board in February 1997. He is Chairman of O₂ plc and the UK Government’s Better Regulation Task Force. He is also a member of the Finance Committee of Oxford University Press. His previous positions include Chairman of Severn Trent plc, Earls Court and Olympia Group Limited and IPC Group Limited, and Group Managing Director of EMAP plc. He is a member of the Board HR and Remuneration Committee and the Board Corporate Governance and Nominations Committee.

3 Sir Richard Broadbent^(a), Senior Independent Director (age 51) joined the Board in September 2003. He was appointed Senior Independent Director on 1st September 2004. He is Chairman of Arriva plc and was previously the Executive Chairman of HM Customs and Excise from 2000 to 2003. He was formerly a member of the Group Executive Committee of Schroders plc and a non-executive Director of the Securities Institute. He is a member of the Board HR and Remuneration Committee, the Board Corporate Governance and Nominations Committee and the Board Risk Committee.

4 Richard Leigh Clifford^(a) (age 57) joined the Board on 1st October 2004. He is Chief Executive of Rio Tinto, having worked for the Rio Tinto Group since 1970. He has extensive experience of managing a business that operates in a number of global regions. He was previously Chairman of the Coal Industry Advisory Board of the International Energy Agency and until May 2004, a Director of Freeport-McMoran Copper & Gold Inc.

5 Professor Dame Sandra June Noble Dawson^(a) (age 58) joined the Board in March 2003. She is currently KPMG Professor of Management Studies at the University of Cambridge, and has been Director of the Judge Institute at Cambridge since 1995, and Master of Sidney Sussex College, Cambridge since 1999. Professor Dawson has held a range of non-executive posts in organisations including Rand Europe (UK), the Society for the Advancement of Management Studies, JP Morgan Fleming Claverhouse Investment Trust, and Riverside Mental Health Trust. She was also a member of the Senior Salaries Review Board. She is a member of the Board Audit Committee.

6 Sir Andrew Likierman^(a) (age 61) joined the Board on 1st September 2004. He was previously Managing Director, Financial Management, Reporting and Audit and Head of the Government Accountancy Service at HM Treasury. He is Professor of Management Practice in Accounting at the London Business School and a non-executive Director of the Bank of England and MORI Group Limited. He is a member of the Board Audit and Board Risk Committees.

2

Barclays PLC Annual Report 2004

7 Sir Nigel Rudd, DL^(a), Deputy Chairman (age 58) joined the Board in February 1996. He is non-executive Chairman of Pilkington PLC, Pendragon PLC and Boots Group PLC. He was formerly Chairman of Kidde PLC. He is Chairman of the Board HR and Remuneration Committee and a member of the Board Corporate Governance and Nominations Committee.

8 Stephen George Russell^(a) (age 59) joined the Board in October 2000 on completion of the acquisition of Woolwich plc. He joined Woolwich plc’s Board as a non-executive Director in 1998. He was Chief Executive of Boots Group PLC from 2000 until 2003. He is Chairman of the Board Audit Committee and Board Risk Committee and is a member of the Board Corporate Governance and Nominations Committee.

9 Dr Jürgen Zech^(a) (age 65) joined the Board in July 2002. Dr Zech is Chairman of Denkwerk GmbH. He retired as Chief Executive of Gerling-Konzern, the general insurance arm of Gerling, at the end of 2001. He is a non-executive Director of Misys PLC and Partner, Re Limited. He is a member of the Board Audit Committee.

10 John Silvester Varley^(b)(c), Group Chief Executive (age 48) was appointed as Group Chief Executive on 1st September 2004, prior to which he had been Group Deputy Chief Executive from 1st January 2004. He held the position of Group Finance Director from 2000 until the end of 2003. He joined the Group Executive Committee in September 1996 and was appointed to the Board in June 1998. He was Chief Executive of Retail Financial Services from 1998 to 2000 and was Chairman of the Asset Management Division from 1995 to 1998.

11 Roger William John Davis^(b)(c), Chief Executive, UK Banking (age 48) was appointed as Chief Executive of UK Banking on 1st January 2004 and joined the Board on the same date. He joined Barclays in February 1997 and his previous roles for the Group include Chief Executive of Business Banking and Chairman and Chief Executive of Barclays Capital, Asia Pacific. He joined the Group Executive Committee in February 2003. Before joining Barclays, he spent 12 years in the British Army and began his City career at Robert Fleming & Co where he was a member of the Board of Jardine Fleming Holdings and Managing Director of Jardine Fleming India.

12 Robert Edward Diamond Jr^(c), Chief Executive, Barclays Capital, Chairman, Barclays Global Investors, and Chief Executive, Private Clients (age 53) was appointed as Chief Executive, Barclays Capital in October 1997 and Chairman, Barclays Global Investors in August 2002. From 1st January 2005 he also assumed responsibility for the Barclays Private Clients business. He joined Barclays in July 1996 from CSFB where he was Vice-Chairman and Head of Global Fixed Income and Foreign Exchange. He was appointed to the Group Executive Committee in September 1997.

13 Gary Andrew Hoffman^(b)(c), Chief Executive, Barclaycard (age 44) was appointed as Chief Executive of Barclaycard in September 2001 and joined the Board on 1st January 2004. He joined the Group in 1982 and has held a variety of management positions, as well as sitting on the Executive Committee of Retail Financial Services and being a member of the Group Operating Committee. He joined the Group Executive Committee in 2001.

3

Directors and Officers

14 Paul Thomas Idzik^(c), Chief Operating Officer
Paul Thomas Idzik^(c), Chief Operating Officer (age 44) joined the Executive Committee and became Chief Operating Officer in November 2004. He is also Chairman of the Group Operating Committee. He was formerly Chief Operating Officer of Barclays Capital. He joined Barclays Capital in August 1999 following a career with Booz Allen & Hamilton where he was a Partner and senior member of the Financial Institutions Practice.

15 Naguib Kheraj^(b)(c), Group Finance Director
(age 40) was appointed as Group Finance Director and joined the Board on 1st January 2004. He had previously held the positions of Chief Executive of Barclays Private Clients, Deputy Chairman of Barclays Global Investors, Global Head of Investment Banking and Global Chief Operating Officer at Barclays Capital. He joined the Group Executive Committee in March 2003. Before joining Barclays, he was a Managing Director and held the position of Chief Financial Officer for Europe at Salomon Brothers.

16 David Lawton Roberts^(b)(c)
David Lawton Roberts^(b)(c), Chief Executive, International Retail and Commercial Banking (age 42) was appointed as Chief Executive, International Retail and Commercial Banking on 1st January 2005. He was formerly Chief Executive of Private Clients & International from 1st January 2004 and joined the Board on the same date. He joined the Group in 1983 and has held various management positions, including Chief Executive of Personal Financial Services and Chief Executive of Business Banking. He joined the Group Executive Committee in 2001.

Current Group Executive Committee members		Appointed to Group
		Executive Committee
John Varley	Group Chief Executive		1996
Roger Davis	Chief Executive, UK Banking		2003
Robert Diamond	Chief Executive, Barclays Capital Chairman, Barclays Global Investors Chief Executive, Private Clients		1997
Gary Hoffman	Chief Executive, Barclaycard		2001
Paul Idzik	Chief Operating Officer		2004
Naguib Kheraj	Group Finance Director		2003
David Roberts	Chief Executive, International Retail and Commercial Banking		2001

Other officers		Appointed to position
Lawrence Dickinson	Company Secretary		2002
Patrick Gonsalves	Joint Secretary, Barclays Bank PLC		2002
Mark Harding	General Counsel		2003
Robert Le Blanc	Risk Director		2004
Colin Walklin	Director of Finance		2002

4

Barclays PLC Annual Report 2004

Directors’ report

Directors’ Report

Profit Attributable

The profit attributable to shareholders for the year amounted to £3,268m, compared with £2,744m in 2003.

Dividends

The final dividends for the year ended 31st December 2004 of 15.75p per ordinary share of 25p each and 10p per staff share of £1 each have been approved by the Directors. The final dividends will be paid on 29th April 2005 in respect of the ordinary shares registered at the close of business on 25th February 2005 and in respect of the staff shares so registered on 31st December 2004. With the interim dividends of 8.25p per ordinary share and of 10p per staff share that were paid on 1st October 2004, the total distribution for 2004 is 24.0p (2003: 20.50p) per ordinary share and 20p (2003: 20p) per staff share. The dividends for the year absorb a total of £1,538m (2003: £1,340m).

Dividend Reinvestment Plan

Ordinary shareholders may have their dividends reinvested in Barclays PLC ordinary shares by participating in the Dividend Reinvestment Plan. The Plan is available to all ordinary shareholders provided that they do not live in, or are subject to the jurisdiction of, any country where their participation in the Plan would require Barclays or The Plan Administrator to take action to comply with local government or regulatory procedures or any similar formalities. Any shareholder wishing to obtain details of the Plan and a mandate form should contact The Plan Administrator to Barclays at The Causeway, Worthing, BN99 6DA. Those wishing to participate for the first time in the Plan should send their completed mandate form to The Plan Administrator so as to be received by 8th April 2005 for it to be applicable to the payment of the final dividend on 29th April 2005. Existing participants should take no action unless they wish to alter their current mandate instructions, in which case they should contact The Plan Administrator.

Share Capital

During the year, Barclays PLC purchased in the market for cancellation 140.1 million of its ordinary shares of 25p at a total cost of £699m as part of its programme of returning excess capital to shareholders. These transactions represented some 2.17% of the issued ordinary share capital at 31st December 2004. As at 28th February 2005 (the latest practicable date for inclusion in this report), the Company had an unexpired authority to repurchase further shares up to a maximum of 930.4 million ordinary shares of 25p.

The ordinary share capital was increased by 31.0 million ordinary shares during the year as a result of the exercise of options under the SAYE and Executive Share Option Schemes. At 31st December 2004 the issued ordinary share capital totalled 6,454 million shares.

Substantial Shareholdings

As at 28th February 2005, the Company had not been notified of any major interests in its shares as required by sections 198 to 208 of the Companies Act 1985.

Board Membership

The membership of the Boards of Directors of Barclays PLC and Barclays Bank PLC is identical and biographical details of the current members are set out on pages 2 to 4. Roger Davis, Gary Hoffman, Naguib Kheraj and David Roberts were appointed as executive Directors with effect from 1st January 2004. Sir Andrew Likierman

and Leigh Clifford were appointed as non-executive Directors with effect from 1st September 2004 and 1st October 2004, respectively. Sir Peter Middleton and Sir Brian Jenkins both retired from the Board on 1st September 2004, at which time Matthew W Barrett became Chairman and John Varley became Group Chief Executive. Dame Hilary Cropper, who served as a Board member since 1998, died on 26th December 2004. Christopher Lendrum retired from the Board on 31st December 2004.

Retirement and Re-election of Directors

In accordance with its Articles of Association, one-third (rounded down) of the Directors of Barclays PLC are required to retire by rotation at each Annual General Meeting (AGM), together with Directors appointed by the Board since the last AGM. The retiring Directors are eligible to stand for re-election. In addition, under the UK Combined Code on Corporate Governance, every Director should seek re-election by shareholders at least every three years.

The Directors retiring by rotation at the 2005 AGM and offering themselves for re-election are Matthew W Barrett, David Arculus, Sir Nigel Rudd and John Varley. In addition, Sir Andrew Likierman and Leigh Clifford, who were appointed as Directors since the last AGM, will be offering themselves for re-election at the 2005 AGM. Dr Jürgen Zech, who joined the Board in 2002, will be retiring at the AGM and is not seeking re-election.

Directors’ Interests

Directors’ interests in the shares of the Group on 31st December 2004, according to the register maintained under the Companies Act 1985, are shown on page 25. The register is available for inspection during business hours at the Group’s Head office and will be available for inspection at the 2005 AGM.

Directors’ Emoluments

Information on emoluments of Directors of Barclays PLC, in accordance with the Companies Act 1985 and the Listing Rules of the United Kingdom Listing Authority, is given in the Corporate Governance Report on pages 17 to 25 and in Note 46 to the accounts.

Activities

Barclays PLC Group is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services. The Group operates through branches, offices and subsidiaries in the UK and overseas. The activities of the Group are described on pages 75 and 76 and developments in the Group’s business during the year and an indication of likely future developments are analysed in the Financial review on pages 78 to 107, with additional information on potential risk factors discussed on pages 28 and 29.

Community Involvement

The total commitment for 2004 was £32m (2003: £32.8m).

Barclays committed £29.5m in support of the community in the UK (2003: £29.4m) and £2.5m was committed in international support (2003: £3.4m). UK commitment includes £11.2m of charitable donations (2003: £9.9m).

Barclays is a member of the Percent Club – a group of companies that have undertaken to ensure that donations to the community over time amount to at least 1% of their UK pre-tax profit.

5

Directors’ Report

Barclays has an extensive community programme covering many countries around the world. The Group provides funding and support to over 6,500 charities and voluntary organisations, ranging from small, local charities like Coyote Theatre in Teesside, UK to international organisations like Sightsavers International. We also have a very successful employee programme which in 2004 saw more than 25,000 employees and pensioners worldwide taking part in Barclays-supported volunteering and fundraising activities.

Political Donations

No political donations were made during the year. At the AGM in 2002 shareholders gave a four-year authority for Barclays Bank PLC and a number of other subsidiaries to make political donations and incur political expenditure up to a maximum aggregate sum of £250,000 per annum as a precautionary measure in light of the wide definitions in The Political Parties, Elections and Referendums Act 2000.

These authorities have not been used and it is not proposed that the Group’s long-standing policy of not making contributions to any political party be changed.

Employee Involvement

Barclays is committed to ensuring that employees share in the success of the Company. Staff are encouraged to participate in share option and share purchase schemes and have a substantial sum invested in Barclays shares.

Employees are kept informed of matters of concern to them in a variety of ways, including the corporate news magazine, the intranet, briefings and mobile phone SMS messaging.

Barclays is also committed to providing employees with opportunities to share their views and provide feedback on issues which are important to them. An annual Employee Opinion Survey is undertaken with results being reported to the Board HR and Remuneration Committee, and roadshows and employee forums take place.

In addition, Barclays undertakes regular and formal Group, business unit and project specific consultations with Amicus, our recognised union.

Equality and Diversity

Barclays is committed to giving full and fair consideration to applications for employment from people with disabilities and to continuing the employment of staff who become disabled and arranging any appropriate training to achieve this.

Barclays respects and values people from all backgrounds and is committed to becoming a more inclusive organisation with a workforce that reflects the markets we serve.

The Barclays Equality and Diversity programme covers employee, customer, supplier and community activities, wherever appropriate.

Health and Safety

Barclays is committed to ensuring the health, safety and welfare of its employees and, as far as is reasonably practicable, to providing and maintaining safe working conditions. This commitment goes beyond just fulfilling its statutory legal obligations; the Bank has a wish to be proactive in its management of health and safety in the workplace, and recognises that this will strengthen both its physical and human resources.

It is also recognised that in addition to its employees, Barclays has responsibilities towards all persons on its premises, such as customers, contractors, visitors and members of the public, and will ensure, as far as is reasonably practicable, that they are not exposed to risks to their health and safety.

The Board HR and Remuneration Committee will receive regular reports on Health and Safety from the Human Resources Director.

Creditors’ Payment Policy

Barclays policy follows the DTI’s Better Payment Practice Code, copies of which can be obtained from the Better Payment Practice Group’s website at www.payontime.co.uk. The Code states that a company should have a clear, consistent policy, adhered to by the finance and purchasing departments, that payment terms are agreed at the outset and payment procedures explained to suppliers, that bills are settled in accordance with payment terms agreed with suppliers, that complaints are dealt with quickly and that suppliers are advised of disputes. Barclays values its suppliers and acknowledges the importance of paying invoices, especially those of small businesses, promptly. Normal policy is to pay all small business purchases within 30 days.

Paragraph 12(3) of Schedule 7 to the Companies Act 1985 requires disclosure of trade creditor payment days. Disclosure is required by the Company, rather than the Group. The Group’s principal trading subsidiary in the UK is Barclays Bank PLC, the accounts for which are prepared under Schedule 9 of the Companies Act 1985. The components for the trade creditor calculation are not easily identified in Schedule 9. However, by identifying as closely as possible the components required by the Schedule, the trade creditor payment days for Barclays Bank PLC for 2004 were 34 days (2003: 40 days). This is an arithmetical calculation and does not necessarily reflect our practice, which is described above, nor the experience of any individual creditor.

The Auditors

The Board Audit Committee approves and reviews the appointment of the external auditors, as well as their relationship with the Group, including monitoring the Group’s use of the auditors for non-audit services and the balance of audit and non-audit fees paid to the auditors. More details on this can be found on pages 9 and 10 and Note 5 to the accounts. Having reviewed the independence and effectiveness of the external auditors, the Committee has recommended to the Board that the existing auditors, PricewaterhouseCoopers LLP, be reappointed. PricewaterhouseCoopers LLP have signified their willingness to continue in office and ordinary resolutions reappointing them as auditors and authorising the Directors to set their remuneration will be proposed at the 2005 AGM.

The Annual General Meeting

The AGM will be held at The Queen Elizabeth II Conference Centre on Thursday 28th April 2005. The Notice of Meeting is included in a separate document sent to shareholders with this report.

By order of the Board

Lawrence Dickinson
Company Secretary
10th March 2005

6

Barclays PLC Annual Report 2004

Corporate governance
Corporate governance report

Chairman’s Introduction

2004 has been a year of major change for Barclays. At the beginning of the year we reorganised some of our businesses under new leaders. In September, we completed our succession plans for the leadership of the Group, four months ahead of schedule. The smoothness of the transition was a testament to the robust and effective corporate governance practices that we already had in place.

As Chairman, I recognise that good corporate governance practices are the cornerstone of an effective organisation and this will be one of my top priorities going forward. You will read in this report about the enhancements that have been made to promote the highest standards of corporate governance in Barclays. Of course, good corporate governance depends on the quality and integrity of Directors and, having conducted an independently facilitated review of overall Board effectiveness, the Board concluded that it is functioning in a highly effective manner. Nonetheless, areas for improvement were identified and we will continue to challenge ourselves to improve our standards further. Our goal is to ensure that Barclays is an exemplar organisation in the field of corporate governance. Our existing framework is a strong base upon which to build.

Statement from Barclays PLC Board of Directors

The Combined Code on Corporate Governance

As a UK listed Company, Barclays is required to state whether it has complied with the provisions set out in section 1 of the UK Listing Authority’s Combined Code on Corporate Governance (the Code) and, where the provisions have not been complied with, to provide an explanation. We are also required to explain how we have applied the principles set out in the Code.

For the year ended 31st December 2004, Barclays has complied with the provisions and applied the principles of the Code as described below. For the appointment of Matthew W Barrett as Chairman on 1st September 2004, we followed the Code’s recommendation on the approach to take where a company’s Chief Executive becomes Chairman. We consulted with our major institutional shareholders in advance of the decision being made and sent a letter, explaining the Board’s decision to all shareholders on 6th November 2003. That letter was reproduced in full, together with some additional commentary, in the 2003 Annual Report. A copy is available upon request to the Company Secretary and is also available on the Company’s website, www.investorrelations.barclays.co.uk. In addition, and in accordance with best practice, Mr Barrett will be standing for re-election at this year’s Annual General Meeting (AGM), his first AGM since becoming Chairman.

Board Structure

As at the date of this report, the Board consists of the Chairman, who has no executive responsibilities, five executive Directors and eight non-executive Directors, all of whom are considered to be independent by the Board. The Board, excluding the Chairman, has a majority of independent non-executive Directors.

During 2004, Sir Richard Broadbent and Sir Nigel Rudd, both of whom are considered by the Board to be independent non-executive Directors, were appointed as Senior Independent Director and Deputy Chairman, respectively. The appointment of a Senior Independent Director was considered by the Board to be an important enhancement to its existing corporate governance practices. It ensured that the Board had the required checks and balances in place when the Group Chief Executive became Chairman.

Role of the Board

The Board is responsible to shareholders for creating and delivering sustainable shareholder value through the management of the Group’s businesses.

The roles of the Chairman and Group Chief Executive are separate and the Board has agreed their respective responsibilities. The Chairman’s main responsibility is to lead and manage the work of the Board to ensure that it operates effectively and fully discharges its legal and regulatory responsibilities. Non-executive Directors, based on their breadth of knowledge and experience, challenge, monitor and approve the strategy and policies recommended by the Group Chief Executive.

The Board has delegated the responsibility for the day-to-day management of the Group to the Group Chief Executive. The Group Chief Executive is supported in this by the Group Executive Committee, which he chairs. This Committee comprises the Group Finance Director, the heads of the Group’s major businesses and the Chief Operating Officer. The Committee usually meets weekly to develop strategies and policies for recommendation to the Board and to implement the strategy approved by the Board.

7

Corporate governance
Corporate governance report

During the year, work commenced on a Charter of Expectations, which sets out both the Role Profile and the behaviours and competencies required for each role on the Board, namely Chairman, Deputy Chairman, Senior Independent Director, non-executive Directors, executive Directors and Committee Chairmen. The Charter will provide a yardstick against which each Director’s effectiveness will be evaluated during 2005. A copy of the Charter is available on the Group’s website www.barclays.com or can be obtained by writing to the Company Secretary.

Appointment of Directors

The process for appointing new Directors to the Board is determined by the Board Corporate Governance and Nominations Committee, the operation of which is described on page 9. Criteria for the desired background and competencies of new non-executive Directors are agreed and reported to the Board before a search commences. The Chairman, Group Chief Executive and at least two members of the Committee interview each potential new Director, who has typically been identified with the assistance of external search consultants, before an appointment is recommended to the Board.

Induction and Training

On appointment to the Board and to Board Committees, all Directors receive a comprehensive induction tailored to their individual requirements. The induction, which is arranged by the Company Secretary, includes meetings with senior management and key external advisors, to assist them in building a detailed understanding of how the Group works and the key issues it faces. Directors are also encouraged to make site visits to see the Group’s operations. In addition, investor bodies and major investors are given the opportunity to meet with new non-executive Directors on their appointment to discuss any concerns they have about the Group.

Where appropriate, additional training and updates on particular issues are arranged by the Company Secretary. For example, during 2004, members of the Board Audit Committee received briefings by the Group’s external auditors on audit committee effectiveness and the valuation of derivatives. Additional training for the Board Risk Committee has included a presentation on Daily Value at Risk.

Board Effectiveness

During the year, a review was conducted of Board effectiveness. The Board enlisted the services of the management consulting firm, Egon Zehnder International, to facilitate a revised evaluation process for the Board, Board Committees and individual Directors. The process was based on a detailed questionnaire, which was sent to each Director, supplemented by individual interviews. Peer group evaluation of Directors was also undertaken as part of this process. A report on the performance of the Board as a whole and of Board Committees was made to the Board at its meeting in December 2004.

Feedback on the performance of Board Committees was shared with the Committee Chairmen, while feedback on individual Directors was discussed with the Chairman. The Chairman then held private meetings with each Director to discuss the results and agree on developmental areas. Feedback on the performance of the Chairman was provided to Sir Richard Broadbent, the Senior Independent Director, who discussed the results privately with the other non-executive Directors and the Group Chief Executive before meeting with the Chairman. As a result of the review, the Board concluded that it was operating in a highly effective manner. Action plans have been developed in respect of those areas identified for improvement.

Board Meetings

The Board meets regularly, usually ten times a year, including a full day each year devoted to the Group’s strategy. Regular items discussed at Board meetings include the Group Finance Director’s Report reviewing monthly financial information, the Group Chief Executive’s Report on the key issues affecting the Group and its businesses, strategy updates from the Group’s main businesses and Reports from the Chairmen of the Board Audit, Risk, Corporate Governance and Nominations and HR and Remuneration Committees.

The Board has a formal schedule of matters reserved to it, including the approval of interim and final financial statements, significant changes in accounting policy and practice, the appointment or removal of Directors or the Company Secretary, changes to the Group’s capital structure and major acquisitions, mergers, disposals and capital expenditure.

The Chairman encourages open discussion and frank debate at meetings. This gives the non-executive Directors the opportunity to provide effective challenge to management. The Chairman meets privately with all the non-executive Directors prior to each Board meeting to brief them on the business being considered at the meeting and to address any concerns they may have.

All Directors have access to the services of the Company Secretary and his team. Independent professional advice is also available, on request, to all Directors at the Company’s expense.

Independence of non-executive Directors
The Code set outs circumstances which may be relevant to the Board’s determination of whether a non-executive Director is independent. These include whether the Director has served on the Board for more than nine years. The Board has carefully considered the issue of independence and has concluded that the following behaviours are essential for the Board to consider a Director to be independent:

• Provides objective challenge to management.

• Is prepared to challenge others’ assumptions, beliefs or viewpoints as necessary for the good of the organisation.

• Questions intelligently, debates constructively, challenges rigorously and decides dispassionately.

• Is willing to stand up to defend their own beliefs and viewpoints in order to support the ultimate good of the organisation.

• Has a good understanding of the organisation’s businesses and affairs to enable them to properly evaluate information and responses provided by management.

Sir Nigel Rudd has now served on the Board for more than nine years, having been appointed in February 1996. The recent evaluation of Directors reinforced the opinion of the Board that Sir Nigel remains independent, notwithstanding his length of tenure. Sir Nigel demonstrates each of the behaviours set out above and there is no evidence that length of tenure is having an adverse impact on his independence. The Board believes his experience and knowledge of the Group’s business, combined with his external business experience, enables him to provide both effective challenge and make a constructive contribution to Board discussions. The Board considers therefore that Sir Nigel continues to be independent.

8

Barclays PLC Annual Report 2004

The Board considers Sir Nigel’s continued chairmanship of the Board HR and Remuneration Committee as essential for continuity. It will also allow new members of the Committee to become fully effective while the Board considers the succession to Chairman of the Committee. Sir Richard Broadbent was appointed to the Board HR and Remuneration Committee during the year and another member will be appointed during 2005. The continued membership of both Sir Nigel and David Arculus, who has served on the Committee since 1997, is considered to be of particular importance in a period when the Group is introducing a new long-term incentive plan.

Having considered the matter carefully, the Board has determined that each of the non-executive Directors is independent. In line with the Code’s recommendation, Sir Nigel will stand for re-election annually by shareholders.

Board Committees

Specific responsibilities have been delegated to Board Committees, which have access to independent expert advice at the Group’s expense. The terms of reference for the principal Board Committees are available, on request, from the Company Secretary and from the Company’s website at www.barclays.com. The principal Board Committees are the Board Audit Committee, the Board HR and Remuneration Committee, the Board Corporate Governance and Nominations Committee and the Board Risk Committee. Membership of each Committee is set out in the Directors’ biographies on pages 2 to 4.

Board HR and Remuneration Committee

During 2004, the remit of the Board Remuneration Committee was extended to include reviewing strategic Human Resources (HR) issues and it was renamed the Board HR and Remuneration Committee.

The Committee, chaired by Sir Nigel Rudd, meets at least four times a year. It considers matters relating to executive reward, including policy for executive Directors’ and senior executives’ remuneration and their individual remuneration awards. The Committee approves changes to incentive and benefits plans applicable to senior executives and governs employee share schemes. Details of the Committee’s role in governing Directors’ rewards are set out in Barclays Report on Remuneration on pages 13 to 25.

The Committee also reviews strategic HR issues including, but not limited to, employee retention, motivation and commitment; Equality and Diversity; significant employee relations matters and the availability of talent for senior roles below executive Director level.

Board Corporate Governance and Nominations Committee

The role of this Committee was also revised during the year and the remit extended to include corporate governance issues. The Committee was consequently renamed the Board Corporate Governance and Nominations Committee. While the Committee met only once during 2004, it will in future meet at least three times a year.

The Committee is responsible for considering matters relating to the composition of the Board, including the appointment of new Directors, making recommendations to the Board as appropriate. It also reviews annually the succession plans for the Chairman and Group Chief Executive and other key Board positions. The Chairman of the Board chairs the Committee, except when the Committee is considering the Chairman’s succession, in which case the Senior Independent Director chairs the Committee.

The Committee’s responsibilities were extended during the year to cover corporate governance issues, including consideration of the Group’s responses to important developments in corporate governance and overseeing the annual performance evaluation of the Board, each committee of the Board, the Chairman of the Board (led by the Senior Independent Director), the Group Chief Executive and individual Directors.

During 2004, the Committee reviewed the composition of the Board and each of the Board Committees and determined its view of the ideal mix of skills and experience required. It also reviewed the process for appointing new Directors and appointed new external search consultants to assist it in identifying potential new Directors. In addition, the Committee reviewed and approved the approach to Board, Board Committee and individual Director evaluation.

Board Audit Committee Chairman’s Statement
Membership

The Committee currently comprises four independent non-executive Directors. During the year, the Board appointed Sir Andrew Likierman as a member of the Committee and has determined him to be a ‘financial expert’ as defined by the US Sarbanes-Oxley Act of 2002 and that he has ‘recent and relevant financial experience’ as recommended by the Code.

Meetings

During 2004, the Committee met five times with senior management, including the Group Chief Executive or Deputy Chief Executive, the Vice-Chairman (Chris Lendrum), the Group Finance Director, the Risk Director and the Internal Audit Director. The lead audit partner of the external auditors, PricewaterhouseCoopers LLP, also attended each meeting.

The Committee receives at each meeting comprehensive reports from management and the internal and external auditors to enable it to discharge its responsibilities. The key responsibilities of the Committee are to approve and review the appointment and retirement of the external auditors, as well as oversee their relationship with the Group including consideration and approval of all audit and non-audit services provided by the external auditor; to monitor the effectiveness of and receive regular reports from the internal audit function; to review the effectiveness of the Group’s risk management standards and review reports on control issues of Group level significance; to review the Group’s annual and interim financial statements, including the effectiveness of the Group’s disclosure controls and procedures and systems of internal control over financial reporting; to review arrangements established by management for compliance with the requirements of the Group’s regulators and to receive reports on the effectiveness of the Group’s whistleblowing arrangements, as well as reports on specific instances of whistleblowing. The Committee also met privately with the external and internal auditors after each Committee meeting.

The Committee also meets once a year specifically to review and approve the audit plans for the following year for the external and internal auditors.

Relationship with the External Auditors

The Committee annually appraises the effectiveness of the external auditors. The evaluation process includes a questionnaire completed by senior members of the Finance function. The results are then

9

Corporate governance
Corporate governance report

reported to the Committee. The lead audit partner is also rotated on a five-year basis and consequently a new lead audit partner will take over following the publication of this Annual Report.

The Committee has put in place a detailed policy on the provision of services by the external auditors. Under the policy, the Committee has agreed which services the external auditors are allowed to carry out on behalf of the Group and which ones they are prohibited from doing. This policy aims to safeguard the independence of the external auditor.

The external auditors are prohibited from providing bookkeeping or other services related to the Group’s accounting records or financial statements, financial information systems design and implementation, appraisal or valuation services, fairness opinions or contribution-in-kind reports, actuarial services, internal audit outsourcing, management functions or other secondments, human resource functions (including recruitment/selection), broker or dealer, investment adviser or investment banking services, legal and expert services and tax services involving advocacy.

Allowable services that may be provided by the external auditors are statutory audit services, regulatory audit services, other attest and assurance services, regulatory non-audit services and taxation services (not involving advocacy). They may also provide accountancy advice, risk management and controls advice and carry out transaction support and business support and recoveries. For these allowable services, the Committee has pre-approved all assignments where the expected fee does not exceed £100,000, or £25,000 in the case of taxation services, although such assignments must be reported to the next meeting of the Committee. Any assignment where the expected fee is above the relevant threshold requires specific approval from the Committee. The Committee has delegated authority to the Chairman of the Committee, or, in his absence an authorised member of the Committee, to approve such assignments in between meetings of the Committee.

A proposed service that does not fall either within the definition of prohibited or allowable services requires the approval of the Committee. A member of the Group Executive Committee must explain the business case for the provision of that service by the external auditor to the Committee. A breakdown of the fees paid to the external auditor during the year is set out on page 128. Where any service requires approval from the Committee, management must set out the reasons why the external auditor has been chosen, rather than an alternative provider.

Details of all services carried out by the external auditor are recorded centrally and reported to the next meeting of the Committee, which spends time at each meeting considering the independence of the external auditor based on this information.

For the year ended 31st December 2004, the Committee has concluded that the external auditor remains independent and is effective. The Committee has recommended to the Board that they propose the re-appointment of the external auditors to shareholders at the 2005 AGM.

Financial Reporting

The Committee has continued to play a pivotal role in reviewing the Group’s annual and interim financial statements, including reviewing the effectiveness of the Group’s disclosure controls and procedures and systems of internal control.

For the disclosures made in the 2004 Annual Report, the Committee, having reviewed the report of the Disclosure Committee and the Turnbull attestations made by senior management, has concluded and reported to the Board for their approval that the Group has maintained effective disclosure controls and procedures and that management has continued to operate an effective system of internal control.

Work of the Committee during 2004

In addition to the regular items discussed by the Committee, described above, the Committee received reports from Business Heads on the control environment affecting their businesses and more detailed reports on specific control issues.

The Committee also received regular reports on the progress of two major regulatory projects, namely the implementation of International Financial Reporting Standards and the implementation of s.404 of the US Sarbanes-Oxley Act of 2002, whereby management and the external auditors will have to attest to the effectiveness of the Group’s systems of internal control over financial reporting. The Committee has concluded that the Group is on track to deliver these projects, but will keep them under ongoing review.

The Committee is confident that it has the required skills and experience to fully discharge its responsibilities.

Board Risk Committee Chairman’s Statement

The Committee met three times during the year, but will normally meet four times a year. The purpose of the Committee is to approve the Group’s overall risk appetite, including limits for individual types of risk, including credit, market and operational risk. The Committee also approves material changes to the overall risk appetite and monitors the Group’s risk profile, including risk trends and concentrations, provisions experience against budget and key performance indicators for risk. A key role of the Committee is also to obtain assurance that the principal risks facing the Group have been properly identified and are being appropriately managed.

In order to assess the effectiveness of the Group’s risk control framework, the Committee regularly reviews the Group’s risk measurement systems and receives reports from management confirming that they have reviewed the Group’s risk control standards. An overview of the Group’s risk management and control framework can be found on page 30. The Board approved the Committee’s revised approach in November 2004.

Signed on behalf of the Board Audit and Board Risk Committees

Stephen Russell
Board Audit and Board Risk Committee Chairman

10

Barclays PLC Annual Report 2004 

Attendance at Board and Board Committee Meetings

Details of the attendance of Directors at meetings of the Board and of Board Committees of which they were members during 2004 are as follows:

							Board
					Board		Corporate
					HR and		Governance and		Board
			Board Audit		Remuneration		Nominations		Risk
Director	Board		Committee		Committee		Committee		Committee
Sir Peter Middleton	6/6 (retired 1st September 2004	)	–		–		–		2/2 (until 1st September 2004	)
Matthew W Barrett	10/10		–		–		1/1 (appointed 23rd September 2004	)	–
John Varley	10/10		–		–		–		1/1 (until 5th February 2004	)
Chris Lendrum	10/10		–		–		–		–
Roger Davis	10/10		–		–		–		–
Gary Hoffman	10/10		–		–		–		–
Naguib Kheraj	10/10		–		–		–		–
David Roberts	10/10		–		–		–		–
David Arculus	9/10		–		5/6		1/1		–
Sir Richard Broadbent	10/10		–		5/5 (appointed 1st April 2004	)	1/1 (appointed 23rd September 2004	)	2/2 (appointed 1st April 2004	)
Dame Hilary Cropper	7/10 (died 26th December 2004	)	–		–		–		1/3
Leigh Clifford	3/3 (appointed 1st October 2004	)	–		–		–		–
Professor Dame Sandra Dawson	9/10		5/5		–		–		–
Sir Brian Jenkins	6/6 (retired 1st September 2004	)	3/3 (until 1st September 2004	)	4/4 (until 1st September 2004	)	–		2/2 (until 1st September 2004	)
Sir Andrew Likierman	4/4 (appointed 1st September 2004	)	2/2 (appointed 1st September 2004	)	–		–		1/1 (appointed 23rd September 2004	)
Stephen Russell	9/10		5/5		–		1/1 (appointed 23rd September 2004	)	3/3
Sir Nigel Rudd	10/10		–		6/6		1/1		–
Dr Jürgen Zech	10/10		5/5		–		–		–

11

Corporate Governance
Corporate Governance Report

Statement on US Corporate Governance standards

As a non-US company listed on the New York Stock Exchange (NYSE), Barclays is required to disclose any significant ways in which its corporate governance practices differ from those followed by domestic US companies listed on the NYSE. As Barclays main listing is on the London Stock Exchange, it follows the United Kingdom Listing Authority’s Combined Code on Corporate Governance (the Code). Key differences are set out below.

The way in which Barclays makes determinations of Directors’ independence differs from the NYSE rules. NYSE Rule 303A.02 sets out five tests for Director independence. In addition to those tests, the NYSE also requires that the Board “affirmatively determines that the Director has no material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company)”.

The Barclays Board annually reviews the independence of its non-executive Directors, taking into account developing best practice and regulation. For 2004, the Board has determined that all the non-executive Directors are independent as defined by the Code, as set out above.

Barclays has a number of principal Board Committees, which are broadly comparable in purpose and composition to those required by NYSE rules for domestic US companies. Barclays has a Board Corporate Governance and Nominations Committee, a Board HR and Remuneration (rather than Compensation) Committee and a Board Audit Committee. Barclays also has a Board Risk Committee.

With the exception of the Board Corporate Governance and Nominations Committee, which is chaired by the Chairman of the Board, these committees are comprised solely of non-executive Directors whom the Board has determined to be independent, in the manner described above.

The NYSE rules require that shareholders must be given the opportunity to vote on all equity-compensation plans and material revisions to those plans. Barclays complies with UK requirements, which are similar to the NYSE rules. The Board, however, does not explicitly take into consideration the NYSE’s detailed definition of what are considered ‘material revisions’.

The NYSE rules require that domestic US companies adopt and disclose a code of business conduct and ethics for Directors, officers and employees. Rather than a single consolidated code as envisaged in the NYSE rules, Barclays has business-based conduct and ethics policies, which apply to all employees. In addition, Barclays has adopted a Code of Ethics for the Group Chief Executive and senior financial officers as required by the US Securities and Exchange Commission.

Corporate Responsibility

The Group’s approach to managing the interests of its stakeholders is fully described in the Corporate Responsibility Report, copies of which are available from the Company Secretary or at www.barclays.com.

Relations with Shareholders

Barclays has a proactive approach to its institutional and private shareholders, totalling around 842,500. In the UK, senior executives hold meetings with our key institutional shareholders to discuss strategy, financial performance and investment activities. Throughout Europe and in the US, we arrange roadshows about the Group for key investors.

The Chairman meets regularly with investor bodies and investors to discuss the Group’s approach to corporate governance issues. Sir Richard Broadbent, the Senior Independent Director, is available to investors should they wish to raise any issues with him.

The Group aims to provide a first class service to private shareholders to help them in the effective and efficient management of their shareholding in Barclays. The main methods of communicating with private shareholders are the Annual Report, the Annual Review and the AGM.

Barclays e-view enables shareholders to receive shareholder documents electronically. It also gives shareholders immediate access to information relating to their personal shareholding and dividend history. Participants can also change their details and dividend mandates online and receive dividend tax vouchers electronically.

All Directors are encouraged to attend the AGM and be available to answer shareholders’ questions. It has been Barclays practice for a number of years that all resolutions are voted on a poll to ensure that the views of all shareholders are reflected proportionately. Each of the resolutions considered at the 2004 AGM was decided on a poll and a copy of the poll results is available from the Company Secretary or on the Company’s website, www.investorrelations.barclays.co.uk. The resolutions to be considered at the 2005 AGM will also be decided on a poll and the results will be made available on the Company’s website. A summary of the resolutions being proposed at the 2005 AGM is set out below:

Ordinary Resolutions

• To receive the Report and Accounts for the year-ended 31st December 2004.

• To approve the Report on Remuneration for the year-ended 31st December 2004.

• To re-elect the following Directors:

– Sir Andrew Likierman;

– Leigh Clifford;

– Matthew W Barrett;

– John Varley;

– David Arculus;

– Sir Nigel Rudd.

• To reappoint PricewaterhouseCoopers LLP as auditors of the Company.

• To authorise the Directors to set the remuneration of the auditors.

• To authorise the creation of a new Performance Share Plan (PSP).

• To authorise the Directors to establish supplements or appendices to the PSP.

• To authorise the Directors to allot securities.

Special Resolutions

• To authorise the Directors to allot securities for cash other than on a pro-rata basis to shareholders and to sell treasury shares.

• To authorise the Directors to repurchase shares.

Signed on behalf of the Board

Matthew W Barrett
Chairman

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Barclays PLC Annual Report 2004 

Corporate governance
Barclays report on remuneration

Statement from the Chairman of the Board HR and Remuneration Committee (the Committee)

All members of the Committee are independent non-executive Directors. The primary purpose of the Committee is to determine the Group’s policy on the remuneration of executive Directors and their specific remuneration packages.

The Committee also determines the aggregate level of bonus and inacentive funding throughout the Group. This includes setting the framework for reward in Barclays Capital and Barclays Global Investors, and approving their aggregate levels of bonus and incentive expenditure, and strategic investment expenditure on new hires.

The Committee undertakes a periodic review of strategic human resources matters. This includes succession for senior roles below Board level, the longer term availability of talent within the Group, equality and diversity policy and key employee relations issues.

This report details the current components of the remuneration policy and details the remuneration for each person who served as a Director during 2004.

• Executive Directors’ bonuses for 2004 reflect very strong corporate performance for the year. Group profit before tax and Group economic profit (EP)¹ are 20% and 32% higher than in 2003.

• The Committee compares Barclays total shareholder return (TSR) with a peer group of eleven other major banks, and also against the FTSE 100 Index. Barclays TSR for 2004 was 23%, which was higher than both the average for the peer group and the FTSE 100 index. 2004 was the first year of a four-year performance cycle, a period during which the primary goal is to deliver top quartile TSR relative to peers. Barclays was ranked first for 2004.

• The main performance condition for executive Directors in the Incentive Share Option Plan (the ISOP) is TSR relative to a peer group of eleven other major banks. This performance condition is very challenging. The maximum number of shares under option vests only if Barclays is ranked first in the peer group. The 2001 grant under the ISOP vested in 2004. Barclays was ranked fourth of the twelve banks over the three-year period. This performance was sufficient for 25% of the maximum number of shares under the TSR condition to vest. The other 75% lapsed.

• As shown in the table on page 25, the executive Directors each have a personal interest in Barclays shares, through shares they own, and shares and options held in employee share plans on their behalf. A significant proportion of annual bonus is made up of an award over Barclays shares deferred for a period of at least three years.

The Committee unanimously recommends that you vote to approve this report at the AGM.

Signed on behalf of the Board

Sir Nigel Rudd
Board HR and Remuneration Committee Chairman

Notes

1	Economic profit (EP) is defined as gains (and losses) reported within gains and losses where they arise in respect of transactions with shareholders’ funds (which includes purchased goodwill)
2	Towers Perrin, Mercer Human given their written consent to the and context in which they appear.

Board HR and Remuneration Committee Members

The Committee comprised the following independent non-executive Directors:

Sir Nigel Rudd, Chairman
David Arculus
Sir Richard Broadbent^(a)
Sir Brian Jenkins^(b)

Notes

(a)	Sir Richard Broadbent joined the Board on 1st September 2003 and the Committee on 1st April 2004.
(b)	Sir Brian Jenkins ceased to be a member of both the Board and the Committee on 1st September 2004.

The Committee members are considered by the Board to be independent of management and free from any business or other relationship which could materially affect the exercise of their independent judgement.

The constitution and operation of the Committee comply with the Best Practice Provisions on Directors’ Remuneration in the Combined Code adopted by the UK Listing Authority.

Advisers to the Committee

The Committee has access to executive remuneration consultants to ensure that it receives independent advice. The selection of advisers is entirely at the discretion of the Committee Chairman. Advisers are appointed by the Committee for specific pieces of work, as necessary, and are required to disclose to the Committee any potential conflict of interest.

During the year Towers Perrin, Mercer Human Resource Consulting and Kepler Associates² advised the Committee on general remuneration matters. Towers Perrin and Mercer Human Resource Consulting companies have advised the Company on other human resource related issues including advice in such areas as employee reward, pensions and employee communication. In addition, Towers Perrin gave actuarial and other advice to the Barclays UK life assurance companies and Barclays Private Clients.

The Chairman of the Board, the Group Chief Executive, the Human Resources Director and, as necessary, members of the Group Executive Committee, also advise the Committee. They are not permitted to participate in discussions or decisions relating to their own remuneration. The Human Resources Director is responsible for providing professional support to line management in HR policy and administration and for monitoring compliance with prescribed policy and programmes across Barclays. The Human Resources Director is not a Board Director, and is not appointed by the Committee.

Our Remuneration Policy

We are committed to using reward to support a high-performance culture. Executive Directors can expect outstanding reward if performance is outstanding and below median reward for below median performance. This philosophy applies to reward policies and practices for all employees in the Group. The Committee considers reward levels across the Group when determining remuneration for executive Directors.

Barclays remuneration policy is as follows:

• to incentivise excellence and balance in both short term (one year) and longer term (three year plus) performance such that the primary goal of achieving top quartile TSR is met and sustained;

13

Corporate governance
Barclays report on remuneration

• to enable the Group to attract and retain people of proven ability, experience and skills in the pools in which we compete for talent;

• to encourage behaviours which lead to excellence and appropriate balance in: financial performance, governance and controls, customer service, human resource management, brand and reputation management, and risk management;

• to promote attention to maximising personal contribution, contribution to the business in which the individuals work, and contribution to the Group overall; and

• to ensure, both internally and externally, that remuneration policies and programmes are transparent, well communicated, easily understood and serve well the interests of shareholders.

Barclays reward programmes are designed to support and facilitate generation of TSR. The graph below shows the TSR for the FTSE 100 Index and Barclays since 31st December 1999. The FTSE 100 Index is the index of the hundred largest UK quoted companies by market capitalisation. It is a widely recognised performance comparison for large UK companies. It shows that, by the end of 2004, a hypothetical £100 invested in Barclays on 31st December 1999 would have generated a total return of £58, compared with a loss of nearly £20 if invested in the FTSE 100 Index. Barclays therefore significantly outperformed the FTSE 100 Index for this period.

This graph shows the value, by 31st December 2004, of £100 invested in Barclays on 31st December 1999 compared with the value of £100 invested in the FTSE 100 Index. The other points plotted are the values at intervening financial year-ends. TSR above is calculated on a net dividend reinvestment basis.

Note

The Directors’ Remuneration Report Regulations 2002 require that the graph shows TSR for the five years ending with the relevant financial year.

The Reward Package for executive Directors

The reward package for the executive Directors and other senior executives comprised:

• base salary;

• annual bonus including the Executive Share Award Scheme (ESAS);

• the Incentive Share Option Plan (ISOP); and

• pension and other benefits.

All the executive Directors met a Committee guideline that they should hold the equivalent of 1x their base salary in Barclays shares, including shares held on their behalf in ESAS.

The Committee reviews the elements of the reward package relative to the practice of other comparable organisations. Reward is benchmarked against the markets in which Barclays competes for talent.

This includes benchmarking against other leading international banks and financial services organisations, and other companies of similar size to Barclays in the FTSE 100 Index.

The sections that follow explain how each of the elements of remuneration listed above is structured. Each part of the package is important and has a specific role in achieving the aims of the remuneration policy. The combined potential earnings from bonus and ISOP outweigh the other elements, and are subject to performance conditions, thereby placing a large proportion of total reward at risk. The component parts for each Director are detailed in tables accompanying this Report.

Base Salary

This is a fixed cash sum, payable monthly. The Committee reviews salaries each year as part of the total reward package, recognising market levels and individual contribution.

The annual base salaries for the Chairman and the current executive Directors are shown in the table below:

	As at 1st Jan 2004		As at 1st Jan 2005
MW Barrett	£	1,100,000	£	650,000
JS Varley(a)	£	700,000	£	850,000
RJ Davis	£	500,000	£	500,000
GA Hoffman	£	500,000	£	500,000
N Kheraj	£	500,000	£	500,000
DL Roberts	£	500,000	£	500,000

Note

(a) John Varley’s base salary increased from £700,000 to £850,000 on 1st September 2004.

Annual Bonus Including Executive Share Award Scheme (ESAS)

The 2004 annual bonuses for executive Directors were linked to Group EP performance and individual performance. Group EP was more than 30% above the level for 2003, which contributed to bonuses being paid towards the top end of the range for 2004. For 2004, the maximum bonus opportunity for outstanding performance was 187.5% of base salary in cash and a further 62.5% in deferred shares. Cash bonuses for current executive Directors for 2004 performance were 154% of base salary as at 31st December 2004 for Mr Varley, and between 150% and 187.5% of base salary for the other current Directors.

The shares element of the annual bonus referred to above must be held for at least three years and is subject to potential forfeit if the individual resigns and commences employment with a competitor business.

Matthew W Barrett’s bonus for 2004 takes account of his former role as Group Chief Executive up to and including 31st August 2004. Mr Barrett is not eligible for a bonus for the performance year starting 1st January 2005.

Incentive Share Option Plan (ISOP)

The ISOP is designed to provide the opportunity for executive Directors and senior managers to receive rewards for creating sustained shareholder value growth. Participants are granted options over Barclays PLC ordinary shares, which are normally exercisable after three years at the market price at the time of grant. The number of shares over which options can be exercised depends upon Barclays performance against specific targets. In establishing the performance targets, the Committee has sought to encourage excellent business

14

Barclays PLC Annual Report 2004 

performance. For the 2000, 2001, 2002 and 2003 ISOP grants, the performance metrics were TSR and EP growth. The measure of performance used for the 2004 grant was TSR, which is a good measure of the value created for shareholders. The awards are also subject to an underlying financial health condition, that EP for the relevant period is more than for the previous three-year period.

The Committee agrees a level of ISOP award for each executive Director, taking account of market practice for comparable positions and performance. The maximum annual target award under the ISOP is 200% of remuneration; however, target awards granted to Directors in 2004 were well below this level at 70% to 82% of base salary. Mr Barrett did not receive a grant of ISOP in 2004, and will not be eligible for awards of this kind as Chairman.

A proposed new long-term incentive plan has been submitted to shareholders for approval at the AGM on 28th April 2005. Details of the new Plan are included in the Notice of Meeting which has been posted to shareholders with their Report. It can be accessed via the Company’s website at www.investorrelations.barclays.co.uk. Awards made in 2004 were made under the existing ISOP Plan.

ISOP Total Shareholder Return, Performance Condition

A proportion of the shares under option are subject to a challenging performance condition based on TSR measured against a financial services peer group approved by the Committee. This peer group comprises eleven other leading UK and international financial institutions that have been chosen to reflect Barclays business mix. For the performance period 2004 to 2006, the peer group is ABN Amro, BBVA, BNP Paribas, Citigroup, Deutsche Bank, HBOS, HSBC, Lloyds TSB, Royal Bank of Scotland, JP Morgan Chase and UBS.

Performance achieved in the TSR	Number of shares
ranking scale out of 12 financial	under option that
institutions including Barclays	become exercisable
1st place	4 x Target Award
2nd place	3 x Target Award
3rd place	2 x Target Award
4th – 6th place	1 x Target Award
7th – 12th place	Zero
If Barclays is ranked below sixth after three years, the performance condition requires there will be a re-test on the fourth anniversary, over the full four- year period. If Barclays is not ranked sixth or higher after four years, the options will lapse. For ISOP, TSR is calculated on a net dividend reinvestment basis. The re-test provision will not be included in the new Performance Share Plan for which we are seeking shareholder approval at the 2005 AGM in April.

Note

Under the TSR condition, the ability to exercise is also subject to the condition that EP for the three-year performance period is greater than the previous performance period.

For the 2001 grant of ISOP, which vested during 2004, Barclays relative TSR performance ranking was fourth, which provided a vesting of 1x target award. Therefore, 75% of the options granted under the TSR condition, which would have vested had Barclays been ranked first, lapsed. Options must normally be held for three years before they can be exercised and lapse ten years after grant if not exercised.

Sharesave

All eligible employees including executive Directors have the opportunity to participate in the Barclays Sharesave Scheme. Sharesave is an Inland Revenue approved all-employee share plan. The Inland Revenue does not permit performance conditions to be attached to the exercise of options. Under the plan, participants are granted options over Barclays PLC ordinary shares. Each participant may save up to £250 per month to purchase Barclays shares at a discount. For the 2004 grant, the discount was 20% of the market value at the time the option was granted.

Sharepurchase (previously named Share Incentive Plan)

Sharepurchase was introduced in January 2002. It is an Inland Revenue approved all-employee share plan. The plan is open to all eligible UK employees, including executive Directors. Under the plan, participants are able to purchase up to £1,500 worth of Barclays PLC ordinary shares per tax year, which, if kept in trust for five years, can be withdrawn from the plan tax-free. Any shares in the plan will earn dividends in the form of additional shares, which must normally be held by the trustee for three years before being eligible for release.

Employee Benefits Trust (EBT)

The shares provided to employees in the ESAS are held in an EBT. The trustees of the Barclays EBT have informed Barclays that their normal policy is to abstain in any shareholder voting, in respect of the Barclays shares held in trust.

Pensions

A pension is payable on retirement at contractual retirement date (normally 60), and is calculated either by reference to an executive Director’s length of service and pensionable salary or to a money purchase arrangement, depending upon date of hire. Pensionable pay comprises base salary only. Matthew W Barrett is not a member of the Group’s main pension schemes. A notional fund has accrued on his behalf outside the pension scheme (see page 18 for further details).

John Varley is a member of a closed non-contributory pension scheme and his contract provides for a pension of 60% of pensionable salary without reduction for early retirement if he retires at age 55 with 28 years of service and two-thirds of pensionable salary at age 60 with 33 years of service.

Service Contracts

The Group has service contracts with its Chairman, executive Directors and senior executives. The effective dates of the contracts for the Chairman and executive Directors who served during 2004 are shown in the table on page 16. The service contracts do not have a fixed term but provide for a notice period from the Group of one year and normally for retirement at age 60. The Committee’s policy is that executive Directors’ contracts should allow for termination with contractual notice from the Company, except in circumstances of gross misconduct when notice is not given.

The Committee’s approach when considering payments in the event of termination is to take account of the individual circumstances including the reason for termination, contractual obligations and share plan rules.

15

Corporate governance
Barclays report on remuneration

				Potential
	Effective		Normal	compensation
	date	Notice	retirement	for loss
Directors(a)	of contract	period	date	of office
				1 year’s
				contractual
MW Barrett(b)	1st Sep 2004	1 year	n/a	remuneration
JS Varley	1st Sep 2004	1 year	31st Mar 2016	”
RJ Davis	1st Jan 2004	1 year	3rd Jun 2016	”
GA Hoffman	1st Jan 2004	1 year	20th Oct 2020	”
N Kheraj	1st Jan 2004	1 year	14th Jul 2024	”
DL Roberts	1st Jan 2004	1 year	11th Sep 2022	”
Former Directors
Sir Peter Middleton(c)	1st May 1999	1 year	n/a	–
CJ Lendrum	15th Jun 1992	1 year	n/a	–

Notes

(a)	Details of executive Directors standing for re-election at the 2005 AGM are set out on page 5.
(b)	There is no formal retirement date under Mr Barrett’s contract.
(c)	Sir Peter Middleton’s service contract did not provide for a retirement date.

Barclays Capital and Barclays Global Investors

The Committee has established frameworks for the governance and control of compensation in these businesses. Ranges have been set for key financial and compensation ratios such as operating costs to net revenue, compensation to pre-compensation Profit Before Tax and bonus expenditure as a percentage of pre-bonus profits. The Committee approves aggregate bonus and long-term incentive expenditure, and strategic investment on new hires, in these businesses, taking account of these agreed ratios. The Committee also approves individual compensation for the members of the management teams in these businesses.

Non-executive Directors

The Board determines the fees of non-executive Directors, which are reviewed annually.

The basic fee for a non-Executive Director is £50,000 p.a. with an additional £15,000 p.a. paid to members of the following committees: Board Audit, Board Risk, Board HR and Remuneration, and Board Corporate Governance and Nominations. The Chairmen of the Board Risk and the Board Audit Committees receive £25,000 p.a.. As Senior Independent Director, Sir Richard Broadbent receives an additional fee of £25,000 p.a.. As Deputy Chairman, Sir Nigel Rudd receives £150,000 p.a. without any additional fee for chairing the Board HR and Remuneration Committee or membership of the Board Corporate Governance and Nominations Committee. Similarly, as Chairman, Matthew W Barrett receives a salary of £650,000 p.a. from 1st January 2005, without any additional fee for chairing the Board Corporate Governance and Nominations Committee.

The Board’s policy is that fees should reflect individual responsibilities and membership of Board Committees. Barclays encourages its non-executive Directors to build up a holding in the Company’s shares. £20,000 of each Director’s basic fee of £50,000 is used to buy shares in the Company. These shares, together with reinvested dividends, are retained on behalf of the non-executive Directors until they retire from

the Board. They are included in the table of Directors’ interests in ordinary shares of Barclays PLC on page 25. Non-executive Directors do not receive awards in share or share option plans for employees, nor do they accrue pension benefits from Barclays for their non-executive services.

Non-executive Directors do not have service contracts. For each non-executive Director, the effective date of their appointment, notice period and the Group’s liability in the event of early termination are shown in the table below:

			Group
			liability in the
Non-executive	Appointment	Notice	event of early
Directors	date	period	termination
TDG Arculus	1st Feb 1997	6 months	6 months’ fees
Sir Richard Broadbent	1st Sep 2003	”	”
RL Clifford	1st Oct 2004	”	”
Professor Dame Sandra Dawson	1st Mar 2003	”	”
Sir Andrew Likierman	1st Sep 2004	”	”
Sir Nigel Rudd	1st Feb 1996	”	”
SG Russell	25th Oct 2000	”	”
Dr Jürgen Zech	30th Jul 2002	”	”
Former Directors Dame Hilary Cropper	1st Jun 1998	”	–
Sir Brian Jenkins	25th Oct 2000	”	–

Each appointment is for an initial six-year term, renewable for a single term of three years thereafter. Details of non-executive Directors standing for re-election at the 2005 AGM are set out on page 5.

Future Policy

The Committee intends to continue to review the existing remuneration arrangements, as detailed in this Report during 2005 and will seek to ensure that Barclays reward programmes remain competitive and provide appropriate incentive to perform. As usual, there will be individual reviews of base salary, annual bonus (including ESAS) and awards under the long-term incentive plans.

Mr Barrett’s base salary from 1st January 2005 has been reduced to £650,000 p.a.. He will not be eligible for any performance bonus in respect of the 2005 performance year. He will also not be eligible for pension accrual or long-term incentive awards. Mr Varley’s base salary from 1st September 2004 is £850,000 p.a. reflecting his role as Group Chief Executive from that date.

A proposal has been submitted to shareholders to seek approval for a new long-term incentive plan for Directors and other senior leaders effective from 2005. The new plan is designed to drive outstanding relative TSR performance. It includes performance shares rather than share options. There is no performance condition re-test in the new plan.

Audited Information

As required by Part 3 of Schedule 7A of the Companies Act 1985, the Group’s auditors, PricewaterhouseCoopers LLP, have audited the information contained on pages 17 to 24.

16

Barclays PLC Annual Report 2004 

2004 Annual Remuneration^(a)(n)

														Executive Share
			Pay in					Annual						Award Scheme
	Salary		lieu of					cash		2004		2003		ESAS(c)
	and fees		notice		Benefits		(b)(f)		bonus	Total		Total		2004		2003
	£000		£000		£000			£000		£000		£000		£000		£000
Chairman
MW Barrett(d)(e)		1,100		–		77			1,650		2,827		3,088		715		831
Executive Directors
JS Varley(e)		750		–		11			1,313		2,074		905		569		184
RJ Davis		500		–		12			825		1,337		–		358		–
GA Hoffman(e)		500		–		10			825		1,335		–		358		–
N Kheraj(e)(f)		500		–		125			938		1,563		–		406		–
DL Roberts		500		–		10			769		1,279		–		333		–
Non-executive Directors(g)
TDG Arculus		68		–		–			–		68		58		–		–
Sir Richard Broadbent		83		–		–			–		83		17		–		–
RL Clifford(h)		13		–		–			–		13		–		–		–
Professor Dame Sandra Dawson		62		–		–			–		62		44		–		–
Sir Andrew Likierman(i)		26		–		–			–		26		–		–		–
Sir Nigel Rudd		98		–		–			–		98		62		–		–
SG Russell		93		–		–			–		93		77		–		–
Dr Jürgen Zech		62		–		–			–		62		57		–		–
Former Directors
Sir Peter Middleton(j)		550		–		16			–		566		566		–		–
CJ Lendrum(k)		425		433		10			900		1,768		868		–		–
Dame Hilary Cropper(l)		62		–		–			–		62		57		–		–
Sir Brian Jenkins(m)		100		–		–			–		100		144		–		–

Notes

(a)	Emoluments include amounts, if any, payable by Barclays subsidiary undertakings.
(b)	The Chairman and executive Directors receive benefits in kind, which may include life cover, the use of a Company owned vehicle or cash equivalent, medical insurance and tax advice, on similar terms to other senior executives.
(c)	The amounts shown for ESAS represent payments which are expected to be made by the trustee to fund the provisional allocation of shares in 2005, in respect of 2004 performance, including a maximum potential 30% bonus share element, which is added to the award in two parts: 20% after three years, 10% after five years.
(d)	Matthew W Barrett’s remuneration reflects his role as Group Chief Executive up to and including 31st August 2004.
(e)	Matthew W Barrett is a member of the Advisory Committee, Federal Reserve Bank of New York, and receives no fee in respect of this position. John Varley is a Director of Ascot Authority (Holdings) Limited and British Grolux Investments Limited, for which he receives fees of £24,565 and £6,000 respectively. Gary Hoffman is a Director of Visa (Europe) Limited, for which he receives no fee. Naguib Kheraj is a member of the Board of Governors of the Institute of Ismaili Studies, for which he receives no fee.
(f)	Benefits for Naguib Kheraj included a cash allowance of 23% of base salary (£115,000) in lieu of pension contributions.
(g)	Fees to non-executive Directors included an amount of not less than £20,000 per annum which, after tax, is used to buy Barclays PLC ordinary shares for each non-executive Director.
(h)	Richard Leigh Clifford was appointed as a non-executive Director on 1st October 2004.
(i)	Sir Andrew Likierman was appointed as a non-executive Director on 1st September 2004.
(j)	Sir Peter Middleton ceased to be Chairman with effect from 1st September 2004. However, his notice period ended on 31st December 2004 and he therefore received remuneration until that date. He received pension payments through the Barclays Bank UK Retirement Fund for 2004 of £74,000 (2003: £73,000). Details of the payment are not included in the table above since this is a pension in payment relating to his Barclays service prior to becoming Chairman.
(k)	Chris Lendrum ceased to be a Director on 31st December 2004. He received a payment in lieu of remuneration in the form of a pension contribution for the balance of his 12-month contractual notice period ending 24th June 2005, less £43,000 for services to Barclays to be undertaken in the period between 1st January and 24th June 2005. These services include Chairmanship of the Barclays Bank UK Retirement Fund.
(l)	Dame Hilary Cropper died on 26th December 2004.
(m)	Sir Brian Jenkins ceased to be a Director on 1st September 2004.
(n)	For those Directors who were appointed during the year and for those who ceased to be Directors during the year the remuneration shown relates to the period for which they were Directors.

17

Corporate governance
Barclays report on remuneration

Executive Directors’ annual pension accrued assuming retirement at contractual age^(d)(e)(h)(i)

							Pension					Transfer		Transfer
							accrued					value of		value of
					Accrued		during			Accrued		accrued		accrued		Increase in		Other
	Age				pension		2004			pension		pension		pension		transfer		contribu-
	at 31st				at 31st		(including			at 31st		at 31st		at 31st		value		tions
	December		Years		December		increase for			December		December		December		during		made in
	2004		of service		2003		inflation)			2004		2003		2004		the year		2004
					£000		£000		(a)	£000		£000		£000		£000		£000
Chairman
MW Barrett(b)		60		5		–		–			–		–		–		–		990
Executive Directors
JS Varley(c)		48		22		181		126			307		2,177		4,705		2,528		–
RJ Davis(f)		48		7		–		–			–		–		–		–		115
GA Hoffman(c)		44		22		140		45			185		1,410		1,488		78		–
N Kheraj(g)		40		7		–		–			–		–		–		–		–
DL Roberts(c)		42		21		133		44			177		1,250		1,295		45		–
Former Director
CJ Lendrum(e)		57		35		257		14			271		4,069		4,639		570		433

Notes

(a)	Pension accrued during the year represents the increase in accrued pension (including inflation at the prescribed rate of 3.1%) which occurred during the entire year. All pensions are reviewed annually, with a guaranteed increase in line with retail price inflation, up to a maximum of 5%.
(b)	Matthew W Barrett is not a member of the Group’s main pension schemes. A notional fund has been accrued on his behalf outside the pension scheme. In the event of Mr Barrett’s death before retirement, a capital sum of up to four times salary would be payable.
(c)	The Group has a closed non-contributory pension scheme, which provides that, in the case of death before retirement, a capital sum of up to four times salary is payable together with a spouse’s pension of approximately 50% of the member’s prospective pension at retirement. For death in retirement, a spouse’s pension of approximately 50% of the member’s pre-commutation pension is payable. If a member, granted a deferred pension, dies before their pension becomes payable, their widow/widower will immediately be paid a pension of 50% of their deferred pension. In all circumstances, children’s allowances are payable, usually up to the age of 18. Enhanced benefits are payable if a member is unable to continue to work as a result of serious ill health. Gary Hoffman and David Roberts are members of the closed non-contributory pension scheme with benefits of 1/60th of final pensionable salary per year of service. Their Normal Retirement Age is 60. John Varley is also a member of the closed non-contributory pension scheme and he is entitled to a pension of 60% of pensionable salary without reduction for early retirement if he retires from age 55 and two-thirds of pensionable salary at age 60.
(d)	The accrued pension amounts at the end of the year for Mr Hoffman, Mr Roberts and Mr Varley are the values if the Director left service on that date.
(e)	Chris Lendrum ceased to be a Director on 31st December 2004. The accrued pension was the value at this date. He accrued benefits in the closed non-contributory Pension Scheme.
(f)	Roger Davis is a member of the Group hybrid scheme. He receives a money purchase contribution of 23% of his salary to this arrangement.
(g)	Naguib Kheraj received a cash allowance of 23% of salary, in lieu of pension contributions.
(h)	The transfer values have been calculated in a manner consistent with ‘Retirement Benefit Schemes – Transfer Values (GNII)’ published by the Institute of Actuaries and the Faculty of Actuaries.
(i)	The tax simplification in the Finance Act 2004 will introduce new maximum limits on tax-approved pension benefits. The Committee’s policy is not to increase executive Directors’ benefits to mitigate changes in tax treatment.

18

Barclays PLC Annual Report 2004 

Executive Directors: illustration of change in value of shares owned beneficially, or held under option or awarded under employee share plans during the year^(a)

	Number at 31st December 2004															Notional			Notional
				Executive			Executive		Incentive							value based			value based
	Shares			Share			Share		Share							on share			on share			Change in
	owned			Award			Option		Option							price of			price of			notional
	beneficially		(b)	Scheme		(c)	Scheme		Plan		(d)	Sharesave		Total		£4.98		(e)	£5.86		(f)	value
																£000			£000			£000
Chairman
MW Barrett		289,242			293,460			766,628		2,832,000			2,479		4,183,809		3,880			7,006			3,127
Executive Directors
JS Varley		338,451			139,695			–		880,000			4,096		1,362,242		2,904			4,041			1,136
RJ Davis		3,156			587,682			–		440,000			2,714		1,033,552		3,185			4,056			870
GA Hoffman		168,240			436,586			–		700,000			6,874		1,311,700		3,475			4,574			1,099
N Kheraj		2,238			868,622			60,000		480,000			10,319		1,421,179		4,655			5,863			1,207
DL Roberts		67,368			288,717			–		480,000			4,483		840,568		2,018			2,710			692
Former Director
CJ Lendrum(g)		239,373			81,712			–		340,000			2,714		663,799		1,809			2,331			522

Notes

(a)	The register of Directors’ interests, which shows full details of Directors’ current share awards and options, is available for public inspection at the Group’s Head office in London.
(b)	The number shown includes shares held under Sharepurchase.
(c)	Executive Share Award Scheme includes the maximum potential 30% bonus share element, which is added to the award in two parts: 20% after three years, 10% after five years.
(d)	The number of shares shown represent the target award shares under option, or the actual number of shares under option if the award has vested.
(e)	The value is based on the share price as at 31st December 2003. In the case of share options, the value is the ‘in-the-money’ value. The notional value of shares under option under the Incentive Share Option Plan (ISOP), Executive Share Option Scheme (ESOS) and Sharesave have been set at zero where the market price at 31st December 2003 is lower than the exercise price per share.
(f)	The value is based on the share price as at 31st December 2004. In the case of share options, the value is the ‘in-the-money’ value. The notional value of shares under option under ISOP, ESOS and Sharesave have been set at zero where the market price at 31st December 2004 is lower than the exercise price per share.
(g)	Chris Lendrum ceased to be a Director on 31st December 2004.

Market price per share at 31st December 2004 was 586p. The highest and lowest market prices per share during the year were 586p and 443p respectively. Under the Executive Share Award Scheme (ESAS), ISOP and ESOS, nothing was paid by these participants on the grant of options.

19

Corporate governance
Barclays report on remuneration

Executive Directors: shares provisionally allocated and shares under option under Executive Share Award Scheme (ESAS)^(a)

During 2004

Awarded in

Market

Market

Number

Number at

respect of

price at

price

Bonus

at 31st

1st January

the results

release

at exercise

shares

December

2004

for 2003

Released(b)

date £

Exercised(c)

date £

lapsed

2004

Chairman

MW Barrett

245,949

169,327

–

–

66,932

4.92

5,576

293,460

45,516

4.75

3,792

Executive Directors

JS Varley

139,838

37,493

37,636

4.87

–

–

–

139,695

RJ Davis(d)

587,682

–

–

–

–

–

–

587,682

GA Hoffman(d)

309,414

–

9,412

4.87

–

–

–

300,002

N Kheraj(d)

868,622

–

–

–

–

–

–

868,622

DL Roberts(d)

294,665

–

5,948

4.87

–

–

–

288,717

Former Director

CJ Lendrum

100,532

–

18,820

4.87

–

–

–

81,712

	Nil cost		Nil cost						Awarded in
	option		option		Date				2005 in
	granted		held under		from		Latest		respect of
	at 3rd		voluntary		which		expiry		the results
	anniversary(e)		ESAS(f)		exercisable		date		for 2004(g)
Chairman
MW Barrett		–		–		–		–		120,982
Executive Directors
JS Varley		46,304		–		25/02/03		23/02/06		96,235
RJ Davis		225,052		–		25/02/03		23/02/06		60,490
GA Hoffman		29,418		136,584		26/02/99		04/03/14		60,490
N Kheraj		–		–		–		–		68,739
DL Roberts		18,368		–		25/02/03		23/02/06		56,367
Former Director
CJ Lendrum		38,432		–		25/02/03		28/02/06		–

Notes

(a)	ESAS is a deferred share award plan in which awards are initially granted in the form of a provisional allocation and do not give rise to any entitlement to the shares. These awards were granted in the years 2000 to 2004, and include mandatory bonus deferrals. For mandatory bonus deferrals under ESAS, the size of any award is subject to the same Group and individual performance criteria as the annual bonus. Normally, the trustees will permit the executive to call for the shares from the end of the third year from grant of an award by granting a right to acquire shares (a nil cost option) exercisable for two years. As this nil cost option is part of the structure of an ESAS award described above, which is a deferred share award plan, it would not be appropriate to attach a performance condition to the exercise of options. If the right is not exercised, the trustees, may at the end of the fifth year, release all of the shares, including bonus shares equal to 30% of the basic award. If the right is exercised, an executive may lose the opportunity of receiving one-third of the bonus shares. The number of shares shown in the table includes the bonus shares where applicable.
(b)	The trustees may release additional shares to participants which represent accumulated net dividends in respect of shares under award. During 2004, the trustees released the following accumulated dividend shares – 5,994 to John Varley, 1,501 to Gary Hoffman, 945 to David Roberts and 2,997 to Chris Lendrum. These are not awarded as part of the original award and consequently are not included in the Released column.
(c)	The trustees may release additional shares to participants which represent accumulated net dividends in respect of shares under award. During 2004, the trustees released the following accumulated dividend shares – 13,996 to Matthew W Barrett. These are not included as part of the original award and consequently are not included in the Exercised column.
(d)	The number shown on 1st January 2004 includes those shares provisionally allocated in respect of performance for 2003, for those individuals who were not Directors in 2003.
(e)	The shares under option shown in this column are already included in the numbers shown at 1st January 2004 and relate to provisional allocations made in 2000 and 2001 except that the figures do not include accumulated dividend shares under option as follows: 3,740 shares for John Varley, 18,363 shares for Roger Davis, 2,550 shares for Gary Hoffman, 1,516 shares for David Roberts and 3,182 for Chris Lendrum. Under ESAS, a participant pays £1 to exercise an option, irrespective of the number of shares involved.
(f)	The shares under option in this column are not included in the numbers shown at 1st January 2004. Voluntary ESAS is an additional award under ESAS following a Director requesting that part of the cash bonus to which he would otherwise become entitled be waived, and is granted as a right to acquire shares which will become fully exercisable after five years.
(g)	The awards in respect of 2004 were made in February 2005. The shares awarded represent shares purchased by the trustees after 10th February 2005 at £5.91 in respect of a recommendation by the Company for an award, including a maximum potential 30% bonus shares, of £715,000 to Matthew W Barrett, £357,500 to Roger Davis, £357,500 to Gary Hoffman, £406,250 to Naguib Kheraj, £333,125 to David Roberts and £568,750 to John Varley.

20

Barclays PLC Annual Report 2004 

Executive Directors: shares under option under Incentive Share Option Plan (ISOP)^(a)(b)(c)

Number held as at

During the year

Number held as at

1st January 2004

Granted

Exercised

Lapsed

31st December 2004

Maximum

Maximum

Maximum

Maximum

number

number

Market

number

number

Shares

Date

Target

over which

Target

over which

Number

price at

Target

over which

Target

over which

due to

Exercise

from

Award

potentially

Award

potentially

of shares

exercise

Award

potentially

Award

potentially

vest in

price per

which

Expiry

Shares

exercisable

Shares

exercisable

exercised

date

Shares

exercisable

Shares

exercisable

2005(b)

share

exercisable

date

000

000

000

000

000

£

000

000

000

000

£

Chairman

MW Barrett

2002

EP

40

80

–

–

–

–

–

–

40

80

40

5.20

20/03/05

19/03/12

TSR

1,960

7,840

–

–

–

–

–

–

1,960

7,840

1,960

5.20

20/03/05

19/03/12

2001

EP

40

80

–

–

–

–

20

60

–

20

–

5.34

12/03/04

11/03/11

TSR

300

1,200

–

–

–

–

–

900

–

300

–

5.34

12/03/04

11/03/11

2000

EP

–

80

–

–

–

–

–

–

–

80

–

3.90

18/05/03

17/05/10

TSR

–

432

–

–

–

–

–

–

–

432

–

3.90

18/05/03

17/05/10

Executive Directors

JS Varley

2004

TSR

–

–

300

1,200

–

–

–

–

300

1,200

–

4.80

23/03/07

22/03/14

2003

EP

40

80

–

–

–

–

–

–

40

80

–

3.26

14/03/06

13/03/13

TSR

80

320

–

–

–

–

–

–

80

320

–

3.26

14/03/06

13/03/13

2002

EP

40

80

–

–

–

–

–

–

40

80

40

5.20

20/03/05

19/03/12

TSR

80

320

–

–

–

–

–

–

80

320

80

5.20

20/03/05

19/03/12

2001

EP

40

80

–

–

–

–

20

60

–

20

–

5.34

12/03/04

11/03/11

TSR

80

320

–

–

–

–

–

240

–

80

–

5.34

12/03/04

11/03/11

2000

EP

–

80

–

–

–

–

–

–

–

80

–

3.90

18/05/03

17/05/10

TSR

–

160

–

–

–

–

–

–

–

160

–

3.90

18/05/03

17/05/10

RJ Davis

2004

TSR

–

–

180

720

–

–

–

–

180

720

–

4.80

23/03/07

22/03/14

2003

EP

40

80

–

–

–

–

–

–

40

80

–

3.26

14/03/06

13/03/13

TSR

80

320

–

–

–

–

–

–

80

320

–

3.26

14/03/06

13/03/13

2002

EP

40

80

–

–

–

–

–

–

40

80

40

5.20

20/03/05

19/03/12

TSR

40

160

–

–

–

–

–

–

40

160

40

5.20

20/03/05

19/03/12

2001

EP

40

80

–

–

–

–

20

60

–

20

–

5.34

12/03/04

11/03/11

TSR

40

160

–

–

–

–

–

120

–

40

–

5.34

12/03/04

11/03/11

GA Hoffman

2004

TSR

–

–

180

720

–

–

–

–

180

720

–

4.80

23/03/07

22/03/14

2003

EP

40

80

–

–

–

–

–

–

40

80

–

3.26

14/03/06

13/03/13

TSR

80

320

–

–

–

–

–

–

80

320

–

3.26

14/03/06

13/03/13

2002

EP

40

80

–

–

–

–

–

–

40

80

40

5.20

20/03/05

19/03/12

TSR

80

320

–

–

–

–

–

–

80

320

80

5.20

20/03/05

19/03/12

2001

EP

40

80

–

–

–

–

20

60

–

20

–

5.34

12/03/04

11/03/11

TSR

60

240

–

–

–

–

–

180

–

60

–

5.34

12/03/04

11/03/11

2000

EP

–

80

–

–

–

–

–

–

–

80

–

3.90

18/05/03

17/05/10

TSR

–

120

–

–

–

–

–

–

–

120

–

3.90

18/05/03

17/05/10

21

Corporate governance
Barclays report on remuneration

Executive Directors: shares under option under Incentive Share Option Plan (ISOP)^(a)(b)(c) (continued)

Number held as at

During the year

Number held as at

1st January 2004

Granted

Exercised

Lapsed

31st December 2004

Maximum

Maximum

Maximum

Maximum

number

number

Market

number

number

Shares

Date

Target

over which

Target

over which

Number

price at

Target

over which

Target

over which

due to

Exercise

from

Award

potentially

Award

potentially

of shares

exercise

Award

potentially

Award

potentially

vest in

price per

which

Expiry

Shares

exercisable

Shares

exercisable

exercised

date

Shares

exercisable

Shares

exercisable

2005(b)

share

exercisable

date

000

000

000

000

000

£

000

000

000

000

£

N Kheraj

2004

TSR

–

–

200

800

–

–

–

–

200

800

–

4.80

23/03/07

22/03/14

2003

EP

40

80

–

–

–

–

–

–

40

80

–

3.26

14/03/06

13/03/13

TSR

80

320

–

–

–

–

–

–

80

320

–

3.26

14/03/06

13/03/13

2002

EP

40

80

–

–

–

–

–

–

40

80

40

5.20

20/03/05

19/03/12

TSR

60

240

–

–

–

–

–

–

60

240

60

5.20

20/03/05

19/03/12

2001

EP

40

80

–

–

–

–

20

60

–

20

–

5.34

12/03/04

11/03/11

TSR

40

160

–

–

–

–

–

120

–

40

–

5.34

12/03/04

11/03/11

DL Roberts

2004

TSR

–

–

180

720

–

–

–

–

180

720

–

4.80

23/03/07

22/03/14

2003

EP

40

80

–

–

–

–

–

–

40

80

–

3.26

14/03/06

13/03/13

TSR

80

320

–

–

–

–

–

–

80

320

–

3.26

14/03/06

13/03/13

2002

EP

40

80

–

–

–

–

–

–

40

80

40

5.20

20/03/05

19/03/12

TSR

80

320

–

–

–

–

–

–

80

320

80

5.20

20/03/05

19/03/12

2001

EP

40

80

–

–

–

–

20

60

–

20

–

5.34

12/03/04

11/03/11

TSR

40

160

–

–

–

–

–

120

–

40

–

5.34

12/03/04

11/03/11

Former Director

CJ Lendrum(d)

2003

EP

40

80

–

–

–

–

–

–

40

80

–

3.26

14/03/06

13/03/13

TSR

80

320

–

–

–

–

–

–

80

320

–

3.26

14/03/06

13/03/13

2002

EP

40

80

–

–

–

–

–

–

40

80

40

5.20

20/03/05

19/03/12

TSR

80

320

–

–

–

–

–

–

80

320

80

5.20

20/03/05

19/03/12

2001

EP

40

80

–

–

–

–

20

60

–

20

–

5.34

12/03/04

11/03/11

TSR

80

320

–

–

–

–

–

240

–

80

–

5.34

12/03/04

11/03/11

2000

EP

–

80

–

–

80

5.15

–

–

–

–

–

3.90

18/05/03

17/05/10

TSR

–

136

–

–

136

5.15

–

–

–

–

–

3.90

18/05/03

17/05/10

Notes

(a)	The Register of Directors’ interests, which shows full details of Directors’ current share awards and options, is available for inspection at the Group’s Head office in London.
(b)	The 2002 grant is due to vest on 20th March 2005. The number of shares due to vest represents the number over which an option may be exercised after the third anniversary from grant, as determined by the Committee in respect of the performance conditions attached to the options originally set at the time of the grant of the option. The shares under option that are not due to vest will lapse. The result of the economic profit performance against the target has resulted in the Target Award vesting. The result of the relative TSR performance target against the comparator group of companies placed Barclays in fourth position for the 2002 to 2004 performance period with a vesting multiplier of one times the Target Award.
(c)	Market price per share at 31st December 2004 was 586p. The highest and lowest market prices per share during the year were 586p and 443p respectively.
(d)	Chris Lendrum ceased to be a Director on 31st December 2004.

22

Barclays PLC Annual Report 2004 

Executive Directors: shares under option under Sharesave^(a)

During 2004

Information as at 31st December 2004

Number

Number

Weighted

Market

held at

at 31st

Exercise

average

price on

Date from

Latest

1st January

December

price per

exercise

date of

which

expiry

2004

Granted

Exercised

2004

share

price

exercise

exercisable

date

£

£

£

Executive

MW Barrett

2,479

–

–

2,479

–

3.73

–

01/11/06

30/04/07

Executive Directors

JS Varley

4,096

–

–

4,096

–

4.11

–

01/11/06

30/04/07

RJ Davis

2,714

–

–

2,714

–

3.50

–

01/11/05

30/04/06

GA Hoffman

5,736

1,138

–

6,874

–

3.76

–

01/11/05

30/04/12

N Kheraj

6,312

4,007

–

10,319

–

3.47

–

01/11/05

30/04/10

DL Roberts

4,626

801

944

4,483

3.56

3.68

5.42

01/11/04

30/04/10

Former Director

CJ Lendrum(b)

2,714

–

–

2,714

–

3.50

–

01/01/05

30/06/05

Notes

(a)	The Register of Directors’ interests, which shows full details of Directors’ current share awards and options, is available for inspection at the Group’s Head office in London.
(b)	Chris Lendrum ceased to be a Director on 31st December 2004.

23

Corporate governance
Barclays report on remuneration

Directors: awards under closed Group incentive schemes^(a)(d)

Number

Market

Weighted

Number at

at 31st

Exercise

price on

average

Date from

Latest

1st January

During the year(b)

December

price per

exercise

exercise

which

expiry

2004

Exercised

Lapsed

2004

share

date

price

exercisable

date

£

£

£

Chairman

MW Barrett(c)

ESOS

766,628

–

–

766,628

–

–

4.43

04/10/02

03/10/09

Executive Directors

GA Hoffman

ESOS

40,000

40,000

–

–

3.47

5.19

3.47

05/09/00

04/09/04

N Kheraj

ESOS

60,000

–

–

60,000

–

–

3.97

14/08/01

13/08/08

Notes

(a)	The register of Directors’ interests, which shows full details of Directors’ current share awards and options, is available for public inspection at the Group’s Head office in London.
(b)	No options were granted under these plans.
(c)	The independent trustee of the Barclays Group (ESOS) employees’ benefit trust granted Matthew W Barrett a share award in 1999 comprising an option on similar terms to options granted under ESOS. For convenience these are described as granted under ESOS in the above table.
(d)	Executive Directors continue to have interests under the ESOS scheme (as indicated in the table above). No further awards will be made under this scheme. Under the ESOS, options granted (at market value) to executives were exercisable only if the growth in earnings per share of the Company over a three-year period was, at least, equal to the percentage increase in the UK Retail Price Index plus 6%, over the same period. The performance target for the 1999 ESOS grant was met.

24

Barclays PLC Annual Report 2004 

Directors: interests in ordinary shares of Barclays PLC^(a)

	At 1st January 2004(b)				At 31st December 2004
			Non-				Non-
	Beneficial		beneficial		Beneficial		beneficial
Chairman
MW Barrett		277,656		–		289,242		–
Executive Directors
JS Varley(c)		303,735		–		338,451		–
RJ Davis		3,156		–		3,156		–
GA Hoffman(c)		126,444		–		168,240		–
N Kheraj		2,238		–		2,238		–
CJ Lendrum(d)		224,456		–		239,373		–
DL Roberts(c)		62,034		–		67,368		–
Non-executive Directors(e)
TDG Arculus		14,289		–		17,428		–
Sir Richard Broadbent		2,000		–		3,992		–
RL Clifford(f)		–		–		2,000		–
Professor Dame Sandra Dawson		2,808		–		5,460		–
Sir Andrew Likierman(g)		–		–		2,000		–
Sir Nigel Rudd		11,427		–		14,367		–
SG Russell		10,609		–		13,774		–
Dr Jürgen Zech		5,195		–		7,964		–

Notes

(a)	Beneficial interests in the table above represent shares held by Directors who were on the Board as at 31st December 2004, either directly or through a nominee, their spouse or children under 18. They include any interests held through the 1991 UK Profit Sharing Schemes (PSS) and Sharepurchase, but do not include any awards under ESAS, ISOP, PSP, ESOS and Sharesave schemes. At 31st December 2004, Matthew W Barrett and the executive Directors, together with other senior executives, were potential beneficiaries in respect of a total of 115,956,111 Barclays PLC ordinary shares (1st January 2004: 82,797,943) held by the trustees of the Barclays Group Employees’ Benefit Trusts. At 28th February 2005, a total of 148,391,046 shares were held by the trustees.
(b)	Or date appointed to the Board if later.
(c)	Between 31st December 2004 and 28th February 2005, 42 ordinary shares were purchased for each of John Varley, Gary Hoffman and David Roberts through Sharepurchase.
(d)	Chris Lendrum ceased to be a Director on 31st December 2004.
(e)	On 10th February 2005 the following non-executive Directors received the amounts of shares set out after their names in respect of part of their Board and (where applicable) Board Committee fees: David Arculus: 1,138; Sir Richard Broadbent: 972; Leigh Clifford: 580; Professor Dame Sandra Dawson: 1,206; Sir Andrew Likierman: 717; Sir Nigel Rudd: 1,137; Stephen Russell: 1,115; Dr Jürgen Zech: 1,085.
(f)	Appointed with effect from 1st October 2004.
(g)	Appointed with effect from 1st September 2004.

25

Corporate governance

Accountability and audit

Accountability and Audit

Going Concern

The Directors confirm they are satisfied that the Company and the Group have adequate resources to continue in business for the foreseeable future. For this reason, they continue to adopt the ‘going concern’ basis for preparing the accounts.

Internal Control

The Directors have responsibility for ensuring that management maintain an effective system of internal control and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss. Throughout the year ended 31st December 2004, and to date, the Group has operated a system of internal control which provides reasonable assurance of effective and efficient operations covering all controls, including financial and operational controls and compliance with laws and regulations. Processes are in place for identifying, evaluating and managing the significant risks facing the Group in accordance with the guidance ‘Internal Control: Guidance for Directors on the Combined Code’ issued by the Institute of Chartered Accountants in England and Wales. The Board regularly reviews these processes through the Board Committees.

The Directors review the effectiveness of the system of internal control annually. An internal control compliance certification process is conducted throughout the Group in support of this review. The effectiveness of controls is periodically reviewed within the business areas. Quarterly risk reports are made to the Board covering risks of Group significance including credit risk, market risk, operational risk, and legal and compliance risk. Regular reports are made to the Board Audit Committee by management, Internal Audit and the compliance and legal functions covering particularly financial controls, compliance and operational controls. Reports covering risk measurement standards and risk appetite are made to the Board Risk Committee.

The key document for the Group’s internal control processes is the record of Group Governance practices which describes the Group’s governance and control framework and details Group policies and processes. The record of Group Governance practices is reviewed and approved on behalf of the Group Chief Executive by the Group Governance and Control Committee. Further details of risk management procedures are given in the Risk management section on pages 30 to 71.

The system of internal financial and operational controls is also subject to regulatory oversight in the United Kingdom and overseas. Further information on supervision by the financial services regulators is provided under Supervision and regulation on pages 76 and 77.

Statement of Directors’ Responsibilities for Accounts
The following statement, which should be read in conjunction with the Auditors’ report set out on page 109, is made with a view to distinguishing for shareholders the respective responsibilities of the Directors and of the auditors in relation to the accounts.

The Directors are required by the Companies Act 1985 to prepare accounts for each financial year which give a true and fair view of the state of affairs of the Company and Group as at the end of the financial year and of the profit or loss for the financial year.

The Directors consider that, in preparing the accounts on pages 110 to 210 and 214 to 223, and the additional information contained on pages 13 to 25, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates, and that all accounting standards which they consider to be applicable have been followed.

The Directors have responsibility for ensuring that the Company and the Group keep accounting records which disclose with reasonable accuracy the financial position of the Company and the Group and which enable them to ensure that the accounts comply with the Companies Act 1985.

The Directors have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Signed on behalf of the Board

Matthew W Barrett
10th March 2005

Disclosure Controls and Procedures

The Group Chief Executive, John Varley, and the Group Finance Director, Naguib Kheraj, conducted with Group Management an evaluation of the effectiveness of the design and operation of the Group’s disclosure controls and procedures as at 31st December 2004, which are defined as those controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the US Securities Exchange Act of 1934 is recorded, processed, summarised and reported within specified time periods. As of the date of the evaluation, the Group Chief Executive and Group Finance Director concluded that the design and operation of these disclosure controls and procedures were effective. No significant changes were made in our internal controls or in other factors that could significantly affect these controls subsequent to their evaluation.

26

Barclays PLC Annual Report 2004

Presentation of information

Presentation of Information

Barclays PLC is a public limited company registered in England and Wales under company number 48839. The Company, originally named Barclay & Company Limited, was incorporated in England and Wales on 20th July 1896 under the Companies Acts 1862 to 1890 as a company limited by shares. The company name was changed to Barclays Bank Limited on 17th February 1917 and it was re-registered in 1982 as a public limited company under the Companies Acts 1948 to 1980. On 1st January 1985, the company changed its name to Barclays PLC.

Barclays Bank PLC is a public limited company registered in England and Wales under company number 1026167. The Bank was incorporated on 7th August 1925 under the Colonial Bank Act 1925 and on 4th October 1971 was registered as a company limited by shares under the Companies Acts 1948 to 1967. Pursuant to The Barclays Bank Act 1984, on 1st January 1985 the Bank was re-registered as a public limited company and its name was changed from Barclays Bank International Limited to Barclays Bank PLC.

All of the issued ordinary share capital of Barclays Bank PLC is owned by Barclays PLC. The Annual Report for Barclays PLC also contains the consolidated accounts of, and other information relating to, Barclays Bank PLC. The Annual Report includes information required on Form 20-F. Form 20-F will contain as exhibits certificates pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, signed by the Group Chief Executive and Group Finance Director, with respect to both Barclays PLC and Barclays Bank PLC. Except where otherwise indicated, the information given is identical with respect to both Barclays PLC and Barclays Bank PLC.

The accounts of Barclays Bank PLC included in this document do not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985. The statutory accounts of Barclays Bank PLC, which contain an unqualified audit report and do not contain any statement under Section 237(2) or (3) of that Act, will be delivered to the Registrar of Companies in accordance with Section 242 of that Act and are published as a separate document.

The term ‘Barclays PLC Group’ means Barclays PLC together with its subsidiary undertakings and the term ‘Barclays Bank PLC Group’ means Barclays Bank PLC together with its subsidiary undertakings. ‘Barclays’ and ‘Group’ are terms which are used to refer to either of the preceding groups when the subject matter is identical. The term ‘Company’ refers to Barclays PLC and the term ‘Bank’ refers to Barclays Bank PLC. ‘Woolwich plc’ is used, as the context requires, to refer to Woolwich plc and its subsidiary undertakings. In this report, the abbreviations ‘£m’ and ‘£bn’ represent millions and thousands of millions of pounds sterling respectively; the abbreviations ‘$m’ and ‘$bn’ represent millions and thousands of millions of US dollars respectively and ‘€m’ and ‘€bn’ represent millions and thousands of millions of euros respectively.

Statutory Accounts

The consolidated accounts of Barclays PLC and its subsidiary undertakings are set out on pages 118 to 123 along with the accounts of Barclays PLC itself on page 124. The consolidated accounts of Barclays Bank PLC and its subsidiary undertakings are set out on pages 214 to 219. The accounting policies on pages 110 to 115 and the Notes commencing on page 125 apply equally to both sets of accounts unless otherwise stated.

27

Risk factors

Risk Factors

The following discussion sets forth certain risk factors that the Group believes could cause its actual future results to differ materially from expected results. However, other factors could also adversely affect the Group results and the reader should not consider the factors discussed in this report to be a complete set of all potential risks and uncertainties.

Business Conditions and General Economy

The profitability of Barclays businesses could be adversely affected by a worsening of general economic conditions in the United Kingdom or globally. Factors such as the liquidity of the global financial markets, the level and volatility of equity prices and interest rates, investor sentiment, inflation, and the availability and cost of credit could significantly affect the activity level of customers. A market downturn would likely lead to a decline in the volume of transactions that Barclays executes for its customers and, therefore, lead to a decline in the income it receives from fees and commissions. A market downturn or worsening of the economy could cause the Group to incur mark-to-market losses in its trading portfolios. A market downturn also could potentially result in a decline in the fees Barclays earns for managing assets. For example, a higher level of domestic or foreign interest rates or a downturn in trading markets could affect the flows of assets under management. An economic downturn or significantly higher interest rates could adversely affect the credit quality of Barclays on balance sheet and off balance sheet assets by increasing the risk that a greater number of the Group’s customers would be unable to meet their obligations.

Credit Risk

The Group’s provisions for credit losses provide for losses inherent in loans and advances and other credit exposures. Estimating losses is inherently uncertain and depends on many factors, including general economic conditions, rating migration, structural and technological changes within industries and changes in customer preferences that alter competitive positions, mismanagement by customers and other external factors such as legal and regulatory requirements.

Market Risks

The most significant market risks the Group faces are interest rate, credit spread, foreign exchange, commodity price and equity price risks. Changes in interest rate levels, yield curves and spreads may affect the interest rate margin realised between lending income and borrowing costs. Changes in currency rates, particularly in the sterling-dollar and sterling-euro exchange rates, affect the value of assets and liabilities denominated in foreign currencies and affect earnings reported by the Group’s non-UK subsidiaries and may affect revenues from foreign exchange dealing. The performance of financial markets may cause changes in the value of the Group’s investment and trading portfolios and in the amount of revenues generated from assets under management. The Group has implemented risk management methods to mitigate and control these and other market risks to which the Group is exposed. However, it is difficult to predict with accuracy changes in economic or market conditions and to anticipate the effects that such changes could have on the Group’s financial performance and business operations. In addition, the value of assets held in the Group’s pension and long-term assurance funds are also affected by the performance of financial markets.

Capital Risk

The Group’s authority to operate as a bank is dependent upon the maintenance of an adequate capital base. It is required to meet capitalisation requirements in the UK and in other markets where banking activities are undertaken. As the level of capitalisation may affect the Group’s debt rating, the Group also manages its capital to secure the maintenance of its strong rating. Moreover, the absence of a sufficiently strong capital base may constrain the Group’s growth and strategic options. Unforeseen circumstances may arise under which the Group is unable to maintain its desired capitalisation.

Liquidity Risk

Liquidity risk is the risk that the Group is unable to meet its payment obligations when they fall due and to replace funds when they are withdrawn; the consequence of which may be the failure to meet obligations to repay depositors and fulfil commitments to lend. This risk exists in the UK as well as in overseas markets. There is a risk that the Group mismanages its liquidity or that circumstances may arise under which it is unable to maintain adequate liquidity.

Operational Risks

The Group’s businesses are dependent on the ability to process a large number of transactions efficiently and accurately. Operational risks and losses can result from fraud, errors by employees, failure to properly document transactions or to obtain proper internal authorisation, failure to comply with regulatory requirements and Conduct of Business rules, equipment failures, natural disasters or the failure of external systems, for example, the Group’s suppliers or counterparties (see page 54 for a fuller list). Although the Group has implemented risk controls and loss mitigation actions, and substantial resources are devoted to developing efficient procedures and to staff training, it is only possible to be reasonably, but not absolutely, certain that such procedures will be effective in controlling each of the operational risks faced by the Group.

Regulatory Compliance Risk

The Group is subject to extensive supervisory and regulatory regimes in the UK, elsewhere in Europe, the US, the Asia-Pacific region and in the many other countries around the world in which it operates.

Regulatory compliance risk arises from a failure or inability to comply fully with the laws, regulations or codes applicable specifically to the financial services industry. Non-compliance could lead to fines, public reprimands, damage to reputation, enforced suspension of operations or, in extreme cases, withdrawal of authorisation to operate.

28

Barclays PLC Annual Report 2004 

Legal Risk

The Group is subject to comprehensive legal obligations in the UK, the European Union, the US, the Asia-Pacific region and in the many other countries around the world in which the Group operates. As a result, the Group is exposed to many forms of legal risk, which may arise in a number of ways. Primarily:

• Group business may not be conducted in accordance with applicable laws;

• contractual obligations may either not be enforceable as intended or may be enforced against the Group in an adverse way;

• the intellectual property of the Group (such as its trade names) may not be adequately protected; and

• the Group may be liable for damages to third parties harmed by the conduct of its business.

In addition, the Group faces risk where legal proceedings are brought against it. Regardless of whether or not such claims have merit, the outcome of legal proceedings is inherently uncertain and could result in financial loss.

Although the Group has processes and controls around the management of legal risk, failure to manage legal risks can impact the Group adversely, both financially and reputationally.

Tax Risk

Tax risk is the risk associated with changes in, or errors in the interpretation of, taxation rates or law. This could result in increased charges or financial loss.

Although the Group devotes considerable resources to managing tax risk, failure to manage this risk can impact the Group adversely.

Changes in Governmental Policy and Regulation

The Group’s businesses and earnings can be affected by the fiscal or other policies and other actions of various regulatory authorities of the UK, other European Union or foreign governments and international agencies. The nature and impact of future changes in such policies and regulatory action are not predictable and are beyond the Group’s control.

There is continuing political and regulatory scrutiny of, and major changes in, legislation and regulation of the consumer credit industry in the UK and elsewhere. In the UK, these currently include a review of store cards by the Competition Commission and investigations by the Office of Fair Trading into interchange rates and default fees on credit cards. The review and investigations are looking at the consumer credit industry generally and the Group is co-operating with those proceedings. Their outcome is unclear but may have an impact on the consumer credit industry in general and therefore on the Group’s business in this sector.

Other areas where changes could have an impact include inter alia:

• the monetary, interest rate and other policies of central banks and regulatory authorities;

• general changes in government or regulatory policy that may significantly influence investor decisions in particular markets in which the Group operates;

• general changes in the regulatory requirements, for example, prudential rules relating to the capital adequacy framework (pages 99 to 101);

• changes in competition and pricing environments;

• changes in the financial reporting environment (see Conversion to International Financial Reporting Standards in 2005 on pages 115 and 116);

• expropriation, nationalisation, confiscation of assets and changes in legislation relating to foreign ownership; and

• other unfavourable political, military or diplomatic developments producing social instability or legal uncertainty which in turn may affect demand for the Group’s products and services.

Impact of Strategic Decisions taken by the Group

The Group devotes substantial management and planning resources to the development of strategic plans for organic growth and identification of possible acquisitions, supported by substantial expenditure to generate growth in customer business. If these strategic plans do not meet with success, the Group’s earnings could grow more slowly or decline.

Competition

The UK and global financial services market remains highly competitive and innovative competition comes both from incumbent players and a steady stream of new market entrants. The landscape is expected to remain highly competitive in all the Group’s businesses, which could adversely affect the Group’s profitability.

Impact of External Factors on the Group and Peer Group

The Group’s primary performance goal is to achieve top quartile TSR performance for 2004 to 2007 inclusive against a group of peer financial institutions. This goal assumes that external factors will impact all peer group entities similarly. The Group’s ability to achieve the goal will be significantly impacted if the Group is disproportionately impacted by negative external factors. Even if the Group performs well, if others perform better or the market believes others have performed better, we may not achieve our goal.

Barclays devotes considerable resources and expertise to managing the risks to which it is exposed. Our risk management is described in the following pages (pages 30-57). Please also refer to the cautionary statement concerning forward-looking statements on the inside of the front cover in conjunction with this section.

29

Risk management

Risk management and control – overview

Introduction

At Barclays the identification and management of risk is a high priority and is integral to the execution of our banking activity and strategy. Our approach is built on formal governance processes, relies on individual responsibility and collective oversight, uses advanced analyses, and is informed by comprehensive reporting.

Responsibility for risk resides at all levels of management, from the Board down through the organisation to individuals in offices around the world. Each business manager is accountable for managing risk in his or her business area, assisted, where appropriate, by risk specialists.

We measure the key risks and understand the viability of transactions after taking risk into account. There are defined appetites for the most important risks and we consider the risk and return on individual transactions as well as their effect on the Bank’s overall portfolio.

From a credit risk perspective, 2004 was a benign year, without the large corporate defaults of the recent past. In our consumer portfolios, the growth in credit losses was consistent with our portfolio growth and risk appetite. Risk taking in our trading activities remained within our Group market risk parameters at all times.

These favourable conditions are reflected in the provisions for bad and doubtful debts which declined from a peak of £1,484m in 2002 to £1,091m, a decline over two years of 26%. During the same period, our portfolio increased by 24%. This good outcome benefited from a much lower corporate provisions charge as well as some recovery of amounts written-off in earlier years, trends that are characteristic of the recovery phase of a credit cycle.

Barclays is growing in our product breadth, our client base and in our domestic and international markets. With this growth and with regulatory changes upon us – the US Sarbanes-Oxley Act, the Basel II Accord and the new International Financial Reporting Standards – we are making continued, significant investments in risk management and risk systems.

In 2004 we further developed our methodology for defining and setting our risk appetite, introducing new formal measurements and governance which are described later in this section. We also strengthened risk management and governance by implementing an enhanced Group Internal Control and Assurance Framework, which provides definitive guidance on governance requirements throughout the Group. Both of these were evolutionary improvements of already sound risk management.

Our aim will continue to be to grow shareholder value through taking risks that are consistent with our risk appetite and commensurate with the associated returns.

Robert Le Blanc
Risk Director

Risk Management

The pages that follow describe our approach to risk management. This first section deals with the overall approach – applicable to all risks. It is followed by material covering individual types of risk.

The narrative contains quantitative information mainly in graphical format. In most cases the same data appear in tables in a statistical section beginning on page 58.

Risk Management Process

Barclays applies a five-step approach to risk management.

		Responsibilities
Direct	•	Understand the principal risks to achieving Group strategy.
	•	Establish risk appetite.
	•	Establish and communicate the risk management framework including responsibilities, authorities and key controls.
Assess	•	Establish the process for identifying and analysing business-level risks.
	•	Agree and implement measurement and reporting standards and methodologies.
Control	•	Establish key control processes and practices, including limit structures, provisioning criteria and reporting requirements.
	•	Monitor the operation of the controls and adherence to risk direction and limits.
	•	Provide early warning of control or appetite breaches.
	•	Ensure that risk management practices are appropriate for the control environment.
Report	•	Interpret and report on risk exposures, concentrations and risk-taking outcomes.
	•	Interpret and report on sensitivities and Key Risk Indicators.
	•	Communicate with external parties.
Manage and Challenge	•	Review and challenge all aspects of the Group’s risk profile.
	•	Assess new risk-return opportunities.
	•	Advise on optimising the Group’s risk profile.
	•	Review and challenge risk management practices.

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Barclays PLC Annual Report 2004 

Risk Responsibilities

The principal responsibilities extend throughout the organisation.

• The Board requires that management maintains an appropriate system of internal control and reviews its effectiveness. The Board approves risk appetite and monitors the Group’s risk profile against this appetite.

• Business leaders are responsible for the identification and management of risk in their businesses.

• The Risk Director, under delegated authority from the Group Chief Executive and Group Finance Director, has responsibility for ensuring effective risk management and control.

• Risk Type Heads and their teams in Central Support are responsible for risk oversight and policy.

• Business risk teams, each under the management of a Business Risk Director, are responsible for assisting business leaders in the identification and management of their business risk profiles and for implementing appropriate risk management processes.

• Internal Audit is responsible for the independent review of the control environment.

Matrix of risk responsibilities at Barclays

The internal control framework at Barclays is aligned with the internationally accepted standard Internal Control – Integrated Framework published by the Committee of Sponsoring Organisations of the Treadway Commission (COSO). The Group’s principal risks are the subject of Board Governance Standards, which set out Board approved risk control requirements. Board Governance Standards exist for the following risks:

Brand Management	Liquidity
Capital Planning	Market
Corporate Responsibility	Operations
Credit	People
Financial Crime	Regulatory Compliance
Financial Reporting, Taxation and Budgeting	Change
Legal	Strategic Planning

Detailed discussion of our risk management of certain risks follows, starting with credit risk on page 35.

The management of risk at Barclays is guided and monitored by a number of committees. Each has specific functions as shown in the chart on the Governance Structure at Group Level on the next page.

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Risk management
Risk management and control – overview

Governance Structure at Group Level

In addition to the committees shown in the chart, the Board established a Brand and Reputation Committee in 2004.

These committees are informed by regular and comprehensive reports. The Board Risk Committee receives a quarterly report covering all significant risk types. The Board Audit Committee receives quarterly reports on control issues of significance and half-yearly provisions and regulatory reports. Both committees also receive reports dealing in more depth with specific issues relevant at the time. The proceedings of both committees are reported to the full Board, which also receives a concise quarterly risk report.

When the new Basel II Accord is introduced, Barclays aims to achieve advanced status under all risk categories. The Group considers that the investment required to attain this status is warranted by the internal risk management improvements that will follow, the reputational benefits and the potential for greater capital efficiency.

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Barclays PLC Annual Report 2004 

Risk Appetite

In 2004, Barclays adopted an improved approach to the setting of risk appetite across the Group, using a more formal, quantitative methodology based on advanced risk analytics. Risk Appetite is the Group’s chosen balance of return and risk employed as we implement our business plans, recognising a range of possible outcomes. This framework, approved by the Board Risk Committee, builds on the analytical capability developed and used within Barclays since the mid 1990s.

The objectives of the risk appetite framework are to:

• help protect the Group’s performance;

• enable unused risk capacity to be identified and thus profitable opportunities to be highlighted;

• improve management confidence and debate regarding our risk profile; and

• help executive management improve control and co-ordination of risk-taking across businesses.

The Risk Appetite framework considers credit, market and operational risk and is applied using two perspectives: ‘earnings volatility’ and ‘mandate and scale’.

Earnings volatility: This takes account of the potential volatility around our forecast financial performance each year. The portfolio’s risk is measured at four representative levels:

• expected performance (including the average credit losses based on measurements over many years);

• a moderate stress level of loss that is likely to occur only infrequently and is meant to correspond to a macroeconomic cycle;

• a severe stress which is much less likely but within a reasonable possibility;

• an extreme but highly improbable level of stressed loss which is used to determine the Group’s Economic Capital.

These ascending but increasingly less likely levels of loss are illustrated in the following chart.

At 31st December 2004, the Group’s expected credit loss in one year was £1,395m (see page 58). The Economic Capital (i.e. the loss in one year under extreme stress) for all risk types was £12.6bn, estimated with a probability of 1 in 5,000 years.

Mandate and Scale: This second perspective enables the setting of limits to control against unacceptable levels of loss that may arise as a result of portfolio concentration. It is our objective that unexpected losses remain within the scope of our communicated strategy and are of a scale that is appropriate for our Group. This perspective uses simple, descriptive measures and limits for relevant exposure types.

Overall, the Risk Appetite framework provides a basis for the allocation of risk capacity to each business. Since the level of loss at each level of probability is dependent on the portfolio of exposures in each business, the statistical measurement for each key risk category gives the Group clearer sight and better control of risk-taking throughout the enterprise.

The Risk Appetite framework is designed to be:

• simple and practical to apply by measurement and monitoring of exposures;

• geared to risk/return where capacity is directly related to opportunity;

• based on a top-down capacity for earnings volatility;

• based on bottom-up identification of risk factors in each business;

• relevant, recognising the impact and likelihood of losses;

• aggregated across businesses where appropriate.

Stress Testing

The Risk Appetite numbers are validated by estimating our sensitivity to macroeconomic events using stress testing and scenario analysis. Changes in certain macroeconomic variables represent environmental stresses which may reveal systemic credit and market risk sensitivities in our retail and wholesale portfolios. The stresses considered include, for example, the following sensitivities:

• Gross Domestic Product weaker;

• employment weaker;

• interest rates higher or lower;

• interest rate curve shifts;

• equity prices lower;

• property prices weaker;

• credit spreads wider;

• country exposure stressed;

• industry exposure stressed;

• sterling stronger.

More complex scenarios, such as recessions, can be represented by combinations of variables. These scenarios allow senior management to gain a better understanding of how the Group is likely to react to changing economic and geo-political conditions. Insights gained are fully integrated into the management process and the Risk Appetite framework. These analyses and insights and the close involvement of management also provide the basis for fulfilling the stress testing requirements of the new Basel II Accord.

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Risk management
Risk management and control – overview

The Application of Economic Capital

Barclays manages both its capital supply and demand for capital in order to optimise capital efficiency.

The management of the supply of capital occurs via the Group’s shareholders’ capital and statutory capital ratios as discussed on pages 99 and 100. See also the management of capital risk on page 51.

The Group assesses the internal demand for capital using its own proprietary economic capital methodology developed and refined over more than a decade. We estimate the capital needed to survive an extreme but highly improbable level of stressed loss. The calculation is based on the historical volatility of losses. Capitalisation occurs to a level sufficient to provide a high level of confidence in the Group, with the level of confidence consistent with the Group’s AA rating.

Economic capital is estimated primarily for the risks listed under Board Governance Standards on page 31 as well as insurance risk, risk associated with fixed assets, and risk in private equity investments. The Group computes and assigns economic capital by the risk categories to all operating units. This enables the Group to apply a common, consistent and additive metric to ensure that returns throughout the Group are commensurate with the associated risks. An asset attracts the same cost of capital wherever it is acquired across the Group.

Barclays estimates the correlation between risk types and calculates a diversification benefit which results in a reduction in allocated economic capital for the Group and each of the businesses.

Economic capital is fully embedded in the management culture of the Group via risk adjusted performance management (e.g. economic profit), effective targeting of resources to value creating areas, pricing tools, compensation and remuneration schemes and is integral to the Risk Appetite framework. The economic capital framework will be an important part to the Group’s implementation of the Basel II Accord.

In 2004, UK Retail Banking economic capital allocation decreased £50m to £2,200m with the impact of continued growth more than offset by the sale in 2003 of non-core assets that had previously been acquired with the Woolwich. UK Business Banking economic capital allocation decreased £50m to £2,450m as a consequence of a general improvement in the credit quality of counterparties and improved risk assessment of complex transactions.

The economic capital allocated to Private Clients (including the closed life assurance business) increased by £50m to £400m following the acquisition of Gerrard and growth of the business. International economic capital allocation increased by £200m to £1,000m reflecting the inclusion of Banco Zaragozano for a full year and growth in the Spanish business.

Barclaycard economic capital allocation increased by £250m to £2,450m due to growth in outstandings and the acquisition of Juniper.

Barclays Capital economic capital decreased by £50m to £2,100m as a result of improved wholesale credit conditions more than offsetting the increase in market risk capital driven by growth of the business.

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Barclays PLC Annual Report 2004 

Risk management

Credit risk management

Credit Risk Management

Credit risk is the risk that the Group’s customers, clients or counterparties will not be able or willing to pay interest, repay capital or otherwise to fulfil their contractual obligations under loan agreements or other credit facilities. Credit risk also arises through the downgrading of counterparties whose credit instruments the Group may be holding, causing the value of those assets to fall. Furthermore, credit risk is manifested as country risk where difficulties experienced by the country in which the exposure is domiciled may impede payment or reduce the value of the asset or where the counterparty may be the country itself. Settlement risk is another special form of credit risk which is the possibility that the Group may pay a counterparty – for example, a bank in a foreign exchange transaction – and fail to receive the corresponding settlement in return.

Credit risk is the Group’s largest risk and considerable resources, expertise and controls are devoted to managing it. The importance of credit risk is illustrated by noting that nearly two-thirds of risk-based economic capital is allocated to businesses for credit risks. Credit exposures arise principally in loans and advances and in irrevocable commitments to lend as shown in the following chart. During 2004, the total exposure increased to £652bn (2003: £555m; 2002: £501bn).

Note

(a) OTC derivatives means derivatives traded bilaterally with counter parties and not through an exchange, commonly called over-the-counter derivatives. LME refers to the London Metal Exchange.

Credit Risk Management Responsibility

In managing credit risk, the Group applies the five-step risk management process and internal control framework described previously (page 30). The credit risk management teams in each business are accountable to the Business Risk Directors in those businesses who, in turn, report to the heads of their businesses and also to the Risk Director.

The Credit Risk function, led by the Credit Risk Director, provides Group-wide direction of credit risk-taking. This functional team manages the resolution of all significant credit policy issues and administers the Credit Committee which approves major credit decisions.

The principal committees that review credit risk management are the Risk Oversight Committee and the Board Risk Committee. The Board Audit Committee reviews and approves provisioning decisions.

Credit Risk Measurement

Barclays has been in the forefront of the development and use of advanced credit risk systems. These systems assist the bank in front-line credit decisions on new commitments and in managing the portfolio of existing exposures. They enable the application of consistent risk measurement across all credit exposures, retail and wholesale. The key building blocks in the measurement system, which are described below, are the probability of customer default (expressed through an internal risk rating), exposure in the event of default, and severity of loss-given-default. Using these, Barclays builds the analyses that lead to its decision support systems in the Risk Appetite context described previously.

Probability of Default: Internal Risk Ratings

Barclays assesses the credit quality and assigns an internal risk rating to all borrowers and other counterparties, including retail customers. Each internal rating corresponds to the statistical probability of a customer in that rating class defaulting within the next 12-month period. Multiple rating methodologies may be used to inform the rating decision on individual large credits. For smaller credits, a single source may suffice such as a rating model result. The table below shows the expected ranges of annual default probabilities associated with Barclays internal ratings, and an approximate relationship to certain external ratings.

Barclays Internal Credit Ratings

Barclays	Annual probability of default						S&P		Moody’s
Internal	Minimum		Mid Point		Maximum		Equivalent		Equivalent
Rating	%		%		%		Rating*		Rating*
1.2		0.02		0.025		0.04	AAA/AA+/AA		Aaa/Aa/A1
1.5		0.05		0.075		0.09	AA-/A+			A2
1.8		0.10		0.125		0.14		A/A-		A3
2.1		0.15		0.175		0.19	BBB+		Baa1
2.5		0.20		0.225		0.24	BBB+		Baa1
2.8		0.25		0.275		0.29	BBB		Baa2
3		0.30		0.450		0.59	BBB-		Baa3
4		0.60		0.900		1.19	BB+/BB/BB-		Ba1/Ba2
5		1.20		1.850		2.49		B+/B	Ba3
6		2.50		3.750		4.99		B-		B1
7		5.00		7.500		9.99	CCC+/CCC-			B2/B3
8		10.00		15.000		–	CC/C		Caa/Ca/C

* Approximate alignment with Barclays and each other.

Exposure in the event of Default

Exposure in the event of default represents the expected level of usage of the credit facility when default occurs. At default the customer may not have drawn the loan fully or may already have repaid some of the principal, so that exposure is typically less than the approved loan limit. When the Group evaluates loans, it takes exposure at default into consideration, using its extensive historical experience. It recognises that customers may make heavier than average usage of their facilities as they approach default.

For derivative instruments, exposure in the event of default is the estimated cost of replacing contracts with a positive value if counterparties should fail to perform their obligations.

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Barclays PLC Annual Report 2004 

Risk management
Credit risk management

Severity of Loss-given-default

When a customer defaults, much of the amount outstanding on its loan or loans is usually recovered. The part that is not recovered, the actual loss, is called the loss-given-default (LGD). The severity of the loss is measured as a percentage of the amount outstanding when the default occurs.

From historical information, the Group can estimate how much is likely to be lost, on average, for various types of loans. To illustrate, loss-given-default is low for residential mortgages because of the property pledged as collateral. In contrast, LGD is about 70% for unsecured personal lending.

The level of LGD depends on the type of collateral (if any); the seniority or subordination of the exposure; the industry in which the customer operates (if a business); the jurisdiction applicable and work-out expenses. The outcome is also dependent on economic conditions that may determine, for example, the prices that can be realised for assets or whether businesses can readily be refinanced. Individual defaults show a wide range of outcomes, varying from full to nil recovery and all points in between.

Expected Loss: Risk Tendency

The three components described above – the credit rating, exposure at default and loss given default – are building blocks used in credit analysis across the entire portfolio in a variety of applications. One of those is to determine a measure of expected loss called Risk Tendency (RT).

Risk Tendency is a measure of the modelled loss for the performing loan portfolio for the forthcoming 12 months, taking into account its current composition, size and risk characteristics and previous experience over a long period with similar credit exposures.

The Risk Tendency of a loan is estimated as the product of the probability of default derived from the rating with the other components discussed above:

Risk Tendency of a loan = probability of default × expected exposure at default × loss given default.

The RT’s of individual loans are summed to produce the Risk Tendencies of the various sub-portfolios in the Group and ultimately for the whole Group. It is thus a ‘bottom-up’ measure of the inherent loss in the Group’s credit exposures. RT provides insight into the credit quality of the portfolio and assists management in tracking risk changes as the Group’s stock of credit exposures evolves in the course of business.

Many models are used in the estimation of the three components of RT in each of the Group’s businesses. The majority of the models are internally developed using Barclays own historical data and other external information. We also use externally developed models and rating tools. These are validated for use within Barclays before they are introduced. All models are validated annually to ensure their applicability to the current portfolios and credit conditions.

In interpreting Risk Tendency, the following should be borne in mind:

• At the individual loan level many of the models take current conditions into account while others are based on conditions over several years. RT is thus to a considerable degree a point-in-time risk measure. This contrasts with a through-the-credit-cycle measure which would provide an estimate of the average loss expected over a whole cycle.

• Risk Tendency is not a forecast of bad debt provisions. It is rather a statistical measure that gives insight into the size and quality of the loan portfolio:

– Risk Tendency covers only the performing loans at the date of estimation and does not make allowance for subsequent growth or change in the composition of the loan book.

– As it only considers the performing portfolio, the often significant additional charges, write-backs and recoveries arising during the year from impaired loans are not included. These items can materially affect the provisions charge to the profit and loss account.

– The actual credit provisions charge arising from new defaults in any one year from loans that are performing at the start of the year vary significantly around the RT value. This can be due to changes during the year in the economic environment or in the business conditions in specific sectors or countries and from unpredictable or unexpected events. This applies especially in wholesale portfolios where the default of a small number of large exposures can have a significant effect on the outcome. For retail portfolios, consisting of a very large number of small exposures, the variation from RT is usually much smaller.

– For these reasons, RT does not equate to the Group’s budget or internal forecast of provisions in the coming year.

Risk Tendency is equivalent to the Expected Loss measure that all banks who wish to qualify for the Advanced Internal Ratings Based Approach will have to disclose from 2008 under the forthcoming Basel II Accord. Barclays has published RT since its 1997 results and is the only British bank and one of the few international banks to do so.

Risk Tendency is used by the Group to inform a range of decisions, such as establishing the desired aggregate exposure levels to individual sectors, and determining pricing policy. It has also been a factor in determining the level of the general provision for loan losses. Going forward, the measurement of credit losses will be governed by IFRS (IAS 39) which will result in the reporting of specific impairment.

In 2004, Risk Tendency remained steady at £1,395m (2003: £1,390m) (see chart on next page).

RT declined in the corporate and wholesale businesses as the corporate and wholesale credit environments continued to improve and as potential problem loans declined significantly.

In International, RT decreased £5m (7%) to £65m (2003: £70m) as the Group developed a better understanding of the risks in the Banco Zaragozano portfolio acquired in 2003.

Barclaycard RT increased 11% to £860m (2003: £775m) due to growth in the portfolio and the acquisition of Juniper.

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Barclays PLC Annual Report 2004 

Credit Risk Mitigation

Barclays employs a range of policies and practices to mitigate credit risk. The most traditional of these is the taking of security for funds advanced which is common practice. See the discussion of loan-to-value ratios for mortgages on page 40.

Barclays manages the diversification of its portfolio to avoid unwanted credit risk concentrations. This takes several dimensions. Maximum exposure guidelines are in place relating to the exposures to any individual counterparty. These permit higher exposures to highly rated borrowers than to lower rated borrowers. They also distinguish between types of counterparty, for example between sovereign governments, banks and corporations. Excesses are considered individually at the time of credit sanctioning, are reviewed regularly, and are reported to the Risk Oversight Committee and the Board Risk Committee. Similarly the Country Risk policy specifies risk appetite by country and avoids excessive concentrations of credits in individual countries. Finally, there are policies that limit lending to certain industries, for example commercial real estate.

Barclays actively manages its credit exposures. When weaknesses in exposures are detected – either in individual exposures or in groups of exposures – it takes action to mitigate the risks. These include steps to reduce the amounts outstanding (in discussion with the customers, if appropriate), the use of credit derivatives and, sometimes, the sale of the loan assets. Credit derivatives are traded for profit and used for managing non-trading credit exposures. Details of these activities may be found in the statistical section (page 64) and Note 37 to the Accounts (page 157).

The Group securitises loans such as credit card receivables. The manner in which these transactions have been structured to date has reduced credit risk only to a small degree because the motivation has generally not been the mitigation of risk. Instead the transactions have served other purposes, such as widening the Group’s sources of funds and addressing regulatory capitalisation in specific geographies. Securitisation remains an avenue of risk mitigation available to Barclays.

The value of assets originated by the Group that were securitised in 2004 was £0.8bn (2003: £2.3bn).

37

Risk management

Loans and advances

Loans and advances are the largest component of the Group’s credit exposures and contain more than half of the credit risk as shown on page 35. They increased over the year by £41bn (14%) to £332.9bn at 31st December 2004 (2003: £291.8bn, 2002: £263.6bn).

Wholesale customers remain the largest customer category.

(See also Table 2 on page 58.)

The drawn balances shown above are before deduction of provisions and interest in suspense. The information in the chart is based on the business unit in which the loans are booked. Loans in those businesses that deal primarily with personal customers, such as Barclaycard and UK Retail Banking, are included in retail customers even though a small percentage may be to business customers. Similarly, loans in businesses that deal primarily with corporate, institutional and sovereign clients are included in wholesale customers, even though they may have some personal customers.

(See also Table 3 on page 58.)

The banking book comprises loans and advances that are intended to be held to maturity or until repayment by the customer. In contrast the loans and advances on the trading book are held for sale. Losses that may arise in the trading book – including credit losses – are absorbed in trading profits and are regarded as market risk, the management of which is described later. The next part of the credit section is thus devoted to exposures on the banking book, particularly customer exposures. For details of exposures to banks refer to the statistical information on page 59.

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Barclays PLC Annual Report 2004 

Risk management

Loans and advances to customers on the banking book

Geographical Analysis and Country Risk

Loans and advances to customers on the banking book amounted to £193bn at the year end (2003: £171bn, 2002: £160bn). The geographical analysis shown in the chart below is based on the location of the office recording the transaction. The UK exposure shown includes some major loans to customers in other countries that were booked in London, and thus includes some international risk.

(See also Table 6 on page 60.)

The loans and advances to customers on the banking book booked through the Group’s operations in Iberia were £12bn at 31st December 2004, 6.2% of the Group total. They were comprised of £5.8bn in residential mortgages (48%) and £6.2bn (52%) in other loans.

Barclays exposure limits to sub-investment grade countries are shown in the chart below (largest 15 exposure limits).

The country exposures shown are the sum of customer limits and unused but available product limits. Both domestic and cross-border exposures are included.

Loans and advances to borrowers in currencies other than the currencies of the borrowers are shown in the tables on page 63.

Risk Profile of Customer Loans and Advances

The chart below shows Barclays wholesale loan profile by internal risk grade (See page 35 for a description of the rating system). It is important to note that Barclays prices loans for risk. Thus higher risk loans will usually have higher interest rates or fees or both. A portfolio of higher risk loans may therefore be as profitable as, or more profitable than, a portfolio of lower risk loans.

Notes

(a) Excludes non-performing and potential problem loans

Industry Analysis

An industry analysis of customer loans is shown in the chart below. These classifications have been prepared at the level of the borrowing entity. This means that a loan to the subsidiary of a major corporation is classified by the industry in which the subsidiary operates, even though the parent’s predominant business may be in a different industry. Loans to customers domiciled outside the country where the office recording the transaction is located are shown in the chart under ‘Overseas Customers’ and not by industry.

39

Risk management
Loans and advances to customers on the banking book

(See also Note 14 on pages 133 to 134.)

The chart shows that Barclays largest sectoral exposures are to home loans, other personal loans and business and other services. These categories are comprised of small loans, have low volatility of credit risk outcomes, and are intrinsically highly diversified.

The loan-to-value ratios on the Group’s UK home loan portfolio are indicated in the next chart.

The valuations in the chart are those which applied at the last credit decision on each loan, i.e. when the customer last requested an increase in the limit or, if there has been no increase, at inception of the loan. Since house prices have risen rapidly in recent years to mid-2004, most loan-to-value ratios would be considerably lower if updated to current market values.

Barclays loan loss rates have remained stable in other personal loans (consumer loans and credit cards) despite the increased levels of household indebtedness and higher interest rates in the UK.

Maturity Analysis

The analysis by contractual maturity, shown in the chart below, indicates that a third of loans to customers have a maturity of more than five years, the majority of which are mortgages. The maturity profile remained broadly steady.

(See also Table 4 on page 59.)

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Barclays PLC Annual Report 2004 

Risk management

Other credit risks

In addition to drawn loans and advances, Barclays is exposed to other credit risks as indicated in the chart on page 35 at the beginning of the discussion on credit risk. These exposures comprise loan commitments, contingent liabilities, debt securities and other exposures arising in the course of trading activities. The risks are managed in a similar way as those in Loans and Advances, and are subject to the same or similar approval and governance processes.

The nature of the credit risks among these exposures differ considerably.

• Loan commitments may become loans and the risks are thus similar to loans.

• Contingent liabilities (guarantees, assets pledged as security, acceptances and endorsements, etc) historically experience low loss rates.

• Losses arising from exposures held for trading (derivatives, debt securities) are accounted for as trading losses, rather than credit charges, even though the fall in value causing the loss may be attributable to credit deterioration.

Further details of these exposures are shown in Note 36 to the Accounts (page 155).

Barclays is also exposed to settlement risk in its dealings with other financial institutions. These risks arise for example in foreign exchange transactions when Barclays pays its side of the transaction to another bank or other counterparty before receiving payment from the other side. The risk is that the counterparty may not meet its obligation. While these exposures are of short duration, they can be large. In recent years settlement risk has been reduced by several industry initiatives that have enabled simultaneous and final settlement of transactions to be made (such as payment-versus-payment through Continuous Linked Settlement and delivery-versus-payment in central bank money). Barclays has worked with its peers in the development of these arrangements. Increasingly the majority of high value transactions are settled by such mechanisms. Where these mechanisms are not available, the risk is further reduced by dealing predominantly with highly rated counterparties, holding collateral and limiting the size of the exposures according to the rating of the counterparty, with smaller exposures to those of higher risk.

41

Risk management

Loan impairment: potential credit risk loans

Potential credit risk loans (PCRLs) comprise non-performing loans (NPLs) and potential problem loans (PPLs). NPLs are loans where the customers have failed to meet their commitments, either in part or in whole. PPLs are loans where payment of principal and interest is up-to-date and the loans are therefore fully performing, but where serious doubt exists as to the ability of the borrowers to continue to comply with repayment terms in the near future.

Non-performing loans and potential problem loans

(See also Table 17 on page 65 and Table 18 on page 65).

The amounts are shown before deduction of the value of security held, the specific provisions carried or interest suspended, all of which might reduce the impact of an eventual loss, should it occur.

Potential problem loans declined sharply for several reasons: the inflow to this category fell as fewer customers encountered new difficulties, some customers recovered sufficiently to be restored to normal status and others were reclassified as non-performing. The deterioration of some potential problem loans to non-performing explains, in part, why non-performing loans fell much less than the potential problem loans. Both categories improved as a proportion of total loans and advances on the banking book as shown in the following charts.

Non-performing loans and potential problem loans as a percentage of Loans and Advances (Gross Banking Book)

42

Barclays PLC Annual Report 2004 

Risk management

Provisions for bad and doubtful debts

Barclays policy is to provide for credit losses when it considers that recovery is doubtful. Risk managers continuously review the quality of the exposures and make provisions where necessary, based on their knowledge of the customer or counterparty, developments in the industry and country of operation.

The estimation of potential credit losses is inherently uncertain and depends upon many factors, including general economic conditions, possible future deterioration in credit quality, structural changes within industries that alter competitive positions, and other external factors such as legal and regulatory requirements.

Total provisions are comprised of two components, specific provisions and general provisions.

Specific Provisions are raised when the Group considers that the creditworthiness of a borrower has deteriorated such that recovery of the whole or part of an outstanding advance is in serious doubt.

• Within the retail businesses, where the portfolio comprises large numbers of homogeneous assets, statistical techniques are used to raise specific provisions for each product portfolio, based on delinquency data and historical recovery rates. These provisions are updated monthly.

• Small business accounts with straightforward loans contracts up to about £15,000 are similarly treated on a product portfolio basis using statistical methods.

• For larger and/or more complex accounts, specific provisioning is done on an individual basis and all relevant considerations that have a bearing on the expected future cash flows are taken into account. The considerations include the business prospects of the customer, the realisable value of collateral, the Group’s position relative to other claimants, the reliability and comprehensiveness of customer information and the likely cost and duration of the work-out process. These provisions are formally reviewed quarterly and revised as new information becomes available in the course of each work-out.

Treatment of interest on debts that have specific provisions – If the collection of interest is doubtful, it is credited to a suspense account and excluded from the interest income in the profit and loss account. Although interest continues to be charged to the customer’s account, the amount suspended is netted against the relevant loan. Loans on which interest is suspended are not reclassified as accruing interest until interest and principal payments are up-to-date and future payments are reasonably assured. If the collection of interest is considered remote, interest is no longer applied.

Treatment of collateral assets acquired in exchange for advances – Assets acquired in exchange for advances in order to achieve an orderly realisation continue to be reported as advances. The assets acquired are recorded at the carrying value of the original advance as at the date of the exchange and any impairment is accounted for as a specific provision.

General Provisions reflect losses that, although not specifically identified, are known from experience to be present in the lending portfolio at the balance sheet date. These provisions are adjusted at least half yearly by an appropriate charge or release.

General provisions are also created with respect to the recoverability of assets arising from off-balance sheet exposures and country transfer risk, all prepared in a manner consistent with the general provisioning methodology.

Write-off occurs when, and to the extent that, the whole or part of a debt is considered irrecoverable.

See also page 80 (Critical Accounting estimates) and page 112 (Accounting policies: loans and advances) for a description of relevant terms and policies.

(See also Analysis of results by business on page 92.)

The credit environment both in retail and in corporate and wholesale businesses was relatively benign in 2004. This led to a lower level of potential problem and non-performing loans and lower provision charges.

Overall, the Group provision charge declined 19% to £1,091m (2003: £1,347m). This resulted from a substantial decrease in the corporate and wholesale provisions charge, while the retail provisions charge was steady. As a percentage of average banking loans and advances, the provisions rate fell to 0.54% (2003: 0.73%).

In the corporate and wholesale businesses, non-performing and potential problem loans in total fell by 29% to £2,062m from £2,920m in 2003, reflecting the continuing strong corporate credit environment. The corporate and wholesale provisions charge declined to £284m (2003: £543m). The reduction in the provisions charge included an exceptional recovery of £57m in UK Business Banking.

In retail, non-performing loans and potential problem loans remained steady at £2,679m (2003: £2,712m). The provisions charge in the retail businesses was also steady at £807m (2003: £804m). The provisions charge increased in Barclaycard (the card and unsecured consumer lending business) due to volume growth and the maturation of new customer recruitment. The provisions charge included a release of £40m associated with the UK mortgage business, following a review of the portfolio and the current loss experience.

43

Risk management
Provisions for bad and doubtful debts

The chart below shows provisions charges over the last ten years. The charge has fallen from its peak in 2002 even though the loan book has grown substantially.

Provisions charges over ten years

(See also Table 20 on page 66 and Table 21 on page 66.)

(See also Table 20 on page 66.)

During 2004, £198m was transferred from the general provisions stock to specific provisions stock. These transfers are included in the release of general provisions and increase the new and increased specific provisions. The transfers reflect enhancements to provisioning models and the resolution of an individual large corporate exposure. The transfers had no effect on the net provisions charge.

44

Barclays PLC Annual Report 2004 

(See also Table 22 on page 67.)

Total provision balances declined 9% (£262m) over the prior year.

While the specific provisions balance has remained broadly flat during 2004, the year-end general provision stock decreased by 29% (£231m) to £564m (2003: £795m) as explained on the previous page.

An analysis of the movements in the provision balances is shown in the following chart.

Note

(a) Includes effects of acquisitions and exchange rate movements. (See also Table 24 on page 67.)

Coverage Ratios
The coverage of non-performing loans by the Group’s stock of provisions and interest in suspense decreased from 71.5% at 31st December 2003 to 70.4% at 31st December 2004. Over the same period, coverage of potential credit risk loans (i.e. NPLs and PPLs) increased from 54.6% to 59.2%.

45

Risk management
Provisions for bad and doubtful debts

Provisions coverage of non-performing loans and potential credit risk loans (NPLs and PPLs)

(See also Table 32 on page 70.)

Another way of assessing provision balances is to recognise that specific provisions are created to cover non-performing loans, whereas general provisions relate to as yet unidentified losses on performing loans. This is shown in the next two charts.

Specific provisions coverage of non-performing loans and general provisions coverage of performing loans

(See also Table 33 on page 71.)

Performing loans comprise gross loans and advances less non-performing loans. The ratio of general provisions to performing loans has declined since 2000 following the acquisition of Woolwich Plc whose portfolio needs comparatively low general provisions as it consists predominantly of secured residential mortgage loans. It declined further in 2004 following transfers to specific provisions.

Write-offs
Debts are written off to the extent that there is no realistic prospect of a change in the customers’ condition, or where local conditions dictate, and the whole or part of the debt is considered irrecoverable.

Total write-offs increased to £1,595m (2003: £1,474m).

Provisioning under International Financial Reporting Standards
From 2005, the Group will prepare its accounts in accordance with the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) as required under European Commission Regulation 1606/2002. This standard does not differentiate between specific and general provisions for bad and doubtful debts. Instead, provisions are replaced by an allowance for impairment. Thus the Group will not show distinct specific and general provisioning information in future reports but will report on the allowance for impairment instead.

46

Barclays PLC Annual Report 2004 

Risk management

Market risk management

Market Risk is the risk that the Group’s earnings or capital, or its ability to meet business objectives, will be adversely affected by changes in the level or volatility of market rates or prices such as interest rates, credit spreads, foreign exchange rates, equity prices, and commodity prices.

The main market risks arise from the Group’s trading activities. Barclays is also exposed to non-trading market risks relating to the pension fund and, to a lesser extent, asset and liability management.

Categorisation of Market Risk
To facilitate the management, control, measurement and reporting of market risk, Barclays has grouped market risk into three broad categories:

• Trading market risk
These risks arise in trading transactions where Barclays acts as principal with clients or with the market. The Group’s policy is that market risks arising from trading activities are concentrated in Barclays Capital.

• Asset and Liability risk
These risks arise from banking activities, including those incurred on non-trading positions such as capital balances, demand deposits and customer originated transactions and flows.

• Other market risks
The Group also incurs market risks that do not fit into the above categories. The principal risks of this type are defined benefit pension scheme risk and asset management structural market risk (including the risk in Barclays Life Fund).

Market Risk Management and Control Responsibilities
The Board Risk Committee approves the market risk appetite for all types of market risk. The Market Risk Director is responsible for the Group’s market risk control framework and, under delegated authority from the Risk Director and the Risk Oversight Committee, sets a limit framework within the context of the approved market risk appetite.

The Market Risk Director is assisted by a central market risk management team (Market Risk) and by risk management departments in the Group’s businesses. A daily market risk report summarises the Group’s market risk exposures against agreed limits. This daily report is sent to the Risk Director, the Market Risk Director, the Group Finance Director and the appropriate Business Risk Directors.

The Head of each business, assisted by the business risk management team, is accountable for identifying, measuring and managing all market risks associated with its activities. In managing market risk, businesses also consider liquidity risk where relevant.

In Barclays Capital, the Head of Market Risk is responsible for the market risk governance and control framework. Day-to-day responsibility for market risk lies with the senior management of Barclays Capital, supported by the Global Market Risk Management team that operates independently of the trading areas. Daily market risk reports are produced for the main Barclays Capital business areas covering the five main risk factor categories, namely interest rate, credit spread, foreign exchange, equity and commodity risk. A more detailed trading market risk presentation is discussed at Barclays Capital’s Traded Products Risk Review meeting, held fortnightly. The attendees at this meeting include the senior managers from Barclays Capital and Market Risk.

Outside Barclays Capital, Treasury manages treasury market risk, strategic interest rate risk and structural interest rate risk. Retail market risk, a consequence of the UK banking operations, is managed by the Retail Market Risk team. In the Group’s non-UK banking operations, market risk is managed mainly by local treasuries supported by Market Risk. The chart overleaf gives an overview of the business control structure.

47

Risk management
Market risk management

Managing market risk – organisational overview

Market Risk Measurement
The measurement techniques used to measure and control market risk include:

• Daily Value at Risk;

• Stress Tests;

• Annual Earnings at Risk;

• Economic capital.

Daily Value at Risk (DVaR)
DVaR is an estimate of the potential loss which might arise from unfavourable market movements, if the current positions were to be held unchanged for one business day, measured to a confidence level of 98%. Daily losses exceeding the DVaR figure are likely to occur, on average, twice in every 100 business days.

In Barclays Capital, DVaR is an important market risk measurement tool. DVaR is calculated using the historical simulation method with a historical sample of two years. Barclays Capital’s interest rate DVaR methodology allows the measurement process to discriminate between the market risk of holding bonds of differing credit quality, for example AAA grade securities as against BBB grade securities. This is achieved by incorporating eight interest rate credit categories, these being government, interest rate swaps and six credit grades for non-government exposures. We have initiated an extension to this model to incorporate issuer specific risk. Outside Barclays Capital, DVaR is calculated using a simplified approach.

The effectiveness of the DVaR model is assessed principally by back-testing which counts the number of days when trading-related losses are bigger than the estimated DVaR figure. Back-testing results are shown on page 50.

Stress Tests
Stress tests provide an indication of the potential size of losses that could arise in extreme conditions. The stress tests carried out by Barclays Capital include risk factor stress testing where stress movements are applied to each of the five risk categories, namely interest rates, credit spreads, foreign exchange rates, and equity and commodity prices; emerging market stress testing where emerging market portfolios are subject to stress movements; and ad-hoc stress testing, which includes applying possible stress events to specific positions or regions e.g. the stress outcome to a region following a currency peg break.

If the potential stress loss exceeds the trigger limit, the positions captured by the stress test are reviewed and discussed by Capital Market Risk and the respective Business Head(s). The minutes of the discussion, including the merits of the position and the appropriate course of action, are then sent to the Market Risk Director for review.

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Barclays PLC Annual Report 2004 

Outside Barclays Capital, stress testing is carried out by the business centres and is reviewed by the senior management and business-level asset and liability committees. The stress testing is tailored to the business and is typically scenario analysis and historical stress movements applied to respective portfolios.

Annual Earnings at Risk (AEaR)
AEaR measures the sensitivity of annual earnings to shocks in market rates at the 99th percentile for change over a one year period. This shock is consistent with the standardised interest rate shock recommended by the Basel II framework for assessing banking book interest rate risk.

AEaR is used to measure structural interest rate market risk and Asset Management structural risk (see the Other Market Risks section (page 50) for more details).

Economic Capital
Economic capital methodologies are used to calculate risk sensitive capital allocations for businesses incurring market risk. Consequently, the businesses incur capital charges related to their market risk.

Trading Market Risk
The Group’s policy is to concentrate trading activities in Barclays Capital. This includes transactions where Barclays Capital acts as principal with clients or with the market. For maximum efficiency, Barclays manages client and market activities together. In Barclays Capital, trading risk occurs in both the trading book and the banking book as defined for regulatory purposes.

In anticipation of future customer demand, the Group maintains access to market liquidity by quoting bid and offer prices with other market makers and carries an inventory of capital market and treasury instruments, including a broad range of cash, securities and derivatives. Trading positions and any offsetting hedges are established as appropriate to accommodate customer or Group requirements.

Derivatives entered into for trading purposes include swaps, forward rate agreements, futures, credit derivatives, options and combinations of these instruments. For a description of the nature of derivative instruments, see page 57.

Analysis of Trading Market Risk Exposures
The table below shows the DVaR statistics for Barclays Capital’s trading activities (trading book and banking book).

Barclays Capital DVaR: Summary table for 2004 and 2003

	Twelve months to							Twelve months to
	31st December 2004							31st December 2003
	Average			High(a)		Low(a)		Average			High(a)		Low(a)
	£m			£m		£m		£m			£m		£m
Interest rate risk		25.0			53.6		15.1		21.0			34.1		13.6
Credit spread risk		22.6			32.9		16.0		16.2			29.2		8.9
Foreign exchange risk		2.4			7.4		0.9		2.3			5.0		1.0
Equities risk		4.2			7.9		2.2		2.6			4.9		1.5
Commodities risk		6.0			14.4		2.2		4.4			7.0		2.2
Diversification effect		(25.9	)		n/a		n/a		(20.6	)		n/a		n/a
Total DVaR(b)		34.3			46.8		24.0		25.9			38.6		17.6

Notes

(a)	The high (and low) DVaR figures reported for each category did not necessarily occur on the same day as the high (and low) DVaR reported as a whole. Consequently, a diversification effect number for the high (and low) DVaR figures would not be meaningful and is therefore omitted from the table.
(b)	The year-end Total DVaR for 2004 was £31.9m (2003: £37.2m).

49

Risk management
Market risk management

Barclays Capital’s market risk exposure, as measured by average total Daily Value at Risk, increased in 2004. This was due mainly to interest rate opportunities taken in the first half of 2004 and an increase in credit spread positions. The latter increase was primarily the result of growing client flows in corporate bonds and credit derivatives. The increase in total DVaR is consistent with Barclays Capital’s business expansion.

The graph below shows the history of total DVaR on a daily basis for 2003 and 2004.

Analysis of Trading Revenue
The histograms below show the distribution of daily trading revenue for Barclays Capital in 2004 and 2003. It includes dealing profits, net interest income and net fees and commissions relating to primary trading. The average daily revenue in 2004 was £12.5m (2003: £10.0m) and there were 246 positive revenue days out of 254 (2003: 244 positive revenue days out of 254).

DVaR Back-testing
Barclays recognises the importance of assessing the effectiveness of its DVaR model. The main approach employed is the technique known as back-testing, which counts the number of days when trading losses are bigger than the estimated DVaR figure. The regulatory standard for back-testing is to measure DVaR assuming a one day holding period with a 99% level of confidence. For Barclays Capital’s regulatory trading book, there were no instances in 2004 or 2003, of a daily trading revenue loss exceeding the corresponding back-testing DVaR.

Asset and Liability Market Risk
Interest rate exposures arising from mismatches of fixed rate assets and liabilities in UK banking operations are passed to Treasury. Treasury aggregates these positions and then passes the net position to the market via Barclays Capital. Due mainly to timing considerations, market risk can arise when some of the net position stays with Treasury. Similarly, market risk can arise due to the impact of interest rates on customer behaviour. The latter risk is managed and measured by the Retail Market Risk team using behavioural models. The positions are converted into wholesale swap or option exposures, passed to Treasury and managed by the process described above.

Structural interest rate risk arises from the variability of income from non-interest bearing products, managed variable rate products and the Group’s capital. This risk is managed by Treasury, assisted by the Retail Market Risk team.

Market risk is also taken in overseas treasuries in support of customer activity. In Group terms the risk is modest. The market risks are managed by local treasury functions and local asset and liability committees. Market Risk maintains regular contact with the businesses on treasury issues and oversees a comprehensive financial risk reporting framework.

Other Market Risks
Defined benefit pension scheme risk
Barclays maintains a number of defined benefit pension schemes for past and current employees. The ability of the pension fund to meet the projected pension payments is maintained through investments. Market risk arises because the estimated market value of the pension fund assets might decline or their investment returns might reduce or because the estimated value of the pension liabilities might increase. In these circumstances, Barclays might be required or might choose to make extra contributions to the pension fund. Financial details of the pension fund are on page 126.

Asset management structural market risk
Asset management structural market risk is the risk that fee and commission income is affected by a change in equity market levels. It affects Barclays Private Clients, Barclays Life and Barclays Global Investors. The risk is controlled and managed by the respective businesses and Barclays Market Risk.

50

Barclays PLC Annual Report 2004 

Risk management

Capital and liquidity risk management

The Board Risk Committee has approved Board Governance Standards for capital and liquidity risk management that are high level statements of the controls required to meet the Group’s strategic objectives.

The Treasurer has established risk control frameworks and a policy and assurance structure to ensure that capital and liquidity risks are managed in accordance with the requirements of the Board Standards. Policies are set by the Treasury Committee which is chaired by the Group Finance Director.

Capital Risk Management

See page 99 in the Financial Discussion for information on the Group’s capital position.

Capital risk is the risk that the Bank fails to comply with FSA mandated regulatory requirements, resulting in a breach of its minimum capital ratios and the possible suspension or loss of its banking licence. Capital risk also includes the risk that the capital base is not managed in a prudent manner thereby endangering the Group’s credit rating.

Barclays views its strong credit rating as a source of competitive advantage. A solid capital position, together with a diverse portfolio of activities, an increasingly international presence, consistent profit performance, prudent risk management and a focus on value creation, underpins that rating.

The Group’s capital management will continue to maximise shareholder value through optimising both the level and mix of its capital resources, seeking to:

• meet the individual capital ratios required by our regulators;

• maintain an AA credit rating;

• generate sufficient capital to support asset growth and corporate activity;

• manage the currency exposure to its overall Sterling Risk Asset ratio.

Over the past four years, the Group’s tier 1 ratio has averaged 7.9%. The Group’s Risk Asset ratio has averaged 12.5% which compares favourably to the minimum requirements of our regulators.

Note

(a) Less supervisory deductions.

Liquidity Risk Management

Liquidity risk is the risk that the Group is unable to meet its payment obligations when they fall due and to replace funds when they are withdrawn, the consequence of which may be the failure to meet obligations to repay depositors and fulfil commitments to lend.

Liquidity management within the Group has several strands. The first is day-to-day funding, managed by monitoring future cash flows to ensure that requirements can be met. This includes replenishment of funds as they mature or are borrowed by customers. The Group maintains an active presence in global money markets to enable that to happen. The second is maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any unforeseen interruption to cash flow. Finally, the ability to monitor, manage and control intraday liquidity in real time is recognised by the Group as a mission critical process: Any failure to meet specific intraday commitments would be a public event and may have an immediate impact on the Group’s reputation.

In overseas markets, day-to-day liquidity is the responsibility of local treasury management in each territory within the parameters set by Treasury and subject to regular reports to Treasury in order to maximise the benefits of knowledge gained. Local asset and liability management committees review liquidity management. These committees are comprised of senior local executives and – when warranted by the size and complexity of the operation – representatives of Treasury.

The ability to raise funds is in part dependent on maintaining the bank’s credit rating. The funding impact of a credit downgrade is regularly estimated. Whilst the impact of a single downgrade may affect the price at which funding is available, the effect on liquidity is not considered material in Group terms.

51

Risk management
Capital and liquidity risk management

Liquidity Risk Measurement

Monitoring and reporting take the form of cash flow measurement and projections for the next day, week and month as these are key periods for liquidity management. This is based on principles agreed by the UK Financial Services Authority.

In addition to cash flow management, Treasury also monitors unmatched medium-term assets and the level and type of undrawn lending commitments, the usage of overdraft facilities and the impact of contingent liabilities such as standby letters of credit and guarantees.

Treasury develops and implements the process for submitting the Group’s projected cash flows to stress scenarios. The output of stress testing informs the Group’s contingency funding plan. This is maintained by Treasury and is aligned with the Group and country business resumption plans to encompass decision-making authorities, internal and external communication and, in the event of a systems failure, the restoration of liquidity management and payment systems.

Sources of liquidity are regularly reviewed to maintain a wide diversification by currency, geography, provider, product and term. Whilst 2004 saw relatively stable markets, with no significant consequences for the Group’s liquidity, significant market events over recent years including corporate scandals contributed to a short-term flight to quality in financial markets from which Barclays benefited.

An important source of structural liquidity is provided by our core retail deposits in the UK and Europe, mainly current accounts and savings accounts. Although current accounts are repayable on demand and savings accounts at short notice, the Group’s broad base of customers – numerically and by depositor type – helps to protect against unexpected fluctuations. Such accounts form a stable funding base for the Group’s operations and liquidity needs.

To avoid reliance on a particular group of customers or market sectors, the distribution of sources and the maturity profile of deposits are also carefully managed. Important factors in assuring liquidity are competitive rates and the maintenance of depositors’ confidence. Such confidence is based on a number of factors including the Group’s reputation, the strength of earnings and the Group’s financial position.

Securitisation represents a relatively modest proportion of the Group’s current funding profile, but provides additional flexibility. The Group has a large residential mortgage portfolio which could be securitised and hence forms a large – and as yet untapped – source of liquidity.

For further details see contractual cash obligations and commercial commitments of the Group on page 53.

52

Barclays PLC Annual Report 2004 

Table A: Contractual Obligations

	Payments due by period
	Less than		One to		Four to		After		Total
	one		three		five		five
	year		years		years		years
	£m		£m		£m		£m		£m
Long-term debt		46,101		9,841		8,472		9,520		73,934
Capital lease obligations		100		93		121		39		353
Operating lease obligations		243		416		366		1,657		2,682
Purchase obligations		296		493		193		103		1,085
Other long-term liabilities		352		–		–		–		352
Total		47,092		10,843		9,152		11,319		78,406

Table B: Other Commercial Commitments

	Amount of commitment expiration per period
	Less than		One to		Four to		After		Total
	one		three		five		five		amounts
	year		years		years		years		committed
	£m		£m		£m		£m		£m
Acceptances and endorsements		294		9		–		–		303
Guarantees and assets pledged as collateral security		24,614		2,088		1,744		1,565		30,011
Other contingent liabilities		6,227		1,156		379		483		8,245
Arising out of sale and option to resell transactions		1		–		–		–		1
Documentary credits and other short-term trade related transactions		506		13		1		2		522
Forward asset purchases and forward forward deposits placed		9		–		–		46		55
Undrawn formal standby facilities, credit lines and other commitments to lend		97,710		14,688		17,762		3,313		133,473

53

Risk management

Management of operational risk and business risk

Operational and business risks are inherent in Barclays operations and are typical of any large enterprise.

Operational Risk is the risk of direct or indirect losses resulting from inadequate or failed internal processes or systems, human factors, or from external events. Major sources of operational risk include: operational process reliability, IT security, outsourcing of operations, dependence on key suppliers, implementation of strategic change, integration of acquisitions, fraud, error, customer service quality, regulatory compliance, recruitment, training and retention of staff, and social and environmental impacts.

Business Risk is the risk of adverse outcomes resulting from a weak competitive position or from poor choice of strategy, markets, products, activities or structures. Major potential sources of business risk include: revenue volatility due to factors such as macro-economic conditions; inflexible cost structures; uncompetitive products or pricing; and structural inefficiencies.

Barclays is committed to the advanced management of operational and business risks. In particular, we are implementing advanced management and measurement approaches for operational risk to strengthen control, improve customer service and minimise operating losses.

It is not cost effective to attempt to eliminate all operational and business risks and in any event it would not be possible to do so. Events of small significance are expected to occur and are accepted as inevitable; events of material significance are rare and the Group seeks to reduce the risk from these in a framework consistent with its agreed risk appetite.

Responsibility for and Control of Operational Risk

Barclays has a Group Operational Risk Framework, which is consistent with and part of the Group Internal Control and Assurance Framework. Board Governance Standards have been established for all key areas of identified risk. These Standards are high-level articulations of the Board’s risk control requirements. The Standards applicable to operational and business risks are: Brand Management, Capital Planning, Corporate Responsibility, Financial Crime, Financial Reporting, Tax and Budgeting, Legal, Operations, People Management, Regulatory Compliance, Change and Strategic Planning.

Responsibility for implementing and overseeing these policies is to be found throughout the organisation as follows:

• The prime responsibility for the management of operational risk and the compliance with Board Governance Standards rests with the business and functional units where the risk arises. Front-line risk managers are widely distributed throughout the Group in business units. They service and support these areas assisting line managers in managing these risks.

• Business Risk Directors in each business are responsible for overseeing the implementation of and compliance with Group policies.

• Governance and Control Committees in each business monitor control effectiveness. The Governance and Control Committee receives reports from the committees in the businesses and considers Group-wide control issues and their risk mitigation.

• A Standard Owner agrees responsibility for each Board Governance Standard, agrees policy and provides advice to business managers Group-wide. Each monitors and reports upon the application of their Standard.

• In the corporate centre, the Operational Risk Director oversees the range of operational risks across the Group in accordance with the Group Operational Risk Framework.

• The Internal Audit function provides assurance for operational risk control across the organisation and reports to the Board and senior management.

The Management and Measurement of Operational Risk
Risk Assessment – A consistent approach to the identification and assessment of key risks and controls is undertaken across all business units. Scenario analysis and self-assessment techniques are widely used by business management for risk identification and for evaluation of control effectiveness and monitoring capability. Business management determines whether particular risks are effectively managed within business risk appetite and otherwise take remedial action. The risk assessment process is consistent with COSO principles.

Risk Event Data Collection and Reporting – A standard process is used Group-wide for the recognition, capture, assessment, analysis and reporting of risk events. This process is used to identify where process and control requirements are needed to reduce the recurrence of risk events. Risk events are loaded onto a central database and reported monthly to the Risk Oversight Committee.

Barclays also uses a database of external public risk events to assist in risk identification and assessment.

Reporting – Business units are required to report on both a regular and an event-driven basis. The reports include a profile of the key risks to their business objectives, control issues of Group-level significance, and operational risk events. Specific reports are prepared on a regular basis for the Risk Oversight Committee, the Board Risk Committee and the Board Audit Committee. In particular the Group Operational Risk Profile Report is provided quarterly to the Risk Oversight Committee.

Economic Capital – Methodologies are used for both operational and business risks to calculate risk sensitive capital allocations. These are allocated to business units which incur risk-based capital charges, as a consequence, providing an incentive to manage the risk within appetite levels. Additional investment is being made to enhance the Operational Risk Capital model to improve risk sensitivity and to obtain approval to apply the Advanced Measurement Approach (AMA) under the Basel II Accord when that option first becomes available in 2008.

54

Barclays PLC Annual Report 2004 

Risk management

Disclosures about certain trading activities including
non-exchange traded contracts

The Group delivers a fully integrated service to clients for base metals, precious metals, oil and oil-related products, power and gas and other commodities.

The Group offers both over the counter (OTC) and exchange traded derivatives in these commodities. The base and precious metals business also enters into outright metal purchase and sale transactions, while the power and gas business trades both physical forwards and derivative contracts.

The Group does not maintain any physical exposures in oil or oil-related products. The Group also develops and offers a range of commodity-related structured products.

The Group’s commodity business continues to expand, as market conditions allow, through the addition of new products and markets.

The Group’s principal commodity related derivative contracts are swaps, options, forwards and futures, which are similar in nature to such non-commodity related contracts. Commodity derivatives contracts include commodity specification and delivery location as well as forward date and notional value.

The fair values of commodity physical and derivative positions are determined through a combination of recognised market observable prices, exchange prices and established inter-commodity relationships. In common with all derivatives, the fair value of OTC commodity derivative contracts is either determined using a quoted market price or by using valuation models. Where a valuation model is used, the fair value is determined based on the expected cash flows under the terms of each specific contract, discounted back to present value. The expected cash flows for each contract are either determined using market parameters such as commodity price curves, commodity volatilities, commodity correlations, interest rate yield curves and foreign exchange rates, or derived from historical or other market prices.

Fair values generated by models are independently validated with reference to market price quotes, or price sharing with other institutions. However, where no observable market parameter is available then instrument fair value will include a provision for the uncertainty in that parameter based on sale price or subsequent traded levels.

Discounting of expected cash flows back to present value is achieved by constructing discount curves from the market price of observable interest rate products, such as deposits, interest rate futures and swaps. In addition, the Group maintains fair value adjustments reflecting the cost of credit risk (where this is not embedded in the fair value), and the cost of trading out of a position (all positions are marked to mid-market and hence some bid/offer transaction cost would be incurred).

The tables on page 56 analyse the overall fair value of the commodity derivative contracts by movement over time and source of fair value. Additionally, the positive fair value, adjusted for the impact of netting, of such contracts is analysed by counterparty credit risk rating.

55

Risk management
Disclosures about certain trading activities including non-exchange traded contracts

The following tables analyse the overall fair value of the commodity derivative contracts by movement over time and source of fair value. As at 31st December 2004 this reflects a gross positive fair value of £4,955m (31st December 2003: £1,982m) and a gross negative fair value of £4,780m (31st December 2003: £2,088m). Realised and unrealised profits related to physical commodity and commodity derivative activities are included with dealing profits. Physical commodity positions are held at fair value and reported with other assets in Note 21 on page 142.

Movement in fair value of commodity derivative positions

	Total			Total
	2004			2003
	£m			£m
Fair value of contracts outstanding at the beginning of the year		(106	)		40
Contracts realised or otherwise settled during the year		171			(8	)
Fair value of new contracts entered into during the year		313			(101	)
Other changes in fair value		(203	)		(37	)
Fair values of contracts outstanding at the end of the year		175			(106	)

Source of commodity derivative fair values

	Fair value of contracts at 31st December 2004
	Maturity			Maturity		Maturity		Maturity		Total
	less than			one to		four to		over		fair
	one year			three years		five years		five years		value
	£m			£m		£m		£m		£m
Prices actively quoted		(38	)		86		16		17		81
Prices provided by other external sources		(8	)		–		–		–		(8	)
Prices based on models and other valuation methods		(5	)		63		23		21		102
Total		(51	)		149		39		38		175

The following table analyses the positive fair value, adjusted for the impact of netting, arising on commodity derivative contracts. As at 31st December 2004, this reflects a gross positive fair value of £4,955m (31st December 2003: £1,982m) adjusted for the Group’s ability to net amounts due to the same counterparties (31st December 2004: £3,198m, 31st December 2003: £864m).

Analysis of net positive commodity derivative fair value by counterparty credit risk rating

	Total		Total
	value		value
	2004		2003
	£m		£m
A- to AAA		1,004		792
BBB- to BBB+		538		280
BB+ and below		215		46
Total		1,757		1,118

All credit exposures are actively managed by the Group. Refer to page 35 for more information on the Group’s approach to credit risk management. In particular, at 31st December 2004, 69% of all of the commodities credit exposure was to counterparties with cross asset class netting agreements, that is, netting agreements allowing exposure on commodities products to be reduced by amounts owed to the same counterparties in other asset classes. This percentage is consistent across the credit ratings applying to BBB+ and below as well as higher rated counterparties.

Additionally, collateral agreements are held with a majority of these same counterparties that allow collateral to be called against commodity exposures. All non-collateralised exposures are subject to credit limits, and credit or risk tendency reserves are created against these exposures if appropriate.

56

Barclays PLC Annual Report 2004 

Risk management

Derivatives

The use of derivatives and their sale to customers as risk management products is an integral part of the Group’s trading activities. These instruments are also used to manage the Group’s own exposure to fluctuations in interest and exchange rates as part of its asset and liability management activities.

Barclays Capital manages the trading derivatives book as part of the market risk book. This includes foreign exchange, interest rate, equity, commodity and credit derivatives. The policies regarding market risk management are outlined in the market risk management section on pages 47 to 50.

The policies for derivatives that are used to manage the Group’s own exposure to interest and exchange rate fluctuations are outlined in the treasury asset and liability management section on page 50.

Derivative instruments are contracts whose value is derived from one or more underlying financial instruments or indices defined in the contract. They include swaps, forward rate agreements, futures, options and combinations of these instruments and primarily affect the Group’s net interest income, dealing profits, commissions received and other assets and liabilities. Notional amounts of the contracts are not recorded on the balance sheet.

The Group participates both in exchange traded and OTC derivatives markets.

Exchange Traded Derivatives

The Group buys and sells financial instruments that are traded or cleared on an exchange, including interest rate swaps, futures and options on futures. Holders of exchange traded instruments provide margin daily with cash or other security at the exchange, to which the holders look for ultimate settlement.

Over the Counter Traded Derivatives (OTC)

The Group also buys and sells financial instruments that are traded over the counter, rather than on a recognised exchange.

These instruments range from commoditised transactions in derivative markets, to trades where the specific terms are tailored to the requirements of the Group’s customers. In many cases, industry standard documentation is used, most commonly in the form of a master agreement, with individual transaction confirmations. The existence of a signed master agreement is intended to give the Group protection in situations where a counterparty is in default, including the ability to net outstanding balances where the rules of offset are legally enforceable. For further explanation of the Group’s policies on netting, see Accounting policies on page 114.

Foreign Exchange Derivatives

The Group’s principal exchange rate related contracts are forward foreign exchange contracts, currency swaps and currency options. Forward foreign exchange contracts are agreements to buy or sell a specified quantity of foreign currency, usually on a specified future date at an agreed rate. A currency swap generally involves the exchange, or notional exchange, of equivalent amounts of two currencies and a commitment to exchange interest periodically until the principal amounts are re-exchanged on a future date.

Currency options provide the buyer with the right, but not the obligation, either to purchase or sell a fixed amount of a currency at a specified exchange rate on or before a future date. As compensation for assuming the option risk, the option writer generally receives a premium at the start of the option period.

Interest Rate Derivatives

The Group’s principal interest rate related contracts are interest rate swaps, forward rate agreements, basis swaps, caps, floors and swaptions. Included in this product category are transactions that include combinations of these features.

An interest rate swap is an agreement between two parties to exchange fixed rate and floating rate interest by means of periodic payments based upon a notional principal amount and the interest rates defined in the contract. Certain agreements combine interest rate and foreign currency swap transactions, which may or may not include the exchange of principal amounts. A basis swap is a form of interest rate swap, in which both parties exchange interest payments based on floating rates, where the floating rates are based upon different underlying reference indices. In a forward rate agreement, two parties agree a future settlement of the difference between an agreed rate and a future interest rate, applied to a notional principal amount. The settlement, which generally occurs at the start of the contract period, is the discounted present value of the payment that would otherwise be made at the end of that period.

Equity Derivatives

The Group’s principal equity related contracts are equity and stock index swaps and options (including warrants, which are equity options listed on an exchange). An equity swap is an agreement between two parties to exchange periodic payments, based upon a notional principal amount, with one side paying fixed or floating interest and the other side paying based on the actual return of the stock or stock index. An equity option provides the buyer with the right, but not the obligation, either to purchase or sell a specified stock, basket of stocks or stock index at a specified price or level on or before a specified date.

Credit Derivatives

The Group’s principal credit derivative related contracts include credit default swaps and total return swaps. A credit derivative is an arrangement whereby the credit risk of an asset (the reference asset) is transferred from the buyer to the seller of protection.

A credit default swap is a contract where the protection seller receives premium or interest related payments in return for contracting to make payments to the protection buyer upon a defined credit event. Credit events normally include bankruptcy, payment default on a reference asset or assets, or downgrades by a rating agency.

A total return swap is an instrument whereby the seller of protection receives the full return of the asset, including both the income and change in the capital value of the asset. The buyer in return receives a predetermined amount.

A description of how credit derivatives are used within the Group is provided on page 37.

A description of the impact of derivatives under US GAAP is set out on page 201.

Commodity Derivatives

The Group’s principal commodity related derivative contracts are swaps, options, forwards and futures. The main commodities transacted are oil, base metals, precious metals, US and UK natural gas, and UK electricity.

A description of commodity derivatives is provided on page 55.

57

Risk management

Statistical information

Statistical and Other Risk Information
This section of the report contains supplementary information that is more detailed or contains longer histories than the data presented in the discussion. For commentary on this information, please refer to the preceding text (pages 28 to 57).

Credit Risk Management

Table 1: Risk Tendency by Business Cluster

	2004		2003
	£m		£m
UK Banking		375		385
UK Retail Banking UK Business Banking		150 225		150 235
Private Clients and International		70		75
Private Clients International		5 65		5 70
Barclaycard		860		775
Barclays Capital		70		135
Transition Businesses		20		20
Total		1,395		1,390

(Also see chart on page 37.)

Table 2: Loans and advances

	2004		2003		2002
	£m		£m		£m
Retail businesses
Banks Customers		1,424 111,074		1,495 100,774		1,748 90,625
Total retail businesses		112,498		102,269		92,373
Wholesale businesses
Banks Customers		73,713 146,672		60,445 129,106		56,508 114,767
Total wholesale businesses		220,385		189,551		171,275
Total		332,883		291,820		263,648

(Also see chart on page 38.)

Table 3: Loans and advances by banking and trading books

	2004
	Customers		Banks		Total
	£m		£m		£m
Banking book		192,647		24,992		217,639
Trading book		65,099		50,145		115,244
Total		257,746		75,137		332,883

	2003
	Customers		Banks		Total
	£m		£m		£m
Banking book		170,919		17,270		188,189
Trading book		58,961		44,670		103,631
Total		229,880		61,940		291,820

58

Barclays PLC Annual Report 2004 

Table 4: Maturity analysis of loans and advances to banks

					Over three		Over one
					months		year but
			Not more		but not		not more
			than three		more than		than five		Over
	On demand		months		one year		years		five years		Total
At 31st December 2004	£m		£m		£m		£m		£m		£m
Banking business:
United Kingdom		733		5,510		1,067		10,533		3,508		21,351
Other European Union		177		540		204		268		–		1,189
United States		25		725		3		–		–		753
Rest of the World		275		819		479		123		3		1,699
Total banking business		1,210		7,594		1,753		10,924		3,511		24,992
Total trading business		1,500		44,289		4,356		–		–		50,145
Total		2,710		51,883		6,109		10,924		3,511		75,137

					Over three		Over one
					months		year but
			Not more		but not		not more
			than three		more than		than five		Over
	On demand		months		one year		years		five years		Total
At 31st December 2003	£m		£m		£m		£m		£m		£m
Banking business:
United Kingdom		629		4,299		586		5,127		3,674		14,315
Other European Union		116		1,525		28		12		21		1,702
United States		23		57		10		20		–		110
Rest of the World		295		605		192		48		3		1,143
Total banking business		1,063		6,486		816		5,207		3,698		17,270
Total trading business		830		39,660		4,180		–		–		44,670
Total		1,893		46,146		4,996		5,207		3,698		61,940

Table 5: Interest rate sensitivity of loans and advances to banks

	2004						2003
	Fixed		Variable				Fixed		Variable
	rate		rate		Total		rate		rate		Total
At 31st December	£m		£m		£m		£m		£m		£m
Banking business:
United Kingdom		14,561		6,790		21,351		7,221		7,094		14,315
Other European Union		1,012		177		1,189		1,523		179		1,702
United States		682		71		753		17		93		110
Rest of the World		1,347		352		1,699		781		362		1,143
Total banking business		17,602		7,390		24,992		9,542		7,728		17,270
Total trading business		23,575		26,570		50,145		25,607		19,063		44,670
Total		41,177		33,960		75,137		35,149		26,791		61,940

59

Risk management
Statistical information

Table 6: Interest rate sensitivity of loans and advances to customers

	2004						2003
	Fixed		Variable				Fixed		Variable
	rate		rate		Total		rate		rate		Total
At 31st December	£m		£m		£m		£m		£m		£m
Banking business:
United Kingdom		40,515		118,579		159,094		35,998		107,811		143,809
Other European Union		2,754		17,639		20,393		4,159		14,868		19,027
United States		1,915		6,069		7,984		1		3,572		3,573
Rest of the World		3,080		2,096		5,176		2,738		1,772		4,510
Total banking business		48,264		144,383		192,647		42,896		128,023		170,919
Total trading business		30,743		34,356		65,099		26,587		32,374		58,961
Total		79,007		178,739		257,746		69,483		160,397		229,880

Table 7: Loans and advances to customers booked in offices in the UK – banking business

	2004		2003		2002		2001		2000
At 31st December	£m		£m		£m		£m		£m
Financial institutions		11,947		7,721		6,158		5,616		4,215
Agriculture, forestry and fishing		1,947		1,766		1,747		1,626		1,689
Manufacturing		6,282		5,967		6,435		6,766		7,573
Construction		2,476		1,883		1,825		1,779		1,666
Property		7,933		6,341		5,695		5,600		5,130
Energy and water		936		1,286		1,290		1,153		1,120
Wholesale and retail distribution and leisure		9,751		8,886		7,858		7,571		7,531
Transport		2,275		2,579		2,366		1,894		1,353
Communications		454		476		694		368		180
Business and other services		14,281		12,030		11,693		10,581		9,894
Home loans		64,481		61,905		58,436		50,945		47,235
Other personal		23,313		21,905		21,357		19,678		18,200
Overseas customers		7,612		5,477		6,201		6,472		5,024
		153,688		138,222		131,755		120,049		110,810
Finance lease receivables		5,406		5,587		4,145		4,205		4,504
Total		159,094		143,809		135,900		124,254		115,314

(See also chart on page 40.)

The category ‘other personal’ includes credit cards, personal loans and personal overdrafts.

The industry classifications in tables 7-9 have been prepared at the level of the borrowing entity. This means that a loan to the subsidiary of a major corporation is classified by the industry in which the subsidiary operates, even though the parent’s predominant business may be in a different industry. Loans to customers domiciled outside the country where the office recording the transaction is located are shown in the table under ‘Overseas customers’ and not by industry.

60

Barclays PLC Annual Report 2004 

Table 8: Loans and advances to customers booked in offices in other European Union countries – banking business

	2004		2003		2002		2001		2000
At 31st December	£m		£m		£m		£m		£m
Financial institutions		822		1,205		371		500		436
Agriculture, forestry and fishing		156		147		165		240		303
Manufacturing		1,154		1,275		1,422		1,317		1,420
Construction		710		609		314		298		261
Property		169		346		137		241		182
Energy and water		337		409		367		282		372
Wholesale and retail distribution and leisure		502		426		215		283		140
Transport		481		566		252		318		172
Communications		47		40		173		185		83
Business and other services		2,339		1,251		1,648		1,679		1,284
Home loans		10,920		10,334		6,243		3,871		4,436
Other personal		2,283		1,769		721		661		582
Overseas customers		143		438		384		685		381
		20,063		18,815		12,412		10,560		10,052
Finance lease receivables		330		212		167		148		151
Total		20,393		19,027		12,579		10,708		10,203

See note under table 7.

Table 9: Loans and advances to customers in offices in the United States – banking business

	2004		2003		2002		2001		2000
At 31st December	£m		£m		£m		£m		£m
Financial institutions		1,510		919		1,036		1,053		616
Agriculture, forestry and fishing		–		1		3		–		–
Manufacturing		394		341		842		1,553		1,123
Construction		111		2		31		24		–
Property		371		1		15		21		30
Energy and water		946		1,358		2,229		1,567		1,440
Wholesale and retail distribution and leisure		353		77		141		160		214
Transport		379		468		1,248		931		580
Communications		138		153		46		66		88
Business and other services		715		220		441		901		2,174
Home loans		2,214		–		–		–		1
Other personal		58		–		–		267		6
Overseas customers		767		–		62		23		56
		7,956		3,540		6,094		6,566		6,328
Finance lease receivables		28		33		44		48		48
Total		7,984		3,573		6,138		6,614		6,376

See note under table 7.

Table 10: Loans and advances to customers booked in offices in the rest of the world – banking business

	2004		2003		2002		2001		2000
At 31st December	£m		£m		£m		£m		£m
Loans and advances		5,129		4,465		5,566		7,384		8,920
Finance lease receivables		47		45		33		32		30
Total		5,176		4,510		5,599		7,416		8,950

61

Risk management
Statistical information

Table 11: Total loans and advances to customers

	2004		2003		2002		2001		2000
At 31st December	£m		£m		£m		£m		£m
Banking business		192,647		170,919		160,216		148,992		140,843
Trading business		65,099		58,961		45,176		34,240		23,198
Total		257,746		229,880		205,392		183,232		164,041

Table 12: Maturity analysis of loans and advances to customers

					Over three		Over one
					months		year but
			Not more		but not		not more
			than three		more than		than five		Over
	On demand		months		one year		years		five years		Total
At 31st December 2004	£m		£m		£m		£m		£m		£m
Banking business:
United Kingdom
Corporate lending(a)		8,327		8,754		8,597		15,063		17,543		58,284
Other lending from United Kingdom offices		4,532		8,049		7,196		13,172		67,861		100,810
Total United Kingdom		12,859		16,803		15,793		28,235		85,404		159,094
Other European Union		951		2,807		5,709		3,308		7,618		20,393
United States		–		913		563		2,807		3,701		7,984
Rest of World		741		1,247		1,774		829		585		5,176
Total banking business		14,551		21,770		23,839		35,179		97,308		192,647
Total trading business		4,294		58,978		1,529		298		–		65,099
Total		18,845		80,748		25,368		35,477		97,308		257,746

					Over three		Over one
					months		year but
			Not more		but not		not more
			than three		more than		than five		Over
	On demand		months		one year		years		five years		Total
At 31st December 2003	£m		£m		£m		£m		£m		£m
Banking business:
United Kingdom
Corporate lending(a)		6,108		9,298		4,596		17,138		11,796		48,936
Other lending from United Kingdom offices		2,869		6,940		6,359		12,345		66,360		94,873
Total United Kingdom		8,977		16,238		10,955		29,483		78,156		143,809
Other European Union		597		2,497		2,591		2,507		10,835		19,027
United States		–		276		253		1,745		1,299		3,573
Rest of the World		601		2,151		495		764		499		4,510
Total banking business		10,175		21,162		14,294		34,499		90,789		170,919
Total trading business		2,004		54,996		1,615		335		11		58,961
Total		12,179		76,158		15,909		34,834		90,800		229,880

(Also see chart on page 40.)

Note

(a) In the UK, finance lease receivables are included in ‘Other lending’, although some leases are to corporate customers.

62

Barclays PLC Annual Report 2004 

Table 13: Loans and advances to borrowers in currencies other than the local currency of the borrower for countries where this exceeds 1% of total Group assets

									Commercial
					Banks				industrial
					and other		Governments		and other
	As % of				financial		and official		private
	assets		Total		institutions		institutions		sectors
			£m		£m		£m		£m
At 31st December 2004
United States		4.1		21,556		10,102		2		11,452
Germany		1.4		7,128		6,614		–		514
France		1.1		5,562		5,019		27		516
At 31st December 2003
United States		2.7		12,110		4,679		–		7,431
Germany		1.2		5,127		4,662		7		458
At 31st December 2002
United States		4.2		17,140		9,672		1		7,467
Germany		2.5		10,094		9,841		7		246
France		1.2		4,871		4,484		24		363

At 31st December 2004, there were no countries where Barclays had cross-currency loans to borrowers between 0.75% and 1% of total Group assets. At 31st December 2003, there were cross-currency loans to borrowers in France of between 0.75% and 1% of total Group assets, amounting to £3,570m. At 31st December 2002 there were cross-currency loans to borrowers in the Netherlands and Ireland of between 0.75% and 1% of total Group assets amounted to £7,552m.

Table 14: Off-balance sheet and other credit exposures as at 31st December

	2004		2003		2002
	£m		£m		£m
Off-balance sheet exposures
Contingent liabilities		38,559		33,694		26,546
Commitments to lend		134,051		114,847		101,378
On-balance sheet exposure
Balances arising from off-balance sheet financial instruments (OTC derivatives)		18,174		15,812		13,454
London Metal Exchange warrants and other trading positions		952		1,290		829
Debt securities – held for trading		87,671		59,812		53,961
– non-trading		39,757		37,581		40,268

Current year credit cards commitments to lend have been calculated on a contractual basis rather than a modelled basis. Had this method been applied in earlier years, reported commitments would have been increased by £5,899m to £120,746m in 2003 and by £5,230m to £106,608m in 2002.

63

Risk management
Statistical information

Table 15: Notional principal amounts of credit derivatives at 31st December

	2004		2003		2002
	£m		£m		£m
Credit derivatives held or issued for trading purposes		186,275		43,256		10,665
Credit derivatives held for the purpose of managing non-trading exposures		5,133		4,194		7,736
Total		191,408		47,450		18,401

Table 16: Non-performing loans summary

	2004		2003		2002		2001		2000
	£m		£m		£m		£m		£m
Non-accrual loans		2,115		2,261		2,542		1,923		1,539
Accruing loans where interest is being suspended with or without provisions		492		629		611		561		496
Other accruing loans against which provisions have been made		842		821		819		830		692
Sub total		3,449		3,711		3,972		3,314		2,727
Accruing loans 90 days or more overdue, against which no provisions have been made		521		590		690		648		713
Reduced rate loans		15		4		6		5		6
Total non-performing loans		3,985		4,305		4,668		3,967		3,446

64

Barclays PLC Annual Report 2004 

Table 17: Non-performing loans

	2004		2003		2002		2001		2000
	£m		£m		£m		£m		£m
Non-accrual loans:
United Kingdom		1,583		1,572		1,557		1,292		1,223
Other European Union		194		143		108		90		96
United States		249		383		744		306		119
Rest of the World		89		163		133		235		101
Total		2,115		2,261		2,542		1,923		1,539
Accruing loans where interest is being suspended with or without provisions:
United Kingdom		431		559		480		386		351
Other European Union		31		29		35		30		36
United States		–		–		–		–		–
Rest of the World		30		41		96		145		109
Total		492		629		611		561		496
Other accruing loans against which provisions have been made:
United Kingdom		764		760		751		756		543
Other European Union		27		35		27		20		71
United States		26		–		–		11		2
Rest of the World		25		26		41		43		76
Total		842		821		819		830		692
Sub totals:
United Kingdom		2,778		2,891		2,788		2,434		2,117
Other European Union		252		207		170		140		203
United States		275		383		744		317		121
Rest of the World		144		230		270		423		286
Total		3,449		3,711		3,972		3,314		2,727
Accruing loans 90 days overdue, against which no provisions have been made:
United Kingdom		484		566		687		621		695
Other European Union		34		24		3		–		1
United States		1		–		–		–		–
Rest of the World		2		–		–		27		17
Total		521		590		690		648		713
Reduced rate loans:
United Kingdom		2		4		4		4		6
Other European Union		–		–		–		–		–
United States		13		–		–		–		–
Rest of the World		–		–		2		1		–
Total		15		4		6		5		6
Total non-performing loans:
United Kingdom		3,264		3,461		3,479		3,059		2,818
Other European Union		286		231		173		140		204
United States		289		383		744		317		121
Rest of the World		146		230		272		451		303
Total		3,985		4,305		4,668		3,967		3,446

(Also see chart on page 42.)

Table 18: Potential problem loans

	2004		2003		2002		2001		2000
	£m		£m		£m		£m		£m
United Kingdom		648		989		852		872		659
Other European Union		–		23		–		2		2
United States		27		259		241		369		313
Rest of the World		81		56		69		63		64
Total		756		1,327		1,162		1,306		1,038

(Also see chart on page 42.)

65

Risk management
Statistical information

Table 19: Interest foregone on non-performing loans

	Year ended 31st December
	2004		2003
	£m		£m
Interest income that would have been recognised under the original contractual terms of the non-performing loans:
United Kingdom		266		247
Rest of the World		52		65
		318		312

Interest income of approximately £59m (2003: £47m) from such loans was included in profit, of which £54m (2003: £39m) related to domestic lending and the remainder to foreign lending. The balance was not received or was suspended.

Table 20: Analysis of the provisions charge for bad and doubtful debts

	Year ended 31st December
	2004			2003		2002			2001			2000
	£m			£m		£m			£m			£m
Net specific provisions charge/(release)
United Kingdom		1,198			1,132		1,041			964			688
Other European Union		57			37		14			20			12
United States		33			84		385			136			17
Rest of the World		13			67		46			45			60
Total net specific provisions charge		1,301			1,320		1,486			1,165			777
General provisions (release)/charge		(210	)		27		(2	)		(16	)		40
Total		1,091			1,347		1,484			1,149			817

(Also see chart on page 44.)

Table 21: Bad debt provisions charge ratios (‘Loan loss ratios’)

	Year ended 31st December
	2004			2003		2002		2001			2000
	%			%		%		%			%
Provisions charge as a percentage of average banking loans and advances for the year:
Specific provisions charge		0.65			0.71		0.85		0.74			0.64
General provisions charge		(0.11	)		0.02		–		(0.01	)		0.03
		0.54			0.73		0.85		0.73			0.67
Amounts written off (net of recoveries)		0.67			0.74		0.64		0.53			0.47
Provisions charge as a percentage of average loans and advances for the year (including trading business):
Specific provisions charge		0.41			0.46		0.58		0.52			0.44
General provisions charge		(0.07	)		0.01		–		–			0.02
Total		0.34			0.47		0.58		0.52			0.46
Amounts written off (net of recoveries)		0.42			0.48		0.43		0.37			0.32

(Also see chart on page 44.)

66

Barclays PLC Annual Report 2004 

Table 22: Analysis of provision balances for bad and doubtful debts

	As at 31st December
	2004		2003		2002		2001		2000
	£m		£m		£m		£m		£m
Specific provisions
United Kingdom		1,860		1,856		1,790		1,605		1,343
Other European Union		104		97		84		89		112
United States		128		121		257		89		20
Rest of the World		110		159		130		188		118
Total specific provision balances		2,202		2,233		2,261		1,971		1,593
General provision balances		564		795		737		745		760
Total provision balances		2,766		3,028		2,998		2,716		2,353
Average loans and advances for the year (excluding trading business)		200,180		184,765		174,764		157,904		122,333
(including trading business)		317,136		285,963		256,789		223,221		176,938

Table 23: Provisions balance ratios

	As at 31st December
	2004		2003		2002		2001		2000
	%		%		%		%		%
Excluding trading business
Provisions balance at end of year as a percentage of loans and advances at end of year:
Specific provision balances		1.01		1.19		1.29		1.22		1.06
General provision balances		0.25		0.42		0.42		0.46		0.51
		1.26		1.61		1.71		1.68		1.57
Including trading business
Provisions balance at end of year as a percentage of loans and advances at end of year:
Specific provision balances		0.66		0.77		0.86		0.85		0.79
General provision balances		0.17		0.27		0.28		0.32		0.38
		0.83		1.04		1.14		1.17		1.17

Table 24: Movements in provisions charge for bad and doubtful debts

	2004			2003			2002			2001			2000
	£m			£m			£m			£m			£m
Provisions balance at beginning of year		3,028			2,998			2,716			2,353			1,983
Acquisitions and disposals		21			62			(11	)		46			119
Exchange and other adjustments		(34	)		(18	)		(77	)		(1	)		4
Amounts written off		(1,595	)		(1,474	)		(1,220	)		(973	)		(683	)
Recoveries		255			113			106			142			113
Provisions charged against profit		1,091			1,347			1,484			1,149			817
Provisions balance at end of year		2,766			3,028			2,998			2,716			2,353

(Also see chart on page 45.)

67

Risk management
Statistical information

Table 25: Amounts written off

	2004			2003			2002			2001			2000
	£m			£m			£m			£m			£m
United Kingdom		(1,411	)		(1,175	)		(950	)		(814	)		(595	)
Other European Union		(58	)		(54	)		(31	)		(36	)		(45	)
United States		(71	)		(215	)		(215	)		(94	)		(26	)
Rest of the World		(55	)		(30	)		(24	)		(29	)		(17	)
Total amounts written off		(1,595	)		(1,474	)		(1,220	)		(973	)		(683	)

Table 26: Recoveries

	2004			2003			2002			2001			2000
	£m			£m			£m			£m			£m
United Kingdom		(220	)		(95	)		(88	)		(106	)		(100	)
Other European Union		(8	)		(7	)		(7	)		(5	)		(6	)
United States		(15	)		(10	)		(9	)		(27	)		(4	)
Rest of the World		(12	)		(1	)		(2	)		(4	)		(3	)
Total recoveries		(255	)		(113	)		(106	)		(142	)		(113	)

Table 27: Provisions charged against profit

	2004			2003			2002			2001			2000
	£m			£m			£m			£m			£m
New and increased specific provisions charge:
United Kingdom		1,571			1,373			1,210			1,157			843
Other European Union		82			57			33			35			35
United States		67			118			404			173			27
Rest of the World		47			80			72			75			76
		1,767			1,628			1,719			1,440			981
Releases of specific provisions charge:
United Kingdom		(153	)		(146	)		(81	)		(87	)		(55	)
Other European Union		(17	)		(13	)		(12	)		(10	)		(17	)
United States		(19	)		(24	)		(10	)		(10	)		(6	)
Rest of the World		(22	)		(12	)		(24	)		(26	)		(13	)
		(211	)		(195	)		(127	)		(133	)		(91	)
Recoveries		(255	)		(113	)		(106	)		(142	)		(113	)
Net specific provisions charge		1,301			1,320			1,486			1,165			777
General provision (release)/charge		(210	)		27			(2	)		(16	)		40
Net provisions charge to profit		1,091			1,347			1,484			1,149			817

68

Barclays PLC Annual Report 2004 

Table 28: Specific provision charges for bad and doubtful debts by industry

	Net specific provision charged for the year
	2004			2003			2002			2001			2000
	£m			£m			£m			£m			£m
United Kingdom:
Banks and other financial institutions		(1	)		13			1			(2	)		7
Agriculture, forestry and fishing		–			(3	)		(1	)		6			6
Manufacturing		28			79			80			62			8
Construction		10			(23	)		41			12			7
Property		(42	)		(3	)		8			3			1
Energy and water		3			13			22			1			8
Wholesale and retail distribution and leisure		66			38			37			44			21
Transport		(19	)		100			7			6			2
Communications		(1	)		1			16			1			–
Business and other services		64			76			62			75			27
Home loans		17			9			4			8			10
Other personal		890			757			748			782			577
Overseas customers		181			66			13			(34	)		6
Finance lease receivables		2			9			3			–			8
		1,198			1,132			1,041			964			688
Foreign		103			188			445			201			89
		1,301			1,320			1,486			1,165			777

The category ‘other personal’ includes credit cards, personal loans and personal overdrafts.

The industry classifications in tables 28, 29 and 30 have been prepared at the level of the borrowing entity. This means that a loan to the subsidiary of a major corporation is classified by the industry in which the subsidiary operates, even though the parent’s predominant business may be in a different industry. Loans to customers domiciled outside the country where the office recording the transaction is located are shown in the chart under ‘Overseas customers’ and not by industry.

Table 29: Specific provision balances for bad and doubtful debts by industry

	Specific provision balances as at 31st December
	2004				2003				2002				2001				2000
	£m		%		£m		%		£m		%		£m		%		£m		%
United Kingdom:
Banks and other financial institutions		7		0.3		12		0.5		1		–		5		0.3		7		0.4
Agriculture, forestry and fishing		4		0.2		5		0.2		7		0.3		13		0.7		11		0.7
Manufacturing		37		1.7		58		2.6		98		4.3		49		2.5		43		2.7
Construction		6		0.3		7		0.3		35		1.6		6		0.3		8		0.5
Property		26		1.2		3		0.1		9		0.4		8		0.4		8		0.5
Energy and water		23		1.0		27		1.2		28		1.3		10		0.5		8		0.5
Wholesale and retail distribution and leisure		70		3.2		52		2.3		54		2.4		60		3.0		42		2.6
Transport		55		2.5		103		4.6		7		0.3		6		0.3		4		0.3
Communications		13		0.6		15		0.7		15		0.7		1		0.1		1		0.1
Business and other services		105		4.8		121		5.4		92		4.1		77		3.9		40		2.5
Home loans		58		2.6		55		2.5		53		2.3		60		3.0		61		3.8
Other personal		1,354		61.5		1,359		60.9		1,343		59.4		1,252		63.5		1,041		65.4
Overseas customers		88		4.0		24		1.1		39		1.7		52		2.6		58		3.6
Finance lease receivables		14		0.6		15		0.7		9		0.4		6		0.3		11		0.7
		1,860		84.5		1,856		83.1		1,790		79.2		1,605		81.4		1,343		84.3
Foreign		342		15.5		377		16.9		471		20.8		366		18.6		250		15.7
		2,202		100.0		2,233		100.0		2,261		100.0		1,971		100.0		1,593		100.0

See Note under table 28.

69

Risk management
Statistical information

Table 30: Analysis of amounts written off and recovered by industry

	Amounts written off for the year										Recoveries of amounts previously written off
	2004		2003		2002		2001		2000		2004		2003		2002		2001		2000
	£m		£m		£m		£m		£m		£m		£m		£m		£m		£m
United Kingdom:
Banks and other financial institutions		7		14		2		3		13		3		12		–		3		4
Agriculture, forestry and fishing		2		–		4		7		6		1		1		2		2		2
Manufacturing		79		126		72		65		30		30		8		22		11		16
Construction		13		19		15		16		8		2		14		3		2		2
Property		2		5		10		5		5		69		1		2		1		3
Energy and water		9		15		4		1		2		2		–		1		–		–
Wholesale and retail distribution and leisure		55		45		53		35		34		7		5		11		9		12
Transport		44		5		7		4		3		15		1		1		–		1
Communications		2		1		2		–		–		1		–		–		–		–
Business and other services		96		58		65		57		33		16		11		13		9		11
Home loans		19		11		11		14		15		5		3		1		4		3
Other personal		963		790		692		599		435		68		38		31		29		28
Overseas customers		116		82		9		2		7		–		–		–		35		17
Finance lease receivables		4		4		4		6		4		1		1		1		1		1
		1,411		1,175		950		814		595		220		95		88		106		100
Foreign		184		299		270		159		88		35		18		18		36		13
		1,595		1,474		1,220		973		683		255		113		106		142		113

See Note under table 28.

Table 31: Total provisions balance coverage of non-performing loans

	2004		2003		2002		2001		2000
	%		%		%		%		%
United Kingdom		72.4		74.2		71.2		72.5		71.1
Other European Union		55.6		71.4		61.8		78.6		72.1
United States		49.5		39.2		43.7		61.8		81.0
Rest of the World		95.9		83.9		61.8		59.2		64.7
Total coverage of non-performing loans		70.4		71.5		65.9		70.4		71.0

(Also see chart on page 46.)

Table 32: Total provisions balance coverage of potential credit risk lending (NPLs and PPLs)

	2004		2003		2002		2001		2000
	%		%		%		%		%
United Kingdom		60.4		57.7		57.2		56.4		57.7
Other European Union		55.6		65.0		61.8		77.5		71.4
United States		45.3		23.4		33.0		28.6		22.6
Rest of the World		61.7		67.5		49.3		51.9		53.4
Total coverage of potential credit risk lending		59.2		54.6		52.8		52.9		54.5

(Also see chart on page 46.)

70

Barclays PLC Annual Report 2004 

Table 33: Ratios of general and specific provision balances

	2004		2003		2002		2001		2000
	%		%		%		%		%
Specific provisions balances coverage of non-performing loans		55.3		51.9		48.4		49.7		46.2
General provisions balances coverage of performing loans (excluding trading book)		0.26		0.43		0.43		0.47		0.52
General provisions coverage of performing loans (including trading book)		0.17		0.28		0.28		0.33		0.38

(Also see chart on page 46.)

Liquidity Risk Management

Table 34: Analysis of weighted-average receive fixed and pay fixed rates by reset maturity date and nominal amount at 31st December 2004

	Sterling denominated contracts								Non-sterling denominated contracts
	Pay fixed				Receive fixed				Pay fixed				Receive fixed
	Nominal		Average		Nominal		Average		Nominal		Average		Nominal		Average
	amount		rate		amount		rate		amount		rate		amount		rate
	£m		%		£m		%		£m		%		£m		%
Reset maturity date
Not more than three months		993		4.60		1,380		6.23		776		2.66		671		2.67
Over three months but not more than six months		2,633		5.11		1,242		6.43		778		2.70		385		3.70
Over six months but not more than one year		1,553		4.62		4,221		5.70		3,063		2.88		854		4.58
Over one year but not more than five years		5,806		5.24		24,250		5.04		2,382		4.23		4,711		4.03
Over five years		4,475		4.63		6,520		5.92		1,499		4.53		5,647		6.45
Total		15,460		4.94		37,613		5.36		8,498		3.51		12,268		5.10

Table 35: Analysis of weighted-average receive variable and pay variable rates by reset maturity date and nominal amount at 31st December 2004

	Sterling denominated contracts								Non-sterling denominated contracts
	Receive variable				Pay variable				Receive variable				Pay variable
	Nominal		Average		Nominal		Average		Nominal		Average		Nominal		Average
	amount		rate		amount		rate		amount		rate		amount		rate
	£m		%		£m		%		£m		%		£m		%
Reset maturity date
Not more than three months		17,093		4.24		29,649		5.10		10,070		2.26		13,073		2.66
Over three months but not more than six months		5,725		4.96		15,821		5.03		1,601		2.35		2,433		2.51
Over six months but not more than one year		542		5.05		43		5.31		633		2.19		144		2.95
Over one year but not more than five years		–		–		–		–		–		–		424		2.27
Over five years		–		–		–		–		–		–		–		–
Total		23,360		4.44		45,513		5.07		12,304		2.26		16,074		2.63

71

Section 2
Results

73	Financial data Barclays PLC
75	Business description
78	Financial review
	78 Overview
	80 Critical accounting estimates
	83 Results by nature of income and expense – Net interest income
	84 Average balance sheet
	88 Results by nature of income and expense – continued
	92 Analysis of results by business
	99 Total assets and liabilities and capital resources
	102 Deposits and short-term borrowings
	103 Securities
	105 Life assurance business
	106 Off balance sheet arrangements
109	Independent Auditors’ report
110	Consolidated accounts Barclays PLC
	110 Accounting policies
	117 Accounting presentation
	118 Consolidated profit and loss account
	119 Statement of total recognised gains and losses
	120 Consolidated balance sheet
	122 Consolidated statement of changes in reserves
	123 Consolidated cash flow statement
	124 Parent company accounts
	125 Notes to the accounts

211	SEC Form 20-F cross reference and other information
	213 Glossary
214	Barclays Bank PLC data
225	US GAAP financial data
226	Reconciliation of economic profit
227	Shareholder information
	227 Dividends
	228 Trading Market for Ordinary Shares of Barclays PLC
	229 Shareholdings at 31st December 2004
	230 Memorandum and Articles of Association
	231 Taxation
	233 Exchange Controls and Other Limitations Affecting Security Holders
	233 Documents on Display
	233 Shareholder Enquiries
234	Group senior management and principal offices
Exhibit 1.2
Exhibit 2.1
Exhibit 4.5
Exhibit 4.6
Exhibit 4.8
Exhibit 4.14
Exhibit 4.15
Exhibit 4.16
Exhibit 4.17
Exhibit 4.18
Exhibit 4.19
Exhibit 4.20
Exhibit 4.21
Exhibit 4.22
Exhibit 4.23
Exhibit 7.1
Exhibit 7.2
Exhibit 7.3
Exhibit 7.4
Exhibit 8.1
Exhibit 12.1
Exhibit 13.1
Exhibit 14.1

72 

Barclays PLC Annual Report 2004 

Financial data Barclays PLC

Consolidated profit and loss account summary^(a)

	2004			2003			2002			2001			2000
	£m			£m			£m			£m			£m
Interest receivable		13,665			12,427			12,044			13,458			11,788
Interest payable		(6,823	)		(5,823	)		(5,839	)		(7,492	)		(6,682	)
Profit on redemption/repurchase of loan capital		–			–			–			–			2
Net interest income		6,842			6,604			6,205			5,966			5,108
Fees and commissions receivable		5,672			4,896			4,454			4,202			3,676
Less: fees and commissions payable		(706	)		(633	)		(529	)		(465	)		(320	)
Dealing profits		1,493			1,054			833			1,011			677
Other operating income		644			490			364			428			353
Operating income		13,945			12,411			11,327			11,142			9,494
Administration expenses – staff costs		(4,998	)		(4,295	)		(3,755	)		(3,714	)		(3,219	)
Administration expenses – other		(2,758	)		(2,404	)		(2,312	)		(2,303	)		(1,967	)
Depreciation		(295	)		(289	)		(303	)		(308	)		(255	)
Goodwill amortisation		(299	)		(265	)		(254	)		(229	)		(51	)
Operating expenses		(8,350	)		(7,253	)		(6,624	)		(6,554	)		(5,492	)
Operating profit before provisions		5,595			5,158			4,703			4,588			4,002
Provisions for bad and doubtful debts		(1,091	)		(1,347	)		(1,484	)		(1,149	)		(817	)
Provisions for contingent liabilities and commitments		(2	)		1			(1	)		(1	)		1
Provisions		(1,093	)		(1,346	)		(1,485	)		(1,150	)		(816	)
Operating profit		4,502			3,812			3,218			3,438			3,186
(Loss)/profit from joint ventures		(3	)		1			(5	)		(1	)		(1	)
Profit/(loss) from associated undertakings		59			28			(5	)		(8	)		(7	)
Exceptional items		45			4			(3	)		(4	)		214
Profit on ordinary activities before tax		4,603			3,845			3,205			3,425			3,392
Tax on profit on ordinary activities		(1,289	)		(1,076	)		(955	)		(943	)		(901	)
Profit on ordinary activities after tax		3,314			2,769			2,250			2,482			2,491
Minority interests (including non-equity interests)		(46	)		(25	)		(20	)		(36	)		(46	)
Profit for the financial year attributable to the members of Barclays PLC		3,268			2,744			2,230			2,446			2,445
Dividends		(1,538	)		(1,340	)		(1,206	)		(1,110	)		(927	)
Profit retained for the financial year		1,730			1,404			1,024			1,336			1,518

Selected financial statistics

Earnings per ordinary share	51.2p	42.3p	33.7p	36.8p	40.4p
Dividends per ordinary share	24.00p	20.50p	18.35p	16.63p	14.50p
Dividend payout ratio	46.9%	48.5%	54.5%	45.2%	35.9%
Attributable profit before tax as a percentage of:
average shareholders’ funds	26.7%	23.6%	21.0%	23.9%	33.8%
Attributable profit after tax as a percentage of:
average shareholders’ funds	19.2%	17.0%	14.7%	17.4%	24.8%
average total assets (Note (b))	0.5%	0.6%	0.5%	0.6%	0.8%
Average United States Dollar exchange rate used in preparing the accounts	1.83	1.64	1.50	1.44	1.52
Average euro exchange rate used in preparing the accounts	1.47	1.45	1.59	1.61	1.64

See Notes on page 74.

73

Financial data Barclays PLC

Consolidated balance sheet summary^(a)

	2004		2003		2002		2001		2000
	£m		£m		£m		£m		£m
Assets
Loans and advances to banks and customers		330,077		288,743		260,572		228,382		198,536
Other assets		177,009		139,818		129,136		113,917		102,484
		507,086		428,561		389,708		342,299		301,020
Infrastructure		6,625		6,624		6,015		6,137		6,450
		513,711		435,185		395,723		348,436		307,470
Retail life-fund assets attributable to policyholders		8,378		8,077		7,284		8,170		8,711
Total assets		522,089		443,262		403,007		356,606		316,181
Liabilities
Deposits by banks, customer accounts and debt securities in issue		396,548		328,529		304,817		273,073		240,607
Other liabilities		86,568		77,660		64,067		50,763		45,715
		483,116		406,189		368,884		323,836		286,322
Capital resources
Undated loan capital		6,149		6,310		6,678		5,054		4,022
Dated loan capital		6,128		6,029		4,859		4,933		3,698
Minority interests (including non-equity interests)		901		283		156		134		250
Shareholders’ funds: equity		17,417		16,374		15,146		14,479		13,178
		30,595		28,996		26,839		24,600		21,148
		513,711		435,185		395,723		348,436		307,470
Retail life-fund liabilities attributable to policyholders		8,378		8,077		7,284		8,170		8,711
Total liabilities and shareholders’ funds		522,089		443,262		403,007		356,606		316,181

Weighted risk assets and capital ratios

Weighted risk assets	218,601	188,997	172,748	158,873	147,040
Tier 1 ratio	7.6%	7.9%	8.2%	7.8%	7.2%
Risk asset ratio	11.5%	12.8%	12.8%	12.5%	11.0%

Selected financial statistics

Average shareholders’ funds as a percentage of average total assets (Note (b))	2.7%	3.3%	3.5%	3.7%	3.2%
Net asset value per ordinary share	270p	250p	230p	217p	198p
Year-end United States Dollar exchange rate used in preparing the accounts	1.92	1.78	1.61	1.45	1.49
Year-end euro exchange rate used in preparing the accounts	1.41	1.41	1.54	1.64	1.60

Notes

(a)	The financial information on pages 73 and 74 is extracted from the published accounts for the last five years, restated where appropriate to accord with the current accounting policies of the Group (see page 110). This information should be read together with, and is qualified by reference to, the accounts and Notes included in this report.
(b)	For the purposes of this summary, the retail life-fund assets attributable to policyholders have been excluded from average total assets.
	Note 52 to the accounts provides a reconciliation of net profit and shareholders’ funds between the amounts calculated under UK GAAP and US GAAP.

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Barclays PLC Annual Report 2004 

Business description

UK Banking
UK Banking delivers banking solutions to Barclays UK retail and business banking customers. It offers a range of integrated products and services and access to the expertise of other Group businesses. Customers are served through a variety of channels comprising: the branch network, automated teller machines, telephone banking, online banking and relationship managers. UK Banking is managed through two business areas, UK Retail Banking and UK Business Banking.

UK Retail Banking
UK Retail Banking comprises Personal Customers, Mortgages, Small Business and UK Premier. The bringing together of these businesses enables the building of broader and deeper relationships with both existing and new customers. Personal Customers and Mortgages provide a wide range of products and services to over 14 million retail customers, including current accounts, savings, mortgages, and general insurance. Small Business provides banking services to 566,000 small businesses. UK Premier provides banking, investment products and advice to some 273,000 affluent customers.

UK Business Banking
UK Business Banking provides relationship banking to the Group’s larger and medium business customers in the United Kingdom. Customers are served by a network of relationship and industry sector specialist managers who provide local access to an extensive range of products and services, as well as offering business information and support. Customers are also offered access to the products and expertise of other businesses in the Group, particularly Barclays Capital.

Private Clients and International
Private Clients and International manages Barclays wealth management operations and the Group’s international retail and commercial banking activities. It is managed as two distinct businesses.

Private Clients
Private Clients serves affluent, high net worth and corporate clients, primarily in the UK and continental Europe, providing private banking, offshore banking, stockbroking and asset management services, as well as financial planning services to a broader customer base. Private Clients comprises two businesses: International and Private Banking; and Wealth Solutions (which includes Barclays Financial Planning, Barclays Stockbrokers and the Gerrard business, which was acquired in 2003). Through Wealth Solutions, Private Clients delivers investment products to UK Retail Banking. Private Clients also includes the closed life assurance activities.

International
International provides a range of banking services, including current accounts, savings, investments, mortgages and consumer loans to personal and corporate customers across Spain, Portugal, France, Italy, the Caribbean, Africa and the Middle East. International also includes the results of the FirstCaribbean business, accounted for as an associated undertaking.

Barclaycard
Barclaycard is a multi-brand credit card and consumer lending business with an increasing international presence and is one of the leading credit card businesses in Europe.

In the UK, Barclaycard operates the Barclaycard branded credit cards, Barclays branded consumer loans – particularly Barclayloan – and also comprises FirstPlus, Clydesdale Financial Services and Monument credit cards.

Outside the UK, Barclaycard International is active in the United States, Germany, Spain, Greece, Italy, Portugal, Republic of Ireland and across Africa. The acquisition of the US credit card issuer, Juniper Financial Corporation, was completed on 1st December 2004. Juniper provides a platform for the expansion of Barclaycard’s international business into the US credit card market.

Barclaycard Business processes card payments for retailers and merchants and issues cards to corporate customers.

Barclaycard works closely with other parts of the Group, including UK Retail Banking, UK Business Banking and International, to leverage their distribution capability.

Barclays Capital
Barclays Capital is a leading global investment bank which provides large corporate, institutional and government clients with solutions to their financing and risk management needs.

The Barclays Capital business model focuses on a broad span of financing and risk management services. It services a wide variety of client needs, from capital raising and managing foreign exchange, interest rate and commodity risks, through to providing technical advice and expertise.

Activities are primarily divided between two areas: Rates, which includes fixed income, foreign exchange, commodities, emerging markets, money markets sales, trading and research, prime brokerage and equity related activities; and Credit, which includes origination, sales, trading and research relating to loans, debt capital markets, structured capital markets, commercial mortgage backed securities, private equity and large asset leasing.

75

Business Description

Barclays Global Investors
Barclays Global Investors (BGI) is one of the world’s largest asset managers and a leading global provider of investment management products and services.

BGI offers structured investment strategies such as indexing, global asset allocation and risk controlled active products, including hedge funds. BGI also provides related investment services such as securities lending, cash management and portfolio transition services. In addition, BGI is the global product leader in Exchange Traded Funds (iShares), with over 100 funds for institutions and individuals trading in ten global markets. BGI’s investment philosophy is founded on managing all dimensions of performance with a consistent focus on controlling risk, return and cost.

Head Office Functions and Other Operations
Head office functions comprise all the Group’s central costs, including the following areas that fall within Central Support: Executive Management, Finance, Treasury, Marketing, Communications, Human Resources, Strategy and Planning, Internal Audit, Legal, Corporate Secretariat, Tax, Compliance and Risk. Costs incurred wholly on behalf of the business units are recharged to them.

Transition Businesses comprise discontinued South American and Middle Eastern corporate banking businesses and other centrally managed Transition Businesses. These non-core relationships are managed separately with the objective of maximising the recovery from the assets concerned.

Central items include internal fees charged by Barclays Capital for structured capital markets activities, income from the management of the Group’s operational premises, property related services and other central items including activities which support the operating business.

Competition and Outlook
The Barclays Group operates in a number of highly competitive environments. Competitors include other banks, brokerage firms, investment banking companies, credit card companies, mortgage companies, leasing companies, and a variety of other financial services and advisory companies.

The UK market remains highly competitive and innovative. Competition comes both from incumbent players and new market entrants. The landscape is expected to remain highly competitive in all our businesses. Barclays remains at the forefront of market innovation to introduce new propositions to the market, and we are confident that the Group’s portfolio of businesses, combined with a focus on improving franchise health and the continued application of value-based management principles, will stand the Group in good stead to meet the challenges ahead.

The recent growth in the UK economy may weaken in the short term, driven by a cooling in the consumer market in response to a more subdued housing market and also by a weaker international economy. The US economy is expected to be more subdued, partly because of oil price strength but also because of the need to resolve imbalances in the economy, in particular the federal and current account deficits. This may have important implications for growth, interest rates and exchange rates around the world, and particularly for Continental Europe, where growth has been dependent on exports.

The financial services industry has undergone consolidation in recent years, as companies involved in a broad range of financial services have merged, and this is expected to continue. This consolidation could result in competition becoming more intense, as firms continue to compete with companies that may be larger, better capitalised or have stronger local presences in certain geographies.

Supervision and Regulation
Barclays is an international financial services group involved primarily in Banking, Investment Banking and Asset Management, and has operations in some 60 countries. The Group’s operations, including its overseas offices subsidiary and associated undertakings, are subject to rules and regulations, including reserve and reporting requirements and conduct of business requirements imposed by the relevant central banks and regulatory authorities.

In the UK, the Financial Services Authority (FSA) is the independent body responsible for the regulation of deposit taking, life insurance and investment business. From 31st October 2004, the FSA assumed responsibility for the regulation of mortgage lending, sales and administration and from 14th January 2005, for the sale and administration of general insurance contracts. The FSA was established by the Government and it exercises statutory powers under the Financial Services and Markets Act 2000 (FSMA).

Barclays Bank PLC is authorised by the FSA to carry on a range of regulated activities within the UK and is subject to consolidated supervision. In its role as supervisor, the FSA is seeking to ensure the safety and soundness of financial institutions with the aim of strengthening, but not guaranteeing, the protection of customers.

The FSA’s continuing supervision of financial institutions authorised by it is conducted through a variety of regulatory tools, including the collection of information from statistical and prudential returns, reports obtained from skilled persons, visits to firms and regular meetings with management to discuss issues such as performance, risk management and strategy.

Under the FSA’s risk-based approach to supervision, the starting point for the FSA’s supervision of all financial institutions is based on a systematic analysis of the risk profile for each authorised firm. The FSA has adopted a homogeneous risk, processes and resourcing model in its approach to its supervisory responsibilities (known as the ARROW model) and the results of the risk assessment are used by the FSA to develop a risk mitigation programme for a firm. The FSA also promulgates requirements that banks and other financial institutions are required to meet on matters such as capital adequacy (see Capital ratios on pages 100 and 101), limits on large exposures to individual entities and groups of closely connected entities, and liquidity.

Banks, insurance companies and other financial institutions in the UK are subject to a single financial services compensation scheme (the Financial Services Compensation Scheme) where an authorised firm is unable or is likely to be unable to meet claims made against it due to its financial circumstances. Different levels of compensation are available to eligible claimants depending upon whether the protected claim is in relation to a deposit, a contract of insurance or protected investment business. The manager of the Scheme is able to make an offer of compensation or, in respect of insurance contracts, offer to continue cover or provide assistance to an insurance undertaking to

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Barclays PLC Annual Report 2004 

allow it to continue insurance business in accordance with the rules of the Scheme. Most deposits made with branches of Barclays Bank PLC within the European Economic Area (EEA) which are denominated in sterling or other EEA currencies (including the euro) are covered by the Scheme. Most claims made in respect of designated investment business will also be protected claims if the business was carried on from the UK or from a branch of the bank or investment firm in another EEA member state. The Scheme establishes the maximum amounts of compensation payable in respect of protected claims: for eligible protected deposit claims, this is £31,700 (100% of the first £2,000 and 90% of the next £33,000) and for protected investment business, this is £48,000 (100% of the first £30,000 and 90% of the next £20,000). There is no maximum limit for protected insurance claims. The first £2,000 of a valid claim is paid in full together with 90% of the remaining loss.

Outside of the UK, the Group has operations (and main regulators) located in continental Europe in particular, France, Germany, Spain, Portugal and Italy (local central banks and other regulatory authorities); Asia Pacific (various regulatory authorities including the Hong Kong Monetary Authority, the Japanese FSA and the Monetary Authority of Singapore); Africa, where the Group’s operations are headquartered in Johannesburg, South Africa (The South African Reserve Bank) and the United States of America (the Federal Reserve Board and the Securities and Exchange Commission).

In the United States, Barclays PLC, Barclays Bank PLC and certain US subsidiary undertakings, branches and agencies of the Bank are subject to a comprehensive regulatory structure, involving numerous statutes, rules and regulations, including the International Banking Act of 1978, the Bank Holding Company Act of 1956, as amended, the Foreign Bank Supervision Enhancement Act of 1991 and the USA PATRIOT Act of 2001. Such laws and regulations impose limitations on the types of businesses, and the ways in which they may be conducted, in the United States and on the location and expansion of banking business there. The Bank’s operations are subject to extensive federal and state supervision and regulation by the Federal Reserve Board (FRB), the State of New York Banking Department (NYSB) and the Office of the Comptroller of the Currency (OCC). The deposits of Barclays Bank PLC branch are insured by the FDIC and subject to its regulations. The Investment Banking and Asset Management operations are subject to ongoing supervision and regulation by the Securities and Exchange Commission (SEC) as well as a comprehensive scheme of regulation under the US federal securities laws, as enforced by, for example, the National Association of Securities Dealers (NASD) and the OCC.

The UK has implemented the various requirements imposed by the European Union Directives on such matters as the carrying on the business of credit institutions and investment firms, capital adequacy, own funds and large exposures. These form part of the European Single Market programme, an important feature of which is the framework for the regulation of authorised firms. This framework is designed to enable a credit institution or investment firm authorised in one European Union member state to conduct banking or investment business through the establishment of branches or by the provision of services on a cross-border basis in other member states without the need for local authorisation. A number of other European Community Directives are being introduced, for example the Market Abuse Directive and the Markets in Financial Instruments Directive

which once in effect, will further shape and influence the UK regulatory agenda. Formal consultation is a key aspect of the UK Government’s reform programme and the Group has been reviewing and, where relevant, commenting on proposals both directly and through industry associations.

The Basel Committee on Banking Supervision and the European Commission have also issued a revised framework for the allocation of regulatory capital for credit risk and to introduce a capital adequacy requirement for operational risk. These bodies recognise that a more sophisticated approach is required to address both financial innovation and the increasingly complex risks faced by financial institutions. The revised Basel Capital Accord and the EU Capital Requirements Directive are expected to be phased in from the end of 2006.

Recent Developments
As announced on 23rd September 2004, Barclays is in discussion with Absa Group Limited (‘Absa’), a leading South African bank, in connection with a possible partial offer for a majority stake in Absa. A due diligence exercise has been completed and Barclays has submitted applications to the South African regulators to approve the possible transaction. It is not known how long the approval process will take. The discussions may or may not lead to an offer being made.

On 20th January 2005 Barclays announced that it had made an offer to acquire the wealth business of ING Securities Bank (France), consisting of ING Ferri and ING Private Banking, subject to consultation with employee representative bodies and finalising terms.

On 3rd February 2005, Barclays announced its plans to consolidate its core general insurance business from two suppliers to one and that discussions are well advanced with Norwich Union to provide services across the home, motor and travel insurance portfolio. Barclays also announced that it has agreed in principle to purchase 90% of Gresham Insurance from Legal & General. Barclays currently owns the remaining 10%. At the same time negotiations are under way for the sale of Gresham Insurance to Norwich Union.

On 4th February 2005, Barclays announced it had signed an agreement with ForeningsSparbanken (also known as Swedbank) to form a joint venture to provide credit cards in the Nordic market, subject to confirmatory due diligence and regulatory approvals.

On 17th February 2005, BSkyB and Barclaycard signed an agreement to launch a Sky-branded credit card which will be fully integrated with interactive television.

77

Financial review

Overview

Introduction
Barclays is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services. We are one of the largest financial services companies in the world by market capitalisation. Operating in over 60 countries and employing over 78,000 people, we move, lend, invest and protect money for over 18 million customers and clients worldwide.

Our business is affected by global economic conditions generally and particularly by conditions in the UK. The UK economy was stronger in 2004 than 2003, with the economy growing at more than 3%. There was some repositioning away from the consumer towards corporate investment and government spending. The US economy sustained strong growth in 2004 whilst the Eurozone economy achieved some recovery in its rate of growth from its level of 2003.

As a financial services group domiciled in the UK, the majority of our earnings arise from the UK. Nonetheless with our global businesses and our international activities we believe that our diverse portfolio provides a broad spread of earnings capabilities and offers greater resilience against exogenous events in any single business or geography.

The profitability of Barclays businesses could be adversely affected by a worsening of general economic conditions in the UK or abroad. Factors such as the liquidity of the global financial markets, the level and volatility of equity prices and interest rates, investor sentiment, inflation, and the availability and cost of credit, could significantly affect the activity level of customers. A continued market downturn would likely lead to a decline in the volume of transactions that Barclays executes for its customers and, therefore, lead to a decline in the income it receives from fees and commissions. In addition, changes in interest rate levels, yields curves and spreads may affect the interest rate margin realised between lending and borrowing costs.

Continuous focus on improvements in productivity provides the ability to respond flexibly to any pressure to income growth, which would help offset the impact on overall profitability.

Key drivers underpinning the financial performance are detailed in the subsequent pages of the ‘Financial review’ section. These include, for net interest income, the volume and rate of growth of asset and liability balances, together with the margin on these balances. Non-interest income is driven primarily by net fees and commissions, although it also includes dealing profits and other operating income.

The principal drivers of expenses are staffing levels and their associated costs, including performance related expenditure, and the level of strategic investment spend.

Provisions are driven by the quantity and quality of lending and reflect the condition of the credit environment.

In addition to the risk factors outlined on pages 28 and 29, other potential impacts on Barclays profitability are the consequences of potential regulation or legislation.

Goals
Barclays primary focus is to deliver superior value to its shareholders. To achieve this we use an operating philosophy, the principles of value-based management (VBM), to develop strategy, allocate resources and manage performance.

In applying VBM principles, Barclays has developed a disciplined fact-based approach to strategy development and business planning, which aims to build sustainable competitive advantage. Individual businesses generate alternative business strategies to facilitate the selection of the most appropriate value-maximising option, in order to achieve profitable growth in all our businesses.

We use performance goals as an integral part of our VBM disciplines. These are designed to stretch the thinking and ambition of our businesses. Goals have been set for four-year periods to align with the planning processes described above. In 2004, we announced new performance cycle goals for the 2004 to 2007 period.

The primary goal remains to achieve top quartile total shareholder return (TSR) relative to a peer group of 11 other UK and international financial services institutions. TSR is defined as the value created for shareholders through share price appreciation, plus reinvested dividend payments.

The TSR peer group is reviewed annually to ensure it aligns with our business mix and the scale of our ambition. The peer group for 2004 was: ABN Amro, BBVA, BNP Paribas, Citigroup, Deutsche Bank, HBOS, HSBC, JP Morgan Chase, Lloyds TSB, Royal Bank of Scotland and UBS. For 2005 the peer group is unchanged.

For the first year of the new goal period, from 31st December 2003 to 31st December 2004, Barclays was positioned first within its peer group, thereby achieving its primary goal of top quartile TSR performance.

In addition, a secondary goal of economic profit (EP) is used to support the pursuit of top quartile TSR. The strategies we follow and the actions we take are aligned to value creation for all stakeholders. Since the introduction of VBM, Barclays has used EP as its key internal financial measure, to support the achievement of our primary top quartile TSR goal. Barclays uses EP, a non-GAAP measure, as a key indicator of performance because it believes that it provides important discipline in decision making. Barclays believes that EP encourages both profitable growth and the efficient use of capital. More information on the reconciliation of EP to profit before tax can be found on page 226.

We believe that, given current and expected market conditions, a compound annual growth rate in EP in the range of 10% to 13%, which would translate into cumulative EP generation of £7.3bn to £7.8bn, will be required to deliver top quartile TSR over the 2004-2007 goal period. In the first year of the new performance goal period, from 31st December 2003 to 31st December 2004, EP amounted to £1.9bn, and was well ahead of plan.

We will continue to report progress against goals on a regular basis.

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Barclays PLC Annual Report 2004 

Financial Performance 2004¹
The Group’s profit before tax in 2004 increased 20% (£758m) to £4,603m (2003: £3,845m). Operating income increased 12% (£1,534m) to £13,945m (2003: £12,411m) whilst operating expenses rose 15% (£1,091m) to £8,350m (2003: £7,253m). Restructuring costs amounted to £199m (2003: £209m). Goodwill amortisation was £299m (2003: £265m). Provisions for bad and doubtful debts fell 19% to £1,091m (2003: £1,347m). Earnings per share rose 21% to 51.2p (2003: 42.3p). Dividends per share rose 17% to 24p (2003: 20.5p). Return on average shareholders’ funds was 19%. Economic profit was up 32%, well ahead of our goal and a reflection of tight capital management as well as good business performance.

Non-performing loans decreased by £320m to £3,985m. Potential problem loans decreased by £571m to £756m. Coverage of non-performing loans decreased from 71.5% to 70.4% while the coverage of potential credit risk loans increased from 54.6% to 59.2%.

Our capital position remained healthy. Shareholders’ funds increased by £1,043m primarily due to profit retention. Total assets increased by £79bn to £522bn. Weighted risk assets increased by £30bn (16%) up to £219bn. The tier 1 capital ratio decreased from 7.9% to 7.6% and the Total risk asset ratio decreased from 12.8% to 11.5%.

Business Performance
There was good growth in profit before tax across all our business divisions with momentum in the core UK businesses and in our global product businesses. Our increasingly diverse and distinctive business mix is well positioned for future growth.

UK Banking grew profit before tax by 9%, driven primarily by a very strong performance in UK Business Banking, where profit before tax was up 19%, and broadly flat profit before tax performance in UK Retail Banking.

UK Business Banking performed strongly with good income growth, up 8%, tight cost management and very good risk management accentuated by one large recovery.

In UK Retail Banking the focus in 2004 was on restructuring the business which included adding additional customer facing staff, upgrading branch management and investing in technology. There were encouraging signs of progress in 2004 with good balance growth in current accounts, premier and small business but a weaker contribution from mortgages where the effect of a decline in the back book, rising base rates and a fall in early redemption income impacted performance. Costs increased 3% with almost half of the increase attributable to the new regulatory environment, particularly in the mortgage and general insurance businesses. Provisions fell 44%, reflecting the overall quality of the loan portfolio but also the release of provisions in the mortgage business.

Profit before tax in Private Clients and International was up 60%. The improved performance in this division reflected the benefits of prior year investments (organic and non-organic) helped by stronger markets. This included a significantly improved performance from the closed life assurance activities.

Profit before tax in Private Clients, for the ongoing business, increased 42% benefiting from strong income growth and good cost control. The integrations of Charles Schwab Europe and the Gerrard business progressed well. In International, profit before tax increased by 14%. This represented good progress across all geographies: Africa; Spain; Portugal; France; Italy; and the Caribbean. The merging of Banco Zaragozano with Barclays Spain to create one Spanish business is well ahead of schedule and there has been a very good response amongst the Banco Zaragozano network to Barclays products.

Barclaycard delivered profit before tax growth of 5% in a year where volume growth more than compensated for the impact of successive interest rate rises and intense competition. Income growth was 6%. There was a high level of investment in both the UK business and internationally, managed within cost growth of 6%. Performance was strong in our multi-branded business such as Monument and First Plus. Barclaycard International delivered a profit of £8m (2003: £4m) despite absorbing significant ongoing investment. The acquisition of Juniper was an important strategic move into the US credit card market.

Barclays Capital had another record year, with profit before tax up 25%. Income grew by 24%, reflecting the return on investment in prior years. Client activity was up sharply, leading to good volume growth in both primary and secondary markets. A significant level of investment for future revenue growth was funded by the business and reflected in costs which grew 37%. Approximately 50% of the cost base is variable and despite accelerating the pace of growth, income per head remained broadly flat.

Barclays Global Investors (BGI) had another excellent year with profit before tax up 85%. Profits have more than quadrupled during the last three years. Income grew 33% and assets under management were £709bn (2003: £598bn). BGI continued to diversify its product range and in particular made significant advances in the exchange traded funds (iShares) where it is the market leader.

Capital Strength
Our capital position and strong credit rating are sources of competitive advantage. At the end of 2004, our risk asset ratio was 11.5%, and our tier 1 capital ratio was 7.6%. This strong capital position enhances our ability to pay dividends and invest confidently in business growth. When we look at the balance sheet, we focus capital management on five areas: maintaining our double A credit rating; generating sufficient capital to support weighted risk asset growth in the business; financing corporate activity, delivering dividend growth; and using share buy-backs to manage any excess capital. In 2004 we bought back almost £700m of stock.

¹ The analysis of results by business includes goodwill amortisation. This differs from the announcement of results dated 10th February 2005, where the analysis of results by business excludes goodwill amortisation.

79

Financial review

Critical accounting estimates

Critical Accounting Estimates
UK accounting standards require that the Group adopt the accounting policies and estimation techniques that the Directors believe are most appropriate in the circumstances for the purpose of giving a true and fair view of the Group’s state of affairs, profit and cash flows. However, different policies, estimation techniques and assumptions in critical areas could lead to materially different results. The accounting policies and estimation techniques to be used in the 2005 consolidated accounts will be impacted by the conversion to International Financial Reporting Standards, as discussed on pages 115 and 116.

The following are estimates which are considered to be the most complex and involve significant amounts of management valuation judgements, often in areas which are inherently uncertain.

Bad and Doubtful Debts
The estimation of potential credit losses is inherently uncertain and depends upon many factors, including general economic conditions, changes in individual customer’s circumstances, structural changes within industries that alter competitive positions, and other external factors such as legal and regulatory requirements and other governmental policy changes.

Specific provisions are raised when the Group considers that the creditworthiness of a borrower has deteriorated such that the recovery of the whole or part of an outstanding advance is in serious doubt.

For larger accounts this is usually done on an individual basis and all relevant considerations that have a bearing on the expected future cash flows are taken into account, for example, the business prospects for the customer, the realisable value of collateral, the Group’s position relative to other claimants, the reliability of customer information and the likely cost and duration of the work-out process. Subjective judgements are made in this process that may vary from person to person and team to team. Furthermore, judgements change with time as new information becomes available or as workout strategies evolve, resulting in frequent revisions to the specific provisions as individual decisions are taken, case by case.

Within the retail and small businesses portfolios which are comprised of large numbers of small homogeneous assets, statistical techniques are used to raise specific provisions on a portfolio basis, based on historical recovery rates. These statistical analyses use as primary inputs the extent to which accounts in the portfolio are in arrears and historical information on the eventual losses encountered from such delinquent portfolios. There are many such models in use, each tailored to a product, line of business or customer category. The models are updated from time to time. However, experience suggests that the models are reliable and stable, stemming from the very large numbers of accounts from which the model building information is drawn. These models do not contain judgemental inputs, but judgement and knowledge is needed in selecting the statistical methods to use when the models are developed or revised.

General provisions are raised to cover losses which are known from previous historical experience to be present in loans and advances at the balance sheet date, but which have not yet been specifically identified. These provisions are adjusted at least half-yearly by an appropriate charge or release of general provision based on statistical analyses, other information about customers and judgements by management and the Board.

In outline, the statistical analyses are performed on a portfolio basis as follows: For larger accounts, gradings are used to rate the credit quality of borrowers. Each grade corresponds to an expected default frequency and is calculated by using statistical methodologies and expert judgement. To ensure that the result is as accurate as possible, several different sources may be used to rate a borrower (e.g. internal model, external vendor model, ratings by credit rating agencies and the knowledge and experience of the credit officers). The general provision also takes into account the expected severity of loss at default, i.e. the amount outstanding when default occurs that is not subsequently recovered. Recovery is usually substantial and depends, for example, on the level of security held in relation to each loan, and the Bank’s position relative to other claimants. Also taken into account is the expected exposure at default. Both loss given default and exposure at default are statistically derived values.

For the large numbers of retail accounts, the approach is in principle the same as for the corporate and business accounts. However, individual consideration of accounts is not practicable, and statistical methodologies are used to assess the loss in portfolios of accounts.

The general provision also includes a specifically identified element to cover country transfer risk calculated on a basis consistent with the overall general provision calculation.

In establishing the level of the general provision, management judgement is applied to the results of the statistical analyses. This is applied at business level where management takes account of the quality of the statistical analyses and the relevance of historical data used in the analyses to individual or groups of customers, current information, and the general economic and environmental factors mentioned above.

Further information on credit risk provisioning is set out on page 43.

Fair Value of Financial Instruments
Some of the Bank’s financial instruments are carried at fair value, including derivatives and debt securities held for trading purposes.

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Financial instruments entered into as trading transactions, together with any associated hedging, are measured at fair value and the resultant profits and losses are included in dealing profits, along with interest and dividends arising from long and short positions and funding costs relating to trading activities. Assets and liabilities resulting from gains and losses on derivative and foreign exchange contracts are reported gross in other assets or liabilities, reduced by the effects of qualifying netting agreements with counterparties.

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Barclays PLC Annual Report 2004 

Financial instruments are either priced with reference to a quoted market price for that instrument or by using a valuation model. Where the fair value is calculated using financial markets pricing models, the methodology is to calculate the expected cash flows under the terms of each specific contract and then discount these values back to a present value. These models use as their basis independently sourced market parameters including, for example, interest rate yield curves, equities and commodities prices, option volatilities and currency rates. Most market parameters are either directly observable or are implied from instrument prices. However, where no observable price is available then instrument fair value will include a provision for the uncertainty in the market parameter based on sale price or subsequent traded levels.

The calculation of fair value for any financial instrument may require adjustment of quoted price or model value to reflect the cost of credit risk (where not embedded in underlying models or prices used), hedging costs not captured in pricing models and adjustments to reflect the cost of exiting illiquid or other significant positions. The process of calculating fair value on illiquid instruments or from a valuation model may require estimation of certain pricing parameters, assumptions or model characteristics. These estimates are calibrated against industry standards, economic models and observed transaction prices. Changes to assumptions or estimated levels can potentially impact the fair value of an instrument as reported. The valuation model used for a particular instrument, the quality and liquidity of market data used for pricing, other fair value adjustments not specifically captured by the model, market data and assumptions or estimates in these are all subject to internal review and approval procedures and consistent application between accounting periods. Under US GAAP the unrealised gain or loss at the inception of a derivative contract is not recognised in the profit and loss account unless obtained using observable market data.

Certain financial instruments which are held on an accruals basis under UK GAAP are required to be measured at fair value under US GAAP. The Group does not manage its business with regard to reported trends on a US GAAP basis. Fair value adjustments to net income or other comprehensive income under US GAAP in current or past periods are not necessarily indicative of the magnitude or direction of such adjustments in subsequent periods.

The fair value of financial instruments is provided in Note 38 on pages 166 and 167.

Goodwill
Determining the period over which to amortise goodwill, where amortisation is applicable under GAAP, requires the assessment of its useful economic life. This assessment involves making judgements over the nature of the acquired business, the economic environment in which it operates and the period of time over which the value of the business is expected to exceed the values of net assets. As a starting point, businesses acquired which operate in more volatile economic environments, such as emerging markets, are considered to have a useful economic life of five years, in other cases 20 years is generally used.

Management also have to consider at least annually whether the current carrying value of goodwill is impaired. This is particularly important under US GAAP where goodwill is not being amortised. The first step of the impairment review process requires the identification of independent operating units, by dividing the Group business into as many largely independent income streams as is reasonably practicable. The goodwill is then allocated to these independent operating units. The first element of this allocation is based on the areas of the business expected to benefit from the synergies derived from the acquisition. The second element reflects the allocation of the net assets acquired and the difference between the consideration paid for those net assets and their fair value. This allocation is reviewed following business reorganisation. The carrying value of the operating unit, including the allocated goodwill, is compared to its fair value to determine whether any impairment exists. Detailed calculations may need to be carried out taking into consideration changes in the market in which a business operates (e.g. competition activity, regulatory change) into consideration. In the absence of readily available market price data this calculation is usually based upon discounting expected cash flows at the Group’s cost of equity, the determination of both of which requires the exercise of judgement.

Pensions
The Group provides pension plans for employees in most parts of the world. Arrangements for staff retirement benefits vary from country to country and are made in accordance with local regulations and customs. For defined contribution schemes, the pension cost recognised in the profit and loss account represents the contributions payable to the scheme. The majority of UK staff are members of The Barclays Bank UK Retirement Fund (the UK Fund) which comprises four sections. These are a defined benefit scheme (the 1964 Pension Scheme) and a defined contribution scheme (the Retirement Investment Scheme), which are both now closed to new members, a hybrid scheme, afterwork, and a defined contribution scheme, the Pension Investment Plan. The pension cost for these schemes is assessed in accordance with the advice of a qualified actuary, using the projected unit method. Variations from the regular cost are allocated over the expected average service lives of current employees. Provisions for pensions arise when the profit and loss account charge exceeds the contribution to the scheme as a result of actuarial valuations. These provisions will be eliminated over the estimated service lives of the employees.

In determining this cost the actuarial value of the assets and liabilities of the scheme are calculated, modelling their future growth, based on key assumptions agreed by management. The main financial assumptions used in the actuarial valuations, as the basis of calculation of the 2004 pension charge/credit relate to inflation, rate of increase in salaries, rate of increase for pensions in payment and deferred pensions, and rate used to discount scheme liabilities. There is an acceptable range in which these assumptions can validly fall. If different assumptions within that range had been chosen, the cost recognised in the accounts could be significantly altered. The approach taken to calculating the pension charge in the accounts for the 1964 Pension Scheme is to take assets and liabilities at market value with effect from 1st January 2004.

81

Financial review
Critical accounting estimates

The principal financial assumptions used to derive the pensions charge for 2004 were as follows:

Price inflation	2.75	%
Pension increases	2.75	%
Earnings growth	4.25	%
afterwork Credit Account revaluation rate	3.75	%
Return on future investments:
1964 Scheme	7.0	%
afterwork	6.75	%
Discount rate for assessing accrued liabilities:
1964 Scheme	6.6	%
afterwork	6.75	%

In calculating the pension expense for the UK schemes and in determining the expected rate of return, the Group uses the value of assets at the start of the year. The UK Schemes’ assets were allocated 48% to equities, 12% to corporate bonds, 18% to UK gilts, 10% to property and 12% to other investments at 31st December 2004 and 49% to equities, 11% to corporate bonds, 20% to UK gilts, 9% to property and 11% to other investments at 31st December 2003. The year-end allocations are within the schemes’ target ranges.

Shareholders’ Interest in the Retail Long-term Assurance Fund
Changes in the net present value of the profits inherent in the in-force policies of the retail long-term assurance fund are included in the profit and loss account. In estimating the net present value of the profits inherent in the in-force policies, the calculations use assumed economic parameters (future investment returns, expense inflation and risk discount rate), taxation, mortality, persistency, expenses and the required levels of regulatory and solvency capital. The returns on fixed interest investments are set to market yields at the period end. The returns on UK and overseas equities and property are set relative to fixed interest returns. The expense inflation assumption reflects long-term expectations of both earnings and retail price inflation.

The risk discount rate is set to market yields on Government securities plus a margin to allow for the risks borne. The mortality, persistency and expense assumptions are chosen to represent best estimates of future experience and are based on current business experience. As with the pension calculation, there is an acceptable range in which these estimates can validly fall, and the income recognised in the accounts could be significantly altered if different estimates had been chosen.

Tax
The taxation charge in the accounts for amounts due to fiscal authorities in the various territories in which the Group operates includes estimates based on a judgement of the application of law and practice in certain cases to determine the quantification of any liability arising. In arriving at such estimates, management assesses the relative merits and risks of the tax treatment assumed taking into account statutory, judicial and regulatory guidance and, where appropriate, external advice.

All of the Group’s significant accounting policies, including those mentioned above, and information about the estimation techniques used to enable the accounting policies to be applied, are set out on pages 110 to 116.

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Barclays PLC Annual Report 2004 

Financial review

Results by nature of income and expense

Results by Nature of Income and Expense

Comparative figures have been restated as a result of the changes in accounting policy and accounting presentation as set out on pages 115 and 117.

Net interest income

	2004			2003			2002
	£m			£m			£m
Interest receivable		13,665			12,427			12,044
Interest payable		(6,823	)		(5,823	)		(5,839	)
		6,842			6,604			6,205

Group net interest margin^(a)

	2004		2003		2002
	%		%		%
Group		2.59		2.61		2.75
Domestic		3.48		3.64		3.61
International		0.81		0.77		0.96

Note

(a)	Domestic business is conducted primarily in the UK in Sterling. International business is conducted primarily in foreign currencies. In addition to the business carried out by overseas branches and subsidiaries, some international business is transacted in the UK. Interest margin is net interest income as a percentage of average interest earning assets.
	The margins shown above exclude non-margin related items, including profits and losses on the repurchase of loan capital and the unwinding of the discount on vacant leasehold property provisions.
	Group net interest income increased 4% (£238m) to £6,842m (2003: £6,604m), reflecting growth in balances which more than offset a 2 basis points fall in the Group net interest margin to 2.59%.

The Group net interest margin of 2.59% (2003: 2.61%) includes 0.42% (2003: 0.48%) arising from the benefit of free funds. A component of the benefit of free funds is the structural hedge against short-term interest rate movements. The contribution of the structural hedge has decreased to 0.12% (2003: 0.19%) largely due to the impact of higher short-term interest rates.

Group average interest earning assets increased £11bn to £264bn (2003: £253bn). Domestic average interest earning assets increased £14bn to £176bn (2003: £162bn). This reflected increases across the businesses. International average interest earning assets remained broadly stable at £88bn (2003: £90bn).

The domestic net interest margin fell 16 basis points to 3.48% (2003: 3.64%). This was attributable to the margin pressure in the mortgage business, the impact of base rate rises during the year, higher funding costs, increased promotional balance transfer activity in the cards business and the impact of the structural hedge. This was partially offset by increased margins in retail savings, Business Banking loans and Barclays Capital banking activities. Margins in other areas remained broadly stable.

The international net interest margin increased by 4 basis points to 0.81% (2003: 0.77%) largely due to a change in the mix of both assets and liabilities in Barclays Capital banking activities.

The Group net interest margin was impacted by the factors described above with the reduction largely mitigated by an increase in the proportion of domestic interest earning assets.

Net interest income in 2003 increased by 6% to £6,604m (2002: £6,205), reflecting growth in the average interest earning assets by 12% to £253bn. This was primarily due to a £4bn increase in UK mortgage balances and £18bn increase in debt securities holdings.

In 2003, overall banking margins were 14 basis points down on 2002 to 2.61%. The adverse impact on the margin was largely due to an increase in higher quality assets in Barclays Capital, the conversion to associate status of the Caribbean business, a change in the currency mix of the portfolio and the general fall in global interest rates.

Prevailing average interest rates

	2004		2003		2002
	%		%		%
United Kingdom:
Barclays Bank PLC base rate		4.38		3.69		4.00
London Inter-Bank Offered Rate (LIBOR): three-month Sterling		4.64		3.74		4.06
three-month US dollar		1.62		1.21		1.80
United States prime rate		4.34		4.12		4.68

83

Financial review

Average balance sheet

Average balance sheet and net interest income (year ended 31st December)

	2004									2003									2002
	Average						Average			Average						Average			Average						Average
	balance			Interest			rate			balance			Interest			rate			balance			Interest			rate
	£m			£m			%			£m			£m			%			£m			£m			%
Assets
Treasury bills and other eligible bills:
in offices in the United Kingdom		1,786			68			3.8			4,048			121			3.0			4,496			158			3.5
in offices outside the United Kingdom		1,988			63			3.2			1,222			66			5.4			960			66			6.9
Loans and advances to banks:
in offices in the United Kingdom		18,431			691			3.7			14,012			574			4.1			12,560			561			4.5
in offices outside the United Kingdom		3,689			93			2.5			4,272			108			2.5			5,535			161			2.9
Loans and advances to customers:
in offices in the United Kingdom		143,643			8,801			6.1			135,373			7,804			5.8			126,306			7,712			6.1
in offices outside the United Kingdom		28,486			1,262			4.4			26,323			1,136			4.3			25,896			1,132			4.4
Lease receivables: in offices in the United Kingdom		5,562			252			4.5			4,520			215			4.8			4,245			209			4.9
in offices outside the United Kingdom		369			21			5.6			265			19			7.2			222			15			6.8
Debt securities: in offices in the United Kingdom		51,508			2,077			4.0			58,435			2,174			3.7			40,115			1,790			4.5
in offices outside the United Kingdom		8,624			337			3.9			4,267			210			4.9			4,843			240			5.0
Average assets of banking business		264,086			13,665			5.2			252,737			12,427			4.9			225,178			12,044			5.3
Average assets of trading business		295,304			7,195			2.4			189,446			5,001			2.6			160,647			4,372			2.7
Total average interest earning assets		559,390			20,860			3.7			442,183			17,428			3.9			385,825			16,416			4.2
Provisions		(2,907	)								(2,796	)								(2,808	)
Non-interest earning assets		68,396									53,428									46,753
Total average assets and interest income		624,879			20,860			3.3			492,815			17,428			3.5			429,770			16,416			3.8
Percentage of total average assets in offices outside the United Kingdom		27.8	%								26.6	%								27.2	%
Average interest earning assets and net interest income:
Banking business		264,086			6,844			2.6			252,737			6,606			2.6			225,178			6,188			2.7
Trading business		295,304			(219	)		(0.1	)		189,446			68			–			160,647			75			–
Non margin interest					(2	)		–						(2	)		–						17			–
Total average interest earning assets and net interest income		559,390			6,623			1.2			442,183			6,672			1.5			385,825			6,280			1.6
Total average interest earning assets related to:
Interest income					20,860			3.7						17,428			3.9						16,416			4.2
Interest expense					(14,235	)		(2.5	)					(10,754	)		(2.4	)					(10,153	)		(2.6	)
Adjustment for non margin interest					(2	)		–						(2	)		–						17			–
					6,623			1.2						6,672			1.5						6,280			1.6

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Barclays PLC Annual Report 2004 

Average balance sheet and net interest income (year ended 31st December)

	2004									2003									2002
	Average						Average			Average						Average			Average						Average
	balance			Interest			rate			balance			Interest			rate			balance			Interest			rate
	£m			£m			%			£m			£m			%			£m			£m			%
Liabilities and shareholders’ funds
Deposits by banks:
in offices in the United Kingdom		46,669			1,225			2.6			40,959			993			2.4			31,880			987			3.1
in offices outside the United Kingdom		16,610			310			1.9			10,100			184			1.8			8,908			200			2.2
Customer accounts – demand deposits:
in offices in the United Kingdom		20,829			310			1.5			18,788			170			0.9			16,260			164			1.0
in offices outside the United Kingdom		3,317			31			0.9			3,497			48			1.4			1,846			27			1.5
Customer accounts – savings deposits:
in offices in the United Kingdom		47,583			1,325			2.8			45,565			999			2.2			41,722			982			2.4
in offices outside the United Kingdom		1,117			21			1.9			813			26			3.2			1,262			32			2.5
Customer accounts – other time deposits – retail:
in offices in the United Kingdom		34,518			1,306			3.8			35,228			1,171			3.3			40,075			1,303			3.3
in offices outside the United Kingdom		4,526			118			2.6			3,678			103			2.8			5,479			139			2.5
Customer accounts – other time deposits – wholesale:
in offices in the United Kingdom		58,023			1,798			3.1			57,364			1,634			2.8			35,607			1,175			3.3
in offices outside the United Kingdom		13,262			342			2.6			8,193			247			3.0			7,959			231			2.9
Debt securities in issue:
in offices in the United Kingdom		32,303			1,052			3.3			34,811			949			2.7			28,596			1,061			3.7
in offices outside the United Kingdom		17,218			336			2.0			11,906			244			2.0			11,728			339			2.9
Dated and undated loan capital and other subordinated liabilities principally in offices in the United Kingdom		12,740			692			5.4			12,312			684			5.6			11,012			645			5.9
Internal funding of trading business		(72,291	)		(2,045	)		(2.8	)		(58,436	)		(1,631	)		(2.8	)		(42,626	)		(1,429	)		(3.4	)
Average liabilities of banking business		236,424			6,821			2.9			224,778			5,821			2.6			199,708			5,856			2.9
Average liabilities of trading business		305,869			7,414			2.4			191,240			4,933			2.6			162,858			4,297			2.6
Total average interest bearing liabilities		542,293			14,235			2.6			416,018			10,754			2.6			362,566			10,153			2.8
Interest free customer deposits:
in offices in the United Kingdom		15,351									13,819									11,614
in offices outside the United Kingdom		1,294									1,260									2,132
Other non-interest bearing liabilities		48,613									45,392									38,184
Minority and other interests and shareholders’ funds		17,328									16,326									15,274
Total average liabilities, shareholders’ funds and interest expense		624,879			14,235			2.3			492,815			10,754			2.2			429,770			10,153			2.4
Percentage of total average non-capital liabilities in offices outside the United Kingdom		26.7	%								23.1	%								25.5	%

Notes

(a)	Loans and advances to customers and banks include all doubtful lendings, including non-accrual lendings. Interest receivable on such lendings has been included to the extent to which either cash payments have been received or interest has been accrued in accordance with the income recognition policy of the Group.
(b)	Average balances are based upon daily averages for most UK banking operations and monthly averages elsewhere.
(c)	The average balance sheet does not include the retail life-fund assets attributable to policyholders nor the related liabilities.
(d)	Interest payable on average liabilities of banking business excludes non-margin interest.

85

Financial review
Average balance sheet

Changes in net interest income – volume and rate analysis

The following tables allocate changes in net interest income between changes in volume and changes in interest rates for the last two years. Volume and rate variances have been calculated on the movement in the average balances and the change in the interest rates on average interest earning assets and average interest bearing liabilities. Where variances have arisen from changes in both volumes and interest rates, these have been allocated proportionately between the two.

	2004/2003 Change due									2003/2002 Change due
	to increase/(decrease) in:									to increase/(decrease) in:
	Total									Total
	change			Volume			Rate			change			Volume			Rate
	£m			£m			£m			£m			£m			£m
Interest receivable
Treasury bills and other eligible bills:
in offices in the United Kingdom		(53	)		(80	)		27			(37	)		(15	)		(22	)
in offices outside the United Kingdom		(3	)		31			(34	)		–			16			(16	)
		(56	)		(49	)		(7	)		(37	)		1			(38	)
Loans and advances to banks:
in offices in the United Kingdom		117			169			(52	)		13			62			(49	)
in offices outside the United Kingdom		(15	)		(15	)		–			(53	)		(34	)		(19	)
		102			154			(52	)		(40	)		28			(68	)
Loans and advances to customers:
in offices in the United Kingdom		997			492			505			92			536			(444	)
in offices outside the United Kingdom		126			95			31			4			19			(15	)
		1,123			587			536			96			555			(459	)
Lease receivables:
in offices in the United Kingdom		37			48			(11	)		6			13			(7	)
in offices outside the United Kingdom		2			6			(4	)		4			3			1
		39			54			(15	)		10			16			(6	)
Debt securities:
in offices in the United Kingdom		(97	)		(270	)		173			384			718			(334	)
in offices outside the United Kingdom		127			178			(51	)		(30	)		(28	)		(2	)
		30			(92	)		122			354			690			(336	)
Total banking business interest receivable:
in offices in the United Kingdom		1,001			359			642			458			1,314			(856	)
in offices outside the United Kingdom		237			295			(58	)		(75	)		(24	)		(51	)
		1,238			654			584			383			1,290			(907	)
Total trading business interest receivable		2,194			2,605			(411	)		629			764			(135	)
Total interest receivable		3,432			3,259			173			1,012			2,054			(1,042	)

86

Barclays PLC Annual Report 2004 

Changes in net interest income – volume and rate analysis

	2004/2003 Change due									2003/2002 Change due
	to increase/(decrease) in:									to increase/(decrease) in:
	Total									Total
	change			Volume			Rate			change			Volume			Rate
	£m			£m			£m			£m			£m			£m
Interest payable
Deposits by banks:
in offices in the United Kingdom		232			146			86			6			246			(240	)
in offices outside the United Kingdom		126			121			5			(16	)		25			(41	)
		358			267			91			(10	)		271			(281	)
Customer accounts – demand deposits:
in offices in the United Kingdom		140			20			120			6			24			(18	)
in offices outside the United Kingdom		(17	)		(2	)		(15	)		21			23			(2	)
		123			18			105			27			47			(20	)
Customer accounts – savings deposits:
in offices in the United Kingdom		326			46			280			17			87			(70	)
in offices outside the United Kingdom		(5	)		8			(13	)		(6	)		(13	)		7
		321			54			267			11			74			(63	)
Customer accounts – other time deposits – retail:
in offices in the United Kingdom		135			(24	)		159			(132	)		(161	)		29
in offices outside the United Kingdom		15			22			(7	)		(36	)		(49	)		13
		150			(2	)		152			(168	)		(210	)		42
Customer accounts – other time deposits – wholesale:
in offices in the United Kingdom		164			19			145			459			638			(179	)
in offices outside the United Kingdom		95			135			(40	)		16			7			9
		259			154			105			475			645			(170	)
Debt securities in issue:
in offices in the United Kingdom		103			(72	)		175			(112	)		203			(315	)
in offices outside the United Kingdom		92			104			(12	)		(95	)		5			(100	)
		195			32			163			(207	)		208			(415	)
Dated and undated loan capital and other subordinated liabilities principally in offices in the United Kingdom		8			23			(15	)		39			73			(34	)
Internal funding of trading businesses		(414	)		(392	)		(22	)		(202	)		(469	)		267
Total banking business interest payable:
in offices in the United Kingdom		694			(234	)		928			81			641			(560	)
in offices outside the United Kingdom		306			388			(82	)		(116	)		(2	)		(114	)
		1,000			154			846			(35	)		639			(674	)
Total trading business interest payable		2,481			2,795			(314	)		636			734			(98	)
Total interest payable		3,481			2,949			532			601			1,373			(772	)
Movement in net interest income
Increase/(decrease) in interest receivable		3,432			3,259			173			1,012			2,054			(1,042	)
(Decrease)/increase in interest payable		(3,481	)		(2,949	)		(532	)		(601	)		(1,373	)		772
		(49	)		310			(359	)		411			681			(270	)
Movement in non-margin interest		–									(19	)
		(49	)								392

87

Financial review

Results by nature of income and expense

Net fees and commissions

	2004			2003			2002
	£m			£m			£m
Fees and commissions receivable		5,672			4,896			4,454
Less: fees and commissions payable		(706	)		(633	)		(529	)
		4,966			4,263			3,925

Group net fees and commissions increased 16% (£703m) to £4,966m (2003: £4,263m), reflecting good growth across all businesses.

Fees and commissions receivable rose 16% (£776m) to £5,672m in 2004 (2003: £4,896m) driven by increases in: Barclays Global Investors, reflecting strong income generation across both the active and index businesses; Barclays Capital, with good contributions from origination and advisory activities; and Private Clients, as a result of stronger business volumes and the acquisition of Gerrard. Good growth was also achieved in UK Banking and in Barclaycard.

In 2003, net fees and commissions increased by £338m to £4,263m primarily driven by increases in: Barclays Global Investors, reflecting growth of investment management fees; Barclaycard as a result of higher cardholder activity and good volume growth within the merchant acquiring business and Barclays Capital, with good performances across the Credit businesses.

Dealing profits

	2004		2003		2002
	£m		£m		£m
Rates related business		1,141		909		876
Credit related business		352		145		(43	)
		1,493		1,054		833

Almost all the Group’s dealing profits are generated in Barclays Capital.

Dealing profits increased 42% (£439m) to £1,493m (2003: £1,054m), with very strong performances in both the Rates and Credit businesses. This reflected higher volumes of client led activity throughout the year across a broad range of products and the continued benefit of headcount investments to broaden product depth and geographical reach. The very strong growth in the Rates businesses was across equity related activities, foreign exchange and fixed income. The very strong performance in the Credit businesses reflected an increase in the contribution from credit derivatives.

Total foreign exchange income was £520m (2003: £498m) and consisted of revenues earned from both retail and wholesale activities. The foreign exchange income earned on customer transactions by UK Banking, Private Clients and International and Barclaycard, both externally and within Barclays Capital, is reported in those business units, within fees and commissions.

Dealing profits in 2003 grew 27% to £1,054m (2002: £833m) driven by significant growth in client transaction volumes, particularly in continental Europe. There were strong performances in the Credit business and good contributions from Rates.

Other operating income

	2004		2003			2002
	£m		£m			£m
Net premium income on insurance underwriting		211		264			178
Gain on disposal of investment securities		181		73			58
Income/loss from the long-term assurance business		58		(33	)		(51	)
Property rentals		9		15			20
Dividend income from equity shares		17		6			7
Other income		168		165			152
		644		490			364

Other operating income increased 31% (£154m) to £644m (2003: £490m).

Net premium income on insurance underwriting decreased 20% (£53m) to £211m (2003: £264m), primarily due to a provision relating to the early termination of contracts.

Gain on disposal of investment securities rose by £108m to £181m (2003: £73m), predominantly due to a number of realisations in the private equity business within Barclays Capital.

Virtually all the Group’s long-term assurance activity is based in the UK and was the main component of the £58m contribution. This included costs of redress for customer claims in respect of endowment policies of £97m (2003: £95m).

Dividend income increased by £11m to £17m (2003: £6m) as a result of a significant dividend received from an investment.

Other income was flat at £168m (2003: £165m). This reflected a reduction of £98m in income, primarily in UK Retail Banking, from the revision of estimated amounts expected to be repaid on banking liabilities. This was offset by realisations on structured capital market transactions.

Other operating income in 2003 increased by 35% (£126m) to £490m (2002: £364m). This was primarily due to premium income on insurance underwriting which rose by £86m to £264m as a result of a good increase from consumer lending activities, a favourable claims experience and a one-off income gain of £43m from an adjustment to insurance reserves.

In addition, profits on disposal of investment securities rose by £15m primarily reflecting realisations in the private equity business within Barclays Capital.

88

Barclays PLC Annual Report 2004 

Administrative expenses – staff costs

	2004		2003		2002
	£m		£m		£m
Salaries and accrued incentive payments		4,043		3,441		3,159
Social security costs		339		278		240
Pension costs		160		180		(27	)
Post-retirement health care		22		19		15
Other staff costs		434		377		368
		4,998		4,295		3,755

Staff costs
Staff costs increased by 16% (£703m) to £4,998m (2003: £4,295m).

Salaries and accrued incentive payments rose by 17% (£602m) to £4,043m (2003: £3,441m) principally reflecting increased performance related payments primarily within Barclays Capital and Barclays Global Investors, increased headcount, and the impact of the businesses acquired in 2003.

Pension costs comprise all UK and international pension schemes. Included in the costs is a charge of £103m (2003: £128m) in respect of the Group’s main UK pension schemes.

Staff costs in 2003 were 14% higher than 2002. Salaries and accrued incentive payments increased by 9% reflecting increased performance related payments primarily within Barclays Capital and Barclays Global Investors. Pension costs in 2002 reflected a £72m credit in respect of the Group’s main UK pension schemes.

Staff numbers

	2004		2003		2002
By class of business
UK Banking		41,800		41,000		43,900
UK Retail Banking UK Business Banking		34,400 7,400		34,000 7,000		36,300 7,600
Private Clients & International		19,300		19,000		16,900
Private Clients International		7,200 12,100		6,900 12,100		6,400 10,500
Barclaycard		6,700		6,200		5,600
Barclays Capital		7,800		5,800		5,600
Barclays Global Investors		1,900		2,000		2,000
Head office functions and other operations		900		800		700
Total Group permanent and contract staff worldwide		78,400		74,800		74,700
Temporary and agency staff worldwide		4,300		4,100		3,700
Total including temporary and agency staff		82,700		78,900		78,400
By geographic segments
United Kingdom		60,000		58,000		59,000
Non-United Kingdom		18,400		16,800		15,700
		78,400		74,800		74,700

Staff numbers are shown on a full-time equivalent basis UK permanent and contract staff.

During 2004, staff numbers permanent and contract staff increased by 3,600. The implementation of restructuring programmes resulted in a decrease of 2,100 staff, but this was more than offset by the recruitment of additional staff throughout the Group and 400 staff from the acquisition of Juniper. Significant areas of recruitment were Barclays Capital to support the expansion of their business, and Barclaycard through the growth of Barclaycard International and the addition of front-office staff to improve customer service in Barclaycard UK; and UK Banking, mostly from the recruitment of frontline staff in both UK Retail Banking and UK Business Banking.

Head office functions and other operations includes staff undertaking activities which support and provide central information technology services and their costs are predominantly passed on to the businesses.

In 2003, Private Clients and International staff numbers increased by 3,500 as a result of the acquisition of Charles Schwab Europe, Banco Zaragozano and Gerrard. This increase was partially offset by restructuring initiatives.

UK Retail Banking staff numbers decreased in 2003 by 2,300. 1,400 of this decrease was a result of a number of productivity initiatives.

Administrative expenses – other

	2004		2003		2002
	£m		£m		£m
Property and equipment expenses
Hire of equipment		9		8		12
Property rentals		197		184		180
Other property and equipment expenses		835		793		725
		1,041		985		917
Other administrative expenses
Stationery, postage and telephones		324		311		294
Advertising and market promotion		264		237		238
Travel, accommodation and entertainment		174		145		136
Subscriptions and publications		130		91		86
Sundry losses, provisions and write-offs		185		128		121
Consultancy fees		67		56		85
Professional fees		234		159		161
Other expenses		339		292		274
		1,717		1,419		1,395
		2,758		2,404		2,312

In 2004, administrative expenses – other rose by 15% (£354m) to £2,758m (2003: £2,404m).

89

Financial review
Results by nature of income and expense

Other administrative expenses increased by 21% (£298m) to £1,717m (2003: £1,419m). This increase reflects increased business activity. Professional costs have increased due to business growth within Barclays Capital, integration of acquisitions and increased outsourcing costs. Increase in subscriptions and publications, travel, accommodation and entertainment primarily reflect business growth across the businesses. Other expenses increased due to new outsourced contracts signed in 2004.

Property and equipment expenses increased by 6% (£56m) to £1,041m (2003: £985m) as a result of increased information technology costs and property repairs and maintenance. Also included is a £23m cost increase relating to the relocation of Barclays headquarters to Canary Wharf.

In 2003, administrative expenses – other rose by 4% (£92m) to £2,404m (2002: £2,312m). This increase reflected increased outsourced processing costs, partially offset by reduced consultancy spend.

Depreciation and amortisation

	2004		2003		2002
	£m		£m		£m
Depreciation
Property depreciation		86		93		93
Equipment depreciation		209		196		210
		295		289		303
Amortisation
Goodwill amortisation		299		265		254

Provisions for bad and doubtful debts

	2004			2003		2002
	£m			£m		£m
Specific charge		1,301			1,320		1,486
General (release)/charge		(210	)		27		(2	)
		1,091			1,347		1,484

The credit environment both in retail and in corporate and wholesale businesses was relatively benign in 2004. This led to a lower level of potential problem and non-performing loans and lower provision charges.

Overall, the Group provision charge declined 19% to £1,091m (2003: £1,347m). This resulted from a substantial decrease in the corporate and wholesale provisions charge, while the retail provisions charge was steady. As a percentage of average banking loans and advances, the provisions rate fell to 0.54% (2003: 0.73%).

In the corporate and wholesale businesses, non-performing and potential problem loans in total fell by 29% to £2,062m from £2,920m in 2003, reflecting the continuing strong corporate credit environment. The corporate and wholesale provisions charge declined to £284m (2003: £543m). The reduction in the provisions charge included an exceptional recovery of £57m in UK Business Banking.

In retail, non-performing loans and potential problem loans remained steady at £2,679m (2003: £2,712m). The provisions charge in the retail businesses was also steady at £807m (2003: £804m). The provisions charge increased in Barclaycard (the card and unsecured consumer lending business) due to volume growth and the maturation of new customer recruitment. The provisions charge included a release of £40m associated with the UK mortgage business, following a review of the portfolio and the current loss experience.

In 2003 provisions fell 9% (£137m) to £1,347m. Provisions, excluding the impact of Transition Businesses, fell £36m to £1,324m. As a ratio of average banking loans and advances, the Group’s provisions charge improved significantly to 0.73% from 0.85% in 2002.

Business Banking provisions increased broadly in line with portfolio growth. Provisions fell in Barclays Capital reflecting the ongoing improvement in the loan book and the continued recovery in the large corporate credit environment.

Provisions fell in the UK Retail businesses with an improvement in the quality of the loan portfolio and improved risk management. The reduction occurred in the unsecured lending portfolio. Provisions for mortgages remained at a very low rate. Barclaycard provisions increased in line with continued portfolio growth.

Profit/(loss) from joint ventures and associated undertakings

	2004			2003		2002
	£m			£m		£m
(Loss)/profit from joint ventures		(3	)		1		(5	)
Profit/(loss) from associated undertakings		59			28		(5	)
		56			29		(10	)

In 2004 and 2003, the profit from associated undertakings primarily relates to the investment in FirstCaribbean.

The profit from FirstCaribbean reflects good operating performance and includes a gain of £28m on the disposal of shares held in Republic Bank Limited.

Exceptional items

	2004		2003		2002
	£m		£m		£m
Profit on disposal of Group and associated undertakings		45		4		8
Loss on termination of Group activities		–		–		(11	)
		45		4		(3	)

The profit on disposal relates mainly to the disposal of its shareholding in Edotech, an investment in a management buy-out of the former Barclays in-house statement printing operation.

90

Barclays PLC Annual Report 2004 

Tax
The overall tax charge is explained in the following table:

	2004			2003			2002
	£m			£m			£m
Tax charge at average United Kingdom corporation tax rate of 30% (2003: 30%; 2002: 30%)		1,381			1,153			961
Prior year adjustments		(12	)		(21	)		(25	)
Effect of change in non-allowable general provisions		2			2			(2	)
Effect of non-allowable property write-downs and depreciation		20			13			12
Net effect of differing tax rates overseas		(110	)		(95	)		(70	)
Net effect of overseas losses not available for relief in the United Kingdom		24			(12	)		(40	)
Other non-allowable expenses		(5	)		(28	)		8
Gains covered by capital losses brought forward		(51	)		(44	)		(3	)
Goodwill		71			74			69
Other items		(31	)		34			45
Overall tax charge		1,289			1,076			955
Effective tax rate %		28.0			28.0			29.8

The charge for the year is based upon a UK corporation tax rate of 30% for the calendar year 2004 (2003: 30%). The effective rate of tax for 2004 was 28% (2003: 28%). This is lower than the standard rate primarily due to the beneficial effects of lower tax on overseas income and certain non-taxable gains offset by the absence of tax relief on goodwill.

UK GAAP compared with US GAAP
The Group also provides results on the basis of accounting principles generally accepted in the United States (US GAAP). The impact on net income and shareholders’ equity of applying US GAAP is set out below. The individual UK/US GAAP adjustments are discussed in Note 52 on pages 182 to 208.

Attributable profit (UK GAAP)/Net income (US GAAP)

	2004		2003		2002
	£m		£m		£m
Barclays PLC Group
Attributable profit (UK GAAP)/
Net income (US GAAP)
UK GAAP		3,268		2,744		2,230
US GAAP		3,032		1,740		2,476
Barclays Bank PLC Group
Attributable profit (UK GAAP)/
Net income (US GAAP)
UK GAAP		3,279		2,744		2,228
US GAAP		3,137		1,842		2,578

Shareholders’ funds (UK GAAP)/Shareholders’ equity (US GAAP)

	2004		2003
	£m		£m
Barclays PLC Group
Shareholders’ funds (UK GAAP)/
Shareholders’ equity (US GAAP)
UK GAAP(a)		17,417		16,374
US GAAP		16,953		16,830
Barclays Bank PLC Group
Shareholders’ funds (UK GAAP)/
Shareholders’ equity (US GAAP)
UK GAAP		18,271		16,485
US GAAP		19,594		18,646

Note

(a)  Figures for 2003 have been restated to reflect the adoption of UITF
       Abstract 38 (UITF 38), ‘Accounting for ESOP trusts’.

The Group does not manage its business with regard to reported trends on a US GAAP basis. Consequently the level of adjustment from the application of US GAAP in current or past periods is not necessarily indicative of the magnitude or direction of such adjustment in subsequent periods.

91

Financial review

Analysis of results by business

Analysis of Results by Business

The following section analyses the Group’s performance within the businesses. Inter-business activities are included within these figures. The total income and expenditure for the businesses therefore does not necessarily equate to the amounts reported in the Group’s results.

The analysis of results by business includes goodwill amortisation. This differs from the announcement of results dated 10th February 2005, where the analysis of results by business excludes goodwill amortisation.

UK Banking

	2004			2003			2002
	£m			£m			£m
Net interest income		3,466			3,301			3,226
Net fees and commissions		1,930			1,807			1,708
Other operating income		250			397			291
Operating income		5,646			5,505			5,225
Goodwill amortisation Other operating expenses		(176   (3,019	) )		(172   (2,903	) )		(184   (2,811	) )
Operating expenses		(3,195	)		(3,075	)		(2,995	)
Operating profit before provisions		2,451			2,430			2,230
Provisions for bad and doubtful debts		(199	)		(326	)		(324	)
Operating profit		2,252			2,104			1,906
Profit from associated undertakings		4			10			3
Exceptional items		42			(11	)		(5	)
Profit on ordinary activities before tax		2,298			2,103			1,904

UK Banking managed its portfolio of businesses to deliver good profit growth in a year of extensive business reorganisation. UK Banking profit before tax increased 9% (£195m) to £2,298m (2003: £2,103m) as a result of a very strong performance from UK Business Banking and a broadly flat contribution from UK Retail Banking.

UK Banking profit before tax in 2003 increased 10% to £2,103m (2002: £1,904m).

Operating income increased 5% to £5,505m (2002: £5,225m), whilst operating expenses increased 3% to £3,075m (2002: £2,995m).

UK Retail Banking

	2004			2003			2002
	£m			£m			£m
Net interest income		2,059			2,000			1,979
Net fees and commissions		1,117			1,074			1,036
Other operating income		239			365			292
Operating income		3,415			3,439			3,307
Goodwill amortisation Other operating expenses		(158   (2,270	) )		(158   (2,188	) )		(158   (2,082	) )
Operating expenses		(2,428	)		(2,346	)		(2,240	)
Operating profit before provisions		987			1,093			1,067
Provisions for bad and doubtful debts		(60	)		(107	)		(138	)
Operating profit		927			986			929
Profit from associated undertakings		–			7			5
Exceptional items		42			(10	)		(11	)
Profit on ordinary activities before tax		969			983			923

UK Retail Banking profit before tax decreased 1% (£14m) to £969m (2003: £983m).

Operating income was broadly flat at £3,415m (2003: £3,439m). There were strong performances in current accounts and UK Premier. The performance in the mortgage business was impacted by margin pressure. Net revenue (operating income less provisions) was also broadly flat at £3,355m (2003: £3,332m).

Net interest income increased 3% (£59m) to £2,059m (2003: £2,000m). Growth was driven by higher customer deposit balances particularly in Personal Customer current accounts and UK Premier deposits, together with an increase in the retail savings margin. This growth was partially offset by a reduced contribution from the mortgage business. The favourable impact of higher average UK mortgage balances was more than offset by margin pressure, due to a fall in the proportion of the mortgage portfolio on the standard variable rate, the impact of successive base rate increases and a reduction in early redemption income.

UK residential mortgage balances ended the period at £61.7bn (2003: £59.8bn). Gross advances were £17.5bn (2003: £18.3bn) and net lending was £1.9bn (2003: £2.0bn). The loan to value ratio within the mortgage book on a current valuation basis averaged 35% (2003: 40%).

Average overdraft balances within Personal Customers increased by 9%. Average customer deposit balances increased 5% to £68.5bn (2003: £65bn). Personal Customer average current account balances increased 10%. There was strong growth in UK Premier with average deposits up 15%, and in Small Business where average deposit balances were 7% higher. Retail average savings balances increased by 1% in a highly competitive market.

92

Barclays PLC Annual Report 2004 

Net fees and commissions increased 4% (£43m) to £1,117m (2003: £1,074m), driven by strong growth in value added fee-based current account income.

Other operating income decreased 35% (£126m) to £239m (2003: £365m). The majority of the decrease was attributable to a reduction of £89m in income from the revision of estimated amounts expected to be repaid on banking liabilities. There was also lower net premium income on insurance underwriting due to a provision relating to the early termination of contracts.

Operating expenses rose 3% (£82m) to £2,428m (2003: £2,346m). Almost half of the cost increase (£40m) was attributable to preparations for a new regulatory environment, particularly in the mortgage and general insurance businesses. There was significant investment in the business infrastructure and restructuring costs were incurred in reorganising the business. This included adding 1,000 customer-facing staff, an upgrade in branch management capability and investment in new technology.

Provisions decreased 44% (£47m) to £60m (2003: £107m). The quality of the loan portfolio improved and mortgage balances in arrears remained at a low level. The reduction in the provisions charge included a release of £40m associated with the UK mortgage business following a review of the portfolio and the current loss experience.

The exceptional item of £42m was predominantly in respect of the profit on the sale of a shareholding in Edotech, a former Barclays in-house statement printing operation.

UK Retail Banking profit before tax in 2003 was £983m (2002: £923m).

Operating income increased 4% to £3,439m (2002: £3.307m).

Net interest income rose by 1% to £2,000m (2002: £1,979m). There was an increase in the spread on new mortgage business whilst the margin for Personal Customers retail savings remained stable. Net fees and commissions in 2003 were 4% higher at £1,074m (2002: £1,036m).

Other operating income increased by 25% to £365m (2002: £292m). This resulted from a strong performance in general insurance, reflecting increased sales of payment protection insurance products, a more favourable claims experience and a one off gain of £43m arising from an adjustment to insurance reserves.

Operating costs increased 5% to £2,346m (2002: £2,240m), with a major contributor to growth being an increase in pension costs.

Provisions fell by 22% to £107m (2002: £138m), reflecting the overall quality of the lending portfolio and improvements to risk management processes.

UK Business Banking

	2004			2003			2002
	£m			£m			£m
Net interest income		1,407			1,301			1,247
Net fees and commissions		813			733			672
Other operating income		11			32			(1	)
Operating income		2,231			2,066			1,918
Goodwill amortisation		(18	)		(14	)		(26	)
Other operating expenses		(749	)		(715	)		(729	)
Operating expenses		(767	)		(729	)		(755	)
Operating profit before provisions		1,464			1,337			1,163
Provisions for bad and doubtful debts		(139	)		(219	)		(186	)
Operating profit		1,325			1,118			977
Profit from associated undertakings		4			3			(2	)
Exceptional items		–			(1	)		6
Profit on ordinary activities before tax		1,329			1,120			981

UK Business Banking profit before tax increased 19% (£209m) to £1,329m (2003: £1,120m), as a result of good income growth, a continued focus on cost management and a significantly reduced provision charge. Both Larger Business and Medium Business performed well.

Operating income increased 8% (£165m) to £2,231m (2003: £2,066m). Net revenue (operating income less provisions) increased 13% (£245m) to £2,092m (2003: £1,847m).

Net interest income increased 8% (£106m) to £1,407m (2003: £1,301m), as a result of strong balance sheet growth. Average lending balances increased 11% to £44.6bn (2003: £40.2bn); the quality of the new lending was good and the overall credit profile of the portfolio was maintained. Average deposit balances increased 9% to £41.5bn (2003: £37.9bn). There was an improvement in the lending margin and a modest decline in the deposit margin. There was a lower contribution from the structural hedge.

Net fees and commissions increased 11% (£80m) to £813m (2003: £733m), driven by significantly higher lending related fees.

Operating expenses increased 5% (£38m) to £767m (2003: £729m), reflecting higher business volumes and increased expenditure on frontline staff and marketing. The cost of regulatory compliance programmes also increased.

Provisions decreased 37% (£80m) to £139m (2003: £219m). The provisions performance was driven by the impact of significantly lower potential problem loans and non-performing loans and the benefit of a single recovery of £57m.

93

Financial review
Analysis of results by business

UK Business Banking profit before tax increased strongly in 2003 to £1,120m (2002: £981m), despite the negative impact on income from the Competition Committee Inquiry remedies.

Operating income grew 8% to £2,066m (2002: £1,918m). Net interest increased 4% to £1,301m (2002: £1,247m), benefiting from higher average balances. Net fees and commissions increased by 9% to £733m (2002: £672m), with lending fees rising strongly.

Operating costs fell 3% to £729m (2002: £755m) with business as usual costs reduced as cost savings achieved more than offset higher pension costs, together with a lower goodwill charge.

Provisions increased 18% to £219m (2002: £186m).

Private Clients and International

	2004			2003			2002
	£m			£m			£m
Net interest income		836			749			698
Net fees and commissions		850			683			751
Other operating income		47			36			26
Operating income		1,733			1,468			1,475
Goodwill amortisation Other operating expenses		(64   (1,304	) )		(42   (1,096	) )		(29   (1,054	) )
Operating expenses		(1,368	)		(1,138	)		(1,083	)
Operating profit before provisions		365			330			392
Provisions for bad and doubtful debts		(30	)		(36	)		(40	)
Operating profit – ongoing business		335			294			352
Profit/(loss) from associated undertakings		49			17			(8	)
Exceptional items		–			7			(2	)
Profit on ordinary activities before tax – ongoing business		384			318			342
Contribution from closed life assurance activities		(4	)		(80	)		(93	)
Profit on ordinary activities before tax		380			238			249

Private Clients and International profit before tax increased 60% (£142m) to £380m (2003: £238m).

The improved performance reflected good momentum in the businesses with strong income growth in both the Private Clients and International businesses. This was supported by improved market conditions together with the benefits from the acquisitions made in 2003 and the return on the prior investments in improving the client experience.

There was a significantly improved performance from the closed life assurance activities.

Private Clients

	2004			2003			2002
	£m			£m			£m
Net interest income		302			288			281
Net fees and commissions		529			394			485
Other operating income		8			4			3
Operating income		839			686			769
Goodwill amortisation Other operating expenses		(40   (696	) )		(30   (585	) )		(28   (575	) )
Operating expenses		(736	)		(615	)		(603	)
Operating profit before provisions		103			71			166
Provisions for bad and doubtful debts		1			(3	)		(2	)
Operating profit – ongoing business		104			68			164
Exceptional items		–			5			(2	)
Profit on ordinary activities before tax – ongoing business		104			73			162
Contribution from closed life assurance activities		(4	)		(80	)		(93	)
Profit on ordinary activities before tax		100			(7	)		69

The comparison with the prior period is impacted by the acquisitions of the Gerrard business in mid December 2003 and the retail stockbroking business of Charles Schwab Europe at the end of January 2003.

Private Clients profit before tax for the ongoing business increased 42% (£31m) to £104m (2003: £73m). There was a significantly improved performance from the closed life assurance activities.

Operating income increased 22% (£153m) to £839m (2003: £686m).

Net interest income increased 5% (£14m) to £302m (2003: £288m). Total average loans increased 31% to £3.8bn (2003: £2.9bn). Total average customer deposits increased 4% to £21.4bn (2003: £20.6bn). Good income growth from offshore corporate deposits and loans in International and Private Banking reflected the benefit of investment in relationship managers and internet-based offerings, partially offset by adverse exchange rate movements. Deposit margins improved slightly and were partially offset by lower lending margins.

Net fees and commissions increased 34% (£135m) to £529m (2003: £394m). Excluding the contribution from Gerrard, net fees and commissions increased 8%. Business volumes improved as higher average equity market levels contributed to increased sales of investment products and higher fund management fees. The average level of the FTSE 100 Index was 12% higher at 4,522 (2003: 4,051). Stockbroking fee income increased 6% reflecting the benefits of the integration of Charles Schwab Europe as well as improved market conditions. Although headline average daily deal volumes in UK retail stockbroking decreased to 7,800 (2003: 8,200), a more favourable product mix, including an increase in higher margin deals, more than compensated for the lower volume. Fee income in Private Banking increased 13%, reflecting the impact of additional private bankers and new product launches.

94

Barclays PLC Annual Report 2004 

Operating expenses increased 20% (£121m) to £736m (2003: £615m). Excluding the Gerrard business, operating expenses remained broadly flat. Cost savings resulting from reduced restructuring costs and cost synergies from Charles Schwab Europe enabled increased investment in product development and customer service in International and Private Banking and in Wealth Solutions.

Total customer funds, comprising customer deposits and assets under management, increased to £77bn (2003: £75bn). Growth in new business and the impact of the rising stock market were partly offset by adverse exchange rate movements. In October 2004, a multi-manager product was launched, which had £1.6bn of assets under management at the year-end.

The contribution from the closed life assurance activities was a loss of £4m (2003: loss of £80m). The impact of stronger stock markets, improved investment performance and better persistency levels largely offset the costs of £97m (2003: £95m) relating to redress for customers in respect of sales of endowment policies. The loss of £4m is reflected in the Group’s results as a gain of £49m (2003: loss of £40m) within other operating income offset by a reduction of £53m (2003: £40m) within net interest income.

Private Clients profit before tax for the ongoing business in 2003 fell 55% to £73m (2002: £162m).

Net interest income in 2003 increased 3% to £288m (2002: £281m).

Net fees and commissions from the ongoing business in 2003 decreased 19% to £394m (2002: £485m). This reflected the impact of lower average equity market levels in 2003 on sales of investment products and on fund management fees. The average level of the FTSE 100 Index was 12% lower than in the prior year at 4,051 (2002: 4,599). Fee income improved significantly in the second half of 2003, reflecting volume growth and the recovery in equity markets towards the year-end. Average daily deal volumes in UK retail stockbroking, including the Charles Schwab Europe business acquired in January 2003, increased to 8,200 (2002: 6,300).

Operating expenses in 2003 increased 2% to £615m (2002: £603m). This was mainly due to the inclusion of costs relating to the Charles Schwab Europe business, including related integration costs, plus additional pensions costs in 2003. Offsetting this was the impact of lower sales volumes and savings resulting from tight management control of costs. Operating expenses included goodwill amortisation of £30m (2002: £28m).

International

	2004			2003			2002
	£m			£m			£m
Net interest income		534			461			417
Net fees and commissions		321			289			266
Other operating income		39			32			23
Operating income		894			782			706
Goodwill amortisation Other operating expenses		(24   (608	) )		(12   (511	) )		(1   (479	) )
Operating expenses		(632	)		(523	)		(480	)
Operating profit before provisions		262			259			226
Provisions for bad and doubtful debts		(31	)		(33	)		(38	)
Operating profit		231			226			188
Profit from associated undertakings		49			17			(8	)
Exceptional items		–			2			–
Profit on ordinary activities before tax		280			245			180

The comparison with the prior period is impacted by the acquisition of Banco Zaragozano in July 2003.

International profit before tax increased 14% (£35m) to £280m (2003: £245m) reflecting good growth in all businesses.

Operating income increased 14% (£112m) to £894m (2003: £782m). Net revenue (operating income less provisions) increased 15% (£114m) to £863m (2003: £749m).

Net interest income increased 16% (£73m) to £534m (2003: £461m) as a result of the inclusion of Banco Zaragozano and good balance growth in Spain, Africa and Italy.

Total average customer deposits increased 18% to £9.4bn (2003: £8bn), resulting from both the inclusion of Banco Zaragozano and strong organic growth in Spain and Africa.

Total average loans increased 48% to £18.3bn (2003: £12.4bn), reflecting strong growth across the portfolio and the inclusion of Banco Zaragozano for a full year in 2004. Mortgage balance growth in Europe was very strong with balances up 39%. Average lending balances in Africa increased 25%. Overall lending margins reduced mainly due to the impact of mortgage growth on the product mix.

Net fees and commissions increased 11% (£32m) to £321m (2003: £289m), with the majority of the increase reflecting the inclusion of Banco Zaragozano. There was a strong performance in France and Spain from increased fund management related fees. Spain’s total assets under management increased by 27%.

Operating expenses increased 21% (£109m) to £632m (2003: £523m) with the majority of the increase attributable to the inclusion of Banco Zaragozano. Investment in the development of new products and in enhancing the customer experience remained high across the portfolio.

95

Financial review
Analysis of results by business

Provisions decreased 6% (£2m) to £31m (2003: £33m).

Barclays Spain (including Banco Zaragozano) profit before tax declined 2% overall, after accounting for integration costs of €62m (2003: €12m) and goodwill of €32m (2003: €15m), with the increase in goodwill between 2003 and 2004 reflecting the first full year of charge. The retention rate of Banco Zaragozano customers has been high and Barclays products were successfully introduced to the customer base. The integration is well ahead of schedule.

Openplan in Spain continued its successful growth and it has been popular with the customers of Banco Zaragozano: total customer numbers at the end of 2004 were 47,000 (2003: 35,000), mortgage balances were €7.8bn (2003: €4.8bn) and savings balances were €1.5bn (2003: €1bn). Openplan also continued to grow in Portugal, with 8,900 customers at 31st December (2003: 6,200) and total balances up 44% to €1.3bn (2003: €0.9bn). This was supported by ongoing investment in new branches. In October 2004, Openplan was launched in France.

Profit before tax in Africa and the Middle East increased 13% to £126m (2003: £112m) driven by strong growth in corporate balances, particularly in South Africa, together with reduced restructuring costs.

The profit from associated undertakings reflected the contribution from FirstCaribbean. The improved performance reflected the delivery of synergies arising from the merger which created FirstCaribbean, together with good underlying growth in customer activity. The results of FirstCaribbean included a gain of £28m on the sale of shares held in Republic Bank Limited.

International profit before tax in 2003 increased by 36% to £245m (2002: £180m).

On 11th October 2002, the Caribbean businesses of Barclays and Canadian Imperial Bank of Commerce were combined to form FirstCaribbean International Bank Ltd, and the interest in FirstCaribbean has been accounted for as an associated undertaking thereafter.

Net interest income in 2003 increased by 11% to £461m (2002: £417m), mainly reflecting the success of Openplan in Spain, growth in lending and deposit volumes together with the acquisition of BNPI Mauritius in Africa, and the inclusion of income relating to Banco Zaragozano, acquired in July 2003. These factors more than offset the absence of the contribution from the Caribbean business in 2003.

Net fees and commissions in 2003 increased by 9% to £289m (2002: £266m). This was due to balance sheet growth in Spain and Africa in addition to the contributions from BNPI Mauritius and Banco Zaragozano.

Operating expenses in 2003 increased by 9% to £523m (2002: £480m). This reflected the inclusion of costs relating to Banco Zaragozano, and additional costs in Africa relating to increased infrastructure investment, further development of the business and costs of relocating the Head office to Johannesburg. Partially offsetting this was the absence of costs relating to the Caribbean in 2003.

Provisions in 2003 decreased by 13% to £33m (2002: £38m), mainly reflecting the impact of the Caribbean transaction.

Barclaycard

	2004			2003			2002
	£m			£m			£m
Net interest income		1,600			1,555			1,354
Net fees and commissions		764			673			585
Other operating income		–			–			1
Operating income		2,364			2,228			1,940
Goodwill amortisation Other operating expenses		(41   (806	) )		(38   (761	) )		(26   (636	) )
Operating expenses		(847	)		(799	)		(662	)
Operating profit before provisions		1,517			1,429			1,278
Provisions for bad and doubtful debts		(761	)		(708	)		(663	)
Operating profit		756			721			615
Profit/(loss) from joint ventures		4			2			(4	)
Exceptional items		–			–			2
Profit on ordinary activities before tax		760			723			613

Barclaycard profit before tax increased 5% (£37m) to £760m (2003: £723m).

Operating income increased 6% (£136m) to £2,364m (2003: £2,228m). Net revenue (operating income less provisions) increased 5% (£83m) to £1,603m (2003: £1,520m). A high level of recruitment of UK retail card customers continued at 1.33m (2003: 1.55m).

Net interest income increased 3% (£45m) to £1,600m (2003: £1,555m) reflecting growth in UK average extended credit balances, up 11% to £8.2bn (2003: £7.4bn) and higher UK average loan balances, up 11% to £9.4bn (2003: £8.5bn). Margins in the consumer lending business remained broadly stable whereas margins in UK cards decreased, reflecting higher funding costs and the impact of increased balance transfer activity at promotional rates.

Net fees and commissions increased 14% (£91m) to £764m (2003: £673m) as a result of the continued growth in the credit card and consumer lending businesses and good volume growth within the merchant acquiring business.

Operating expenses rose 6% (£48m) to £847m (2003: £799m). The increase reflected investment in Barclaycard International and brand related investment in the UK.

Provisions increased 7% (£53m) to £761m (2003: £708m). This increase was lower than the growth in assets and reflected the continued benefit of improved collections activity. Non-performing loan balances increased but at a significantly lower rate than the growth in assets. Delinquency levels as a percentage of outstandings for both Barclaycard branded credit cards and for Barclayloan were stable.

In the UK, particularly strong performances from the Monument and FirstPlus businesses, together with Barclaycard Business, more than offset the margin pressure and brand investment in the Barclaycard branded card activities.

96

Barclays PLC Annual Report 2004 

Barclaycard International made good progress with its growth strategy. Profit before tax increased to £8m (2003: £4m). Income increased 30% due to the growth in average extended credit balances, up 28% to £882m (2003: £689m). The number of Barclaycard International cards in issue rose to 2.9m (2003: 1.7m). Barclaycard established a presence in the US credit card market through the acquisition of the Juniper Financial Corporation in December 2004. Juniper is a US credit card issuer with US$1.4bn in receivables and 1 million cards in issue. In 2004, Juniper contributed a loss of £2m, for the month of December, in line with expectations at the time of the acquisition.

Barclaycard profit before tax in 2003 increased 18% to £723m (2002: £613m).

Net interest income in 2003 increased 15% to £1,555m (2002: £1,354m). This was mainly due to good growth in average UK extended credit balances, up 14% to £7.4bn (2002: £6.5bn).

Net fees and commissions in 2003 increased 15% to £673m (2002: £585m), as a result of higher cardholder activity and good volume growth within the merchant acquiring business.

Operating expenses in 2003 increased by 21% to £799m (2002: £662m). The increase reflected higher business volumes and greater marketing spend coupled with increased strategic investment spend as Barclaycard enhanced operational capability. Included in operating expenses was goodwill of £38m (2002: £26m).

Provisions in 2003 increased 7% to £708m (2002: £663m).

Barclays Capital

	2004			2003			2002
	£m			£m			£m
Net interest income		1,006			1,024			939
Dealing profits		1,469			1,042			828
Net fees and commissions		611			551			481
Other operating income		295			109			78
Operating income		3,381			2,726			2,326
Goodwill amortisation Other operating expenses		–   (2,237	)		–   (1,638	)		(2   (1,345	) )
Operating expenses		(2,237	)		(1,638	)		(1,347	)
Operating profit before provisions		1,144			1,088			979
Provisions for bad and doubtful debts		(102	)		(253	)		(334	)
Operating profit		1,042			835			645
Profit from associated undertakings		–			1			1
Profit on ordinary activities before tax		1,042			836			646

Barclays Capital profit before tax increased 25% (£206m) to £1,042m (2003: £836m), as a result of very strong operating income growth and the continued improvement in the credit environment. The very strong performance was driven by growth in business volumes and client activity levels. Net revenue (operating income less provisions) increased 33% (£806m) to £3,279m (2003: £2,473m).

Operating income increased 24% (£655m) to a record £3,381m (2003: £2,726m) as a result of strong growth across most of the product areas in Rates and Credit. Income by product continued to diversify with the strongest growth delivered by credit products and equity related products. Regional growth was broadly based with particularly strong results in the US and Asia. Average DVaR increased to £34m (2003: £26m). Period end DvaR was £32m (2003: £37m).

Secondary income, comprising dealing profits and net interest income, is mainly generated from providing client risk management solutions. This increased 20% (£409m) to £2,475m (2003: £2,066m).

Dealing profits increased 41% (£427m) to £1,469m (2003: £1,042m), with very strong performances in both the Rates and Credit businesses. This reflected higher volumes of client led activity across a broad range of products and the continued benefit of recent headcount investments in product depth and geographic reach. Net interest income fell 2% (£18m) to £1,006m (2003: £1,024m) driven by lower contributions from money markets due to the reduced size of the book.

Primary income, comprising net fees and commissions from advisory and origination activities, grew 11% (£60m) to £611m (2003: £551m). Securitisation, structured bonds and leveraged finance grew significantly, more than offsetting lower market activity by corporates. Net fees and commissions included £63m (2003: £89m) of internal fees for structured capital markets activities arranged by Barclays Capital.

Other operating income increased to £295m (2003: £109m) as a result of a number of private equity realisations and structured capital markets transactions.

Operating expenses increased 37% (£599m) to £2,237m (2003: £1,638m) due to the execution of the business expansion plan and an increase in performance related pay. Business as usual costs increased significantly, reflecting higher volumes and the growth in staff numbers. Revenue related costs increased due to the strong profit performance. The recruitment of staff to expand product, client coverage and distribution capabilities resulted in significantly higher strategic investment costs. The ratio of total costs to net revenue and staff costs to net revenue both increased by 2% to 68% and 55% respectively. Approximately half of the total costs comprised performance related pay, discretionary investment spend and short-term contractor resource.

Total headcount increased by 2,000 to 7,800 (2003: 5,800). Almost a third were in the front office, mainly in Europe and the US. Approximately half of the increase was directed at strengthening the back office and control functions. The remainder related to contract staff, mainly in technology, which ensured that the support platform could be developed whilst maintaining flexibility. Barclays Capital accelerated targeted investments in revenue generating capabilities together with a strengthening of the control and support environment. This investment has expanded the scope of the product offering, building new income streams from commercial and residential mortgage backed securities and home equity loans. Existing offerings in commodities trading and equity related products were extended to the US and client channels continued to be extended in Europe, the US and Asia.

97

Financial review
Analysis of results by business

Provisions fell 60% (£151m) to £102m (2003: £253m), reflecting the significant decline in non-performing and potential problem loan balances as a result of a more stable wholesale credit environment.

Profit before tax in 2003 increased 29% to £836m (2002: £646m), due to very strong operating income growth and an improving credit environment. Revenue related costs increased with the strong performance.

Operating income increased 17% to £2,726m (2002: £2,326m) reflecting broadly based growth across most products in Rates and Credit. Secondary income increased 17% to £2,066m (2002: £1,767m) driven by strong growth in dealing profits. Primary income grew 15% to £551m (2002: £481m) with good performances across the Credit businesses.

Operating expenses grew 22% to £1,638m (2002: £1,347m) reflecting increased revenue related costs due to the strong financial performance and growth in BAU costs associated with higher business volumes and front-office hiring.

Provisions fell 24% to £253m (2002: £334m) reflecting ongoing improvements in the quality of the loan book and the recovery in the large corporate credit environment.

Barclays Global Investors

	2004			2003			2002
	£m			£m			£m
Net interest income		5			9			9
Net fees and commissions		882			662			538
Other operating income		6			1			–
Operating income		893			672			547
Goodwill amortisation Other operating expenses		(18   (545	) )		(13   (480	) )		(13   (439	) )
Operating expenses		(563	)		(493	)		(452	)
Operating profit		330			179			95
Loss from joint ventures		(2	)		(1	)		(1	)
Exceptional items		1			–			–
Profit on ordinary activities before tax		329			178			94

Barclays Global Investors (BGI) delivered another year of record performance. Profit before tax increased 85% (£151m) to £329m (2003: £178m) reflecting substantial income growth and continued discipline in cost management. Foreign exchange movements impacted growth in income and costs. Approximately 55% of income is generated in the US and 31% in the UK and continental Europe.

Net fees and commissions increased 33% (£220m) to £882m (2003: £662m), with strong income generation across both the active and index businesses and particularly in investment management fees. These resulted from strong net new sales, growth in sales of higher margin products and stronger global equity markets, partially offset by adverse foreign exchange movements. Securities lending income growth was also very strong, benefiting from increased volumes.

Successful income generation continued across a diverse range of products, distribution channels and geographies and active product investment performance remained strong. BGI’s commitment to

innovation continued as a number of iShare (Exchange Traded Funds) products were launched during 2004. There was significant growth in global iShares with assets under management up 88% to US$130bn at the year-end.

Operating expenses increased 14% (£70m) to £563m (2003: £493m) primarily as a result of higher performance based expenses and benefited from foreign exchange movements.

Total assets under management increased 19% (£111bn) to £709bn (2003: £598bn). The growth included the significant generation of net new assets of £65bn. An increase of £97bn attributable to market movements was partially offset by £51bn of adverse exchange rate movements.

Barclays Global Investors profit before tax in 2003 increased 89% (£84m) to £178m (2002: £94m) and reflected very strong top-line income growth and good control of costs.

Net fees and commissions in 2003 increased 23% (£124m) to £662m (2002: £538m), reflecting good income generation across a diverse range of products, distribution channels and geographies. The increase was largely driven by growth of investment management fees. These resulted from strong net new sales, growth in the sales of higher margin products, good investment performance and the recovery of equity markets towards the year end, which more than compensated for the adverse impact of foreign exchange translation movements.

Operating expenses in 2003 increased by 9% (£41m) to £493m (2002: £452m) due to higher revenue related costs, partly offset by the impact of foreign exchange translation movements.

Head office functions and other operations

	2004			2003		(a)	2002		(a)
	£m			£m			£m
Head office functions and central items		(201	)		(192	)		(155	)
Transition businesses		7			(25	)		(125	)
Restructuring costs		(12	)		(16	)		(21	)
Loss on ordinary activities before tax		(206	)		(233	)		(301	)

Note

(a) Comparative figures have been restated to reflect the aggregation of Head office functions and other operations, which were formerly reported separately.

Head office functions and central items costs increased 5% (£9m) to a loss of £201m (2003: loss £192m). Central items included internal fees charged by Barclays Capital for structured capital market activities of £63m (2003: £89m).

The improved performance of Transition Businesses, from a loss of £25m to a profit of £7m, primarily reflected provisions released in the current year.

Head office functions and central items costs increased in 2003 by 24% (£37m) to a loss of £192m (2002: loss £155m).

The improved performance of Transition Businesses, from a loss in 2002 of £125m to a loss in 2003 of £25m, primarily reflected a reduced provisions charge in respect of various South American Corporate Banking exposures.

98

Barclays PLC Annual Report 2004 

Financial review

Total assets and liabilities and capital resources

Total Assets and Liabilities

Total Assets and Weighted Risk Assets
The Group’s balance sheet increased 18% (£78.8bn) to £522.1bn (2003: £443.3bn). Weighted risk assets increased 16% (£29.6bn) to £218.6bn (2003: £189bn).

UK Banking total assets increased 8% to £122.4bn (2003: £113.7bn). Weighted risk assets increased 9% to £91.9bn (2003: £84.5bn).

UK Retail Banking total assets increased 3% to £71.6bn (2003: £69.7bn) and weighted risk assets increased 4% to £37.1bn (2003: £35.8bn). This was mainly attributable to growth in the UK residential mortgage portfolio, up 3% to £61.7bn (2003: £59.8bn).

UK Business Banking total assets increased 15% to £50.8bn (2003: £44bn) and weighted risk assets increased 13% to £54.8bn (2003: £48.6bn). This reflected strong growth in lending balances.

Private Clients and International total assets (excluding the assets of the closed life assurance activities) increased 14% to £31bn (2003: £27.2bn), and weighted risk assets increased 28% to £23.3bn (2003: £18.2bn). This was mainly attributable to growth in customer loans in Spain, Italy and Africa.

Barclaycard total assets increased 14% to £23.4bn (2003: £20.6bn) reflecting growth in the credit card and consumer lending business and the acquisition of Juniper. Weighted risk assets increased 10% to £20.2bn (2003: £18.3bn).

Barclays Capital total assets increased 24% to £332.6bn (2003: £268.7bn) due to increases in debt securities and fully collateralised reverse repos as the expansion of the business continued. Total weighted risk assets increased 23% to £79.9bn (2003: £65.1bn), reflecting increased business volumes and the expansion of credit trading, credit derivatives and residential and commercial mortgage backed securities to meet client demands.

Capital Resources
The Group manages both its debt and equity capital actively. The Group’s authority to buy-back equity was renewed at the 2004 AGM to provide additional flexibility in the management of the Group’s capital resources.

	2004		2003		2002
	£m		£m		£m
Barclays PLC Group
Shareholders’ funds		17,417		16,374		15,146
Minority interests: non-equity		690		–		–
Minority interests: equity		211		283		156
		18,318		16,657		15,302
Undated loan capital		6,149		6,310		6,678
Dated loan capital		6,128		6,029		4,859
Total capital resources		30,595		28,996		26,839

Total capital resources increased in the year by £1,599m.

Shareholders’ funds increased by £1,043m, reflecting profit retentions of £1,730m, net proceeds of share issues of £114m and gains arising from transactions with third parties which are reflected in the statement of recognised gains and losses of £13m; offset by share repurchases of £699m, an increase in treasury and ESOP shares of £53m, exchange rate losses of £58m.

Non-equity minority interests reflected the issue by Barclays Bank PLC of €1bn (£688m) of non-cumulative preference shares on 8th December 2004 and an additional £2m of profits attributable to these non-equity minority interests at the year-end.

Loan capital decreased by £62m reflecting raisings of £774m, more than offset by redemptions of £611m, exchange rate movements of £224m and amortisation of issue expenses of £1m.

	2004		2003		2002
	£m		£m		£m
Barclays Bank PLC Group
Shareholders’ funds: equity		17,581		16,485		15,205
Shareholders’ funds: non-equity		690		–		–
Minority interests: equity		211		283		156
		18,482		16,768		15,361
Undated loan capital		6,149		6,310		6,678
Dated loan capital		6,128		6,029		4,859
Total capital resources		30,759		29,107		26,898

Capital resources for Barclays Bank PLC Group differ from Barclays PLC Group by £164m (2003: £111m).

99

Financial review
Total assets and liabilities and capital resources

Capital ratios
Capital adequacy and the use of regulatory capital are monitored by the Group, employing techniques based on the guidelines developed by the Basel Union on Banking Supervision (the Basel Committee) and European Union Directives, as implemented by the Financial Services Authority (FSA) for supervisory purposes.

These techniques include the risk asset ratio calculation, which the FSA regards as a key supervisory tool. The FSA sets ratio requirements for individual banks in the UK at or above the internationally agreed minimum of 8%. The ratio calculation involves the application of designated risk weightings to reflect an estimate of credit, market and other risks associated with broad categories of transactions and counterparties. Regulatory guidelines define three ‘Tiers’ of capital resources. Tier 1 capital, comprising mainly shareholders’ funds and including Reserve Capital Instruments and Tier One Notes, is the highest tier and can be used to meet trading and banking activity requirements. Tier 2 includes perpetual, medium-term and long-term subordinated debt, general provisions for bad and doubtful debts and fixed asset revaluation reserves. Tier 2 capital can also be used to support both trading and banking activities. Tier 3 capital also comprises short-term subordinated debt with a minimum original maturity of two years. The use of tier 3 capital is restricted to trading activities only and it is not eligible to support counterparty or settlement risk. The aggregate of tiers 2 and 3 capital included in the risk asset ratio calculation may not exceed tier 1 capital.

The following tables set out the calculated capital ratios and the weighted risk assets and regulatory capital resources on which they were based as at 31st December:

Capital ratios

2004

2003

2002

Barclays

Barclays

Barclays

Barclays

Barclays

Barclays

PLC

Bank PLC

PLC

Bank PLC

PLC

Bank PLC

Group

Group

Group

Group

Group

Group

£m

£m

£m

£m

£m

£m

Capital ratios

Tier 1 ratio

7.6

7.6

7.9

7.9

8.2

8.2

Risk asset ratio

11.5

11.5

12.8

12.8

12.8

12.8

	2004		2003		2002
	£m		£m		£m
Weighted risk assets
Banking book
on-balance sheet		148,621		133,816		128,691
off-balance sheet		26,741		22,987		21,999
Associated undertakings and joint ventures		3,020		2,830		3,065
Total banking book		178,382		159,633		153,755
Trading book
Market risks		22,106		13,861		7,988
Counterparty and settlement risks		18,113		15,503		11,005
Total trading book		40,219		29,364		18,993
Total weighted risk assets		218,601		188,997		172,748

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Barclays PLC Annual Report 2004 

	2004						2003						2002
	Barclays			Barclays			Barclays			Barclays			Barclays			Barclays
	PLC			Bank PLC			PLC			Bank PLC			PLC			Bank PLC
	Group			Group			Group			Group			Group			Group
Capital resources (as defined for regulatory purposes)	£m			£m			£m			£m			£m			£m
Tier 1
Called up share capital		1,614			2,316			1,642			2,302			1,645			2,293
Eligible reserves		15,670			15,656			14,657			13,997			13,405			12,757
Minority interests
– non-equity		688			–			–			–			–			–
– equity		575			575			637			637			522			522
Reserve Capital Instruments(a)		1,627			1,627			1,705			1,705			1,771			1,771
Tier One Notes(a)		920			920			960			960			1,019			1,019
Less: goodwill		(4,432	)		(4,432	)		(4,607	)		(4,607	)		(4,158	)		(4,158	)
Total qualifying tier 1 capital		16,662			16,662			14,994			14,994			14,204			14,204

	2004			2003			2002
	£m			£m			£m
Tier 2
Revaluation reserves		25			25			25
General provisions		564			795			737
Qualifying subordinated liabilities(b)
Undated loan capital		3,573			3,636			3,854
Dated loan capital		5,647			5,652			4,573
Other(c)		2			2			2
Total qualifying Tier 2 capital		9,811			10,110			9,191
Tier 3: short-term subordinated liabilities(b)		286			280			203
Less: supervisory deductions
Investments not consolidated for supervisory purposes(d)		(1,047	)		(979	)		(1,288	)
Other deductions		(496	)		(182	)		(119	)
Total deductions		(1,543	)		(1,161	)		(1,407	)
Total net capital resources		25,216			24,223			22,191

Notes

(a)	Reserve Capital Instruments (RCIs) and Tier One Notes (TONs) are included in undated loan capital in the consolidated balance sheet.
(b)	Subordinated liabilities are included in Tiers 2 or 3, subject to limits laid down in the supervisory requirements. Barclays retains significant capacity to raise additional capital within these limits.
(c)	Comprises revaluation reserves attributable to minorities £2m (2003: £2m, 2002: £2m).
(d)	Includes £610m (2003: £478m, 2002: £867m) of shareholders’ interest in the retail life-fund.

Net capital resources grew by 4.1% (£1bn). Tier 1 capital rose by £1.7bn with retained profits of £1.7bn and the issue of £0.7bn of preference shares being offset by share repurchases of £0.7bn. Tier 2 capital fell by 3% (£0.3bn) and tier 3 capital remained broadly as reported at 31st December 2003. Supervisory deductions increased by £0.4bn.

The overall growth in weighted risk assets of £29.6bn comprised trading book weighted assets growth of 37% (£10.9bn) and banking book weighted assets of 11.7% (£18.7bn).

The risk asset ratio was 11.5% (2003: 12.8%). The tier 1 ratio was 7.6% (2003: 7.9%).

101

Financial review

Deposits and short-term borrowings

Deposits

	Average: year ended 31st December
	2004		2003		2002
	£m		£m		£m
Deposits by banks
Offices in the United Kingdom		46,835		41,034		31,966
Offices outside the United Kingdom:
Other European Union		3,511		2,696		1,894
United States		946		597		2,213
Rest of the World		12,170		6,815		4,909
		63,462		51,142		40,982
Customer accounts
Offices in the United Kingdom		176,137		170,689		145,192
Offices outside the United Kingdom:
Other European Union		8,485		6,935		5,418
United States		6,447		3,671		3,964
Rest of the World		8,568		6,827		9,188
		199,637		188,122		163,762

Average deposits (excluding trading balances) are analysed by type in the average balance sheet on page 85 and are based on the location of the office in which the deposits are recorded.

‘Demand deposits’ in offices in the UK are mainly current accounts with credit balances, obtained through the UK branch network.

‘Savings deposits’ in offices in the UK are also obtained through, and administered by, the UK branch network. Interest rates are varied from time to time in response to competitive conditions. These deposits are not drawn against by cheque or similar instrument.

‘Other time deposits – retail’ in offices in the UK are interest bearing and also are not drawn against by cheque or similar instrument. They are generally distinguished from savings deposits by having fixed maturity requirements and from wholesale deposits by being collected, in the main, through the UK branch network.

‘Other time deposits – wholesale’ in offices in the UK are obtained through the London money market and are booked mainly within the Group’s money market operations. These deposits are of fixed maturity and bear interest rates which relate to the London inter-bank money market rates.

‘Other time deposits’ includes commercial paper and inter-bank funds.

Although the types of deposit products offered through offices located outside the UK are broadly similar to those described above, they are tailored to meet the specific requirements of local markets.

A further analysis of Deposits by banks and Customer accounts is given in Note 23 and Note 24 to the accounts on page 143.

Short-term Borrowings
Short-term borrowings include Deposits by banks as reported in ‘Deposits’, Commercial paper and negotiable certificates of Deposit.

Deposits by banks (excluding trading business)
Deposits by banks are taken from a wide range of counterparties and generally have maturities of less than one year.

	2004		2003		2002
	£m		£m		£m
Year-end balance		74,211		57,641		48,751
Average balance		63,279		51,059		40,788
Maximum balance		93,809		77,195		56,414
Average interest rate during year		2.4%		2.3%		2.9%
Year-end interest rate		2.9%		2.5%		2.6%

Commercial paper
Commercial paper is issued by the Group, mainly in the United States, generally in denominations of not less than $100,000, with maturities of up to 270 days.

	2004		2003		2002
	£m		£m		£m
Year-end balance		8,688		4,426		5,192
Average balance		6,828		3,288		4,818
Maximum balance		9,381		6,284		5,234
Average interest rate during year		1.8%		1.1%		2.0%
Year-end interest rate		2.2%		1.6%		1.6%

Negotiable certificates of deposit
Negotiable certificates of deposits are issued mainly in the UK and US, generally in denominations of not less than $100,000.

	2004		2003		2002
	£m		£m		£m
Year-end balance		37,213		28,536		30,045
Average balance		35,409		33,013		27,111
Maximum balance		44,934		40,274		36,780
Average interest rate during year		2.2%		2.2%		3.3%
Year-end interest rate		2.8%		2.1%		2.8%

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Barclays PLC Annual Report 2004 

Financial review

Securities

Securities
The following table analyses the book value and valuation of securities.

	2004				2003				2002
	Book value		Valuation		Book value		Valuation		Book value		Valuation
	£m		£m		£m		£m		£m		£m
Investment securities
Debt securities:
United Kingdom government		19		19		565		621		1,465		1,496
Other government		11,858		12,051		16,347		16,772		18,963		19,564
Other public bodies		21		21		78		79		17		17
Mortgage-backed securities		6,563		6,537		3,074		3,077		4,693		4,704
Corporate issuers		15,765		15,796		13,826		13,966		12,601		12,666
Other issuers		5,531		5,547		3,691		3,695		2,529		2,530
Equity shares		1,293		1,513		954		1,134		505		509
		41,050		41,484		38,535		39,344		40,773		41,486
Other securities
Debt securities:
United Kingdom government		2,567		2,567		2,084		2,084		1,025		1,025
Other government		37,438		37,438		28,011		28,011		25,385		25,385
Other public bodies		8,177		8,177		4,513		4,513		2,438		2,438
Bank and building society certificates of deposit		7,063		7,063		5,796		5,796		12,027		12,027
Other issuers		32,426		32,426		19,408		19,408		13,086		13,086
Equity shares		10,873		10,873		6,905		6,905		2,624		2,624
		139,594		140,028		105,252		106,061		97,358		98,071

Investment debt securities include government securities held as part of the Group’s treasury management portfolio for asset and liability, liquidity and regulatory purposes and are for use on a continuing basis in the activities of the Group. In addition, the Group holds as investments listed and unlisted corporate securities. Investment securities are valued at cost, adjusted for the amortisation of premiums or discounts to redemption, less any provision for diminution in value.

Other securities comprise dealing securities which are valued at market value.

Bank and building society certificates of deposit are freely negotiable and have original maturities of up to five years, but are typically held for shorter periods.

A further analysis of the book value and valuation of securities is given in Notes 16 and 17 to the accounts on pages 137 and 138.

103

Financial review
Securities

In addition to UK government securities shown above, at 31st December 2004 and 2003 the Group held the following government securities which exceeded 10% of shareholders’ funds.

	2004				2003
	Book value		Valuation		Book value		Valuation
	£m		£m		£m		£m
United States government securities		14,334		14,349		10,155		10,203
Japanese government securities		8,494		8,512		9,802		9,806
Italian government securities		6,900		6,930		5,770		5,835
German government securities		6,215		6,229		4,468		4,504
French government securities		3,035		3,035		2,674		2,697
Spanish government securities		2,597		2,631		2,594		2,650

Maturities and yield of investment debt securities

	Maturing within				Maturing after one but				Maturing after five but				Maturing after
	one year:				within five years:				within ten years:				ten years:
																			Total
	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		yield
	£m		%		£m		%		£m		%		£m		%		£m		%
Government		2,271		3.1		5,660		3.5		3,609		3.9		337		0.8		11,877		3.5
Other public bodies		9		–		12		–		–		–		–		–		21		–
Other issuers		9,080		3.7		13,883		2.8		670		4.4		4,226		3.7		27,859		3.3
Total book value		11,360		3.6		19,555		3.0		4,279		4.0		4,563		3.5		39,757		3.3
Total valuation		11,379				19,660				4,346				4,586				39,971

The yield for each range of maturities is calculated by dividing the annualised interest income prevailing at 31st December 2004 by the book value of securities held at that date. Yields on certain US securities, which are exempt from tax, have been calculated using interest income adjusted to reflect a taxable equivalent basis.

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Barclays PLC Annual Report 2004 

Financial review

Life assurance business

Life Assurance business

The Group has life businesses operating in the UK and through its French and Spanish subsidiaries in Spain, Portugal and France. The UK company has ceased to accept new business applications and did not write with profits contracts previously. The French and Spanish subsidiaries offer a diverse range of insurance products. As discussed in the section on Future UK accounting developments on page 115, the Group is expanding its disclosure in respect of the life business, in line with the Memorandum of Understanding entered into by the Accounting Standards Board, together with the Association of British Insurers and major insurers and bancassurers in the banking industry, following the publication of FRS 27 in December 2004.

Options and Guarantees

The Group’s life contracts do not contain options or guarantees that could confer material risk upon the company.

Capital position statement

Available capital resources for life business:	£m
Total shareholders’ funds in the life business		276
Fund for Future Appropriations (FFA) and other sources of capital		–
Conversion to regulatory basis		8
Total available capital resources		284
Less: surplus		(154	)
Capital resource requirement		130

Reconciliation of capital resources:	£m
Shareholder capital available for life business (see above table)		284
Shareholders’ funds attributed to other businesses		17,133
Total shareholders’ funds (see Note 33 on page 153)		17,417
FFA and other capital resources available for life business (see above table)		–
Other capital resources attributable to other businesses		13,178
Total other capital resources		13,178
Total capital resources		30,595

Capital management and constraints on the transfer of capital

Capital resource requirements are assessed at company level in accordance with local laws and regulations. However, the aim is that each life fund should be able to meet its own liabilities. In the event that this should not be the case, shareholders’ funds attributed to businesses other than Life Insurance are available to meet liabilities of life business to the extent that they otherwise cannot be met. Conversely, there are some constraints in moving capital out of the life funds.

During 2003, Barclays restructured its UK retail life assurance businesses. This resulted in the transfer of Barclays Life to Woolwich Life, subsequently renamed Barclays Life, and the establishment of a reinsurance arrangement with Barclays Reinsurance Dublin Limited, a new subsidiary of Barclays Life. Under this arrangement Barclays Reinsurance Dublin Limited raised finance via a contingent loan which was ultimately funded partly by investors external to the Group and partly by the Group.

The capital management objective is to ensure that sufficient capital is in place to meet liabilities as they fall due. This is supported by risk management policies designed to manage key risks to the life business:

• Credit risk;

• Market risk;

• Liquidity risk;

• Operational risk; and

• Insurance risk.

In managing risk, management considers the impact of key assumptions. Included in the capital management policies are the requirements to:

• manage credit risk by adopting prudent parameters as constraints for investment managers and by diversifying reinsurance amongst a selection of well capitalised providers; and

• hold a suitably diversified portfolio of admissible assets of a value sufficient to cover technical provisions and of appropriate currency, term, safety and yield to ensure that cash inflows from those assets will be sufficient to meet expected cash flows from its insurance liabilities as they fall due.

Although there are a number of factors influencing the capital position of the life business, the key factors include equity risk, inflation risk, mortality shock, and morbidity shock.

Liabilities are sensitive to a downturn in the economy and the investment market, such as increased mortgage protection claims, policy lapses and surrenders at a time when it is difficult to liquidate assets. Barclays has a policy to choose assets to match the nature and the term of the liability and this policy would continue to be applied to any changes in market conditions.

105

Financial review

Off balance sheet arrangements

Off Balance Sheet Arrangements

In the ordinary course of business and primarily to facilitate client transactions, the Group enters into off balance sheet arrangements with unconsolidated entities. These arrangements include the provision of guarantees on behalf of the Group’s customers, retained interests in assets which have been transferred to an unconsolidated entity and obligations arising out of variable interests in an unconsolidated entity.

Guarantees

In the normal course of business, the Group issues guarantees on behalf of its customers. In the majority of cases, Barclays will hold collateral against the exposure, have a right of recourse to the customer or both. In addition, Barclays issues guarantees on its own behalf.

The main types of guarantees provided are financial guarantees given to banks and financial institutions on behalf of customers to secure loans, overdrafts and other banking facilities, including stock borrowing indemnities and standby letters of credit. Other guarantees provided include performance guarantees, advance payment guarantees, tender guarantees, guarantees to Customs and Excise and retention guarantees.

Further details on these guarantees are provided in Note 52 on page 207.

Special purpose entities

The off balance sheet arrangements entered into by the Group typically involve the use of special purpose entities (SPEs).

These are entities that are set up for a specific purpose and generally would not enter into an operating activity nor have any employees. The most common form of SPE involves the acquisition of financial assets that are funded by the issuance of securities to external investors, which have cash flows different from those of the underlying instruments. The repayment of these securities is determined by the performance of the assets acquired by the SPE. These entities form an integral part of many financial markets, and are important to the development of the securitisation markets and functioning of the US commercial paper market.

The consolidation approach to the SPEs is different under UK and US GAAP.

UK GAAP treatment

Under UK GAAP the financial statements are required to present a true and fair view, which includes reflecting the substance of the transactions and arrangements and not just the legal form.

Accordingly, the substance of any transaction with an SPE forms the basis for the treatment in the Group’s financial statements. When a Group company has transferred assets into an SPE, these assets should only be derecognised when the criteria within Financial Reporting Standard (FRS) 5 (Reporting the substance of transactions) are fully met.

An SPE is consolidated by the Group either if it meets the criteria of FRS 2 (Accounting for subsidiaries), or if the risk and rewards associated with the SPE reside with the Group, such that the substance of the relationship is that of a subsidiary. Financial data relating to entities consolidated on this latter basis is given in Note 47 on page 173.

US GAAP treatment

Under US GAAP, the Group determines whether it has a controlling financial interest in an entity by initially evaluating whether the entity is a variable interest entity (VIE), voting interest entity, or a qualifying special purpose entity (QSPE).

As defined in FASB interpretation (FIN) 46-R (Consolidation of Variable Interest Entities), VIEs are entities which lack one or more of the characteristics of a voting interest entity described below. FIN 46-R states that a controlling financial interest in an entity is present where an enterprise has a variable interest, or a combination of variable interests, that will absorb the majority of the entity’s expected losses, receive a majority of the entity’s expected residual returns, or both. The enterprise with a controlling financial interest is the primary beneficiary under FIN 46-R. Accordingly, the Group consolidates all VIEs in which it is the primary beneficiary, as described in Note 52.

Voting interest entities are entities in which the total equity investment at risk is sufficient to enable each entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the rights to receive residual returns and the right to make decisions about the entity’s activities. Voting interest entities are evaluated for consolidation in accordance with Accounting Research Bulletin (ARB) 51. ARB 51 states that the usual condition for a controlling financial interest in an entity is ownership of a majority voting interest.

In accordance with SFAS 140 (Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities), the Group does not consolidate QSPEs. QSPEs are passive entities that hold financial assets transferred to them by the Group and are commonly used in mortgage and other securitisation transactions.

The Group, in the ordinary course of business, and primarily to facilitate client transactions, has helped establish SPEs in various areas which are described below, along with their UK and US GAAP treatment:

Commercial paper conduits

The Group provides its clients with access to liquidity through the use of asset backed commercial paper programmes. These programmes involve the sale of financial assets by clients to entities which are, in effect, commercial paper conduits that then issue commercial paper to fund the purchases. The financial assets held by the conduits, which totalled £12,404m (2003: £12,650m) at 31st December 2004, normally take the form of consumer or trade receivables. Of the above amount, assets held by the conduits which have been originated by the Group amounted to £68m (2003: £192m) and have been reported on the Group’s balance sheet under UK GAAP. The remainder represents client assets in which the Group has no interest and which are not reported on the Group’s balance sheet at 31st December 2004. Certain administrative activities and the provision of liquidity and credit facilities to the programmes are performed by the Group under arm’s-length contracts that it, or the conduit’s independent board of directors, can terminate. Net fees received by the Group for performing these services amounted to £53m (2003: £58m). Under US GAAP these conduits are consolidated by the Group. This has minimal impact on net income, although assets increase by £12,336m (2003: £2,845m). The commitments to provide liquidity to these vehicles are a maximum of £16,296m, which would be required to be provided in the event of the conduits’ access to funding markets being restricted.

Further details of these transactions are provided in Note 52 on pages 202 and 203.

Credit structuring business

The Group structures investments with specific risk profiles which are attractive to investors. This business involves the sale by the Group of credit exposures based on an underlying portfolio of assets into SPEs,

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Barclays PLC Annual Report 2004 

often using credit derivative contracts. The assets are funded by issuing securities with varying terms. In accordance with UK GAAP, the Group does not recognise the assets and liabilities of these entities in its balance sheet once the securities that represent substantially all the risks and rewards associated with the SPE have been sold to third parties. Otherwise these are recognised in full. Under UK GAAP, as at 31st December 2004, the Group had consolidated gross assets of £2,024m (2003: £2,793m) in respect of these transactions. The Group’s net income for 2004 included an £8m profit (2003: £38m) generated by the relationship with these entities. Under US GAAP, as at 31st December 2004, the Group had consolidated gross assets of £2,343m (2003: £2,877m). The summarised results of these entities under UK GAAP are given in Note 47 on page 173.

Asset securitisations

The Group assists companies with the formation of asset securitisations. These entities have minimal equity and rely on funding in the form of notes to purchase the assets for securitisation. The Group provides financing in the form of senior notes and/or junior notes and may also provide derivatives to the SPE. The Group has also used SPEs to securitise part of its originated and purchased retail and commercial lending portfolios and credit card receivables. Following the sale of these assets to the securitisation vehicles, the Group may retain servicing rights and an interest in the residual income of the SPEs.

Under UK GAAP, the SPEs are consolidated as quasi-subsidiaries where the Group has the risks and rewards of the transaction. Under UK GAAP, as at 31st December 2004, gross assets of £7,168m (2003: £6,717m) were consolidated. Where junior notes and certain derivative contracts are provided by the Group, the Group may be the primary beneficiary under FIN 46-R and would be required to consolidate these SPEs. Under US GAAP, as at 31st December 2004, the Group had consolidated gross assets of £3,925m (2003: £7,178m) in respect of these transactions in which the Group is determined to be the primary beneficiary. Certain of the entities used are QSPEs in accordance with SFAS 140 and, where this is the case, the securitised assets are deemed to have been sold and consolidation of the QSPE is not required. This results in the derecognition of assets of £7,660m as at 31st December 2004 (2003: £2,350m).

Further details are included in Notes 14 and 47 on pages 133 and 173.

Asset realisations

The Group establishes SPEs to facilitate the recovery of banking facilities in circumstances where the borrower has suffered financial

loss. Under US GAAP, as at 31st December 2004, the Group had recognised assets of £68m (2003: £nil) in respect of the transactions. These entities are not consolidated under UK GAAP.

Client intermediation

The Group is involved in structuring transactions as a financial intermediary to meet investor and client needs. These transactions involve entities structured by either the Group or the client and they are used to modify cash flows of third party assets to create investments with specific risk or return profiles or to assist clients in the efficient management of other risks. The Group also invests in lessor entities specifically to acquire assets for leasing.

Client intermediation also includes arrangements to fund the purchase or construction of specific assets (most common in the property industry).

Where the Group has the risks and rewards, the SPEs are consolidated either as quasi-subsidiaries under UK GAAP or as VIEs under US GAAP, with assets of £216m as at 31st December 2004 (2003: £5,740m). Certain entities that are consolidated in accordance with FRS 2 under UK GAAP are deconsolidated under US GAAP where the Group is not the primary beneficiary. The impact on the Group’s total assets is a reduction of £2,699m (2003: £43m).

Fund management

The Group provides asset management services to a large number of investment entities on an arm’s-length basis and at market terms and prices. The majority of these entities are investment funds that are owned by a large and diversified number of investors.

In addition, there are various partnerships, funds and open-ended investment companies that are used by a limited number of independent third parties to facilitate their tailored private equity, debt securities or hedge fund investment strategies. These entities have assets under management of £284m (2003: £290m). The Group has acquired interests in these entities, which are included within debt securities or equity shares, but the entities are not consolidated under UK or US GAAP because the Group does not own either a significant portion of the equity, or the risks and rewards inherent in the assets. Some £4m (2003: £2m) of net income relates to transactions with these entities.

The gross assets of the SPEs described above, which would require consolidation before the impact of intercompany eliminations under UK and US GAAP, are included in the table below.

	2004				2003
	Assets		Assets		Assets		Assets
	consolidated		consolidated		consolidated		consolidated
	under UK GAAP		under US GAAP		under UK GAAP		under US GAAP
	£m		£m		£m		£m
Commercial paper conduits		68		12,404		192		12,650
Credit structuring		2,024		2,343		2,793		2,877
Asset securitisations		7,168		3,925		6,717		7,178
Asset realisations		–		68		–		–
Client intermediation(a)		216		216		5,740		5,740

Note

(a) Certain entities which are consolidated in accordance with FRS 2 under UK GAAP are deconsolidated under US GAAP where the Group is not the primary beneficiary. The impact on the Group’s total assets is a reduction of £2,699m (2003: £43m).

Further disclosure of the Group’s involvement with entities of this and similar nature under US GAAP are given in Note 52 on pages 202 and 203.

107

Intentionally left blank.

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US Audit Report of the Independent Registered Public Accounting Firm to the Board of Directors and Shareholders of Barclays PLC and Barclays Bank PLC

We have audited the accompanying consolidated financial statements of Barclays PLC and its subsidiary undertakings on pages 110 to 209 and Barclays Bank PLC and its subsidiary undertakings on pages 214 to 223. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Barclays PLC and its subsidiary undertakings and Barclays Bank PLC and its subsidiary undertakings at 31st December 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended 31st December 2004 in accordance with accounting principles generally accepted in the United Kingdom.

Accounting principles generally accepted in the United Kingdom vary in certain significant respects from accounting principles generally accepted in the United States of America. The application of the latter would have affected the determination of consolidated net income for each of the three years in the period ended 31st December 2004 and the determination of consolidated shareholder’s equity at 31st December 2004 and 2003 to the extent summarised in Note 52 to the consolidated financial statements.

PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
London, United Kingdom, 10th March 2005

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Accounting policies

Accounting Policies

Summary of Significant Accounting Policies

(a) Accounting convention

The accounts have been prepared under the historical cost convention, as modified by the revaluation of certain properties, assets held for dealing purposes, assets held in the long-term assurance business and the investment in Barclays Bank PLC in the balance sheet of Barclays PLC. They are prepared in accordance with applicable accounting standards of the UK Accounting Standards Board (ASB) and pronouncements of its Urgent Issues Task Force (UITF) and with the Statements of Recommended Accounting Practice (SORPs) issued by the British Bankers’ Association (BBA) and the Finance and Leasing Association (FLA).

The SORP issued by the Association of British Insurers (ABI) addresses the accounting and disclosure of insurance business for insurance undertakings. Barclays is primarily a banking group, not an insurance group, and prepares accounts in accordance with Schedule 9 of the Companies Act 1985. The ABI SORP does not specifically address the accounting for long-term assurance business in this context. In line with other such banking groups, Barclays uses the embedded value method to measure the shareholders’ interest in its long-term assurance business, which is consistent with the alternative measurement method described in guidance issued by the ABI ‘Supplementary Reporting for Long-Term Insurance Business’ and is considered more relevant than the modified statutory solvency basis for describing the financial position and current performance of the business.

Changes to the accounting policies described in the 2003 Annual Report are set out on page 115.

(b) Consolidation and format

The consolidated accounts have been prepared in compliance with Sections 230, 255, 255A and 255B of, and Schedule 9 to, the Companies Act 1985 (the Act). The profit and loss account and balance sheet of Barclays PLC have been prepared in compliance with Section 226 of, and Schedule 4 to, the Act.

The consolidated accounts include the accounts of Barclays PLC and its subsidiary undertakings made up to 31st December. Entities that do not qualify as subsidiaries but which give rise to benefits that are, in substance, no different from those that would arise were the entity a subsidiary, are included in the consolidated accounts. Details of the principal subsidiary undertakings are given in Note 50. In order to reflect the different nature of the shareholders’ and policyholders’ interests in the retail long-term assurance business, the value of the long-term assurance business attributable to shareholders is included in Other Assets and the assets and liabilities attributable to policyholders are classified under separate headings in the consolidated balance sheet.

As the consolidated accounts include partnerships where a Group member is a partner, advantage has been taken of the exemption given by Regulation 7 of the Partnerships and Unlimited Companies (Accounts) Regulations 1993 with regard to the preparation and filing of individual partnership accounts.

Equity minority interests in the balance sheet represent the interests of third parties in the equity shares of the Group subsidiary undertakings.

(c) Shares in subsidiary undertakings

Barclays PLC’s investment in Barclays Bank PLC, together with Barclays Bank PLC’s investments in subsidiary undertakings, are stated at the amount of the underlying net asset, including attributable goodwill. Changes in the value of the net assets are accounted for as movements in the revaluation reserve.

(d) Interests in associated undertakings and joint ventures

An associated undertaking generally is one in which the Group’s interest is more than 20% and no more than 50% and where the Group exercises a significant influence over the entity’s operating and financial policies. A joint venture is one where the Group holds an interest on a long-term basis and which is jointly controlled by the Group and one or more other parties. The profit and loss account includes income from interests in associated undertakings and joint ventures based on accounts made up to dates not earlier than three months before the balance sheet date. Interests in associated undertakings and joint ventures are included in the consolidated balance sheet at the Group’s share of the book value of the net assets of the undertakings concerned plus unamortised goodwill arising on the acquisition of the interest.

In the ordinary course of the private equity business the Group makes investments that might be classified as joint ventures. As required by FRS 9 ‘Associates and Joint Ventures’, these investments are accounted for at cost, less any provision for impairment. This is a departure from the requirements of the Companies Act 1985 which requires joint ventures to be accounted for using the equity method of accounting. The Directors believe that this departure is necessary to present a true and fair view of these investments. Accounting for these investments in accordance with the Companies Act would increase ‘Interests in joint ventures – share of gross assets’ by £281m, ‘Interests in joint ventures – share of gross liabilities’ by £149m and ‘Loss from joint ventures’ by £1m.

(e) Goodwill

Goodwill may arise on the acquisition of subsidiary and associated undertakings and joint ventures. It represents the excess of cost over fair value of the Group’s share of net assets acquired.

In accordance with Financial Reporting Standard (FRS) 10, goodwill is capitalised as an intangible asset and amortised through the profit and loss account over its expected useful economic life. For acquisitions prior to 1st January 1998, the Group accounting policy had been to write-off goodwill directly to reserves. The transitional arrangements of FRS 10 allow this goodwill to remain eliminated. In the event of a subsequent disposal, any goodwill previously charged directly against reserves prior to FRS 10 will be written back and reflected in the profit and loss account.

The useful economic life of the goodwill is determined at the time of the acquisition giving rise to it by considering the nature of the acquired business, the economic environment in which it operates and period of time over which the value of the business is expected to exceed the values of the identifiable net assets. For acquisitions in less mature economic environments, goodwill is generally considered to have a useful economic life of five years. For all other acquisitions, goodwill is generally expected to have a useful economic life of 20 years. In all cases, goodwill is amortised over its useful economic life and is subject to regular review as set out in policy (k).

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For the purpose of calculating goodwill, fair values of acquired assets and liabilities are determined by reference to market values, where available, or by reference to the current price at which similar assets could be acquired or similar obligations entered into, or by discounting expected future cash flows to present value. This discounting is either performed using market rates or by using risk-free rates and risk-adjusted expected future cash flows.

(f) Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at rates of exchange ruling on the balance sheet date. Overseas profits and losses are translated into sterling at average rates of exchange for the year. Profits arising in areas experiencing hyperinflation are adjusted to recognise its effect on the worth of the working capital employed. Exchange differences arising from the application of closing rates of exchange to the opening net assets held overseas, the retranslation of the result for the year from the average rate to the closing rate and to related foreign currency borrowings are taken directly to reserves. All other exchange profits and losses, which arise from normal trading activities, are included in the profit and loss account.

(g) Shareholders’ interest in the retail long-term assurance fund

The value of the shareholders’ interest in the Group’s retail long-term assurance business represents an estimate of the net present value of the profits inherent in the in-force policies, based on the advice of qualified actuaries, together with the surplus retained within the long-term assurance funds. This value is calculated after tax. Changes in the value placed on the long-term assurance business attributable to shareholders are included in the profit and loss account.

For the purpose of presentation, the change in value is grossed up at the effective rate of corporation tax.

In estimating the net present value of the profits inherent in the in-force policies, the calculations use assumptions for economic parameters (future investment returns, expense inflation and risk discount rate), taxation, mortality, persistency, expenses and the required levels of regulatory and solvency capital. Each of these assumptions is reviewed annually. The returns on fixed interest investments are set to market yields at the period end. The returns on UK and overseas equities and property are set to fixed interest returns plus a margin to reflect the additional return expected on each of these investments. The calculations are based on the market value of assets at the period end. The expense inflation assumption is based on long-term expectations of both earnings and retail price inflation. The risk discount rate is set to market yields on Government securities plus a margin to allow for the risks borne. The mortality, persistency and expense assumptions are chosen to represent best estimates of future experience and are based on current business experience. No credit is taken for favourable changes in experience unless it is reasonably certain to be delivered. The projected tax charges and the required levels of regulatory and solvency capital are based on current legislation.

(h) Revenue recognition

Interest income is recognised in the profit and loss account as it accrues, with the exception of interest on non-performing loans as set out in accounting policy (l) on page 112.

Fee income relating to loans and advances is recognised in the profit and loss account to match the cost of providing a continuing service, together with a reasonable profit margin. Where a fee is charged in lieu of interest, it is recognised in the profit and loss account as interest receivable on a level yield basis over the life of the advance. Fees and commissions receivable in respect of all other services provided are recognised in the profit and loss account when the related services are performed and when considered recoverable.

Income arises from the margins which are achieved through market-making and customer business and from changes in market value caused by movements in interest and exchange rates, equity prices and other market variables. Trading positions are valued on a mark to market basis. The resulting income is included in dealing profits along with interest and dividends arising from long and short positions and funding costs relating to trading activities.

(i) Lending related fees and commissions payable and incentives

Fees and commissions payable to introducers in respect of obtaining certain lending business, where this is the primary form of distribution, are charged to the profit and loss account as fees and commissions payable, over the anticipated life of the loans.

The costs of mortgage incentives, which comprise cashbacks and interest discounts, are charged to the profit and loss account as a reduction to interest receivable as incurred.

The amount of a fee payable by a borrower representing an insurance premium, in respect of high loan to value UK residential secured loans is deferred and included in accruals and deferred income in the Group balance sheet. Deferred income is released to the profit and loss account over the average life of the loan.

(j) Tangible fixed assets

Tangible fixed assets are carried at original cost or, for certain properties, at subsequent valuation, less related depreciation, calculated on the revalued amount where appropriate. Following the introduction of FRS 15 in 2000, the revalued book amounts are retained without subsequent revaluation, subject to the requirement to test for impairment.

Tangible fixed assets are depreciated on a straight-line basis over their useful economic lives at the following annual rates:

Freehold buildings and long-leasehold property (more than 50 years to run)		2	%
Leasehold property	over the remaining
(less than 50 years to run)	life of the lease
Costs of adaptation of freehold and leasehold property(a)		10	%
Equipment installed in freehold and leasehold property(a)		10	%
Computers and similar equipment		20%-33	%
Fixtures and fittings and other equipment		20	%

Note

(a) Where a leasehold has a remaining useful life of less than ten years, costs of adaptation and installed equipment are depreciated over the remaining life of the lease.

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Accounting policies

The Group selects its depreciation rates carefully and reviews them regularly to take account of any changes in circumstances. When setting useful economic lives, the principal factors the Group takes into account are the expected rate of technological developments, expected market requirements for the equipment and the intensity at which the assets are expected to be used.

No depreciation is provided on freehold land.

(k) Impairment

Tangible fixed assets and goodwill are subject to impairment review in accordance with FRS 11 if there are events or changes in circumstances that indicate that the carrying amount of the fixed asset or goodwill may not be fully recoverable. The impairment review comprises a comparison of the carrying amount of the fixed asset or goodwill with its recoverable amount, which is the higher of net realisable value and value in use. Net realisable value is calculated by reference to the amount at which the asset could be disposed of. Value in use is calculated by discounting the expected future cash flows obtainable as a result of the asset’s continued use, including those resulting from its ultimate disposal, at a market based discount rate on a pre-tax basis. The carrying values of fixed assets and goodwill are written down by the amount of any impairment and this loss is recognised in the profit and loss account in the period in which it occurs. If the occurrence of an external event gives rise to a reversal of an impairment loss, the reversal is recognised in the profit and loss account and by increasing the carrying amount of the fixed asset or goodwill in the period in which it occurs. The carrying amount of the fixed asset or goodwill will only be increased up to the amount that it would have been had the original impairment not occurred. For the purpose of conducting impairment reviews, income generating units are identified as groups of assets, liabilities and associated goodwill that generate income that is largely independent of other income streams. The assets and liabilities include those directly involved in generating the income and an appropriate proportion of those used to generate more than one income stream.

(l) Loans and Advances

Loans and advances, other than those held in a dealing portfolio, are recorded in the balance sheet at cost, less interest in suspense debited to the customer’s account, specific and general provisions. Advances held in a dealing portfolio for the purpose of trading on a secondary market are valued at the lower of cost and market value. Market values are based on independent price quotations.

Specific provisions are raised when the Group considers that the creditworthiness of a borrower has deteriorated such that the recovery of the whole or part of an outstanding advance is in serious doubt. For larger accounts, this is done on an individual basis, by taking into account relevant considerations that have a bearing on expected cashflows, although scope exists within the retail businesses, where the portfolio comprises homogeneous assets and where statistical techniques are appropriate, to raise specific provisions on a portfolio basis.

General provisions are raised to cover losses which are judged to be present in loans and advances at the balance sheet date, but which have not been specifically identified as such. These provisions are adjusted at least half yearly by an appropriate charge or release of general provision based on a statistical analysis. The accuracy of this analysis is periodically assessed against actual losses.

Gradings are used to rate the credit quality of borrowers. Each grade corresponds to an Expected Default Frequency and is calculated by using manual or computer driven score-sheets validated by an analysis of the Group’s own historical data. This grade can be derived from different sources depending upon the borrower (e.g. internal model, credit rating agency). The general provision also takes into account the economic climate in the market in which the Group operates and the level of security held in relation to each category of counterparty. The general provision includes a specifically identified element to cover country transfer risk calculated on a basis consistent with the overall general provision calculation. General provisions are created with respect to the recoverability of assets arising from off balance sheet exposures in a manner consistent with the general provisioning methodology.

The aggregate specific and general provisions which are made during the year, less amounts released and recoveries of bad debts previously written off, are charged against operating profit and are deducted from loans and advances. Impaired lendings are written off against the balance sheet asset and provision in part, or in whole, when the extent of the loss incurred has been confirmed.

If the collection of interest is doubtful, it is credited to a suspense account and excluded from interest income in the profit and loss account, although it continues to be charged to the customers’ accounts. The suspense account in the balance sheet is netted against the relevant loan. If the collection of interest is considered to be remote, interest is no longer applied and suspended interest is written off. Loans on which interest is suspended are not reclassified as accruing interest until interest and principal payments are up to date and future payments are reasonably assured.

Assets acquired in exchange for advances in order to achieve an orderly realisation continue to be reported as advances. The asset acquired is recorded at the carrying value of the original advance updated as at the date of the exchange. Any subsequent impairment is accounted for as a specific provision.

(m) Debt Securities and Equity Shares

Investment securities are debt securities and equity shares intended for use on a continuing basis by the Group and identified as such. Investment securities are stated at cost less any provision for impairment. The cost of dated investment securities is adjusted for the amortisation of premiums or discounts on purchase over the period to redemption. The amortisation of premiums and discounts is included in interest receivable.

Other debt securities and equity shares are stated at market value and profits and losses arising from this revaluation are taken directly to the profit and loss account through dealing profits. Listed securities are valued based on market prices, with long positions at bid and short positions at offer price. Unlisted securities are valued based on the Directors’ estimate, which takes into consideration discounted cash flows, price earnings ratios and other valuation techniques.

In the case of private equity investments, listed and unlisted investments are stated at cost less any provision for impairment.

Investment and other securities may be lent or sold subject to a commitment to repurchase them. Securities lent or sold are retained on the balance sheet where substantially all the risks and rewards of

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ownership remain with the Group. Similarly, securities purchased subject to a commitment to resell are treated as collateralised lending transactions where the Group does not acquire the risks and rewards of ownership.

(n) Pensions and Other Post-retirement Benefits

The Group provides pension plans for employees in most parts of the world. Arrangements for staff retirement benefits in overseas locations vary from country to country and are made in accordance with local regulations and customs. For defined contribution schemes, the pension cost recognised in the profit and loss account represents the contributions payable to the scheme. The majority of UK staff are members of The Barclays Bank UK Retirement Fund (the UKRF) which comprises five sections. These are a defined benefit scheme (the 1964 Pension Scheme) and a defined contribution scheme (the Retirement Investment Scheme), which are both now closed to new members, a hybrid scheme, afterwork, and a defined contribution scheme, the Pension Investment Plan. Details are set out in Note 4. Other UK staff are covered by broadly comparable schemes which are accounted for on a comparable basis. The assets of the UKRF are held separately from the assets of the Group and are administered by a trustee. The pension cost for the defined benefit scheme is assessed in accordance with the advice of a qualified actuary, using the projected unit method. Variations from the regular cost are allocated over the expected average service lives of current employees. Provisions for pensions arise when the profit and loss account charge exceeds the contribution to the scheme as a result of actuarial valuations. These provisions will be eliminated over the estimated service lives of the employees. The basis of estimation is set out in Note 4 on page 126. The Group also provides post-retirement health care to certain staff and pensioners in the UK and US. Where appropriate, provisions for post-retirement benefits are raised on a basis similar to that detailed for defined benefit pension schemes. Where an actuarial basis is not appropriate, provisions are recognised in accordance with the policy on non-credit risk provisions (see (q) below).

(o) Finance Leases

Assets leased to customers under agreements which transfer substantially all the risks and rewards of ownership, other than legal title, are classified as finance leases. Finance lease receivables are included in loans and advances to customers. Gross earnings under finance leases are allocated to accounting periods in such a way as to give a constant periodic rate of return on the net cash investment. Finance lease receivables are stated at the cost of the equipment, including gross earnings to date, less rentals received to date.

(p) Deferred Tax

Deferred tax is provided in full in respect of timing differences that have originated but not reversed at the balance sheet date. Timing differences are differences between the Group’s taxable profits and its results as stated in the accounts that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements. Deferred tax is not provided on permanent differences. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recoverable. Deferred tax is not provided on the unremitted

earnings of subsidiary undertakings, joint ventures and associated undertakings except to the extent that dividends have been accrued or a binding agreement to distribute past earnings in the future has been entered into.

Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is not discounted.

(q) Non-credit Risk Provisions

Provisions are recognised for present obligations arising as consequences of past events where it is probable that a transfer of economic benefit will be necessary to settle the obligation and it can be reliably estimated.

When a leasehold property ceases to be used in the business, provision is made where the unavoidable costs of the future obligations relating to the lease are expected to exceed anticipated income. The provision is discounted using market rates to reflect the long-term nature of the cash flows.

When the Group has a detailed formal plan for restructuring a business and has raised valid expectations in those affected by the restructuring by starting to implement the plan or announcing its main features, provision is made for the anticipated cost of the restructuring, including redundancy costs. The provision raised is normally utilised within 12 months.

Contingent liabilities are possible obligations whose existence will be confirmed only by uncertain future events or present obligations where the transfer of economic benefit is uncertain or cannot be reliably measured. Contingent liabilities are not recognised but are disclosed unless they are remote.

(r) Derivatives

Derivatives are used to hedge interest, exchange rate, commodity and equity exposures related to non-trading positions. Instruments used for hedging purposes include swaps, equity derivatives, forward rate agreements, futures, options and combinations of these instruments. In addition, the use of derivatives and their sale to customers as risk management products is an integral part of the Group’s trading activities. Derivatives entered into for trading purposes include swaps, equity derivatives, credit derivatives, commodity derivatives, forward rate agreements, futures, options and combinations of these instruments.

Derivatives used for asset and liability management purposes

Derivatives used for hedging purposes are measured on an accruals basis consistent with the assets, liabilities, positions or future cash flows being hedged. The gains and losses on these instruments (arising from changes in fair value) are not recognised in the profit and loss account immediately as they arise. Such gains are either not recognised in the balance sheet or are recognised and carried forward. When the hedged transaction occurs, the gain or loss is recognised in the profit and loss account at the same time as the hedged item.

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Consolidated accounts Barclays PLC
Accounting policies

The criteria required for a derivative instrument to be classified as a designated hedge are that:

(i) the transaction must be reasonably expected to match or eliminate a significant proportion of the risk inherent in the assets, liabilities, other positions or cash flows being hedged and which results from potential movements in market rates and credit risk; and

(ii) adequate evidence of the intention to hedge and linkage with the underlying risk inherent in the assets, liabilities, other positions or cash flows being hedged, must be established at the outset of the transaction.

Designated hedges are reviewed for effectiveness by regular tests to determine that the hedge is closely negatively correlated to the designated hedged position in each and every identified time band in the maturity profile.

Profits and losses on interest rate swaps and options entered into for hedging purposes are measured on an accrual accounting basis, included in the related category of income and expense and reported as part of the yield on the hedged transaction. Amounts paid or received over the life of futures contracts are deferred until the contract is closed; accumulated deferred amounts on futures contracts and settlement amounts paid or received on forward contracts are accounted for as elements of the carrying value of the associated instrument, affecting the resulting yield.

A premium paid or received in respect of a credit derivative hedging an asset or liability is amortised over the life of the protection purchased or sold against either interest payable or interest receivable. Where a credit event occurs which triggers a recovery under the credit derivative, then the recovery will be offset against the profit and loss charge on the underlying asset or liability.

Foreign exchange contracts which qualify as hedges of foreign currency exposures, including positions relating to investments the Group makes outside the UK, are retranslated at the closing rate with any forward premium or discount recognised over the life of the contract in net interest income.

Profits and losses related to qualifying hedges, including foreign exchange contracts, of firm commitments and probable anticipated transactions are deferred and recognised in income or as adjustments to carrying amounts when the hedged transactions occur.

Hedging transactions that are superseded or cease to be effective are measured at fair value. Any profit or loss on these transactions, together with any profit or loss arising on hedging transactions that are terminated prior to the end of the life of the asset, are deferred and amortised into interest income or expense over the remaining life of the item previously being hedged.

When the underlying asset, liability position or cash flow is terminated prior to the hedging transaction, or an anticipated transaction is no longer likely to occur, the hedging transaction is measured on the fair value accounting basis, as described in the section on derivatives used for trading purposes below, prior to being transferred to the trading portfolio. The profit or loss arising from the fair value measurement prior to the transfer to the trading portfolio is included in the category of income or expense relating to the previously hedged transaction.

Derivatives used for trading purposes

Derivatives entered into as trading transactions, together with any associated hedging, are measured at fair value and the resultant profits and losses are included in dealing profits, along with interest and dividends arising from long and short positions and funding costs relating to trading activities. Assets and liabilities resulting from gains or losses on derivative and foreign exchange contracts are reported gross in other assets or liabilities, reduced by the effects of qualifying netting agreements with counterparties.

The fair value of derivatives is determined by calculating the expected cash flows under the terms of each specific contract, discounted back to a present value. The expected cash flows for each contract are determined either directly by reference to actual cash flows implicit in observable market prices or through modelling cash flows using appropriate financial-markets pricing models.

The effect of discounting expected cash flows back to present value is achieved by constructing discount curves derived from the market price of the most appropriate observable interest rate products such as deposits, interest rate futures and swaps. In addition, the Group maintains fair value adjustments reflecting the cost of credit risk (where this is not embedded in the fair value), hedging costs not captured in pricing models, future administration costs associated with ongoing operational support of products as well as adjustments to reflect the cost of exiting illiquid or other significant positions.

(s) Collateral and Netting

The Group enters into master agreements with counterparties whenever possible and, when appropriate, obtains collateral. Master agreements provide that, if an event of default occurs, all outstanding transactions with the counterparty will fall due and all amounts outstanding will be settled on a net basis.

Where the amounts owed by both the Group and the counterparty are determinable and in freely convertible currencies, and where the Group has the ability to insist on net settlement which is assured beyond doubt, and is based on a legal right under the netting agreement that would survive the insolvency of the counterparty, transactions with positive fair values are netted against transactions with negative fair values.

The Group obtains collateral in respect of customer liabilities where this is considered appropriate. The collateral normally takes the form of a lien over the customer’s assets and gives the Group a claim on these assets for both existing and future liabilities.

The Group also receives collateral in the form of cash or securities in respect of other credit instruments, such as stock borrowing contracts, and derivative contracts in order to reduce credit risk. Collateral received in the form of securities is not recorded on the balance sheet. Collateral received in the form of cash is recorded on the balance sheet with a corresponding liability or asset. These items are assigned to deposits received from bank or other counterparties in the case of cash collateral received, and to loans and advances to banks or customers in the case of cash collateral paid away. Any interest payable or receivable arising is recorded as interest payable or interest income respectively.

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(t) Credit Related Instruments

The Group treats credit related instruments (other than credit derivatives) as contingent liabilities and these are not shown on the balance sheet unless, and until, the Group is called upon to make a payment under the instrument. Assets arising from payments to a third party where the Group is awaiting reimbursement from the customer, are shown on the balance sheet where reimbursement is considered to be virtually certain. Fees received for providing these instruments are taken to profit over the life of the instrument and reflected in fees and commissions receivable.

(u) Sale and Repurchase Agreements (including Stock Borrowing and Lending)

The Group enters into sale and repurchase agreements, including stock lending arrangements (repos), and purchase and resale agreements, including stock borrowing arrangements (reverse repos). Under a repo (sale and repurchase agreement) an asset is sold (or lent) to a counterparty with a commitment to repurchase (or return) the assets at a future date at an agreed price. A reverse repo is the same transaction from the opposite viewpoint. The cash legs of these transactions are included within loans and advances to banks, loans and advances to customers, deposits by banks and customer accounts. The Group aims to earn net interest income and dealing profits from these activities, as well as funding its own holdings of securities. The difference between sale and repurchase and purchase and resale prices for such transactions, including dividends received where appropriate, is charged or credited to the profit and loss account over the life of the relevant transactions.

(v) Securitisation Transactions

Certain Group undertakings have issued debt securities or have entered into funding arrangements with lenders in order to finance specific loans and advances to customers. In accordance with FRS 5, these balances are either accounted for on the basis of linked presentation or through separate recognition of the gross assets and related funding.

(w) Capital Instruments

Debt securities in issue and similar securities are stated at the net issue proceeds adjusted for amortisation of premiums, discounts and expenses related to their issue where the liability is a fixed amount. Where the liability fluctuates, based on, for example, the performance of an index then the debt security reflects the current value of the liability.

Loan capital in issue is stated at the net issue proceeds adjusted for amortisation of premiums, discounts and expenses related to their issue. Amortisation is calculated in order to achieve a constant yield across the life of the instrument.

(x) Internally Developed Software

The Group’s general policy is to write-off such expenditure as incurred except where the software is required to facilitate the use of new hardware. Capitalised amounts are recorded as tangible fixed assets.

Changes in Accounting Policy

A change in accounting policy arose from the adoption in 2004 of UITF Abstract 38 (UITF 38), ‘Accounting for ESOP trusts’. UITF 38 requires Barclays PLC shares held in Employee Share Ownership Plans (ESOP) trusts to be accounted for as a deduction in arriving at shareholders’ funds, rather than as assets. The balance sheet for December 2003 has been restated accordingly, and other assets and shareholders’ funds have been reduced by £153m at 31st December 2004 (2003: £99m, 2002: £55m). There was no impact on the 2003 or 2004 profit and loss account.

There have been no other significant changes to the accounting policies as described in the 2003 Annual Report.

Future UK Accounting Developments

During 2004 the Accounting Standards Board (ASB) issued seven new Financial Reporting Standards, FRS 20 to FRS 26, as part of its convergence programme between UK GAAP and International Financial Reporting Standards (IFRS). These new UK standards, which are not effective until 2005, will not impact the Group, because of the conversion to IFRS in 2005, as discussed below.

In December 2004 the ASB issued FRS 27 ‘Life Assurance’. Following feedback received in response to the exposure draft issued in July 2004, the ASB has deferred implementation of the standard until 2005. However, in line with the Memorandum of Understanding entered into by the ASB, together with the Association of British Insurers and major insurers and bancassurers, Barclays is making additional voluntary disclosure in respect of its life assurance business on page 105.

International Financial Reporting Standards

By Regulation, the European Union (EU) has agreed that virtually all listed companies must use International Financial Reporting Standards (IFRS) adopted for use in the EU in the preparation of their 2005 consolidated accounts. Barclays will comply with this Regulation. The objective is to improve financial reporting and enhance transparency to assist the free flow of capital throughout the EU and to improve the efficiency of the capital markets.

The Group commenced a programme of work in 2002, initially identifying the differences between IFRS and existing UK standards based on the requirements then in force. This led to a programme of work led centrally, but involving all the businesses and functions, to change systems and processes and to provide training so as to ensure that the Group can meet the requirements fully in 2005. In addition, the programme is assisting the businesses and functions to consider and address the wider business impact of the change in reporting in the EU. This work is nearing completion. Conversion work, including reviewing the accuracy of the opening balances, will continue during 2005.

115

Consolidated accounts Barclays PLC
Accounting policies

Although many of the uncertainties concerning whether and how the standards will be adopted for use in the EU have been resolved, some questions remain, particularly regarding the endorsement of amendments to standards and to interpretations issued in the second half of 2004. In addition, how IFRS financial statements will be interpreted for tax and regulatory capital purposes remains subject to some uncertainty, with the regulatory capital requirements not expected to be finalised before April 2005 and the tax treatment of the first time adoption adjustments not determined until later. However, the programme is following normal project controls and change management and the Group is on track to meet all requirements for financial reporting in 2005.

Barclays held briefings and issued a presentation in December 2004 that set out the main impacts of the conversion to IFRS and explained the policy choices that the Group had made.

The main impacts of the standards, as described in the briefings, are:

• Hedge accounting (IAS 39) – as permitted by the EU, the hedge accounting requirements of IAS 39 will be applied in full. Both cash flow hedge accounting and micro fair value hedge accounting will be used resulting in all hedging derivatives being carried at fair value, equity volatility with respect to cash flow hedge accounting and any hedge ineffectiveness being reflected immediately in income.

• Classification of instruments (IAS 39) – UK GAAP requires the separate classification of financial assets between banking book and trading book. Under IFRS, financial assets will be classified as: held to maturity; loans and receivables (carried at amortised cost less impairment); held for trading and fair valued through income; or available for sale and fair valued through equity. Financial liabilities held for trading will be fair valued through income. The fair value option is not currently available for other financial liabilities under EU law.

• Balance sheet gross up (IAS 32/39/27) – the IFRS netting rules coupled with the consolidation requirements will result in significant grossing up of the balance sheet, including certain conduit vehicles and funds under management being included on balance sheet, no linked presentation for securitisations and line by line consolidation of insurance subsidiaries.

• Funding instruments (IAS 32) – Reserve Capital Instruments and other Upper Tier 2 instruments that contain no obligation to pay coupon or interest will be reclassified from debt to equity.

• Goodwill (IFRS 3) – rather than being subject to systematic annual amortisation, goodwill arising on consolidation will be tested for impairment each year. Future acquisitions will give rise to more intangible assets that are subject to amortisation and potentially less goodwill.

• Effective interest rate (IAS 39) – rather than interest-related fees and costs being recognised as earned or incurred, all interest and interest-related fees and costs will be recognised at a constant rate over the expected life of the related financial instruments. Such fees and costs will also be included in net interest rather than in fees and commissions.

• Loan impairment (IAS 39) – provisions will be raised where there is objective evidence of impairment and determined based on the expected cash flows discounted at the loan’s original effective interest rate. Opening impairment stock is expected to be broadly in line with UK GAAP provisions stock.

• Share-based payments (IFRS 2) – an annual charge for share options and other share-based payments will be determined based on the fair value of options granted spread over the vesting period.

• Pensions (IAS 19) – the initial pension surpluses or deficits will be recognised in the opening balance sheet resulting in a significant reduction in shareholders’ funds compared with the previous UK GAAP approach which relied on the actuarial funding valuations.

• Dividends (IAS 10) – rather than being accrued as a liability when declared, dividends will be recognised when paid.

• Life fund (IFRS 4/IAS 39) – although IFRS permits embedded value accounting to be used for insurance contracts, all embedded value will be reversed on adoption of IFRS, whether it relates to investment products or insurance products, resulting in a reduction in shareholders’ funds.

• Software capitalisation (IAS 38) – internally generated computer software will be recognised on balance sheet and amortised over its useful economic life.

• Guarantees (IAS 39) – issued guarantees will be recognised initially on balance sheet at fair value resulting in a small reduction in shareholders’ funds.

• Leasing (IAS 17) – the income recognition profile for finance leases is different under IFRS with revenue typically being recognised later.

• De-recognition of liabilities (IAS 39) – liabilities can only be removed from the balance sheet when they are legally extinguished.

The restated 2004 IFRS results, excluding the impact of IAS 32 and IAS 39 on financial instruments and IFRS 4 on insurance contracts, and the opening 2005 IFRS balance sheet, including these standards, will be issued in the second quarter of 2005. The first results on a full IFRS basis will be provided for the June 2005 half year.

116

Barclays PLC Annual Report 2004 

Consolidated accounts Barclays PLC

Accounting presentation

Changes in Accounting Presentation

The prior period presentation has, where appropriate, been restated to conform with current year classification, and the change in accounting policy discussed above.

US GAAP

Significant differences exist between accounting principles generally accepted in the UK and those generally accepted in the US. The effect of US GAAP on attributable profit and shareholders’ funds of Barclays PLC is set out in Note 52.

Analyses by Geographical Segments and Classes of Business

The analyses by geographical segment are generally based on the location of the office recording the transaction.

Acquisitions

In April 2002, Barclaycard acquired the UK Providian credit card business.

In October 2002, Barclays and Canadian Imperial Bank of Commerce completed the combination of their retail, corporate and offshore banking operations in the Caribbean to create FirstCaribbean International Bank (FirstCaribbean). Barclays interest in the new entity has been accounted for as an associated undertaking. The transaction resulted in a gain for Barclays of £206m (recognised in the Statement of total recognised gains and losses) consequent on the disposal of a share of its Caribbean operations. The acquisition of a share of CIBC West Indies Holding Limited generated goodwill in Barclays of £131m.

On 31st January 2003, Barclays acquired the retail stockbroking business Charles Schwab Europe.

On 19th May 2003, Barclays completed the acquisition of Clydesdale Financial Services Limited and its holding company Carnegie Holdings Limited, a retailer point of sale finance business.

On 16th July 2003, Barclays completed the acquisition of Banco Zaragozano, a Spanish private sector banking group.

On 17th December 2003, Barclays acquired Gerrard Management Services Limited (‘Gerrard’), a private client discretionary and advisory asset management business.

On 11th March 2004, Barclays purchased the remaining 40% minority share in Barclays Cairo Bank.

On 1st December 2004, Barclays completed the acquisition of Juniper Financial Corporation from Canadian Imperial Bank of Commerce.

Disposals

In 2002 the Group disposed of a share of the Group’s Caribbean operation (see detail under Acquisitions above). The effect of the disposal is reflected in the Statement of recognised gains and losses on page 119.

In 2003, the Group did not make any significant disposals.

On 7th April 2004, Barclays completed the disposal of its shareholding in Edotech Limited to Astron, the business process outsourcing group.

117

Consolidated accounts Barclays PLC
Consolidated profit and loss account

Consolidated profit and loss account

For the year ended 31st December

			2004			2003			2002
	Note		£m			£m			£m
Interest receivable:
Interest receivable and similar income arising from debt securities				2,414			2,384			2,030
Other interest receivable and similar income				11,251			10,043			10,014
				13,665			12,427			12,044
Interest payable				(6,823	)		(5,823	)		(5,839	)
Net interest income				6,842			6,604			6,205
Fees and commissions receivable				5,672			4,896			4,454
Less: fees and commissions payable				(706	)		(633	)		(529	)
Dealing profits		1		1,493			1,054			833
Other operating income		2		644			490			364
Operating income				13,945			12,411			11,327
Administrative expenses – staff costs		3		(4,998	)		(4,295	)		(3,755	)
Administrative expenses – other		5		(2,758	)		(2,404	)		(2,312	)
Depreciation		6		(295	)		(289	)		(303	)
Goodwill amortisation		6		(299	)		(265	)		(254	)
Operating expenses				(8,350	)		(7,253	)		(6,624	)
Operating profit before provisions				5,595			5,158			4,703
Provisions for bad and doubtful debts		15		(1,091	)		(1,347	)		(1,484	)
Provisions for contingent liabilities and commitments				(2	)		1			(1	)
Provisions				(1,093	)		(1,346	)		(1,485	)
Operating profit				4,502			3,812			3,218
(Loss)/profit from joint ventures				(3	)		1			(5	)
Profit/(loss) from associated undertakings				59			28			(5	)
Exceptional items		7		45			4			(3	)
Profit on ordinary activities before tax				4,603			3,845			3,205
Tax on profit on ordinary activities		8		(1,289	)		(1,076	)		(955	)
Profit on ordinary activities after tax				3,314			2,769			2,250
Minority interests (including non-equity interests)		9		(46	)		(25	)		(20	)
Profit for the financial year attributable to the members of Barclays PLC				3,268			2,744			2,230
Dividends		10		(1,538	)		(1,340	)		(1,206	)
Profit retained for the financial year				1,730			1,404			1,024
Basic earnings per 25p ordinary share		11		51.2p			42.3p			33.7p
Diluted earnings per 25p ordinary share		11		51.0p			42.1p			33.4p

All results arise from continuing operations. For each of the years reported above, there was no material difference between profit before tax and profit retained and profit on an historical cost basis.

The Board of Directors approved the accounts set out on pages 110 to 210 on 10th March 2005.

The accompanying notes form an integral part of the Consolidated Accounts.

118

Barclays PLC Annual Report 2004 

Consolidated accounts Barclays PLC
Statement of total recognised gains and losses

Statement of total recognised gains and losses

For the year ended 31st December

	2004			2003			2002
	£m			£m			£m
Profit for the financial year attributable to the members of Barclays PLC		3,268			2,744			2,230
Exchange rate translation differences		(33	)		(4	)		(61	)
Gain/(loss) arising from transaction with third parties		13			(4	)		206
Joint ventures and associated undertakings		(30	)		(22	)		2
Other items		5			(3	)		8
Total recognised gain relating to the period		3,223			2,711			2,385

The accompanying notes form an integral part of the Consolidated Accounts.

119

Consolidated accounts Barclays PLC
Consolidated balance sheet

Consolidated balance sheet

As at 31st December

			2004					2003
	Note		£m			£m		£m			£m
Assets
Cash and balances at central banks							1,753					1,726
Items in course of collection from other banks							1,772					2,006
Treasury bills and other eligible bills		12					6,658					7,177
Loans and advances to banks – banking				24,986					17,254
– trading				50,145					44,670
		13					75,131					61,924
Loans and advances to customers – banking				189,847					167,858
– trading				65,099					58,961
		14					254,946					226,819
Debt securities		16					127,428					97,393
Equity shares		17					12,166					7,859
Interests in joint ventures – share of gross assets				147					266
– share of gross liabilities				(119	)				(208	)
		18					28					58
Interests in associated undertakings		18					381					370
Intangible fixed assets		19					4,295					4,406
Tangible fixed assets		20					1,921					1,790
Other assets		21					22,154					19,736
Prepayments and accrued income		21					5,078					3,921
							513,711					435,185
Retail life-fund assets attributable to policyholders		22					8,378					8,077
Total assets							522,089					443,262

The accompanying notes form an integral part of the Consolidated Accounts.

Matthew W Barrett Chairman

John Varley Group Chief Executive

Naguib Kheraj Group Finance Director

120

Barclays PLC Annual Report 2004 

Consolidated balance sheet
As at 31st December

			2004				2003
	Note		£m		£m		£m		£m
Deposits by banks – banking				74,211				57,641
– trading				36,813				36,451
		23				111,024				94,092
Customer accounts – banking				171,963				155,814
– trading				45,755				29,054
		24				217,718				184,868
Debt securities in issue		25				67,806				49,569
Items in course of collection due to other banks						1,205				1,286
Other liabilities		26				76,565				69,497
Accruals and deferred income		26				6,582				4,983
Provisions for liabilities and charges – deferred tax		27				738				646
Provisions for liabilities and charges – other		28				467				369
Dividend						1,011				879
Subordinated liabilities:
Undated loan capital – non-convertible		29				6,149				6,310
Dated loan capital – convertible to preference shares				15				17
– non-convertible				6,113				6,012
		30				6,128				6,029
						495,393				418,528
Minority interests (including non-equity interests)						901				283
Called up share capital		31		1,614				1,642
Share premium account				5,524				5,417
Capital redemption reserve				309				274
Other capital reserve				617				617
Revaluation reserve				24				24
Profit and loss account				9,329				8,400
Shareholders’ funds – equity		33				17,417				16,374
						18,318				16,657
						513,711				435,185
Retail life-fund liabilities to policyholders		22				8,378				8,077
Total liabilities and shareholders’ funds						522,089				443,262

			2004		2003
	Note		£m		£m
Memorandum items		36
Contingent liabilities:
Acceptances and endorsements				303		671
Guarantees and assets pledged as collateral security				30,011		24,596
Other contingent liabilities				8,245		8,427
				38,559		33,694
Commitments – standby facilities, credit lines and other				134,051		114,847

The accompanying notes form an integral part of the Consolidated Accounts.

121

Consolidated accounts Barclays PLC
Consolidated statement of changes in reserves

Consolidated statement of changes in reserves
For the year ended 31st December

	2004			2003			2002
	£m			£m			£m
Share premium account
At beginning of year		5,417			5,277			5,149
Premium arising on shares issued		107			140			128
At end of year		5,524			5,417			5,277
Capital redemption reserve
At beginning of year		274			262			232
Repurchase of ordinary shares		35			12			30
At end of year		309			274			262
Other capital reserve
At beginning of year		617			617			617
At end of year		617			617			617
Revaluation reserve
At beginning of year		24			24			30
Exchange rate translation differences		–			2			–
Released on transaction with third parties		–			(2	)		(6	)
At end of year		24			24			24
Profit and loss account
At beginning of year		8,400			7,321			6,783
Exchange rate translation differences		(58	)		(31	)		(61	)
Repurchase of ordinary shares		(664	)		(192	)		(516	)
Transfer to capital redemption reserve		(35	)		(12	)		(30	)
Goodwill written back on disposals		–			–			10
Shares issued to the 2003 QUEST in relation to share option schemes for staff		(1	)		(36	)		(48	)
Gain/(loss) arising from transaction with third parties		13			(4	)		212
Other items		(3	)		2			–
Increase in Treasury shares and ESOP shares		(53	)		(52	)		(53	)
Profit retained		1,730			1,404			1,024
At end of year		9,329			8,400			7,321
Total reserves		15,803			14,732			13,501

The Group operates in a number of countries subject to regulations under which a local subsidiary undertaking has to maintain a minimum level of capital. The current policy of the Group is that local capital requirements are met, as far as possible, by the retention of profit. Certain countries operate exchange control regulations which limit the amount of dividends that can be remitted to non-resident shareholders. It is not possible to determine the amount of profit retained and other reserves that is restricted by these regulations, but the net profit retained of overseas subsidiaries, associated undertakings and joint ventures at 31st December 2004 totalled £1,417m (2003: £925m, 2002: £1,038m). If such overseas reserves were to be remitted, other tax liabilities, which have not been provided for in the accounts, might arise.

Goodwill amounting to £205m (2003: £205m, 2002: £205m) has been charged directly against reserves in prior years in respect of acquisitions. This amount is net of any goodwill attributable to subsidiary undertakings disposed of prior to the balance sheet date.

In 1998, the Group established a Qualifying Employee Share Ownership Trust (QUEST) for the purposes of delivering shares on the exercise of options under the SAYE. As a result of the scheme closing in 2003, there is no 2004 impact. During 2003 the Group received from the trustees of the QUEST £88m (2002: £122m) on the issue of shares in respect of the exercise of options awarded under SAYE. Of the amount received in 2003 from the trustees, employees paid £53m (2002: £76m) and the balance of £35m (2002: £46m) comprised utilisation of contribution to the QUEST from Group Companies together with net interest earned thereon.

Accumulated exchange rate translation differences included in reserves are £626m debit (2003: £568m, 2002: £539m both debit).

The accompanying notes form an integral part of the Consolidated Accounts.

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Barclays PLC Annual Report 2004 

Consolidated accounts Barclays PLC
Consolidated cash flow statement

Consolidated cash flow statement
For the year ended 31st December

			2004						2003						2002
	Note		£m			£m			£m			£m			£m			£m
Net cash inflow/(outflow) from operating activities		39					6,089						(2,290	)					6,747
Dividends received from joint ventures and associated undertakings							15						7						1
Returns on investments and servicing of finance:
Interest paid on loan capital and other subordinated liabilities				(652	)					(606	)					(607	)
Dividends paid to minority shareholders				(19	)					(14	)					(23	)
Net cash outflow from returns on investment and servicing of finance							(671	)					(620	)					(630	)
Tax paid							(690	)					(910	)					(828	)
Capital expenditure and financial investment:
Capital expenditure				(532	)					(310	)					(301	)
Sale of property and equipment				125						97						289
Purchase of investment securities				(47,520	)					(36,886	)					(28,128	)
Redemption of investment securities				18,441						17,137						10,247
Sale of investment securities				22,722						21,394						11,137
Net cash (outflow)/inflow from capital expenditure and financial investment							(6,764	)					1,432						(6,756	)
Acquisitions and disposals
Net cash outflow from formation of FirstCaribbean International Bank Ltd		42		–						–						(160	)
Acquisition of subsidiary undertakings		41		(211	)					(985	)					(451	)
Acquisition of associated undertakings and joint ventures				(21	)					–						–
Sale of other Group undertakings		42		–						39						(1	)
Sale of associated undertakings				47						16						–
Net cash outflow from acquisitions and disposals							(185	)					(930	)					(612	)
Equity dividend paid							(1,406	)					(1,249	)					(1,146	)
Net cash outflow before financing							(3,612	)					(4,560	)					(3,224	)
Financing:
Issue of loan capital and other subordinated liabilities (net of expenses)				666						1,926						2,173
Redemption/repurchase of loan capital and other subordinated liabilities				(611	)					(974	)					(376	)
Net cash inflow from non-recourse financing				4,264						3,262						644
Repurchase of ordinary shares				(699	)					(204	)					(546	)
Issue of ordinary shares (net of contribution to the QUEST and ESOP)				60						113						87
Issue of preference shares to minority interests				688						–						–
Issue of shares to minority interests				52						65						35
Net cash inflow from financing							4,420						4,188						2,017
Increase/(decrease) in cash		44					808						(372	)					(1,207	)

The accompanying notes form an integral part of the Consolidated Accounts.

123

Consolidated accounts Barclays PLC
Parent company accounts

Parent company accounts

	2004			2003			2002
Profit and loss account and changes in reserves for the year ended 31st December	£m			£m			£m
Interest income		3			4			6
Operating expenses:
Management charge from subsidiary undertaking		(3	)		(4	)		(6	)
Operating profit		–			–			–
Dividends from subsidiary undertaking		2,247			1,580			1,798
Profit on ordinary activities before tax		2,247			1,580			1,798
Tax on profit on ordinary activities		–			–			–
Profit on ordinary activities after tax		2,247			1,580			1,798
Dividends		(1,547	)		(1,340	)		(1,206	)
Profit retained by Barclays PLC		700			240			592
Profit retained by subsidiary undertakings		999			1,148			443
Profit/(loss) retained by associated undertakings and joint ventures		31			16			(11	)
Profit retained for the financial year		1,730			1,404			1,024
Premium arising on shares issued		107			140			128
Reduction in reserves arising from repurchase of shares		(664	)		(192	)		(516	)
Shares issued to the 2003 QUEST in relation to share option schemes for staff		(1	)		(36	)		(46	)
Other movements in investment in Barclays Bank PLC		(101	)		(85	)		100
Profit and loss account and other reserves brought forward		14,732			13,501			12,811
Profit and loss account and other reserves carried forward		15,803			14,732			13,501

			2004			2003
Balance sheet as at 31st December	Note		£m			£m
Fixed assets
Investment in Barclays Bank PLC		34		17,417			16,374
Current assets
Amounts falling due within one year:
Due from subsidiary undertaking				1,020			879
				1,020			879
Current liabilities
Amounts falling due within one year				(1,020	)		(879	)
Net current assets				–			–
Assets less current liabilities				17,417			16,374
Capital and reserves
Called up share capital		31		1,614			1,642
Share premium account				5,524			5,417
Capital redemption reserve				309			274
Revaluation reserve				9,089			8,160
Profit and loss account				881			881
Shareholders’ funds – equity		33		17,417			16,374

All results arise from continuing operations. For each of the years reported above, there was no material difference between profit before tax and profit retained and profit on an historical cost basis.

The accompanying notes form an integral part of the Consolidated Accounts.

Matthew W Barrett Chairman

John Varley Group Chief Executive

Naguib Kheraj Group Finance Director

124

Barclays PLC Annual Report 2004 

Notes to the accounts
For the year ended 31st December 2004

1 Dealing profits

	2004		2003		2002
	£m		£m		£m
Rates related business		1,141		909		876
Credit related business		352		145		(43	)
		1,493		1,054		833

Dealing profits include the profits and losses arising both on the purchase and sale of trading instruments and from their revaluation to market value, together with the interest income earned from these instruments and the related funding cost.

Of the total dealing profit, £556m was earned on securities (2003: £498m, 2002: £325m).

Rates related businesses include fixed income, foreign exchange, commodities, emerging markets, money markets trading and equity related activities. Credit related businesses include trading relating to loans, corporate bonds, credit derivatives and structured capital markets.

2 Other operating income

	2004		2003			2002
	£m		£m			£m
Net premium income on insurance underwriting		211		264			178
Gain on disposal of investment securities		181		73			58
Income/(loss) from the long-term assurance business		58		(33	)		(51	)
Property rentals		9		15			20
Dividend income from equity shares		17		6			7
Other income		168		165			152
		644		490			364

3 Administrative expenses – staff costs

	2004		2003		2002
	£m		£m		£m
Salaries and accrued incentive payments		4,043		3,441		3,159
Social security costs		339		278		240
Pension costs (see Note 4)		160		180		(27	)
Post-retirement health care		22		19		15
Other staff costs		434		377		368
		4,998		4,295		3,755

The following amounts, relating to the administration staff (including temporary staff) whose remuneration is reflected in the valuation of the long-term assurance fund, are not included in staff costs reported above:

	2004		2003		2002
	£m		£m		£m
Salaries and accrued incentive payments		2		5		12
Social security costs		–		1		1
		2		6		13

Average number of employees

The average number of persons employed by the Group worldwide during the year, excluding agency staff, was 77,000 (2003: 74,400, 2002: 77,200). The average number of administration staff whose remuneration is reflected in the valuation of the long-term assurance fund, was 63 (2003: 208, 2002: 370).

Post-retirement benefits

Some 11,000 UK and US pensioners are provided with private health care on similar terms to current employees. In addition, 4,000 members of staff and a further 1,000 Barclays Bank PLC pensioners who have retired since 30th June 1999 and have satisfied the qualification criteria may also become eligible for this benefit, which is being progressively withdrawn for these pensioners over the period to 30th June 2008.

Other staff costs

Other staff costs comprise medical health care costs, social welfare taxes, staff transfer costs, redundancy payments and other sundry employee costs.

125

Notes to the accounts
For the year ended 31st December 2004

4 Pension costs

Pensions

The UK Retirement Fund (UKRF) comprises five sections:

The 1964 Pension Scheme

Most UK employees recruited before July 1997 are members of this non-contributory defined benefit scheme. Pensions are calculated by reference to service and pensionable salary and are normally subject to a deduction from State Pension age.

The Retirement Investment Scheme (RIS)

A defined contribution plan for most new joiners up to 1st October 2003. Between 5.5% and 13.5% of pensionable pay is credited to members’ retirement accounts in addition to contributions paid by the members themselves; precise amounts are dependent upon each member’s age and contribution decision. This was closed to new entrants on 1st October 2003 and the large majority of existing members of the RIS transferred to afterwork in respect of future benefit accrual with effect from 1st January 2004. There are now no longer any active members of the RIS.

The Pension Investment Plan (PIP)

A defined contribution plan created from 1st July 2001 to provide benefits for certain employees of Barclays Capital. 10% of pay is credited to members’ retirement accounts.

afterwork

Combines a contributory cash balance element with a voluntary defined contribution element. New employees since 1st October 2003 are eligible to join afterwork. In addition, the large majority of active members of the RIS (now closed) were transferred to afterwork in respect of future benefit accrual after 1st January 2004.

Career Average Section (Career Average)

The Career Average Section was established in the UKRF with effect from 1st May 2004 following the transfer of the members from the Woolwich Pension Fund. The Career Average Section is a non-contributory career average scheme and is open to new members who are employees of either the Clacton or FirstPlus call centres.

In addition, the costs of ill-health retirements and death in service benefits are generally borne by the UKRF for each of the five sections.

Integration of the Woolwich Pension Fund (WPF)

Under the terms of an agreement between the Bank, the Trustees of the WPF and the Trustees of the UKRF, the liabilities in respect of all pensioners and deferred pensioners, along with consenting active members of the WPF, were transferred into the UKRF on 14th February 2003. Payments were made on 1st July 2003, with the WPF Trustees transferring assets worth £418m and Woolwich plc making a special contribution of £138m on 4th July 2003. The bulk of the remaining WPF assets (approximately £56m) were transferred to the UKRF on 14th May 2004 and the final transfer was completed on 15th June 2004. As part of this final transfer a further special contribution of £2m was paid to the UKRF.

Actuarial valuation of the UKRF

Formal actuarial valuations of the UKRF are carried out triennially by a professional qualified independent actuary, with annual reviews carried out in the interim. The most recent formal valuation was conducted as at 30th September 2004. The market value of assets was £12,351m and the valuation revealed a shortfall of assets compared to accrued liabilities of £388m after allowing for expected future salary increases (2003: surplus of assets compared to accrued liabilities of £158m). The impact of the change in mortality assumptions was to increase accrued liabilities by £750m. Following the initial results of the valuation, the Bank made a contribution of £250m to the pension fund on 29th December 2004 to cover the cost of benefits accrued in 2004. The next formal valuation will be conducted as at 30th September 2007, at which point the position will again be reviewed. Protected Rights contributions in respect of RIS and PIP members have been paid during 2004 as required by the contracting-out regulations.

The principal financial assumptions underlying the 2004 actuarial review were:

Price inflation	2.75	%	Return on future investments:
Pension increases	2.75	%	1964 Scheme	6.5	%
			afterwork	6.14	%
Earnings growth	4.25	%	Discount rate for assessing accrued liabilities:
afterwork Credit Account revaluation rate	3.55	%	1964 Scheme afterwork	6.31 6.14	% %

The projected unit method was used for assessing the level of future contributions. In calculating the shortfall of assets compared to accrued liabilities, assets were taken at their market value and the discount rates used for assessing the accrued liabilities were derived by taking a weighted average of the market yields on the day, weighting by reference to the UKRF’s strategic asset allocation; for the equity component, allowance was made for future dividend growth.

126

Barclays PLC Annual Report 2004 

4 Pension costs (continued)

Pension charge for 2004

It is the Bank’s policy to allow for the results of a new valuation in its pension charge in the year following the valuation date. Therefore, the 2004 figures shown below reflect the 2003 interim actuarial valuation.

The approach taken to calculating the pension charge in the accounts for the UKRF was to take assets and liabilities at market values with effect from 1st January 2004. The principal financial assumptions used to derive the pensions charge for 2004 for the material sections of the UKRF were as follows:

Price inflation	2.75	%	Return on future investments:
Pension increases	2.75	%	1964 Scheme	7.0	%
			afterwork	6.75	%
Earnings growth	4.25	%	Discounted rate for assessing accrued liabilities:
afterwork Credit Account revaluation rate	3.75	%	1964 Scheme	6.6	%
			afterwork	6.75	%

This resulted in an accounting surplus of assets over the accrued liabilities and pension repayments of £419m, allowing for expected future salary increases. Spreading the accounting surplus using the straight-line method over the future remaining service lives of the active members produced a variation from regular cost of £107m including interest.

Without the benefit of the surplus, based on the 2003 interim valuation, the 1964 Pension Scheme charge would be 20.7% of the pensionable salaries (on the projected unit method), the afterwork section charge would be 9.7% of pensionable salaries and the Career Average section charge would be 8.9% of pensionable salaries assessed using the assumption regarding return on new investments. Contributions to the PIP would equal the contributions described above plus the costs of ill-health and death in service benefits.

The pensions charge in the accounts was reduced over the remaining service lives of the members to take account of the surplus, arising from the interim actuarial valuation.

	2004			2003			2002
	£m			£m			£m
Pension costs vary from regular costs as follows (UKRF): Regular costs		219			221			197
Variation from regular costs (including interest)		(107	)		(90	)		(266	)
		112			131			(69	)

Of the total regular cost in 2004 of £219m, £149m relates to the 1964 Pension Scheme, £46m to afterwork and £24m to the PIP. The regular cost of Career Average in the UKRF was less than £1m.

Total pension costs of the Group are summarised as follows:

	2004		2003		2002
	£m		£m		£m
The UK Retirement Fund		112		131		(69	)
Other UK pension schemes		6		17		20
Overseas pension schemes		42		32		22
		160		180		(27	)

The Bank also operates a defined benefit scheme for overseas employees of the Bank similar in design to the 1964 Pension Scheme, the Barclays Bank (1951) Pension Fund, which had a formal valuation as at 30th September 2002 and an interim valuation as at 31st January 2004. The pension charge has been assessed using consistent assumptions to those used for the 1964 Pension Scheme and a credit of £9m (2003: £3m, 2002: £3m) is included in Other UK pension schemes.

A net prepayment of £881m was reflected in the balance sheet (2003: £637m), which results from the difference between the amounts recognised as costs in the profit and loss account and the amounts funded.

Note 49 contains the disclosures required by FRS 17. Note 52 provides additional disclosures required by US Statement of Financial Accounting Standards (SFAS) No. 132 (revised).

127

Notes to the accounts
For the year ended 31st December 2004

5 Administrative expenses – other

	2004		2003		2002
Property and equipment expenses	£m		£m		£m
Hire of equipment		9		8		12
Property rentals		197		184		180
Other property and equipment expenses		835		793		725
Other administrative expenses		1,717		1,419		1,395
		2,758		2,404		2,312

Fees paid to the Group’s main auditors, PricewaterhouseCoopers LLP and its worldwide associates, were as follows:

	2004		2003		2002
	£m		£m		£m
Audit related
Group statutory		7		6		5
Regulatory		5		3		5
		12		9		10
Further assurance services		3		3		3
Taxation services
Compliance		3		4		3
Advisory		2		2		2
		5		6		5
Other services
Transaction support		2		2		3
Other services		–		1		1
		2		3		4
Total fees		22		21		22

The figures shown in the above table include amounts paid to PricewaterhouseCoopers LLP and also PricewaterhouseCoopers in previous years. Fees for audit services above include all amounts paid to the Group’s auditors in their capacity as such.

In addition to the fees included in the above table, amounts paid in prior periods to PwC Consulting, the management consultancy arm of PricewaterhouseCoopers up to its sale to the IBM Corporation on 1st October 2002, amounted to £nil in the year (2003: £nil, 2002: £6m).

Further assurance services include internal control reviews, attest services not required by statute or regulation and consultation concerning financial accounting and reporting standards.

Taxation services include compliance services such as tax return preparation and advisory services such as consultation on tax matters, tax advice relating to transactions and other tax planning and advice.

Transaction support service includes due diligence related to transactions and accounting consultations and audits in connection with transactions.

Other services primarily include general process reviews and training programmes.

For US reporting purposes, Audit Fees would comprise all items described as ‘audit related’ in the above table. Similarly, ‘Further assurance services’ as shown above would be reported as ‘audit related’.

128

6 Depreciation and amortisation

	2004		2003		2002
	£m		£m		£m
Depreciation
Property depreciation		86		93		93
Equipment depreciation		209		196		210
		295		289		303
Amortisation
Goodwill amortisation		299		265		254

7 Exceptional items

	2004		2003		2002
	£m		£m		£m
Net profit on disposal of Group and associated undertakings		45		4		8
Loss on termination of Group activities		–		–		(11	)
		45		4		(3	)

The net profit on disposal comprises profits on disposal of £45m (2003: £7m, 2002: £14m) and losses on disposal of £nil (2003: £3m, 2002: £6m).

Up to the date of sale, the businesses sold in 2004 contributed £nil to Group profit before tax (2003: £29m, 2002: £3m).

8 Tax

The charge for tax is based upon the effective UK corporation tax rate of 30% (2003: 30%, 2002: 30%) and comprises:

	2004			2003			2002
	£m			£m			£m
Current tax:
United Kingdom		938			726			806
Overseas		258			154			184
Total current tax		1,196			880			990
Deferred tax (credit)/charge:
United Kingdom		90			215			(32	)
Overseas		(3	)		(21	)		(2	)
Total deferred tax		87			194			(34	)
Associated undertakings and joint ventures, including overseas tax of £9m (2003: (£2m), 2002: (£1m))		6			2			(1	)
Total charge		1,289			1,076			955
Analysis of deferred tax (credit)/charge:
Leasing transactions		25			6			57
Short-term and other timing differences		62			188			(91	)
		87			194			(34	)

Current tax includes a credit of £20m (2003: £53m, 2002: £38m) on the shareholders’ interest in the long-term assurance fund. Included within current tax are prior year adjustments to UK tax of (£24m) (2003: (£3m), 2002: (£12m)) and overseas tax of (£1m) (2003: £10m, 2002: £3m).

Available overseas tax credits of £360m (2003: £197m, 2002: £221m) have been applied to reduce UK tax in accordance with UK legislation.

129

Notes to the accounts
For the year ended 31st December 2004

8 Tax (continued)

The tax charge for the year in 2004, 2003 and 2002 is lower than the standard rate of corporation tax in the UK (30%) (2003 and 2002: 30%). The differences are set out below:

	2004			2003			2002
	£m			£m			£m
Tax charge at average United Kingdom corporation tax rate of 30% (2003: 30%, 2002: 30%)		1,381			1,153			961
Prior year adjustments		(26	)		7			(9	)
Effect of change in non-allowable general provisions		2			2			(2	)
Effect of non-allowable property write-downs and depreciation		20			13			12
Effect of Enterprise Zone Allowance		–			(205	)		–
Net effect of differing tax rates overseas		(110	)		(95	)		(70	)
Net effect of overseas losses not available for relief in the United Kingdom		24			(12	)		(40	)
Other non-allowable expenses		(5	)		(28	)		8
Gains covered by capital losses brought forward		(51	)		(44	)		(3	)
Goodwill		71			74			69
Other items		(104	)		17			63
Current tax charge		1,202			882			989
Deferred tax charge		87			194			(34	)
Overall tax charge		1,289			1,076			955
Effective tax rate %		28.0			28.0			29.8

9 Minority interests – Barclays PLC

Equity minority interests in the balance sheet amounting to £211m (2003: £283m) represent the interests of third parties in the equity shares of the Group subsidiary undertakings.

Non-equity minority interests in the balance sheet comprise non-cumulative, callable euro-denominated preference shares issued by Barclays Bank PLC of £688m (2003: £nil) and an additional £2m of profits attributable to these non-equity minority interests at the year end. Further details of the rights of holders of preference shares are given in note (c) to the accounts of Barclays Bank PLC on page 220.

Total minority equity and non-equity interests as at 31st December 2004 were £901m (2003: £283m).

Minority interests in the profit and loss account include £44m (2003: £25m) in relation to equity minority interests and £2m (2003: £nil) in relation to non-equity minority interests.

10 Dividends – Barclays PLC

	2004			2003		2002
Dividends on ordinary shares	£m			£m		£m
Interim		528			457		419
Final		1,010			883		787
		1,538			1,340		1,206
			(pence per share)
Interim		8.25			7.05		6.35
Final		15.75			13.45		12.00
		24.00			20.50		18.35

Dividends amounting to £0.2m (2003: £0.2m, 2002: £0.2m) are payable on the staff shares, which carry a fixed dividend of 20% per annum unless no dividend is paid for the year on the ordinary shares.

The total dividend of £1,538m stated in the Barclays PLC Group profit and loss account excludes £9m payable on shares held by employee benefit trusts. The shares to which this adjustment relates are those where the full cost of the shares has not been expensed to the profit and loss account at the end of the period to which the dividend relates. The total dividend of £1,547m is reflected in the Barclays PLC parent company profit and loss account on page 124.

130

Barclays PLC Annual Report 2004 

11 Earnings per 25p ordinary share – Barclays PLC

	2004			2003		2002
	£m			£m		£m
Basic and diluted earnings		3,268			2,744		2,230
			Number of shares (millions)
Basic weighted average number of shares		6,381			6,483		6,626
Potential ordinary shares		33			31		47
Diluted weighted average number of shares		6,414			6,514		6,673

Basic and diluted earnings are based upon the results after deducting tax, profit attributable to minority interests and dividends on staff shares.

Certain shares held by incentive plans have been excluded from the calculation of earnings per share in line with UITF 13.

12 Treasury bills and other eligible bills

	2004		2003
	£m		£m
Treasury bills		6,438		6,600
Other eligible bills		220		577
		6,658		7,177
Treasury bills and other eligible bills comprise:
Banking business		1,380		3,113
Trading business		5,278		4,064
		6,658		7,177

Treasury bills and other eligible bills are mainly short term in maturity with a book value not materially different from market value.

The total amount of treasury bills and other eligible bills included above, which are subject to sale and repurchase agreements, was £3,438m at 31st December 2004 (2003: £1,665m).

13 Loans and advances to banks

	2004			2003
	£m			£m
Repayable
on demand		2,710			1,893
not more than three months		51,883			46,146
over three months but not more than one year		6,109			4,996
over one year but not more than five years		10,924			5,207
over five years		3,511			3,698
		75,137			61,940
Less: Provisions		(6	)		(16	)
		75,131			61,924

131

Notes to the Accounts
For the year ended 31st December 2004

13 Loans and advances to banks (continued)

	2004			2003
	£m			£m
By geographical area
Banking business:
United Kingdom		21,351			14,315
Other European Union		1,189			1,702
United States		753			110
Rest of the World		1,699			1,143
		24,992			17,270
Less: Provisions		(6	)		(16	)
Total banking business		24,986			17,254
Total trading business		50,145			44,670
		75,131			61,924

At 31st December 2004, there were loans and advances to banks of £54m (2003: £27m) due from associated undertakings and joint ventures.

The Group is required to maintain balances with central banks and other regulatory authorities and these amounted to £621m at 31st December 2004 (2003: £346m).

The geographic analysis of the banking business is based on the location of the office from which the lendings are made. The trading business, which is largely carried out in the UK, the US and Japan, is more international in nature and has not been analysed geographically. It primarily constitutes settlement and reverse repo balances.

Provisions include specific provisions of £2m (2003: £12m) and general provisions of £4m (2003: £4m).

132

Barclays PLC Annual Report 2004 

14 Loans and advances to customers

	2004						2003
	£m			£m			£m			£m
Repayable
on demand					18,845						12,179
not more than three months					80,748						76,158
over three months but not more than one year					25,368						15,909
over one year but not more than five years					35,477						34,834
over five years					97,308						90,800
					257,746						229,880
Less:
Provisions		(2,760	)					(3,012	)
Interest in suspense		(40	)					(49	)
					(2,800	)					(3,061	)
					254,946						226,819
By geographical area
Banking business:
United Kingdom					159,094						143,809
Other European Union					20,393						19,027
United States					7,984						3,573
Rest of the World					5,176						4,510
					192,647						170,919
Less: Provisions					(2,760	)					(3,012	)
Interest in suspense					(40	)					(49	)
Total banking business					189,847						167,858
Total trading business					65,099						58,961
					254,946						226,819

Loans and advances to customers booked in offices in the UK — banking business

	2004		2003
At 31st December	£m		£m
Financial institutions		11,947		7,721
Agriculture, forestry and fishing		1,947		1,766
Manufacturing		6,282		5,967
Construction		2,476		1,883
Property		7,933		6,341
Energy and water		936		1,286
Wholesale and retail distribution and leisure		9,751		8,886
Transport		2,275		2,579
Communications		454		476
Business and other services		14,281		12,030
Home loans		64,481		61,905
Other personal		23,313		21,905
Overseas customers		7,612		5,477
		153,688		138,222
Finance lease receivables		5,406		5,587
Total		159,094		143,809

133

Notes to the accounts
For the year ended 31 st December 2004

14 Loans and advances to customers (continued)

Loans and advances to customers booked in offices outside the UK – banking business

	2004		2003
At 31st December	£m		£m
Financial institutions		3,055		3,398
Agriculture, forestry and fishing		296		352
Manufacturing		2,140		2,082
Construction		913		651
Property		644		453
Energy and water		1,598		1,998
Wholesale and retail distribution and leisure		1,177		763
Transport		1,186		1,453
Communications		224		247
Business and other services		4,723		2,132
Home loans		13,192		10,450
Other personal		2,639		2,034
Overseas customers		1,361		807
		33,148		26,820
Finance lease receivables		405		290
		33,553		27,110

At 31st December 2004, there were loans and advances to customers of £236m (2003: £277m) due from associated undertakings and joint ventures.

Mortgage incentive costs of £67m (2003: £81m, 2002: £86m) have been charged to operating income.

The geographical analysis of the banking business is based on the location of the office from which the lendings are made. The trading business, which is largely carried out in the UK, the US and Japan, is more international in nature and has not been analysed geographically. It primarily constitutes settlement and reverse repo balances.

Provisions include specific provisions of £2,200m (2003: £2,221m) and general provisions of £560m (2003: £791m).

Banking business loans and advances to customers include finance lease receivables of £5,811m (2003: £5,877m) which are stated in the balance sheet after deducting £1,254m (2003: £1,737m) of unearned charges and interest. Assets acquired in the year for letting under finance leases amounted to £318m (2003: £645m).

The following unguaranteed residual values are included in finance lease receivables:

	2004		2003
Residual risk under finance leases	£m		£m
Recoverable:
not more than one year		4		7
over one year but not more than two years		1		2
over two years but not more than five years		6		3
over five years		7		11
		18		23

Aggregate amounts received and receivable during the year under finance leases were £482m (2003: £419m, 2002: £433m), including interest income of £272m (2003: £234m, 2002: £225m).

134

Barclays PLC Annual Report 2004 

14 Loans and advances to customers (continued)

Securitised transactions
Loans and advances to customers include balances which have been securitised. These balances are either accounted for on the basis of linked presentation or separate recognition of the gross assets and related funding.

Linked presentation
Loans and advances to customers include certain securitised loans, subject to non-recourse finance arrangements, which meet the requirements for linked presentation under FRS 5 ‘Reporting the substance of transactions’.

Linked presentation has been applied for these loans and the net of the loan and finance is included within Loans and advances to customers on the balance sheet, as follows:

	2004			2003
	£m			£m
Gross loan receivable		4,540			81
Non-recourse finance		(4,446	)		(80	)
Net amount reported in Loans and advances to customers		94			1

Barclays Bank S.A., Spain
Barclays securitised two static pools of residential mortgage loans originated by Barclays Bank S.A., domiciled in Spain. Both securitisations were effected through the sale of mortgage shares to, respectively, AyT Génova Hipotecario II, Fondo de Titulización Hipotecario (‘Genova II’) and AyT Génova Hipotecario III, Fondo de Titulización Hipotecario (‘Genova III’) (each an ‘Issuer’). Each Issuer is a fund which is managed by Ahorro Y Titulización S.G.F.T. S.A. (the ‘Managing Company’).

To fund the acquisition of these mortgage shares, each Issuer issued floating rate notes (‘FRNs’). All FRNs were publicly subscribed. The offering circulars for both issues of FRNs stated that they are the obligations of the respective Issuer only and are not guaranteed by, or the responsibility of, any other party. Non-returnable proceeds of these two securitisation issues totalled €1.6bn at issue. Each Issuer has entered into a swap agreement with Barclays Bank PLC, Spain branch under which each pays the floating rate of interest on the respective mortgage loans and receives interest linked to 3 month Euribor. The proceeds generated from the loans are used in each case in priority to meet the claims of the FRN holders, after the payment of Managing Company and administration expenses and amounts payable in respect of the interest rate swap arrangements. As at 31st December 2004, the outstanding balance on non-returnable proceeds of these two securitisation issues totalled €1,408m (£996m).

There is no option to transfer additional assets to either of the Issuers. The Managing Company has the right to liquidate the fund if the principal balance of the mortgage shares has fallen below 10% of their initial amount provided all obligations under the bonds can be satisfied in full. In circumstances considered to be remote, the Managing Company also has the right to offer to the market to sell the pool of assets remaining at the time. The price achieved must be the best of five bids given by five major players in the market. Only in these circumstances and on this pricing basis, Barclays Bank S.A. has an option, but not an obligation, to re-purchase the assets then remaining. Barclays Bank PLC Spain branch has provided two subordinated loans to each Issuer in respect of a reserve fund and initial expenses. Barclays Bank S.A. is also remunerated for its roles as Financial Agent and Manager of the mortgage loans on behalf of the Managing Company.

The directors of each of the Issuers have confirmed that Barclays Bank S.A., is not obliged and does not intend to support any losses beyond the recourse to the mortgage loan assets underlying each issue.

Barclays is not obliged, beyond any obligations mentioned above, to support any losses that may be suffered by the FRN holders and does not intend to provide such support.

In 2004 Barclays recognised net income of £0.6m arising from these securitisations, which comprised £0.1m as financial agent and mortgage originator and £0.5m as the amount remaining in Genova II and Genova III after making all other payments in priority.

Barclays Capital, New York
In 2004, Barclays securitised ten static pools of residential mortgage loans in the US, which were originated by unaffiliated mortgage companies. All of the securitisations were effected through the sale of mortgage loans to trusts that are bankruptcy remote from Barclays.

To fund the acquisition of these mortgage loans, the trust issued FRNs. The FRNs were underwritten by Barclays and sold to third party investors. Barclays often retained a residual interest in the securitisation for which financial consideration was given. The offering circulars for the issues of FRNs stated that they are the obligations of the respective trust only and are not guaranteed by, or the responsibility of, any other party. Non-returnable proceeds of these securitisations totalled $7,780m at issue. At 31st December 2004, the outstanding balance on non-returnable proceeds of these securitisation issues totalled $6,629m (£3,450m).

There is no option to transfer additional assets to any of the trusts. A call right exists with the right to liquidate the trust if the principal balance of the mortgage shares has fallen below 10% of their initial amount, provided all obligations under the bonds can be satisfied in full.

135

Notes to the accounts
For the year ended 31 st December 2004

14 Loans and advances to customers (continued)

Barclays is not obliged and does not intend to support any losses beyond the recourse to the mortgage loan assets underlying each issue.

Barclays is not obliged to support any losses that may be suffered by the FRN holders and does not intend to provide such support.

In 2004 Barclays recognised net income of £40m (2003: £nil) from the whole loan securitisations business.

Gross assets presentation
In 2002, 2003 and 2004, a proportion of the Barclaycard personal credit and charge card receivables portfolio in the UK was securitised. The noteholders in this securitisation have a proportionate interest in each balance in the portfolio and at 31st December 2004 the value of this interest was £3,318m (2003: £2,508m). At 31st December 2004, the Group’s net exposure to this securitisation, after taking into account the limited recourse financing, was £40m (2003: £nil). The total portfolio is included within gross loans and advances and the funding giving rise to the noteholders interest is included within Debt securities in issue (Note 25).

Loans and advances also include £80m of securitised assets within the banking business as at 31st December 2004 which are reported under gross asset presentation. As at 31st December 2003, the gross balances outstanding on these totalled £81m.

In addition to securitised loans and advances, the Group has securitised a portfolio of investment debt securities which are also disclosed on a gross asset presentation basis, as discussed in Note 16, and a securitised portion of life fund disclosed net in Note 22.

15 Provision balances for bad and doubtful debts

	2004									2003									2002
Movements in provision
balances for bad and	Specific			General			Total			Specific			General			Total			Specific			General			Total
doubtful debts	£m			£m			£m			£m			£m			£m			£m			£m			£m
Balance at beginning of year		2,233			795			3,028			2,261			737			2,998			1,971			745			2,716
Acquisitions and disposals		38			(17	)		21			27			35			62			(25	)		14			(11	)
Exchange and other adjustments		(30	)		(4	)		(34	)		(14	)		(4	)		(18	)		(57	)		(20	)		(77	)
		2,241			774			3,015			2,274			768			3,042			1,889			739			2,628
Charge for the year		1,301			(210	)		1,091			1,320			27			1,347			1,486			(2	)		1,484
Amounts written off, net of recoveries of £255m (2003: £113m, 2002: £106m)		(1,340	)		–			(1,340	)		(1,361	)		–			(1,361	)		(1,114	)		–			(1,114	)
Balance at end of year		2,202			564			2,766			2,233			795			3,028			2,261			737			2,998

	2004		2003
Provision balances at 31st December	£m		£m
Specific provision balances
United Kingdom		1,860		1,856
Other European Union		104		97
United States		128		121
Rest of the World		110		159
		2,202		2,233
General provision balances		564		795
		2,766		3,028

	2004			2003
Non-performing advances	£m			£m
Loans and advances on which interest is in suspense or is not being applied		2,607			2,890
Specific provision balance		(1,563	)		(1,527	)
		1,044			1,363

136

Barclays PLC Annual Report 2004 

15 Provision balances for bad and doubtful debts (continued)

	2004		2003
	£m		£m
Non-accrual loans		2,115		2,261
Accruing loans where interest is being suspended with or without provisions		492		629
Other accruing loans against which provisions have been made		842		821
Sub total		3,449		3,711
Accruing loans 90 days or more overdue, against which no provisions have been made		521		590
Reduced rate loans		15		4
Total non-performing loans		3,985		4,305

16 Debt securities

	2004									2003
			Gross		Gross							Gross		Gross
	Balance		unrealised		unrealised					Balance		unrealised		unrealised
	sheet		gains		losses			Valuation		sheet		gains		losses			Valuation
Investment securities:	£m		£m		£m			£m		£m		£m		£m			£m
United Kingdom government		19		–		–			19		565		63		(7	)		621
other government		11,858		200		(7	)		12,051		16,347		475		(50	)		16,772
other public bodies		21		–		–			21		78		1		–			79
mortgage-backed securities		6,563		3		(29	)		6,537		3,074		7		(4	)		3,077
corporate issuers		15,765		36		(5	)		15,796		13,826		158		(18	)		13,966
other issuers		5,531		20		(4	)		5,547		3,691		6		(2	)		3,695
		39,757		259		(45	)		39,971		37,581		710		(81	)		38,210
Other debt securities:
United Kingdom government		2,567		–		–			2,567		2,084		–		–			2,084
other government		37,438		–		–			37,438		28,011		–		–			28,011
other public bodies		8,177		–		–			8,177		4,513		–		–			4,513
bank and building society certificates of deposit		7,063		–		–			7,063		5,796		–		–			5,796
other issuers		32,426		–		–			32,426		19,408		–		–			19,408
		127,428		259		(45	)		127,642		97,393		710		(81	)		98,022

	2004
							Balance
	Cost			Provisions			sheet
Movements in investment securities	£m			£m			£m
At beginning of year		37,646			(65	)		37,581
Exchange and other adjustments		(904	)		–			(904	)
Acquisitions and transfers		44,114			–			44,114
Redemption of investment securities		(18,441	)		–			(18,441	)
Sale of investment securities		(22,486	)		18			(22,468	)
Provisions raised		–			(12	)		(12	)
Amortisation of discounts and premiums		(113	)		–			(113	)
At end of year		39,816			(59	)		39,757

In the above table the valuation of debt securities is based on market value.

The total value of debt securities at 31st December 2004 includes securities which are subject to sale and repurchase agreements of £58,557m (2003: £42,592m) unamortised net premium on investment securities of £319m (2003: net premium £153m) and holdings by the Group of debt securities of £nil (2003: £4m) issued by associated undertakings or joint ventures. The value of securities due within one year at 31st December 2004 was £12,818m (2003: £20,458m).

During 1999, the Group securitised a portfolio of investment debt securities. Linked presentation under FRS 5 is not available and therefore the portfolio with a sterling equivalent book value of £68m at 31st December 2004 (2003: £192m) is included within the total above. The funding from this transaction is reported in Other liabilities (Note 26 on page 145).

137

Notes to the accounts
For the year ended 31st December 2004

16 Debt securities (continued)

The Group has a portfolio of investment debt securities, a large portion of which are subject to limited recourse financing. Linked presentation under FRS 5 is not available and therefore the portfolio with a sterling equivalent book value of £4,782m (2003: £3,750m) is included in the total above, with the financing reported in Deposits by banks and Debt securities in issue. At 31st December 2004, the Group’s net exposure to these investment debt securities, after taking into account the limited recourse financing, was £1,149m (2003: £1,203m).

Barclays PLC holds, as an investment, British government stock with a book value of £0.1m (2003: £0.1m).

Gross gains of £34m (2003: £4m, 2002: £5m) and gross losses of £13m (2003: £6m, 2002: £37m) were realised on the sale of investment securities using an average weighted cost approach.

Other debt securities are held at valuation. The cost of Other debt securities is not available and would be unreasonably expensive to obtain.

Of the total debt securities disclosed above, £81,146m (2003: £63,629m) were listed on a recognised exchange. These debt securities had a market value of £81,342m (2003: £64,230m).

			Maturing		Maturing
	Maturing		after one		after five		Maturing
	within		but within		but within		after
	one year		five years		ten years		ten years
Maturities of investment debt securities	£m		£m		£m		£m		£m
Government		2,271		5,660		3,609		337		11,877
Other public bodies		9		12		–		–		21
Other issuers		9,080		13,883		670		4,226		27,859
Total book value		11,360		19,555		4,279		4,563		39,757
Total valuation		11,379		19,660		4,346		4,586		39,971

17 Equity shares

	2004				2003
	Balance				Balance
	sheet		Valuation		sheet		Valuation
	£m		£m		£m		£m
Investment securities		1,293		1,513		954		1,134
Other securities		10,873		10,873		6,905		6,905
		12,166		12,386		7,859		8,039

	2004
							Balance
	Cost			Provisions			sheet
Movements in Investment securities	£m			£m			£m
At beginning of year		973			(19	)		954
Acquisitions and transfers		423			(2	)		421
Sale of Investment securities		(73	)		–			(73	)
Exchange/other		(9	)		–			(9	)
At end of year		1,314			(21	)		1,293

In the above table the valuation of equity securities is based on market value.

Gross unrealised gains on equity shares amounted to £220m (2003: £180m). Gross unrealised losses amounted to £nil (2003: £nil).

Gross gains of £200m (2003: £82m, 2002: £91m) and gross losses of £nil (2003: £nil, 2002: £12m) were realised on the sale of Investment securities. Other securities are stated at valuation. The cost of Other securities is not available and would be unreasonably expensive to obtain.

Of the total equity shares disclosed above, £9,675m (2003: £6,471m) were listed on a recognised exchange. These listed equity securities had a market value of £9,753m (2003: £6,486m).

138

Barclays PLC Annual Report 2004 

18 Interests in associated undertakings and joint ventures

	Associates						Joint ventures
	2004			2003			2004			2003
Share of net assets	£m			£m			£m			£m
At beginning of year		370			397			58			58
Exchange and other adjustments		(25	)		(25	)		–			–
New investments/acquisitions		8			2			23			–
Disposals		(6	)		(19	)		(50	)		(1	)
Profit/(loss) retained		34			15			(3	)		1
At end of year		381			370			28			58
Interest in FirstCaribbean International Bank
– share of gross assets		2,160			2,294
– share of gross liabilities		(1,932	)		(2,082	)
– goodwill		114			120
Other associates
– share of net assets		38			38
– goodwill		1			–
Total		381			370

Associated undertakings and joint ventures include £342m in respect of banks (2003: £332m). Dividend income from associated undertakings and joint ventures amount to £15m (2003: £7m). On an historical cost basis, the Group’s interests in associated undertakings and joint ventures at 31st December 2004 amount to £409m (2003: £428m).

The principal associate of Barclays is:

					Percentage of
			Percentage of		non-cumulative		Date of
	Country of	Nature	equity share		perpetual preference		last audited
	Incorporation	of business	capital held		share capital held		accounts
FirstCaribbean International Bank	Barbados	Banking		43.7%		100%		31/10/2004

The interest in FirstCaribbean International Bank is owned by Barclays Bank PLC.

Of the above interests in associated undertakings and joint ventures, Gabetti Holding SpA is listed on the Milan stock exchange.

The Group’s share of the total operating income of joint ventures is £32m (2003: £21m, 2002: £17m). The Group’s share of the total operating income of FirstCaribbean International Bank is £133m (2003: £93m).

Included within Barclays share of associates net assets is goodwill as follows:

	2004		2003
Goodwill	£m		£m
Cost
At beginning of year		128		131
Additions/(disposals)		2		(3	)
At end of year		130		128
Accumulated amortisation
At beginning of year		8		1
Amortisation charge for year		7		7
At end of year		15		8
Net book value		115		120

139

Notes to the accounts
For the year ended 31st December 2004

18 Interests in associated undertakings and joint ventures (continued)

The table below provides summarised financial information of associated undertakings and joint ventures in which the Group has an interest (the entities’ entire financial position and results of operations are presented, not Barclays share).

	2004												2003
	FirstCaribbean												FirstCaribbean
	International			Other			Joint						International			Other			Joint
	Bank			associates			ventures			Total			Bank			associates			ventures			Total
	£m			£m			£m			£m			£m			£m			£m			£m
Fixed assets		82			427			102			611			80			405			382			867
Debt and equity securities		513			114			–			627			462			78			–			540
Loans to banks and customers		3,687			61			217			3,965			3,804			144			198			4,146
Other assets		72			153			53			278			267			182			60			509
Total assets		4,354			755			372			5,481			4,613			809			640			6,062
Deposits from banks and customers		3,840			250			2			4,092			4,093			247			287			4,627
Other liabilities		54			226			313			593			97			272			227			596
Shareholders’ funds		460			279			57			796			423			290			126			839
Total liabilities		4,354			755			372			5,481			4,613			809			640			6,062
Profit/(loss) before tax		124			34			(18	)		140			50			38			(8	)		80
Taxation		(10	)		(12	)		7			(15	)		(5	)		(11	)		7			(9	)
Profit/(loss) after tax		114			22			(11	)		125			45			27			(1	)		71

The amounts included above are based on accounts made up to 31st December 2004 with the exception of FirstCaribbean International Bank and certain undertakings included within the other associates category for which the amounts are based on accounts made up to dates not earlier than three months before the balance sheet date.

19 Intangible fixed assets

	2004			2003
Goodwill cost	£m			£m
At beginning of year		5,232			4,502
Additions		196			750
Disposals		–			(1	)
Exchange and other adjustments		(13	)		(19	)
At end of year		5,415			5,232

Accumulated amortisation
At beginning of year	826		568
Amortisation charge for year	299		265
Exchange and other adjustments	(5	)	(7	)
At end of year	1,120		826
Net book value	4,295		4,406

Goodwill is amortised to the profit and loss account over its useful economic life, generally estimated to be between five and 20 years.

140

Barclays PLC Annual Report 2004 

20 Tangible fixed assets

	2004									2003
	Total			Property			Equipment			Total			Property			Equipment
Cost or valuation	£m			£m			£m			£m			£m			£m
At beginning of year		4,011			2,184			1,827			3,672			1,968			1,704
Acquisitions and disposals of Group undertakings		6			5			1			234			160			74
Exchange and other adjustments		(30	)		(16	)		(14	)		(2	)		(5	)		3
Additions at cost		531			219			312			320			86			234
Sale of assets		(186	)		(87	)		(99	)		(207	)		(22	)		(185	)
Fully depreciated assets written off		(4	)		(2	)		(2	)		(6	)		(3	)		(3	)
At end of year		4,328			2,303			2,025			4,011			2,184			1,827
Accumulated depreciation and impairment
At beginning of year		2,221			884			1,337			2,046			797			1,249
Acquisitions and disposals of Group undertakings		–			–			–			1			–			1
Exchange and other adjustments		(14	)		14			(28	)		12			4			8
Charge for year		295			86			209			289			93			196
Sale of assets		(91	)		(4	)		(87	)		(121	)		(7	)		(114	)
Fully depreciated assets written off		(4	)		(2	)		(2	)		(6	)		(3	)		(3	)
At end of year		2,407			978			1,429			2,221			884			1,337
At valuation
1979 to 1993		610			610			–			618			618			–
At cost		3,718			1,693			2,025			3,393			1,566			1,827
		4,328			2,303			2,025			4,011			2,184			1,827
Accumulated depreciation		(2,407	)		(978	)		(1,429	)		(2,221	)		(884	)		(1,337	)
Net book value		1,921			1,325			596			1,790			1,300			490

	2004			2003
Balance sheet value of property	£m			£m
Freehold		850			978
Leasehold over 50 years unexpired		45			84
Leasehold up to 50 years unexpired		286			236
Assets in the course of construction		144			2
		1,325			1,300
Historical cost of property
At cost		2,081			1,956
Accumulated depreciation and impairment		(968	)		(880	)
Net book value		1,113			1,076

The net book value of property occupied by the Group for its own use was £1,265m at 31st December 2004 (2003: £1,250m).

The net book value of property at 31st December 2004 included £196m (2003: £191m) in respect of land.

As at 31st December 2004, Barclays Group owns leases or holds under licence properties throughout the world arising from operational activities. The majority of UK properties are retail branches and are widely distributed throughout England, Scotland, Wales and Northern Ireland. The most significant properties are 54 Lombard Street, St Swithins House, Murray House and North and South Colonnade, Canary Wharf, all located in London, together with administrative buildings in Northampton, Knutsford, Coventry and Poole.

Outside the UK Barclays largest branch network lies in Spain. The most significant office premises are in New York, San Francisco and Madrid.

During 2005 Barclays will occupy a new global headquarters at 1 Churchill Place, Canary Wharf, London.

At 31st December 2004, commitments for capital expenditure under contract amounted to £2m (2003: £nil).

141

Notes to the accounts
For the year ended 31st December 2004

21 Other assets, prepayments and accrued income

	2004		2003
Other assets	£m		£m
Balances arising from off-balance sheet financial instruments		18,174		15,812
Shareholders’ interest in the long-term assurance fund		610		478
London Metal Exchange warrants and other metals trading positions		952		1,290
Sundry debtors		2,418		2,156
		22,154		19,736

	2004		2003
Prepayments and accrued income	£m		£m
Accrued interest and commission		3,538		2,763
Prepayments		1,540		1,158
		5,078		3,921

22 Retail long-term assurance funds

The increase in the shareholders’ interest in the retail long-term assurance funds in the UK is calculated as follows:

	2004			2003
	£m			£m
Value of shareholders’ interest at beginning of year		878			867
Increase in the value for the year after tax		19			11
Value of shareholders’ interest at end of year		897			878
Non-recourse borrowing		(287	)		(400	)
Value of shareholders’ interest after non-recourse borrowings		610			478

Before tax, the decrease in the value for the year was £1m (2003: £42m).

In 2003, loan notes of £400m were issued. The first £400m of emerging surplus from the retail long-term assurance funds is used to repay these notes with the remaining surplus being available to shareholders. In 2004 £113m of the loan notes were redeemed.

In addition to the increase in the shareholders’ interest in the retail long-term assurance funds detailed above, £9m (2003: £9m) of other income from the long-term assurance business has been recognised in the year.

The principal economic assumptions used in calculating the value of the shareholders’ interest were as follows:

	2004		2003
	%		%
Risk discount rate (net of tax)		7.1		7.3
Gross United Kingdom equities returns for unit linked business (net of irrecoverable tax credit)		7.0		7.2
Gross United Kingdom equities dividend yield for unit linked business (net of irrecoverable tax credit)		2.5		2.5
Gross property and overseas equities returns for unit linked business		7.6		7.8
Gross fixed interest returns for unit linked business		4.6		4.8
Renewal expense inflation (including effect of fixed costs)		5.0		4.8

The retail life-fund assets attributable to policyholders comprise:

	2004			2003
	£m			£m
Assets:
Investments		8,253			7,329
Other debtors		209			984
		8,462			8,313
Current liabilities		(84	)		(236	)
		8,378			8,077

142

Barclays PLC Annual Report 2004 

23 Deposits by banks

	2004		2003
	£m		£m
Repayable
on demand		9,858		8,086
not more than three months		81,214		67,866
over three months but not more than six months		5,762		2,286
over six months but not more than one year		993		2,135
over one year but not more than two years		1,942		407
over two years but not more than five years		1,738		2,944
over five years		9,517		10,368
		111,024		94,092
By geographical area
Banking business: United Kingdom		52,708		39,068
Other European Union		2,733		2,418
United States		4,956		6,173
Rest of the World		13,814		9,982
Total banking business		74,211		57,641
Total trading business		36,813		36,451
		111,024		94,092

At 31st December 2004, there were deposits by banks of £1,634m (2003: £1,438m) due to associated undertakings and joint ventures.

Deposits by banks are mostly over £50,000.

The average interest rate during 2004 for deposits by banks (excluding trading business) was 2.4% (2003: 2.3%, 2002: 2.9%).

24 Customer accounts

	2004		2003
	£m		£m
Repayable
on demand		106,675		95,253
not more than three months		99,656		79,259
over three months but not more than six months		2,860		2,898
over six months but not more than one year		2,391		2,765
over one year but not more than two years		918		964
over two years but not more than five years		1,615		2,141
over five years		3,603		1,588
		217,718		184,868
By geographical area
Banking business:
United Kingdom		155,946		140,363
Other European Union		8,395		8,510
United States		1,776		1,236
Rest of the World		5,846		5,705
Total banking business		171,963		155,814
Total trading business		45,755		29,054
		217,718		184,868

143

Notes to the accounts
For the year ended 31st December 2004

24 Customer accounts (continued)

	2004		2003
	£m		£m
By type
In offices in the United Kingdom:
current and demand accounts – interest free		12,509		13,374
current and demand accounts – interest bearing		23,599		20,102
savings accounts		51,061		49,124
other time deposits – retail		31,618		31,801
other time deposits – wholesale		55,195		40,187
In offices outside the United Kingdom:
current and demand accounts – interest free		1,513		1,359
current and demand accounts – interest bearing		3,361		3,534
savings accounts		864		1,561
other time deposits		37,998		23,826
		217,718		184,868

At 31st December 2004, there were customer accounts of £53m (2003: £34m) due to associated undertakings and joint ventures.

Deposits in offices in the UK received from non-residents amounted to £34,183m (2003: £27,593m and 2002: £19,490m).

Other time deposits in the UK and the US are mostly over £50,000.

25 Debt securities in issue

	2004		2003
	£m		£m
Bonds and medium-term notes repayable: within one year		1,438		2,157
over one year but not more than two years		4,797		933
over two years but not more than five years		3,723		5,106
over five years		1,313		2,587
		11,271		10,783
Other debt securities in issue repayable: not more than three months		36,949		17,872
over three months but not more than one year		7,418		13,780
over one year but not more than two years		2,692		1,520
over two years but not more than five years		6,799		3,032
over five years		2,677		2,582
		67,806		49,569

Debt securities in issue at 31st December 2004 included certificates of deposit of £37,213m (2003: £28,536m) and commercial paper of £8,688m (2003: £4,426m). The average interest rates during 2004 for commercial paper was 1.8% (2003: 1.0%, 2002: 2.0%) and for negotiable certificates of deposits was 2.2% (2003: 2.2%, 2002: 3.3%). At 31st December 2004, there were £530m of debt securities in issue due to associated undertakings and joint ventures (2003: £448m).

Debt securities in issue at 31st December 2004 include £3,278m (2003: £2,508m) raised from the securitisation of credit and charge card receivables (see Note 14).

144

Barclays PLC Annual Report 2004 

26 Other liabilities, accruals and deferred income

	2004			2003
Other liabilities	£m			£m
Obligations under finance leases payable: not more than one year		117			22
over one year but not more than two years		100			24
over two years but not more than five years		159			61
over five years		30			53
		406			160
Less: future finance charges		(53	)		(50	)
		353			110
Balances arising from off-balance sheet financial instruments		18,009			14,797
Short positions in securities		53,714			49,934
Current tax		584			497
Sundry creditors		3,905			4,159
		76,565			69,497
Short positions in securities comprise: Treasury bills and other eligible bills		1,782			2,547
Debt securities – government		38,358			37,526
Debt securities – other public sector		3,186			1,035
Debt securities – other		5,392			4,256
Equity shares		4,996			4,570
		53,714			49,934

Of the total short positions disclosed above, £34,993m (2003: £37,028m) were listed on a recognised exchange.

Other liabilities as at 31st December 2004 include £68m (2003: £192m) raised from the securitisation of investment debt securities (see Note 16).

	2004		2003
Accruals and deferred income	£m		£m
Accrued interest and commission		2,860		2,193
Other accruals and deferred income		3,722		2,790
		6,582		4,983

27 Deferred tax

The movements on deferred tax during the year were:

	2004			2003
	£m			£m
At beginning of year		646			461
Exchange and other adjustments		5			(9	)
Charge to profit and loss account		87			194
At end of year		738			646
Deferred tax at 31st December:
Leasing transactions		759			739
Other timing differences		(21	)		(93	)
		738			646

No tax (2003: £nil) has been calculated on capital gains that might arise on the disposal of Barclays Bank PLC at the amounts at which it is stated. The Directors are of the opinion that the likelihood of any such tax liability arising in the foreseeable future is remote. Tax would become payable only if the investment (and consequently virtually all of the Group’s activities) were disposed of. The amount of tax payable would be dependent upon the level of capital losses available within the Barclays Group to reduce any capital gains that may arise.

145

Notes to the accounts
For the year ended 31st December 2004

27 Deferred tax (continued)

No tax has been calculated on capital gains (2003: £nil) that might arise on the disposal of properties at their balance sheet amounts. The aggregate disposal of the property portfolio would not be expected to give rise to a significant gain or loss. Tax would become payable only if property were sold without it being possible to claim rollover relief. At present, it is not envisaged that any tax will become payable in the foreseeable future.

The fair values of certain derivatives and financial instruments are disclosed in Note 37. For trading balances, where fair values are recognised in the financial statements and mark to market movements included in the profit and loss account, the gains and losses are subject to current tax and no deferred tax arises. In the case of derivatives used for asset and liability management purposes, tax arises when the gain or loss is recognised in the profit and loss account at the same time as the hedged item. Where fair values are disclosed but not recognised, tax would arise if the assets were sold at their fair value. Tax of £759m (2003: £900m) would become payable on the sale of the non-trading financial assets for which a valuation has been given.

Deferred tax assets have not been recognised on tax losses to the extent that they are not regarded as recoverable in the foreseeable future. The unrecognised asset of £5m (2003: £4m) would be regarded as recoverable to the extent that, on the basis of all available evidence, it was more likely than not that there would be suitable taxable profits from which the tax losses could be deducted.

No deferred tax is recognised on the unremitted earnings of overseas subsidiary undertakings, associated undertakings and joint ventures. Such earnings form part of the balance sheet value and are therefore included in the deferred tax of subsidiaries.

28 Other provisions for liabilities and charges

	Employee
	pension and									Redundancy
	post-retirement						Customer			and
	benefit			Onerous			loyalty			restruct-			Sundry
	contributions			contracts			provisions			uring			provisions			Total
	£m			£m			£m			£m			£m			£m
At 1st January 2004		65			23			32			71			178			369
Acquisitions and disposals of Group undertakings		(3	)		–			–			–			–			(3	)
Exchange		(5	)		4			–			(3	)		(6	)		(10	)
Additions		135			25			12			202			187			561
Amounts used		(28	)		(11	)		(32	)		(161	)		(98	)		(330	)
Unused amounts reversed		(60	)		(3	)		–			(12	)		(46	)		(121	)
Amortisation of discount		–			1			–			–			–			1
		104			39			12			97			215			467
At 1st January 2003		180			26			55			113			112			486
Acquisitions and disposals of Group undertakings		8			–			–			–			1			9
Exchange		(1	)		4			–			4			–			7
Additions		30			7			11			235			121			404
Amounts used		(50	)		(10	)		(34	)		(245	)		(35	)		(374	)
Unused amounts reversed		(102	)		(5	)		–			(36	)		(21	)		(164	)
Amortisation of discount		–			1			–			–			–			1
		65			23			32			71			178			369

Customer loyalty provisions are made with respect to anticipated future claims on redemption under the Group’s customer loyalty bonus schemes. Sundry provisions are made with respect to commission clawbacks, warranties, cost of customer redress and litigation claims.

The Group has a restructuring programme, largely focused on activities within the UK, which involves the reshaping of the Group’s operations through the centralisation of core processes, application of new technologies, and reduction of workforce. It is anticipated that the majority of remaining liabilities and charges will be utilised in 2005.

146

Barclays PLC Annual Report 2004 

29 Undated loan capital

Undated loan capital, issued by the Bank for the development and expansion of the Group’s business and to strengthen its capital base comprised:

				2004		2003
	Notes			£m		£m
The Bank
6% Callable Perpetual Core Tier One Notes		(a, n	)		400		400
6.86% Callable Perpetual Core Tier One Notes ($1,000m)		(a, n	)		520		560
8.55% Step-up Callable Perpetual Reserve Capital Instruments ($1,250m)		(b, o	)		646		694
7.375% Step-up Callable Perpetual Reserve Capital Instruments ($750m)		(b, p	)		386		415
7.50% Step-up Callable Perpetual Reserve Capital Instruments (€850m)		(c, q	)		595		596
Junior Undated Floating Rate Notes ($121m)		(d, r	)		63		68
Undated Floating Rate Primary Capital Notes Series 1 ($358m)		(d, s	)		186		201
Undated Floating Rate Primary Capital Notes Series 2 ($442m)		(d, s	)		230		248
Undated Floating Rate Primary Capital Notes Series 3		(d, s	)		145		145
9.875% Undated Subordinated Notes		(e, t	)		300		300
9.25% Perpetual Subordinated Bonds (ex-Woolwich plc)		(f, u	)		180		181
9% Permanent Interest Bearing Capital Bonds		(g, v	)		100		100
7.125% Undated Subordinated Notes		(h, w	)		525		525
6.875% Undated Subordinated Notes		(i, x	)		650		650
6.375% Undated Subordinated Notes		(j, y	)		465		465
6.125% Undated Subordinated Notes		(k, z	)		550		550
6.5% Undated Subordinated Notes (FFr1,000m)		(l, aa	)		108		107
5.03% Reverse Dual Currency Undated Subordinated Loan (Yen 8,000m)		(m, ab	)		40		42
5% Reverse Dual Currency Undated Subordinated Loan (Yen 12,000m)		(m, ab	)		60		63
Total undated loan capital					6,149		6,310

Security and subordination
None of the undated loan capital of the Bank is secured or convertible.

The Junior Undated Floating Rate Notes (the ‘Junior Notes’) rank behind the claims against the Bank of depositors and other unsecured unsubordinated creditors and holders of dated loan capital.

All other issues of the Bank’s undated loan capital rank pari passu with each other and behind the claims of the holders of Junior Notes, except for the 6% and 6.86% Callable Perpetual Core Tier One Notes (the ‘TONs’) and the 8.55%, 7.375% and 7.5% Step-up Callable Perpetual Reserve Capital Instruments (the ‘RCIs’) (such issues, excluding the TONs and the RCIs, being the ‘Undated Notes and Loans’).

The TONs and the RCIs rank pari passu with each other and behind the claims of the holders of the Undated Notes and Loans.

In accordance with the Barclays Group Reorganisation Act 2002, the 9.25% Perpetual Subordinated Bonds of Woolwich plc were transferred to the Bank by operation of law on 1st December 2003 and accordingly the Bank has become the obligor for this issue from that date.

Interest

Notes

(a)	These TONs bear a fixed rate of interest until 2032. After that date, in the event that the TONs are not redeemed, the TONs will bear interest at rates fixed periodically in advance, based on London interbank rates.
(b)	These RCIs bear a fixed rate of interest until 2011. After that date, in the event that the RCIs are not redeemed, the RCIs will bear interest at rates fixed periodically in advance, based on London interbank rates.
(c)	These RCIs bear a fixed rate of interest until 2010. After that date, in the event that the RCIs are not redeemed, the RCIs will bear interest at rates fixed periodically in advance, based on European interbank rates.
(d)	These Notes bear interest at rates fixed periodically in advance, based on London interbank rates.
(e)	These Notes bear a fixed rate of interest until 2008. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of five years.
(f)	These Notes bear a fixed rate of interest until 2021. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of five years.
(g)	The interest rate on these Notes is fixed for the life of this issue.
(h)	These Notes bear a fixed rate of interest until 2020. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of five years.

147

Notes to the accounts
For the year ended 31st December 2004

29 Undated loan capital (continued)

(i)	These Notes bear a fixed rate of interest until 2015. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of five years.
(j)	These Notes bear a fixed rate of interest until 2017. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of five years.
(k)	These Notes bear a fixed rate of interest until 2027. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of five years.
(l)	These Notes bear a fixed rate of interest until 2009. After that date, in the event that the Notes are not redeemed, the Notes will bear interest at rates fixed periodically in advance based on European interbank rates.
(m)	These Loans bear a fixed rate of interest until 2028 based on a US Dollar principal amount, but the interest payments have been swapped, resulting in a Yen interest rate payable which is fixed periodically in advance based on London interbank rates. After that date, in the event that the Loans are not redeemed, the Loans will bear Yen interest at rates fixed periodically in advance, based on London interbank rates.

The Bank is not obliged to make a payment of interest on its Undated Notes and Loans excluding the 9.25% Perpetual Subordinated 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 the Bank. The Bank is not obliged to make a payment of interest on its 9.25% Perpetual Subordinated Bonds if, in the immediately preceding 12 months interest period, a dividend has not been paid on any class of its share capital. Interest not so paid becomes payable in each case if such a dividend is subsequently paid or in certain other circumstances.

No payment of principal or any interest on any such undated loan capital may be made unless the Bank satisfies a specified solvency test.

The Bank may elect to defer any payment of interest on the RCIs for any period of time. Whilst such deferral is continuing, neither the Bank nor Barclays PLC may declare or pay a dividend, subject to certain exceptions, on any of its ordinary shares or preference shares.

The Bank may elect to defer any payment of interest on the TONs if it determines that it is, or such payment would result in it being, in non-compliance with capital adequacy requirements and policies of the Financial Services Authority. Any such deferred payment of interest will only be payable on a redemption of the TONs. Until such time as the Bank next makes a payment of interest on the TONs, neither the Bank nor Barclays PLC may (a) declare or pay a dividend, subject to certain exceptions, on any of their respective ordinary shares or preference shares, or make payments of interest in respect of the RCIs and (b) certain restrictions on the redemption, purchase or reduction of their respective share capital and certain other securities also apply.

Interest payable on undated loan capital amounted to £419m (2003: £451m, 2002: £407m).

Repayment and conversion

Notes

(n)	These TONs are repayable, at the option of the Bank, in whole on any coupon payment date falling in or after June 2032.
(o)	These RCIs are repayable, at the option of the Bank, in whole on any coupon payment date falling in or after June 2011.
(p)	These RCIs are repayable, at the option of the Bank, in whole on any coupon payment date falling in or after December 2011.
(q)	These RCIs are repayable, at the option of the Bank, in whole on any coupon payment date falling in or after December 2010.
(r)	These Notes are repayable, at the option of the Bank, in whole or in part on any interest payment date.
(s)	These Notes are repayable in each case, at the option of the Bank, in whole on any interest payment date.
(t)	These Notes are repayable, at the option of the Bank, in whole in 2008, or on any fifth anniversary thereafter.
(u)	These Bonds are repayable, at the option of the Bank, in whole in 2021, or on any fifth anniversary thereafter.
(v)	These Bonds are repayable, at the option of the Bank, in whole at any time.
(w)	These Notes are repayable, at the option of the Bank, in whole in 2020, or on any fifth anniversary thereafter.
(x)	These Notes are repayable, at the option of the Bank, in whole in 2015, or on any fifth anniversary thereafter.
(y)	These Notes are repayable, at the option of the Bank, in whole in 2017, or on any fifth anniversary thereafter.
(z)	These Notes are repayable, at the option of the Bank, in whole in 2027, or on any fifth anniversary thereafter.
(aa)	These Notes are repayable, at the option of the Bank, in whole in 2009, or on any fifth anniversary thereafter.
(ab)	These Loans are repayable, at the option of the Bank, in whole in 2028, or on any fifth anniversary thereafter.

In addition, each issue of undated loan capital is repayable, at the option of the Bank in whole for certain tax reasons, either at any time, or on an interest payment date. There are no events of default except non-payment of principal or mandatory interest. Any repayments require the prior approval of the Financial Services Authority.

All issues of undated loan capital have been made in the eurocurrency market and/or under Rule 144A, and no issues have been registered under the US Securities Act of 1933.

148

Barclays PLC Annual Report 2004 

30 Dated loan capital

Dated loan capital, issued by the Bank for the development and expansion of the Group’s business and to strengthen its capital base, and by Barclays Spain, Barclays Bank of Botswana Ltd (‘BBB’) and Barclays Bank Zambia PLC (‘Barclays Zambia’) to enhance their respective capital bases, comprise:

				2004		2003
	Notes			£m		£m
Non-convertible
The Bank
Floating Rate Subordinated Notes 2005 (€115m)		(b, l	)		81		81
Floating Rate Subordinated Notes 2005 (€300m)		(b, l	)		212		212
Floating Rate Unsecured Capital Loan Stock 2006		(b, m, n	)		3		3
Subordinated Floating Rate Notes 2009 (2003: $60m)					–		41
Floating Rate Subordinated Step-up Callable Notes 2009 (2003: $550m)					–		360
Floating Rate Subordinated Step-up Callable Notes 2009 (2003: $115m)					–		79
7.4% Subordinated Notes 2009 ($400m)		(a	)		208		225
Subordinated Fixed to CMS – Linked Notes 2009 (€31m)		(b	)		22		22
Floating Rate Subordinated Step-up Callable Notes 2009 (2003: €150m)					–		106
Variable Floating Rate Subordinated Notes 2009 (2003: Yen 5,000m)					–		26
12% Unsecured Capital Loan Stock 2010		(a	)		25		25
Floating Rate Subordinated Step-up Callable Notes 2011 ($100m)		(b, m	)		52		56
Floating Rate Subordinated Step-up Callable Notes 2011 ($125m)		(b, m	)		65		70
Floating Rate Subordinated Notes 2011 ($400m)		(b, m	)		208		225
5.75% Subordinated Notes 2011 (€1,000m)		(a	)		708		707
5.25% Subordinated Notes 2011 (€250m) (ex-Woolwich plc)		(a	)		169		167
Fixed/Floating Rate Subordinated Notes 2011 (Yen 5,000m)		(d, m	)		25		26
Floating Rate Subordinated Notes 2012		(b, m	)		300		299
Callable Subordinated Floating Rate Notes 2012		(b, m	)		44		44
Step-up Callable Floating Rate Subordinated Bonds 2012 (ex-Woolwich plc)		(b, m	)		148		148
Callable Subordinated Floating Rate Notes 2012 ($150m)		(b, m	)		78		84
Floating Rate Subordinated Notes 2012 ($100m)		(b, m	)		52		56
Capped Floating Rate Subordinated Notes 2012 ($100m)		(b, m	)		52		56
Floating Rate Subordinated Notes 2013 ($1,000m)		(b, k, m	)		551		582
5.015% Subordinated Notes 2013 ($150m)		(a	)		78		84
4.875% Subordinated Notes 2013 (€750m)		(a	)		531		531
5.5% Subordinated Notes 2013 (DM500m)		(e, m	)		181		181
Floating Rate Subordinated Step-up Callable Notes 2013 (Yen 5,500m)		(b, j, m	)		30		30
Floating Rate Subordinated Notes 2013 (AU$150m)		(c, m	)		61		63
5.93% Subordinated Notes 2013 (AU$100m)		(f, m	)		40		42
10.125% Subordinated Notes 2017 (ex-Woolwich plc)		(g, m	)		117		119
Floating Rate Subordinated Notes 2018 (€40m)		(b	)		28		28
Floating Rate Subordinated Notes 2019 (€50m)		(b	)		36		35
Callable Fixed/Floating Rate Subordinated Notes 2019 (€1,000m)		(h	)		708		–
9.5% Subordinated Bonds 2021 (ex-Woolwich plc)		(a	)		254		258
Subordinated Floating Rate Notes 2021 (€100m)		(b	)		71		71
Subordinated Floating Rate Notes 2022 (€50m)		(b	)		36		35
Subordinated Floating Rate Notes 2023 (€50m)		(b	)		36		35
5.75% Fixed Rate Subordinated Notes 2026		(a	)		600		600
5.4% Reverse Dual Currency Subordinated Loan 2027 (Yen 15,000m)		(i	)		75		79
6.33% Subordinated Notes 2032		(a	)		50		50
Subordinated Floating Rate Notes 2040 (€100m)		(b	)		71		71
Barclays Bank SA, Spain (Barclays Spain)
Subordinated Floating Rate Capital Notes 2007 (€60m)		(b	)		42		–
Subordinated Floating Rate Capital Notes 2009 (€42m)		(b	)		30		–
Subordinated Floating Rate Capital Notes 2011 (€50m)		(b	)		35		–
					6,113		6,012
Convertible
Barclays Bank of Botswana Ltd (BBB)
Subordinated Unsecured Floating Rate Capital Notes 2014 (BWP100m)		(m, o	)		12		13
Barclays Bank Zambia PLC
Subordinated Unsecured Floating Rate Capital Notes 2015 (ZMK30bn)		(m, p	)		3		4
Total dated loan capital					6,128		6,029
Repayable
not more than one year					296		3
over one year but not more than two years					–		293
over two years but not more than five years					302		–
over five years					5,530		5,733
					6,128		6,029

149

Notes to the Accounts
For the year ended 31st December 2004

30 Dated loan capital (continued)

None of the Group’s dated loan capital is secured. The debt obligations of the Bank, Barclays Spain, BBB and Barclays Zambia rank ahead of the interests of holders of their equity. Dated loan capital of the Bank, Barclays Spain, BBB and Barclays Zambia has been issued on the basis that the claims thereunder are subordinated to the respective claims of their depositors and other unsecured unsubordinated creditors.

In accordance with the Barclays Group Reorganisation Act 2002, the 5.25% Subordinated Notes 2011, the Step-up Callable Floating Rate Subordinated Bonds 2012, the 10.125% Subordinated Notes 2017 and the 9.5% Subordinated Bonds 2021 of Woolwich plc were transferred to the Bank by operation of law on 1st December 2003 and accordingly the Bank has become the obligor for these issues from that date.

The loan capital of Barclays Spain was reclassified from Other liabilities to Dated loan capital during 2004.

Interest

Notes

(a)	The interest rates on these Notes are fixed for the life of those issues.
(b)	These Notes bear interest at rates fixed periodically in advance based on London or European interbank rates.
(c)	These Notes bear interest at rates fixed periodically in advance based on Sydney bill of exchange rates.
(d)	These Notes bear a fixed rate of interest until 2006. After that date, in the event that the Notes are not redeemed, the Notes will bear interest at rates fixed periodically in advance based on London interbank rates.
(e)	These Notes bear a fixed rate of interest until 2008. After that date, in the event that the Notes are not redeemed, the Notes will bear interest at rates fixed periodically in advance based on London interbank rates.
(f)	These Notes bear a fixed rate of interest until 2008. After that date, in the event that the Notes are not redeemed, the Notes will bear interest at rates fixed periodically in advance based on Sydney Bill of exchange rates.
(g)	These Notes bear a fixed rate of interest until 2012. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of five years.
(h)	These Notes bear a fixed rate of interest until 2014. After that date, in the event that the Notes are not redeemed, the Notes will bear interest at rates fixed periodically in advance based on European interbank rates.
(i)	This Loan bears a fixed rate of interest based on a US Dollar principal amount, but the interest payments have been swapped, resulting in a Yen interest rate payable which is fixed periodically in advance based on London interbank rates.
(j)	The Bank has swapped the proceeds of these Notes for euro under a swap, the duration of which matches the term of the Notes. The payment obligations of the Bank under this swap are subordinated so that the claims against the Bank in respect of this swap rank pari passu with claims against the Bank in respect of its dated loan capital. The sterling value of these Notes in the figures set out above takes into account this subordinated swap.
(k)	The Bank has swapped US$250m of the proceeds of these Notes for euro under a swap, the duration of which matches the term of the Notes. The payment obligations of the Bank under this swap are subordinated so that the claims against the Bank in respect of this swap rank pari passu with claims against the Bank in respect of its dated loan capital. The sterling value of these Notes in the figures set out above takes into account this subordinated swap.
(l)	The Bank may defer the payment of interest and principal on these Notes in the event that the Financial Services Authority has required or requested the Bank to make such a deferral.
(m)	Repayable at the option of the issuer, prior to maturity, on conditions governing the respective debt obligations, some in whole or in part, and some only in whole.
(n)	Holders of these Notes have certain rights to call for the redemption of their holdings.
(o)	These Notes bear interest at rates fixed periodically in advance based on the Bank of Botswana Certificate Rate. All of these Notes will be compulsorily converted to Preference Shares of BBB, having a total par value equal in sum to the principal amount of Notes outstanding at the time of conversion, should BBB experience pre-tax losses in excess of its retained earnings and other capital surplus accounts.
(p)	These Notes bear interest at rates fixed periodically in advance based on the Bank of Zambia Treasury Bill rate. All of these Notes will be compulsorily converted to Preference Shares of Barclays Zambia, having a total par value equal in sum to the principal amount of Notes outstanding at the time of conversion, should Barclays Zambia experience pre-tax losses in excess of its retained earnings and other capital surplus accounts.

Interest payable on loan capital with a final maturity within five years amounted to £23.8m (2003: £10.7m, 2002: £28m).

The 7.4% Subordinated Notes 2009 (the ‘7.4% Notes’) issued by the Bank have been registered under the US Securities Act of 1933. All other issues of dated loan capital by the Bank, Barclays Spain, BBB and Barclays Zambia, which were made in non-US markets, have not been so registered. With respect to the 7.4% Notes, the Bank is not obliged to make (i) a payment of interest on any interest payment date unless a dividend is paid on any class of share capital and (ii) a payment of principal until six months after the respective maturity date with respect to such Notes.

150

Barclays PLC Annual Report 2004 

30 Dated loan capital (continued)

Repayment terms
Unless otherwise indicated, the Group’s dated loan capital outstanding at 31st December 2004 is redeemable only on maturity, subject in particular cases, to provisions allowing an early redemption in the event of certain changes in tax law or, in the case of BBB and Barclays Zambia, to certain changes in legislation or regulations.

Any repayments prior to maturity require in the case of the Bank, the prior approval of the Financial Services Authority, in the case of BBB, the prior approval of the Bank of Botswana and in the case of Barclays Zambia, the prior approval of the Bank of Zambia.

There are no committed facilities in existence at the balance sheet date which permit the refinancing of debt beyond the date of maturity.

31 Called up share capital

The authorised share capital of Barclays PLC is £2,500m (2003: £2,500m), comprising 9,996 million (2003: 9,996 million) ordinary shares of 25p each and 1 million (2003: 1 million) staff shares of £1 each. Called up share capital comprises 6,454 million (2003: 6,563 million) ordinary shares of 25p each and 1 million (2003: 1 million) staff shares of £1 each.

	2004			2003
	£m			£m
Called up share capital, allotted and fully paid
Ordinary shares:
At beginning of year		1,641			1,644
Issued to staff under the SAYE Share Option Scheme		6			7
Issued under Incentive Share Option Plan		1			1
Issued under Woolwich Executive Share Option Plan		–			1
Repurchase of shares		(35	)		(12	)
At end of year		1,613			1,641
Staff shares		1			1
		1,614			1,642

Share repurchase
The following table shows by month, the number of shares purchased and the average price paid per share. No share repurchases were made in any month not listed below.

					Total number of		Maximum number
					shares purchased		(or approximate value)
					as part of publicly		of shares that may yet
	Total number of		Average price		announced plans		be purchased under
Period	shares purchased		paid per share		or programmes		the plans or programmes
1st February 2004 to 29th February 2004		8,381,800		4.96		–		n/a
1st March 2004 to 31st March 2004		42,341,364		4.85		–		n/a
1st April 2004 to 30th April 2004		39,085,413		4.96		–		n/a
1st May 2004 to 31st May 2004		31,884,909		5.02		–		n/a
1st August 2004 to 31st August 2004		14,170,000		5.04		–		n/a
1st September 2004 to 30th September 2004		4,260,000		5.33		–		n/a
Total		140,123,486		4.96		–

At the 2003 AGM on 24th April, Barclays PLC was authorised to repurchase 985,524,000 of its ordinary shares of 25p. The authorisation was effective until the AGM in 2004. 35,220,413 of the 39,085,413 shares repurchased in April 2004 were repurchased under the 2003 AGM authorisation. At the 2004 AGM on 29th April, Barclays PLC was authorised to repurchase 984,600,000 of its ordinary shares of 25p. The authorisation is effective until the AGM in 2005. 3,865,000 of the 39,085,413 shares repurchased in April 2004 were repurchased under the 2004 AGM authorisation.

As at 28th February 2005, there were 930,420,091 shares that may yet be purchased under the 2004 AGM authorisation.

All shares purchased during the period were open market transactions.

151

Notes to the Accounts
For the year ended 31st December 2004

32 Shares under option

The Group has three current schemes that give employees rights to subscribe for shares in Group companies. A summary of the key terms of the Incentive Share Option Plan (ISOP) and Sharesave (SAYE) is provided on pages 14 and 15.

The other current scheme is the BGI Equity Ownership Plan (EOP) which provides for options to be granted to certain management personnel for shares in Barclays Global Investors UK Holdings Limited, a subsidiary of Barclays Bank PLC. Under the terms of the Plan, options are normally exercisable upon vesting. One-third of the options will generally vest at each anniversary of the grant date over three years. If unexercised, the options will lapse ten years after the grant.

At 31st December 2004, 7.6 million (2003: 13.5 million) options were outstanding under the terms of the BGI EOP (which would represent a 7.8% interest if exercised), enabling certain management personnel to subscribe for shares in Barclays Global Investors UK Holdings Limited between 2005 and 2014 at prices between £6.11 and £20.11. One year following the exercise of the option, the shareholder has the right to offer to sell the shares to Barclays Bank PLC. Barclays Bank PLC may accept the offer and purchase the shares at the most recent agreed valuation. The most recently agreed valuation at 30th June 2004 was £32.10 (2003: £15.16).

If all the current options were exercised, £96.5m (2003: £128.7m) would be subscribed. At the most recently agreed valuation these shares would be valued at £243.1m, resulting in a gain of £146.7m to the option holders if these shares were sold at this price. Since the scheme was introduced, options over 12.7 million (2003: 4.9 million) shares have been exercised, of which 10 million are still held by employees and represent a minority interest in the Group.

At 31st December 2004, 97.3 million (2003: 106 million) options were outstanding under the terms of the SAYE Share Option Scheme, 0.2 million (2003: 0.6 million) options were outstanding under the terms of the Woolwich SAYE Scheme, 4.5 million (2003: 5.9 million) options were outstanding under the terms of the Executive Share Option Scheme, 2.3 million (2003: 4.4 million) options were outstanding under the terms of the Woolwich ESOP and 137.9 million (2003: 98.9 million) options were outstanding under the terms of the Incentive Share Option Plan, enabling certain Directors and members of staff to subscribe for ordinary shares between 2005 and 2014 at prices ranging from 176p to 562p.

In addition to the above, the independent trustee of the Barclays Group (ESAS) Employees’ Benefit Trust (ESAS Trust), established by Barclays Bank PLC in 1996, operates the Executive Share Award Scheme (ESAS). ESAS is a deferred share bonus plan for employees of the Group. The key terms of ESAS are described on page 14. The independent trustees of the ESAS Trust make awards of Barclays shares and grant options over Barclays shares to beneficiaries of the ESAS Trust. Beneficiaries of the ESAS Trust include employees and former employees of the Barclays Group.

The independent trustee of the Barclays Group (PSP & ESOS) Employees’ Benefit Trust (PSP Trust), established by Barclays Bank PLC in 1996, operates the Performance Share Plan (PSP) and may satisfy awards under the Executive Share Option Scheme (ESOS). No awards have been made under this trust since 1999. All awards are in the form of options over Barclays shares.

The total number of Barclays shares held in Group employee benefit trusts at 31st December 2004 was 115 million (2003: 82.8 million). Dividend rights have been waived on 1.6 million (2003:1.6 million) of these shares. The total number of shares includes those represented by the reduction to shareholders’ funds of £153m (2003: £99m) where the cost has not yet been fully expensed to the profit and loss account. The total market value of the shares held in trust based on the year-end share price of £5.86 (2003: £4.98) was £674m (2003: £412m). As at 31st December 2004, options over 10.1 million (2003: 7.3m) of the total shares held in the trusts were exercisable.

152

Barclays PLC Annual Report 2004 

33 Shareholders’ funds

	2004									2003
							Associated									Associated
							undertakings									undertakings
							and joint									and joint
	Consolidated			Barclays PLC			ventures			Consolidated			Barclays PLC			ventures
	£m			£m			£m			£m			£m			£m
At beginning of year		16,374			16,374			(14	)		15,146			15,146			(8	)
Proceeds of shares issued (net of expenses)		114			114			–			149			149			–
Exchange rate translation differences		(58	)		–			(25	)		(29	)		–			(25	)
Repurchase of ordinary shares		(699	)		(699	)		–			(204	)		(204	)		–
Revaluation of investment in subsidiary undertaking		–			929			–			–			1,079			–
Shares issued to the 2003 QUEST in relation to share option schemes for staff		(1	)		(1	)		–			(36	)		(36	)		–
Gain/(loss) arising from transactions with third parties		13			–			–			(4	)		–			–
ESOP Trust Shares allocated to staff		(3	)		–			–			–			–			–
Other items		–			–			(5	)		–			–			3
Profit retained		1,730			700			31			1,404			240			16
Increase in ESOP shares		(54	)		–			–			(44	)		–			–
Decrease/(increase) in Treasury shares		1			–			–			(8	)		–			–
At end of year		17,417			17,417			(13	)		16,374			16,374			(14	)

Opening shareholders’ funds have been restated due to the adoption of UITF Abstract 38, ‘Accounting for ESOP trusts’. Further information can be found in the changes in accounting policy on page 115.

The revaluation reserve of Barclays PLC arises from the revaluation of the investment in Barclays Bank PLC.

The decrease in consolidated shareholders’ funds of £58m (2003: decrease £29m) arising from exchange rate translation differences is net of a related tax credit of £2m (2003: credit £2m).

Treasury shares are carried at £11m (2003: £12m). The number of treasury shares in issue as at 31st December 2004 is 2 million (2003: 2 million).

34 Investment in Barclays Bank PLC

The investment in Barclays Bank PLC is stated in the balance sheet at Barclays PLC’s share of the book value of the net assets of Barclays Bank PLC including unamortised goodwill. The net increase of £1,043m during the year comprised the cost of additional shares of £114m and an increase of £929m in other net assets of Barclays Bank PLC. The cost of the investment was £7,879m (2003: £7,765m).

Details of subsidiary undertakings, held through Barclays Bank PLC, are shown in Note 50.

153

Notes to the accounts
For the year ended 31st December 2004

35 Analysis of assets and liabilities

Assets and liabilities denominated in sterling and foreign currencies

	2004		2003
	£m		£m
Denominated in sterling		220,902		190,948
Denominated in currencies other than sterling		301,187		252,314
Total assets		522,089		443,262
Denominated in sterling		205,845		193,561
Denominated in currencies other than sterling		316,244		249,701
Total liabilities		522,089		443,262

Assets pledged to secure liabilities
Barclays has pledged assets as security for liabilities and potential liabilities included under the following headings:

	2004		2003
	£m		£m
Amount of liability secured
Deposits by banks		32,392		25,895
Customer accounts		40,633		28,732
Debt securities in issue		3,016		3,221
Other liabilities		1,414		1,243
Total		77,455		59,091

The amount of assets pledged to secure these liabilities and potential liabilities is included under the following headings:

	2004		2003
	£m		£m
Amount of assets pledged
Treasury bills and other eligible securities		5,807		3,394
Loans and advances to customers		4,334		3,594
Debt securities		70,975		54,336
Other		857		826
Total		81,973		62,150

At 31st December 2004 guarantees and assets pledged as collateral security against contingent liabilities amounted to £30,011m (2003: £24,596m).

154

Barclays PLC Annual Report 2004 

36 Contingent liabilities and commitments

In common with other banks, the Group conducts business involving acceptances, guarantees, performance bonds and indemnities. The majority of these facilities are offset by corresponding obligations of third parties. In addition, there are other off balance sheet financial instruments, including swaps, futures, forwards and option contracts or combinations thereof (all commonly known as derivatives), the nominal amounts of which are not reflected in the consolidated balance sheet.

Following internationally accepted banking supervisory practice for the calculation of the credit risk associated with such non-derivative off balance sheet items, for the purpose of this Note the contract or underlying principal amounts are either recognised at face value or converted to credit risk equivalents by applying specified conversion factors.

Nature of instruments
For a description of the nature of derivative financial instruments, see page 57.

An acceptance is an undertaking by a bank to pay a bill of exchange drawn on a customer. The Group expects most acceptances to be presented, but reimbursement by the customer is normally immediate. Endorsements are residual liabilities of the Group in respect of bills of exchange which have been paid and subsequently rediscounted.

Guarantees and assets pledged as collateral security are generally written by a bank to support the performance of a customer to third parties. As the Group will only be required to meet these obligations in the event of the customer’s default, the cash requirements of these instruments are expected to be considerably below their nominal amounts.

Other contingent liabilities include transaction related customs and performance bonds and are, generally, short-term commitments to third parties which are not directly dependent on the customer’s creditworthiness.

Commitments to lend are agreements to lend to a customer in the future, subject to certain conditions. Such commitments are either made for a fixed period, or have no specific maturity but are cancellable by the lender subject to notice requirements.

Documentary credits commit the Group to make payments to third parties on production of documents, which are usually reimbursed immediately by customers.

The following table summarises the nominal principal amount of contingent liabilities and commitments with off balance sheet risk as at 31st December 2004:

	2004		2003
	Contract or		Contract or
	underlying		underlying
	principal		principal
	amount		amount
	£m		£m
Contingent liabilities
Acceptances and endorsements		303		671
Guarantees and assets pledged as collateral security		30,011		24,596
Other contingent liabilities		8,245		8,427
Off balance sheet credit risk		38,559		33,694
Commitments
Other commitments:
Arising out of sale and option to resell transactions		1		–
Documentary credits and other short-term trade related transactions		522		359
Forward asset purchases and forward forward deposits placed		55		88
Undrawn formal standby facilities, credit lines and other commitments to lend: Over one year		36,083		27,160
In one year or less		97,390		87,240
Off balance sheet credit risk		134,051		114,847

Current year credit card commitments to lend have been calculated on a contractual basis rather than a modelled basis. Had this method been applied in 2003, reported commitments would have been increased by £5,899m to £120,746m.

As an active participant in international banking markets, the Group has a significant concentration of off balance sheet items with financial institutions, as shown in Note 55.

For a further description of the nature and management of credit risks and market risks, see pages 30 to 71 of the Risk Management section.

155

Notes to the accounts
For the year ended 31st December 2004

36 Contingent liabilities and commitments (continued)

UK obligations to purchase goods and services
The table below gives details of the Group’s obligations to purchase goods and services at 31st December 2004:

	2004		2003
	£m		£m
Obligations payable
less than one year		296		273
over one year but not more than three years		493		377
over three years but not more than five years		193		123
over five years		103		73
		1,085		846

The obligations mainly relate to contracts for the provision of services such as office supplies, telecommunications, maintenance and sponsorship agreements.

Future rental commitments under operating leases
At 31st December 2004, the Group held various leases on land and buildings, many for extended periods, and other leases for equipment.

	2004				2003
	Property		Equipment		Property		Equipment
	£m		£m		£m		£m
Annual commitments under non-cancellable operating leases expiring:
not more than one year		22		2		9		1
over one year but not more than five years		33		4		45		1
over five years		182		–		142		–
		237		6		196		2

The aggregate rental payments outstanding at 31st December 2004 fall due as follows:

	Year ended 31st December
											Total
	2005		2006		2007		2008		2009		thereafter
	£m		£m		£m		£m		£m		£m
Aggregate rental payments		243		216		200		190		176		1,657

The aggregate rental payments above include the lease commitment for the new headquarters at 1 Churchill Place. The rentals for leasehold land, buildings and equipment, included in operating expenses for the year ended 31st December 2004, amounted to £206m (2003: £192m, 2002: £192m).

156

Barclays PLC Annual Report 2004 

37 Derivatives and other financial instruments

The Group’s objectives and policies in managing the risks that arise in connection with the use of financial instruments are set out on pages 30 to 34 under the headings ‘Risk Management and Control – Overview’; ‘Market Risk Management’ and ‘Treasury Asset and Liability Management’. Short-term debtors and creditors are included in the following interest rate repricing and non-trading currency risk tables. All other disclosures in Note 37 exclude these short-term balances.

Interest rate sensitivity gap analysis
The table below summarises the repricing profiles of the Group’s non-trading book as at 31st December 2004. Items are allocated to time bands by reference to the earlier of the next contractual interest rate repricing date and the maturity date.

Interest rate repricing – as at 31st December 2004

				Over three			Over			Over		Over		Over
				months but			six months			one year		three years		five years
	Not more			not more			but not			but not		but not		but not		Over		Non-
	than three			than six			more than			more than		more than		more than		ten		interest			Trading
	months			months			one year			three years		five years		ten years		years		bearing			balances		Total
	£m			£m			£m			£m		£m		£m		£m		£m			£m		£m
Interest rate sensitivity
Assets:
Treasury bills and other eligible bills		500			144			26			41		–		–		–		–			5,947		6,658
Loans and advances to banks		1,855			143			7			403		12		3		–		258			72,450		75,131
Loans and advances to customers		110,267			5,526			8,019			12,739		5,653		3,134		4,956		78			104,574		254,946
Debt securities and equity shares		420			100			64			635		291		87		10		717			137,270		139,594
Other assets		899			–			–			–		–		–		–		12,705			23,778		37,382
Total assets		113,941			5,913			8,116			13,818		5,956		3,224		4,966		13,758			344,019		513,711
Liabilities:
Deposits by banks		5,217			353			2			364		459		–		–		1			104,628		111,024
Customer accounts		125,575			1,580			1,516			998		78		33		208		15,590			72,140		217,718
Debt securities in issue		7,038			222			225			1,178		25		–		207		–			58,911		67,806
Other liabilities		–			–			–			–		–		–		–		10,445			76,123		86,568
Loan capital and other subordinated liabilities		2,523			432			108			25		849		3,853		4,487		–			–		12,277
Minority interests and shareholders’ funds		–			–			–			–		–		–		–		18,318			–		18,318
Internal funding of trading business		(21,620	)		(1,073	)		(523	)		249		221		245		426		(10,142	)		32,217		–
Total liabilities		118,733			1,514			1,328			2,814		1,632		4,131		5,328		34,212			344,019		513,711
Off balance sheet items		(10,564	)		(18,855	)		3,257			9,488		10,654		4,762		1,258		–			–		–
Interest rate repricing gap		(15,356	)		(14,456	)		10,045			20,492		14,978		3,855		896		(20,454	)		–		–
Cumulative gap		(15,356	)		(29,812	)		(19,767	)		725		15,703		19,558		20,454		–			–		–

Total assets and liabilities exclude retail life-fund assets and liabilities. These are not relevant in considering the interest rate risk of the Group.

Trading balances for the purposes of this table are those, within Barclays Capital, where the risk is managed by DVaR (see page 159).

157

Notes to the accounts

For the year ended 31st December 2004

37 Derivatives and other financial instruments (continued)

Interest rate repricing – as at 31st December 2003

				Over three			Over			Over		Over		Over
				months but			six months			one year		three years		five years
	Not more			not more			but not			but not		but not		but not		Over			Non-
	than three			than six			more than			more than		more than		more than		ten			interest			Trading
	months			months			one year			three years		five years		ten years		years			bearing			balances		Total
	£m			£m			£m			£m		£m		£m		£m			£m			£m		£m
Assets:
Treasury bills and other eligible bills		592			28			33			35		–		–		–			–			6,489		7,177
Loans and advances to banks		2,632			2			53			48		9		–		–			212			58,968		61,924
Loans and advances to customers		104,397			4,679			7,155			11,739		6,007		2,388		1,102			882			88,470		226,819
Debt securities and equity shares		721			66			420			898		580		259		250			272			101,786		105,252
Other assets		338			–			–			–		–		–		–			12,850			20,825		34,013
Total assets		108,680			4,775			7,661			12,720		6,596		2,647		1,352			14,216			276,538		435,185
Liabilities:
Deposits by banks		4,247			275			105			202		29		235		–			357			88,642		94,092
Customer accounts		118,981			1,369			1,749			1,407		103		13		240			14,056			46,950		184,868
Debt securities in issue		7,101			55			–			1,345		206		–		122			–			40,740		49,569
Other liabilities		–			–			–			–		–		–		–			9,576			68,084		77,660
Loan capital and other subordinated liabilities		3,060			499			22			22		536		3,649		4,551			–			–		12,339
Minority and other interests and shareholders’ funds		–			–			–			–		–		–		–			16,657			–		16,657
Internal funding of trading business		(22,649	)		(2,590	)		(530	)		1,080		666		–		269			(8,368	)		32,122		–
Total liabilities		110,740			(392	)		1,346			4,056		1,540		3,897		5,182			32,278			276,538		435,185
Off-balance sheet items		(16,637	)		(10,301	)		(464	)		11,341		8,448		4,114		3,499			–			–		–
Interest rate repricing gap		(18,697	)		(5,134	)		5,851			20,005		13,504		2,864		(331	)		(18,062	)		–		–
Cumulative gap		(18,697	)		(23,831	)		(17,980	)		2,025		15,529		18,393		18,062			–			–		–

Non-trading currency risk
Non-trading currency risk exposure arises principally from the Group’s investments in overseas branches and subsidiary and associated undertakings, principally in the United States, Japan and Europe.

The Group’s structural currency exposures at 31st December 2004 were as follows:

	Net investments in				Borrowings which hedge				Remaining structural
	overseas operations				the net investments				currency exposures
	2004		2003		2004		2003		2004		2003
Functional currency of the operation involved	£m		£m		£m		£m		£m		£m
United States Dollar		2,050		1,448		2,038		1,166		12		282
Yen		2,594		3,063		2,589		2,984		5		79
Euro		3,148		4,333		3,102		3,520		46		813
Other non-Sterling		753		700		332		255		421		445
Total		8,545		9,544		8,061		7,925		484		1,619

In accordance with Group policy, as at 31st December 2004 and 31st December 2003, there were no material net currency exposures in the non-trading book relating to transactional (or non-structural) positions that would give rise to net currency gains and losses recognised in the profit and loss account. Instruments used in hedging non-trading exposures are described on page 57.

158

Barclays PLC Annual Report 2004 

37 Derivatives and other financial instruments (continued)

Daily Value at Risk

The Daily Value at Risk (DVaR) methodology of estimating potential losses arising from the Group’s exposure to market risk is explained on pages 47 to 50. The models used in estimating potential losses are based on past movements and may not be indicative of future market conditions. The following table shows an analysis of DVaR for the market risk exposures in Barclays Capital as an average for the year and the high and low during the year.

	Year to 31st December 2004							Year to 31st December 2003
	Average			High(a)		Low(a)		Average			High(a)		Low(a)
	£m			£m		£m		£m			£m		£m
Interest rate risk		25.0			53.6		15.1		21.0			34.1		13.6
Credit spread risk		22.6			32.9		16.0		16.2			29.2		8.9
Foreign exchange risk		2.4			7.4		0.9		2.3			5.0		1.0
Equities risk		4.2			7.9		2.2		2.6			4.9		1.5
Commodities risk		6.0			14.4		2.2		4.4			7.0		2.2
Diversification effect		(25.9	)		n/a		n/a		(20.6	)		n/a		n/a
Total DVaR(b)		34.3			46.8		24.0		25.9			38.6		17.6

Notes

(a)	The high (and low) DVaR figures reported for each category did not necessarily occur on the same day as the high (and low) DVaR reported as a whole. Consequently a diversification effect number for the high (and low) DVaR figures would not be meaningful and it is therefore omitted from the above table.
(b)	The year-end Total DVaR for 2004 was £31.9m (2003: £37.2m).

The hedging tables below summarise, firstly, the unrecognised gains and losses on hedges at 31st December 2004 and 31st December 2003 and the movements therein during the year, and, secondly, the deferred gains and losses on hedges carried forward in the balance sheet at 31st December 2004 and 31st December 2003, pending their recognition in the profit and loss account.

	Gains						Losses						Total net gains/(losses)
	2004			2003			2004			2003			2004			2003
	£m			£m			£m			£m			£m			£m
Unrecognised gains and losses on hedges
At 1st January		2,752			3,290			(2,715	)		(2,353	)		37			937
(Gains)/losses arising in previous years that were recognised in 2004/2003		(1,240	)		(1,527	)		1,122			999			(118	)		(528	)
Brought forward gains/(losses) not recognised in 2004/2003		1,512			1,763			(1,593	)		(1,354	)		(81	)		409
Gains/(losses) arising in 2004/2003 that were not recognised in 2004/2003		849			989			(824	)		(1,361	)		25			(372	)
At 31st December		2,361			2,752			(2,417	)		(2,715	)		(56	)		37
Of which:
Gains/(losses) expected to be recognised in 2005/2004		570			870			(324	)		(613	)		246			257
Gains/(losses) expected to be recognised in 2006/2005 or later		1,791			1,882			(2,093	)		(2,102	)		(302	)		(220	)
Deferred gains and losses on hedges carried forward in the balance sheet
At 1st January		41			91			(92	)		(107	)		(51	)		(16	)
Deferred (gains)/losses brought forward that were recognised in income in 2004/2003		(32	)		(81	)		55			64			23			(17	)
Brought forward deferred gains/(losses) not recognised in 2004/2003		9			10			(37	)		(43	)		(28	)		(33	)
Gains/(losses) that became deferred in 2004/2003		174			31			(172	)		(49	)		2			(18	)
At 31st December		183			41			(209	)		(92	)		(26	)		(51	)
Of which:
Gains/(losses) expected to be recognised in income in 2005/2004		61			19			(66	)		(39	)		(5	)		(20	)
Gains/(losses) expected to be recognised in income in 2006/2005 or later		122			22			(143	)		(53	)		(21	)		(31	)

Where a non-trading derivative no longer represents a hedge because the underlying non-trading asset, liability or position has been de-recognised or transferred into a trading portfolio, it is restated at fair value and any resultant gains or losses taken directly to the profit and loss account. Gains of £354m (2003: £87m) and losses of £427m (2003: £54m) were recognised in the year to 31st December 2004.
The disclosure of the fair value of financial instruments as required by FRS 13 is provided in Note 38 on pages 166 to 167.

159

Notes to the accounts
For the year ended 31st December 2004

37 Derivatives and other financial instruments (continued)

Derivatives held or issued for trading purposes

The tables set out below analyse the notional principal amounts and fair values (which, after netting, are the book values) of trading instruments entered into with third parties.

	2004
	Contract or		Year-end			Year-end			Average		Average
	underlying		positive			negative			positive		negative
	principal		fair			fair			fair		fair
	amount		value			value			value		value
	£m		£m			£m			£m		£m
Foreign exchange derivatives
Forward foreign exchange		379,375		6,797			7,793			5,694		4,792
Currency swaps		263,727		11,287			11,750			7,476		7,677
OTC options bought and sold		169,150		1,982			1,933			2,346		1,807
OTC derivatives		812,252		20,066			21,476			15,516		14,276
Exchange traded futures – bought and sold		321		–			–			–		14
Total		812,573		20,066			21,476			15,516		14,290
Interest rate derivatives
Swaps		5,236,145		53,782			51,511			46,611		44,669
Forward rate agreements		871,939		265			208			218		189
OTC options bought and sold		1,720,881		9,132			8,912			7,857		7,626
OTC derivatives		7,828,965		63,179			60,631			54,686		52,484
Exchange traded futures – bought and sold		1,029,595		–			–			–		–
Exchange traded options – bought and sold		476,446		–			–			–		–
Exchange traded – swaps		1,761,192		–			–			–		–
Total		11,096,198		63,179			60,631			54,686		52,484
Credit derivatives
Swaps		186,275		1,444			1,186			513		509
Equity and stock index derivatives
OTC options bought and sold		107,328		4,161			5,068			3,051		3,873
Equity swaps and forwards		12,367		269			182			164		182
OTC derivatives		119,695		4,430			5,250			3,215		4,055
Exchange traded futures – bought and sold		33,366		–			–			–		–
Exchange traded options – bought and sold		26,029		–			–			–		–
Total		179,090		4,430			5,250			3,215		4,055
Commodity derivatives
OTC options bought and sold		43,057		1,398			1,184			887		769
Commodity swaps and forwards		82,725		3,557			3,596			3,216		3,315
OTC derivatives		125,782		4,955			4,780			4,103		4,084
Exchange traded futures – bought and sold		11,764		–			–			–		–
Exchange traded options – bought and sold		2,863		–			–			–		–
Total		140,409		4,955			4,780			4,103		4,084
Total trading derivatives				94,074			93,323
Effect of netting				(69,919	)		(69,919	)
Allowable offset – cash collateral				(5,981	)		(5,395	)
Balances arising from off-balance sheet financial instruments (see Other assets/Other liabilities, Notes 21 and 26)				18,174			18,009

Non-cash collateral held that reduced credit risk in respect of derivative instruments at 31st December 2004, but did not meet the offset criteria amounted to £1,568m (2003: £672m).

160

Barclays PLC Annual Report 2004 

37 Derivatives and other financial instruments (continued)

	2003
	Contract or		Year-end			Year-end			Average		Average
	underlying		positive			negative			positive		negative
	principal		fair			fair			fair		fair
	amount		value			value			value		value
	£m		£m			£m			£m		£m
Foreign exchange derivatives
Forward foreign exchange		308,671		5,501			7,109			4,288		4,956
Currency swaps		196,450		9,049			9,086			6,572		6,583
OTC options bought and sold		167,513		2,579			2,198			1,315		1,120
OTC derivatives		672,634		17,129			18,393			12,175		12,659
Exchange traded futures – bought and sold		87		–			–			–		–
Exchange traded options – bought and sold		3		–			–			–		–
Exchange traded swaps
Total		672,724		17,129			18,393			12,175		12,659
Interest rate derivatives
Swaps		2,650,289		43,891			41,874			54,517		52,241
Forward rate agreements		352,769		114			104			128		112
OTC options bought and sold		827,569		7,771			7,757			8,459		8,338
OTC derivatives		3,830,627		51,776			49,735			63,104		60,691
Exchange traded futures – bought and sold		761,048		–			–			–		–
Exchange traded options – bought and sold		317,857		–			–			–		–
Exchange traded – swaps		972,173		–			–			–		–
Total		5,881,705		51,776			49,735			63,104		60,691
Credit derivatives
Swaps		43,256		798			584			810		591
Equity and stock index derivatives
OTC options bought and sold		54,488		2,482			3,433			2,173		2,572
Equity swaps and forwards		3,855		257			212			101		72
OTC derivatives		58,343		2,739			3,645			2,274		2,644
Exchange traded futures – bought and sold		20,686		–			–			–		–
Exchange traded options – bought and sold		11,870		–			–			–		–
Total		90,899		2,739			3,645			2,274		2,644
Commodity derivatives
OTC options bought and sold		11,782		266			230			227		225
Commodity swaps and forwards		45,308		1,716			1,812			1,415		1,400
OTC derivatives		57,090		1,982			2,042			1,642		1,625
Exchange traded futures – bought and sold		21,327		–			46			–		1
Exchange traded options – bought and sold		961		–			–			–		–
Total		79,378		1,982			2,088			1,642		1,626
Total trading derivatives				74,424			74,445
Effect of netting				(55,030	)		(55,030	)
Allowable offset – cash collateral				(3,582	)		(4,618	)
Balances arising from off-balance sheet financial instruments (see Other assets/Other liabilities, Notes 21 and 26)				15,812			14,797

Non-cash collateral held that reduced credit risk in respect of derivative instruments at 31st December 2003, but did not meet the offset criteria amounted to £672m (2002: £591m).

161

Notes to the accounts
For the year ended 31st December 2004

37 Derivatives and other financial instruments (continued)

Derivative financial instruments held for the purpose of managing non-trading exposures
The following table, which includes only the derivative components of the Group’s hedging programme, summarises the nominal values, fair values and book values of derivatives held for the purpose of managing non-trading exposures. Included in the amounts below were £10,295m (2003: £10,685m) contract amount of foreign exchange derivatives and £151,957m (2003: £200,126m) of interest rate derivatives which were made for asset and liability management purposes with independently managed dealing units of the Group.

	2004										2003
	Contract or		Year-end		Year-end		Year-end		Year-end		Contract or		Year-end		Year-end
	underlying		positive		negative		positive		negative		underlying		positive		negative
	principal		fair		fair		book		book		principal		fair		fair
	amount		value		value		value		value		amount		value		value
	£m		£m		£m		£m		£m		£m		£m		£m
Foreign exchange derivatives
Forward foreign exchange		1,480		25		14		17		2		1,648		18		23
Currency swaps		10,841		211		842		181		355		10,914		64		786
OTC derivatives		12,321		236		856		198		357		12,562		82		809
Exchange traded futures – bought and sold		–		–		–		–		–		40		–		–
Total		12,321		236		856		198		357		12,602		82		809
Interest rate derivatives
Swaps		174,382		2,806		2,039		1,015		663		294,021		3,656		3,165
Forward rate agreements		22,039		5		5		–		5		28,742		27		5
OTC options bought and sold		4,080		41		78		3		2		15,062		5		66
OTC derivatives		200,501		2,852		2,122		1,018		670		337,825		3,688		3,236
Exchange traded futures – bought and sold		–		–		–		–		–		83		–		–
Total		200,501		2,852		2,122		1,018		670		337,908		3,688		3,236
Credit derivatives		5,133		8		31		4		2		4,194		3		77
Equity, stock index, commodity and precious metals derivatives		1,536		70		23		3		4		1,662		78		34

At 31st December 2003, the total positive book value of derivatives held for the purposes of managing non-trading exposures was £1,856m. The total negative book value of such contracts at 31st December 2003 was £2,198m.

The nominal amounts of OTC foreign exchange derivatives held to manage the non-trading exposure of the Group analysed by currency and final maturity are as follows:

	2004								2003
			Over one								Over one
			year but								year but
			not more								not more
	One year		than five		Over five				One year		than five		Over five
	or less		years		years		Total		or less		years		years		Total
	£m		£m		£m		£m		£m		£m		£m		£m
£/euro		352		698		–		1,050		406		1,890		–		2,296
£/Yen		905		3,657		–		4,562		1,147		4,097		–		5,244
£/United States Dollar		194		5,205		520		5,919		625		2,797		561		3,983
United States Dollar/euro		105		130		–		235		127		196		–		323
United States Dollar/Yen		22		–		148		170		13		21		159		193
United States Dollar/South African Rand		176		–		–		176		233		–		–		233
Yen/euro		28		28		–		56		22		29		–		51
Other		104		49		–		153		181		58		–		239
Total		1,886		9,767		668		12,321		2,754		9,088		720		12,562

162

Barclays PLC Annual Report 2004 

37 Derivatives and other financial instruments (continued)

Maturity of notional principal amounts as at 31st December 2004
At 31st December 2004, the notional principal amounts, by residual maturity, of the Group’s trading and non-trading derivatives were as follows:

			Over one
			year but
			not more		Over
	One year		than five		five
	or less		years		years		Total
	£m		£m		£m		£m
Foreign exchange derivatives
Forward foreign exchange		360,272		18,971		1,612		380,855
Currency swaps		42,220		144,184		88,164		274,568
OTC options bought and sold		144,162		22,014		2,974		169,150
OTC derivatives		546,654		185,169		92,750		824,573
Exchange traded futures – bought and sold		321		–		–		321
Total		546,975		185,169		92,750		824,894
Interest rate derivatives
Swaps		2,509,842		1,798,816		1,101,869		5,410,527
Forward rate agreements		813,813		80,101		64		893,978
OTC options bought and sold		1,049,865		512,811		162,285		1,724,961
OTC derivatives		4,373,520		2,391,728		1,264,218		8,029,466
Exchange traded futures – bought and sold		606,849		418,939		3,807		1,029,595
Exchange traded options – bought and sold		430,147		46,299		–		476,446
Exchange traded swaps		221,538		861,585		678,069		1,761,192
Total		5,632,054		3,718,551		1,946,094		11,296,699
Credit derivatives
Swaps		5,307		136,049		50,052		191,408
Equity and stock index derivatives
OTC options bought and sold		35,182		70,665		9,675		115,522
Equity swaps and forwards		3,122		2,302		285		5,709
OTC derivatives		38,304		72,967		9,960		121,231
Exchange traded futures – bought and sold		33,362		4		–		33,366
Exchange traded options – bought and sold		15,495		9,904		630		26,029
Total		87,161		82,875		10,590		180,626
Commodity derivatives
OTC options bought and sold		14,060		25,539		3,458		43,057
Commodity swaps and forwards		44,806		35,551		2,368		82,725
OTC derivatives		58,866		61,090		5,826		125,782
Exchange traded futures – bought and sold		9,237		2,407		120		11,764
Exchange traded options – bought and sold		1,303		1,560		–		2,863
Total		69,406		65,057		5,946		140,409

163

Notes to the accounts

For the year ended 31st December 2004

37 Derivatives and other financial instruments (continued)

Maturity of notional principal amounts as at 31st December 2003
At 31st December 2003, the notional principal amounts, by residual maturity, of the Group’s trading and non-trading derivatives were as follows:

			Over one
			year but
			not more		Over
	One year		than five		five
	or less		years		years		Total
	£m		£m		£m		£m
Foreign exchange derivatives
Forward foreign exchange		290,842		18,269		1,208		310,319
Currency swaps		40,357		107,488		59,519		207,364
OTC options bought and sold		150,700		15,304		1,509		167,513
OTC derivatives		481,899		141,061		62,236		685,196
Exchange traded futures – bought and sold		121		6		–		127
Exchange traded options – bought and sold		3		–		–		3
Total		482,023		141,067		62,236		685,326
Interest rate derivatives
Swaps		848,412		1,228,034		867,864		2,944,310
Forward rate agreements		338,887		42,555		69		381,511
OTC options bought and sold		341,390		387,271		113,970		842,631
OTC derivatives		1,528,689		1,657,860		981,903		4,168,452
Exchange traded futures – bought and sold		518,048		230,563		12,520		761,131
Exchange traded options – bought and sold		246,613		71,244		–		317,857
Exchange traded swaps		119,331		432,237		420,605		972,173
Total		2,412,681		2,391,904		1,415,028		6,219,613
Credit derivatives Swaps		4,471		37,790		5,189		47,450
Equity and stock index derivatives
OTC options bought and sold		14,563		37,226		3,509		55,298
Equity swaps and forwards		3,477		1,046		148		4,671
OTC derivatives		18,040		38,272		3,657		59,969
Exchange traded futures – bought and sold		20,686		–		–		20,686
Exchange traded options – bought and sold		7,932		3,841		97		11,870
Total		46,658		42,113		3,754		92,525
Commodity derivatives
OTC options bought and sold		6,617		4,401		764		11,782
Commodity swaps and forwards		26,636		16,936		1,772		45,344
OTC derivatives		33,253		21,337		2,536		57,126
Exchange traded futures – bought and sold		18,599		2,686		42		21,327
Exchange traded options – bought and sold		671		290		–		961
Total		52,523		24,313		2,578		79,414

164

Barclays PLC Annual Report 2004 

37 Derivatives and other financial instruments (continued)

Maturity analyses of replacement cost and counterparty analyses of net replacement cost
The fair value of a derivative contract represents the amount at which that contract could be exchanged in an arm’s-length transaction, calculated at market rates current at the balance sheet date. The totals of positive and negative fair values arising on trading derivatives at the balance sheet date have been netted where the Group has a legal right of offset with the relevant counterparty. The total positive fair value after permitted netting equates to net replacement cost.

The residual replacement cost by maturity and net replacement cost by counterparty analyses of OTC and non-margined exchange traded derivatives held for trading and non-trading purposes at 31st December 2004 and 31st December 2003 are as follows:

	2004								2003
			Over one								Over one
			year but								year but
	One		not more		Over				One		not more		Over
	year or		than five		five				year or		than five		five
	less		years		years		Total		less		years		years		Total
	£m		£m		£m		£m		£m		£m		£m		£m
Replacement cost by residual maturity
Foreign exchange derivatives		9,285		6,886		4,320		20,491		8,357		5,862		2,929		17,148
Interest rate derivatives		6,121		23,130		34,701		63,952		5,661		21,332		25,603		52,596
Equity and stock index derivatives		1,750		2,312		394		4,456		550		1,952		267		2,769
Commodity derivatives		1,791		2,899		265		4,955		1,008		851		123		1,982
Credit derivatives		22		1,098		332		1,452		11		381		408		800
		18,969		36,325		40,012		95,306		15,587		30,378		29,330		75,295

	Total		Total
	2004		2003
	£m		£m
Net replacement cost by counterparty
Central Banks		2,563		1,046
Banks and other financial institutions		7,043		8,364
Other corporate and public bodies		9,552		7,010
		19,158		16,420

Potential credit risk exposure
The potential credit risk exposure for each product equals net replacement cost as reduced by the fair value of collateral provided by the counterparty.

At 31st December 2004 and 31st December 2003, the potential credit risk exposures in respect of the Group’s trading and non-trading OTC derivatives were not significantly different to net replacement cost.

165

Notes to the Accounts
For the year ended 31st December 2004

38 Fair values of financial instruments

Financial instruments include both financial assets and financial liabilities and also derivatives. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Wherever possible, the Group has estimated fair value using market prices or data available for instruments with characteristics either identical or similar to those of the instruments held by the Group. In certain cases, however, including loans and advances to customers, no ready markets currently exist in the UK wherein exchanges between willing parties occur. Accordingly, various techniques have been developed to estimate what the fair value of such instruments might be.

These estimation techniques are necessarily subjective in nature and involve several assumptions. There have been no significant changes in the estimation techniques or the methodology used compared with those used at 31st December 2003.

Because a variety of estimation techniques are employed and significant estimates made, comparisons of fair values between financial institutions may not be meaningful. Readers of these accounts are thus advised to use caution when using this data to evaluate the Group’s financial position.

Fair value information is not provided for items that do not meet the definitions of a financial instrument. These items include short-term debtors and creditors, intangible assets such as the value of the Group’s branch network, the long-term relationships with depositors (core deposit intangibles), premises and equipment and shareholders’ equity. These items are material and accordingly the fair value information presented does not purport to represent, nor should it be construed to represent, the underlying value of the Group as a going concern at 31st December 2004.

The following table shows the carrying amount and the fair value of the Group’s financial instruments analysed between trading and non-trading assets and liabilities.

				2004				2003
				Carrying		Fair		Carrying		Fair
				amount		value		amount		value
	Note			£m		£m		£m		£m
Trading
Assets
Treasury bills and other eligible bills		(a	)		5,278		5,278		4,064		4,064
Loans and advances to banks (including reverse repurchase agreements)		(a	)		50,145		50,145		44,670		44,670
Loans and advances to customers (including reverse repurchase agreements)		(a	)		65,099		65,099		58,961		58,961
Debt securities		(a	)		87,671		87,671		59,812		59,812
Equity shares		(a	)		10,873		10,873		6,905		6,905
Derivatives (see analysis in Note 37)		(b	)		18,174		18,174		15,812		15,812
London Metal Exchange warrants and other metals trading positions (see Note 21)		(a	)		952		952		1,290		1,290
Liabilities
Deposits by Banks and customers accounts (including repurchase agreements)		(a	)		82,568		82,568		65,505		65,505
Short positions in securities (see Note 26)		(a	)		53,364		53,364		42,228		42,228
Derivatives (see analysis in Note 37)		(b	)		18,009		18,009		14,797		14,797

166

Barclays PLC Annual Report 2004 

38 Fair values of financial instruments (continued)

				2004				2003
				Carrying		Fair		Carrying		Fair
				amount		value		amount		value
	Note			£m		£m		£m		£m
Non-trading
Assets
Cash and balances at central banks		(a	)		1,753		1,753		1,726		1,726
Items in course of collection from other banks		(a	)		1,772		1,772		2,006		2,006
Treasury bills and other eligible bills		(a	)		1,380		1,380		3,113		3,113
Loans and advances to banks		(c	)		24,986		24,982		17,254		17,261
Loans and advances to customers		(d	)		189,847		190,005		167,858		168,047
Debt securities		(e	)		39,757		39,971		37,581		38,210
Equity shares		(e	)		1,293		1,513		954		1,134
Derivatives (see analysis in Note 37)		(b	)		1,223		3,166		1,856		3,851
Liabilities
Deposits by Banks and customers accounts		(f	)		246,174		246,180		213,455		213,470
Debt securities in issue		(g	)		67,806		67,900		49,569		50,888
Items in course of collection due to other banks		(a	)		1,205		1,205		1,286		1,286
Undated loan capital		(h	)		6,149		6,946		6,310		7,048
Dated loan capital		(h	)		6,128		6,483		6,029		6,263
Short positions in securities (see Note 26)		(e	)		350		351		7,706		7,664
Derivatives (see analysis in Note 37)		(b	)		1,033		3,032		2,198		4,156

Notes

(a)	Financial assets and financial liabilities where fair value approximates carrying value because they are either (i) carried at market value or (ii) have minimal credit losses and are either short-term in nature or repriced frequently.
(b)	Derivatives held for trading purposes are carried at fair value. Derivatives held for non-trading purposes are accounted for in accordance with the accounting treatment of the underlying transaction or transactions being hedged. The fair value of these instruments is estimated using market prices or pricing models consistent with the methods used for valuing similar instruments used for trading purposes.
(c)	Within this calculation, the fair value for loans and advances to banks was estimated using discounted cash flows, applying either market rates, where practicable, or rates currently offered by other financial institutions for placings with similar characteristics.
(d)	The Group provides lending facilities of varying rates and maturities to corporate and personal customers. In estimating the fair value of such instruments, the fair value of personal and corporate loans subject to variable interest rates is considered to approximate the carrying value. The fair value of such instruments subject to fixed interest rates was estimated by discounting cash flows using market rates or rates normally offered by the Group.
(e)	The valuation of listed securities and investments is at quoted market prices and that of unlisted securities and investments is based on the Directors’ estimate, which takes into consideration discounted cash flows, price earnings ratios and other suitable valuation techniques.
(f)	Fair values of deposit liabilities payable on demand (interest free, interest bearing and savings deposits) approximate to their carrying value. The fair value of all other deposits and other borrowings was estimated using discounted cash flows, applying either market rates, where practicable, or rates currently offered by the Group for deposits of similar remaining maturities.
(g)	Fair values of short-term debt securities in issue are approximately equal to their carrying amount. Fair values of other debt securities in issue are based on quoted prices where available, or where these are unavailable, are estimated using other valuation techniques.
(h)	The estimated fair values for dated and undated convertible and non-convertible loan capital were based upon quoted market rates for the issue concerned or equivalent issues with similar terms and conditions.
(i)	The Group considers that, given the lack of an established market, the diversity of fee structures and the difficulty of separating the value of the instruments from the value of the overall transaction, it is not meaningful to provide an estimate of the fair value of financial commitments and contingent liabilities.

167

Notes to the Accounts
For the year ended 31st December 2004

39 Reconciliation of operating profit to net cash flow from operating activities

	2004			2003			2002
	£m			£m			£m
Operating profit		4,502			3,812			3,218
Provisions for bad and doubtful debts		1,091			1,347			1,484
Depreciation and amortisation		594			554			545
Net (decrease)/increase in accrued expenditure and prepayments		489			(216	)		(90	)
Provisions for contingent liabilities and commitments		2			(1	)		1
Other provisions for liabilities and charges		440			241			203
Interest on dated and undated loan capital		691			684			645
Decrease/(increase) in shareholders’ interest in the long-term assurance fund		(112	)		42			55
Net (increase)/decrease in accrued interest and deferred income		(86	)		(170	)		(402	)
Net profit on disposal of investments and fixed assets		(211	)		(84	)		(47	)
Other non-cash movements		130			110			85
		7,530			6,319			5,697
Net change in items in course of collection		153			199			(25	)
Net increase in other credit balances		5,986			12,139			13,105
Net increase in loans and advances to banks and customers		(40,745	)		(26,294	)		(35,997	)
Net increase in deposits and debt securities in issue		63,465			16,429			33,485
Net increase in other assets		(2,172	)		(2,886	)		(387	)
Net increase in debt securities and equity shares		(28,838	)		(8,831	)		(8,812	)
Net (increase)/decrease in treasury and other eligible bills		530			579			(260	)
Other non-cash movements		180			56			(59	)
Net cash inflow/(outflow) from operating activities		6,089			(2,290	)		6,747

40 Acquisitions

The Group made the following significant acquisitions of Group undertakings in 2004 which are accounted for on an acquisition basis:

	% Acquired			Date
Barclays Bank Egypt (acquired remaining 40%)		40	%	11/03/04
Juniper Financial Corporation		100	%	1/12/04

	Book value
	and
	Fair value
	£m
Net assets acquired
Cash and balances at central banks		16
Loans and advances to banks		79
Loans and advances to customers		753
Other assets		111
Deposits by banks		(4	)
Customer accounts		(128	)
Other liabilities		(809	)
Net assets		18
Goodwill		165
Satisfied by cash		183

The above table reflects all acquisitions made in the year. The fair values of the assets and liabilities acquired given in the above table are provisional, and will be finalised in 2005.

Acquiring Juniper underlines Barclays strategy to grow its global product business. The Group acquired a 100% holding in Juniper for a total consideration of £153m and provisionally generated goodwill in Barclays of £149m. The amount of goodwill acquired will be finalised in 2005.

168

Barclays PLC Annual Report 2004 

41 Analysis of the net outflow of cash in respect of the acquisitions

	2004			2003			2002
	£m			£m			£m
Cash consideration, including acquisition expenses		227			1,103			454
Cash at bank and in hand acquired		(16	)		(118	)		(3	)
Net outflow of cash in respect of the purchase of Group undertakings		211			985			451

42 Sale of Group undertakings during the year

	2004		2003		2002
Net cash outflow from formation of FirstCaribbean International Bank Ltd	£m		£m		£m
Advances and other accounts		–		–		3,277
Deposits and other borrowings		–		–		(3,189	)
Net assets disposed of		–		–		88
Balance transferred to associated undertaking		–		–		(366	)
Profit on disposal reflected in statement of total recognised gains and losses		–		–		206
Amounts not yet settled (including deferred consideration)		–		–		28
Cash at bank and in hand disposed of		–		–		(116	)
Net cash outflow from formation of FirstCaribbean International Bank Ltd		–		–		(160	)

In 2002 the balance transferred to associated undertakings comprised the Group’s share of the net assets disposed of and the Group’s share of the net assets acquired from the Canadian Imperial Bank of Commerce and goodwill thereon. Fair value adjustments of (£1m) were applied to the assets acquired primarily relating to loans and advances to customers and customer accounts.

	2004		2003			2002
Sale of Group undertakings	£m		£m			£m
Goodwill written off		–		–			10
Advances and other accounts		–		65			2
Deposits and other borrowings		–		(30	)		(1	)
Net assets disposed of		–		35			11
Net profit/(loss) on disposal		–		4			(3	)
Amounts not yet settled (including deferred consideration)		–		–			(8	)
Cash at bank and in hand disposed of		–		–			(1	)
Net cash inflow/(outflow) from sale of Group undertakings		–		39			(1	)

43 Changes in financing during the year

The following table does not include the premium and legal costs on the repurchase of ordinary shares of £664m and takes account of the Group’s contribution to the Employee Share Option Plan (ESOP) of £54m.

	Non-		Undated			Dated
	recourse		loan			loan		Ordinary			Share		Minority
	financing		capital			capital		shares			premium		interests
	£m		£m			£m		£m			£m		£m
Barclays PLC
At beginning of year		4,513		6,310			6,029		1,642			5,417		283
Exchange rate and other movements		–		(161	)		44		–			–		(122	)
Net cash inflow/(outflow) from financing		4,264		–			55		(28	)		107		740
At end of year		8,777		6,149			6,128		1,614			5,524		901

169

Notes to the Accounts
For the year ended 31st December 2004

44 Analysis of cash balances

	31st Dec				31st Dec					31st Dec					31st Dec
	2004		Change		2003		Change			2002		Change			2001
	£m		£m		£m		£m			£m		£m			£m
Cash and balances at central bank		1,753		27		1,726		(306	)		2,032		751			1,281
Loans and advances to other banks repayable on demand		2,710		817		1,893		(80	)		1,973		(2,144	)		4,117
		4,463		844		3,619		(386	)		4,005		(1,393	)		5,398

	2004				2003						2002
	£m		£m		£m			£m			£m			£m
Balance at beginning of year				3,619					4,005						5,398
Net increase/(decrease) in cash before the effect of exchange rate movements		808				(372	)					(1,207	)
Effect of exchange rate movements		36				(14	)					(186	)
				844					(386	)					(1,393	)
Balance at end of year				4,463					3,619						4,005

45 Related party transactions

a) Subsidiary undertakings

Details of the principal subsidiary undertakings are shown in Note 50. In accordance with FRS 8, transactions or balances between Group entities that have been eliminated on consolidation are not reported.

b) Associated undertakings and joint ventures

The Group provides certain banking and financial services for associated undertakings and joint ventures. These are conducted on similar terms to third-party transactions and are not material to the Group’s results. Details of lendings to associated undertakings and joint ventures are set out in Notes 13 and 14. Any loans are made on substantially the same criteria and terms, including interest rates and collateral, as those prevailing at the time for corporate transactions with other persons and did not involve more than the normal risk of collectability or present other unfavourable features.

Astron Document Solutions Limited (previously Edotech Limited), an associate until its disposal on 7th April 2004, provided printing services to the Group. The cost of these services provided in the year was £35.3m (2003: £31.1m, 2002: £24.1m). At the end of the year, a balance outstanding of £2.9m was included in sundry creditors (2003: £3m, 2002: £2.3m).

Intelligent Processing Systems Limited (IPSL) is a joint venture between the Group, Lloyds TSB Bank PLC, HSBC Bank plc and Unisys Limited. The Bank has outsourced its cheque processing services to IPSL. The cost of these core services to the Barclays Group in the UK provided in the year was £36.6m (2003: £26.7m, 2002: £30.2m). At the year end, a balance outstanding of £1.4m was included in sundry creditors (2003: £1.7m, 2002: £2.2m). In addition, a further £15.1m was included in prepayments and accrued income (2003: £16.6m, 2002: £6.3m).

Gresham Insurance Company Limited (Gresham) became an associated undertaking following the acquisition of Woolwich plc. The arrangement enables Gresham to underwrite household insurances provided to customers of the Group. Underwriting payments made to Gresham during the year were £81.9m (2003: £44.8m, 2002: £54.9m) and balances outstanding of £63.2m (2003: £53.2m, 2002: £6.9m) are included in trade creditors.

Global Home Loans Limited (GHL) is an associated undertaking of the Group. Mortgage origination and processing activities are outsourced to GHL and its subsidiaries. The fees payable to GHL during the year were £110.7m (2003: £100.7m, 2002: £57.9m). At the year end, £13.7m was payable to GHL (2003: £11.2m, 2002: £8.9m).

Gabetti Holdings SpA, an associated undertaking, acts as an introducer of mortgage business to Banca Woolwich SpA and received commission of £5.5m in 2004 (2003: £5.1m, 2002: £7m). At the year end, there were no amounts outstanding (2003: £nil, 2002: £1m sundry creditors). The value of the Group’s investment in Gabetti Holdings SpA, based on its listed share price at 31st December 2004, was £9.9m (2003: £8.3m, 2002: £7.4m).

170

Barclays PLC Annual Report 2004 

45 Related party transactions (continued)

Solution Personal Finance Limited (formerly Littlewoods Personal Finance Limited, changed 21st September 2004) is a joint venture between the Group and Littlewoods Ltd. The Group provides a retail financial service to Solution Personal Finance Limited retail customers and charged £7m during 2004 for account servicing, maintenance and development costs (2003: £4.4m, 2002: £1.7m). During 2004, Solution Personal Finance Limited customers’ accounts were hosted on Barclays systems. Solution Personal Finance Limited is entitled to recover the income generated from their customers amounting to £14.9m in 2004 (2003: £11.5m, 2002: £2.8m). At 31st December 2004, £3m was owed to Solution Personal Finance Limited (2003: £0.8m, 2002: £2.2m). There was £4.1m outstanding from Solution Personal Finance Limited at that date (2003: £nil, 2002: £nil).

Xansa Barclaycard Partnership Limited (formerly Barshelfco (No 73) Limited) became a joint venture between the Group and Xansa Plc on 1st February 2002. The company delivers IT services to Barclaycard. The IT service contract has an estimated minimum value of £125m over five years. The cost of providing these services to the Group during the year was £52m (2003: £37.2m, 2002: £38.5m). At 31st December 2004, £3.3m (2003: £1.4m, 2002: £0.6m) was owed to Xansa Barclaycard Partnership Limited.

FirstCaribbean International Bank Limited became an associate of the Group in October 2002 following the combination of the Caribbean retail, corporate and offshore banking operations of Barclays and Canadian Imperial Bank of Commerce. As part of this transaction, the bank has agreed to ensure that the pension scheme assets are sufficient to cover the pension fund liabilities of the affected employees and a £20m provision was created, in 2002, to cover a potential shortfall in pension scheme assets. During 2004 it was established that there were sufficient assets in the scheme and consequently the provision was released. At 31st December 2004, a provision of £nil (2003: £20m, 2002: £20m) was held to cover this liability. Barclaycard received management fees of £nil (2003: £1.2m, 2002: £0.2m) in respect of credit card services supplied to FirstCaribbean Investment Bank in 2004. The value of the Group’s investment in FirstCaribbean International Bank Limited, based on its listed share price as quoted on the Barbados Stock Exchange as at 31st December 2004, was £741m (2003: £498m, 2002: £706m).

E-Crossnet Limited is a joint venture between the Group and Merrill Lynch Mercury Asset Management. The company was established as an electronic crossing network for UK and Continental Equities. During the year, the Group invested a further £1m in this joint venture.

c) Pension funds, unit trusts and investment funds

The Group provides a number of normal current and interest bearing cash accounts to the Group pension funds (principally the UK Retirement Fund and the 1951 Fund) in order to facilitate the day to day financial administration of the funds. Group companies, principally Barclays Global Investors, also provide investment management and custodian services. The Group also provides normal banking services for unit trust and investment funds managed by Group companies. These are all conducted on similar terms to third-party transactions and are not individually material. In aggregate, amounts included in the accounts are as follows:

	2004		2003		2002
	£m		£m		£m
Liabilities of Group – banking facilities		207		228		87
Interest payable – banking facilities		–		1		2
Fees receivable – investment management and custody		19		14		12
Value of schemes’ investments in pooled funds managed by BGI		11,589		13,140		11,866
Income from pooled funds managed by BGI		13		10		11
Investments with other Group companies – OTC derivatives		161		195		330
– Private Equity		11		5		1
Margin loans from other Group companies		64		152		176

d) Directors

Details of Directors’ emoluments are set out in Note 46 and further information on Directors’ emoluments, shareholdings, options and awards is given in the Barclays report on remuneration on pages 13 to 25.

In the ordinary course of business, the Bank makes loans to companies where a Director or officer is also a Director of Barclays. With the exception of an interest free loan of £0.5m to the Charity Bank Limited (part of the Charities Aid Foundation group of which Sir Brian Jenkins is President of Trustees), these loans are made on substantially the same criteria and terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectibility or present other unfavourable features. The interest free loan to the Charity Bank Limited was repaid on 21st September 2004 and the Bank subscribed on the same date for preference shares of the same value.

Xansa Plc, of which the late Dame Hilary Cropper was Honorary President, provides software support and development resource capability to the Group. The total value of these transactions for the year ending 31st December 2004 was £13.1m (2003: £10.6m, 2002: £14.3m). This is in addition to the transactions with Xansa Barclaycard Partnership Limited discussed in Note (b) above.

171

Notes to the accounts

For the year ended 31st December 2004

46 Directors’ and officers’ emoluments and interests

Directors’ and officers’ emoluments and other benefits
The aggregate emoluments and other benefits of the Directors of Barclays PLC set out below are disclosed in accordance with Part I of Schedule 6 to the Companies Act 1985.

	2004		2003
	£000		£000
Aggregate emoluments		16,229		7,617
Gains made on the exercise of share options		928		24
Actual pension contributions to money purchase scheme (2004: one Director and 2003: none)		115		–
Notional pension contributions to money purchase schemes (2004: one Director and 2003: one Director)		990		990

As at 31st December 2004, four Directors were accruing retirement benefits under a defined benefit scheme (2003: two Directors).

For US disclosure purposes, the aggregate emoluments of all Directors and officers of Barclays PLC who held office during the year (2004: 30 persons, 2003: 27 persons) for the year ended 31st December 2004 amounted to £48,125,000 (2003: £51,215,000). In addition, the aggregate amount set aside for the year ended 31st December 2004, to provide pension benefits for the Directors and officers amounted to £1,939,000 (2003: £1,741,000). The aggregate emoluments of all Directors and officers of Barclays Bank PLC who held office during the year (2004: 31 persons, 2003: 28 persons) for the year ended 31st December 2004 amounted to £48,263,000 (2003: £51,328,000). In addition, the aggregate amount set aside by the Bank and its subsidiary undertakings, for the year ended 31st December 2004, to provide pension benefits for the Directors and officers amounted to £1,939,000 (2003: £1,741,000).

Directors’ and officers’ shareholding and options
The beneficial ownership of the ordinary share capital of Barclays PLC by all Directors and officers of Barclays PLC (involving 21 persons) and Barclays Bank PLC (involving 22 persons) at 31st December 2004 amounted to 1,681,679 ordinary shares of 25p each (0.03% of ordinary share capital outstanding).

Executive Directors and officers of Barclays PLC as a group (involving 12 persons) held, at 31st December 2004, options to purchase 17,096,750 Barclays PLC ordinary shares of 25p each at prices ranging from 308p to 411p under the SAYE Share Option Scheme, and ranging from 397p to 445p under the Executive Share Option Scheme and ranging from 326p to 534p under the Incentive Share Option Plan, respectively.

Contracts with Directors and connected persons and with managers
The aggregate amounts outstanding at 31st December 2004 under transactions, arrangements and agreements made by authorised institutions within the Group for persons who are, or were during the year, Directors of Barclays PLC and persons connected with them and for managers, within the meaning of the Financial Services and Markets Act 2000, of Barclays Bank PLC were:

	Number of		Number of
	Directors or		connected		Amount
	managers		persons		£000
Directors
Loans		3		–		2,031
Quasi-loans and credit card accounts		4		1		25
Managers
Loans		5		n/a		193
Quasi-loans and credit card accounts		11		n/a		43

Each of the transactions, arrangements and agreements disclosed above were made in accordance with the requirements of the Companies Act 1985 and the US Sarbanes-Oxley Act of 2002.

There are no transactions, arrangements or agreements with Barclays PLC or its subsidiary undertakings in which Directors, or persons connected with them, or managers of Barclays Bank PLC had a material interest and which are disclosable under the relevant provisions of the Companies Act 1985, other than options to subscribe for Barclays PLC ordinary shares as described above.

172

Barclays PLC Annual Report 2004 

47 Other entities

There are a number of entities that do not qualify as subsidiary undertakings but which give rise to benefits that are in substance no different from those that would arise were the entity a subsidiary. In accordance with the disclosure required by FRS 5, the summarised combined results of these entities, which are included in the Group consolidated results, by type of entity for each main financial statement heading where there are material items, are set out below. They are categorised according to the activities in which they are engaged.

	Credit structuring						Asset securitisation						Client
	business						vehicles						intermediation
	2004			2003			2004			2003			2004			2003(a)
	£m			£m			£m			£m			£m			£m
Profit and loss account
Interest receivable		94			121			222			147			5			26
Interest payable		(94	)		(121	)		(222	)		(147	)		(5	)		(3	)
Operating profit		–			–			–			–			–			23
Balance sheet
Fixed assets		–			–			–			–			–			2
Investment in Group subsidiary undertakings		1			1			–			–			–			–
Other investments		–			–			–			–			–			1,530
Debt securities		759			1,306			55			55			–			–
Loans and advances		–			–			6,794			5,777			215			–
Amounts due from Group undertakings		1,228			1,410			287			852			–			4,120
Other debtors		–			–			32			29			–			21
Cash		36			76			–			4			1			67
Debt securities in issue		(2,003	)		(2,768	)		(134	)		(4,490	)		–			–
Amounts owed to Group undertakings		(18	)		(22	)		(7,026	)		(2,227	)		(216	)		(5,391	)
Creditors due greater than one year		–			–			(8	)		–			–			(349	)
Shareholders’ funds – retained profit		(3	)		(3	)		–			–			–			–
Cash flow Net cash inflow from operating activities		(2	)		37			–			78			(49	)		–

Note

(a) Includes entities previously disclosed as financing transactions.

Subsidiary undertakings excluded from consolidation

		Percentage
		of ordinary		Equity			Retained
		share		shareholders’			profit/(loss)
		capital held		funds			for the year
Country of registration or incorporation	Name	%		£m			£m
UK	Oak Dedicated Limited		100		1			5
UK	Oak Dedicated Two Limited		100		(1	)		2
UK	Oak Dedicated Three Limited		100		3			1
Cayman Islands	Gallaher (C.I) Limited		100		–			1
Cayman Islands	Core Investments (Cayman) Limited		100		–			–

In accordance with Section 231(5) of the Companies Act 1985 the above information is provided for subsidiary undertakings excluded from consolidation. The subsidiaries are excluded because the Group could not direct the financial and operating policies or on the grounds that another group has a superior economic interest and consolidates the undertaking in their financial statements under UK GAAP. Gallaher (C.I) Limited and Core Investments (Cayman) Limited have non-equity share capital owned by third parties comprising fixed rate redeemable preference shares of £1,502m and £2,000m respectively.

173

Notes to the accounts
For the year ended 31st December 2004

48 Segmental analysis

	2004						2003						2002
By class of business(a)	£m			%			£m			%			£m			%
Net interest income
UK Banking		3,466			51			3,301			50			3,226			52
UK Retail Banking UK Business Banking		2,059 1,407			30 21			2,000 1,301			30 20			1,979 1,247			32 20
Private Clients and International		783			11			709			10			669			11
Private Clients – ongoing Private Clients – closed life assurance activities International		302 (53 534	)		4 (1 8	)		288 (40 461	)		4 (1 7	)		281 (29 417	)		5 – 7
Barclaycard		1,600			23			1,555			24			1,354			22
Barclays Capital		1,006			15			1,024			16			939			15
Barclays Global Investors		5			–			9			–			9			–
Head office functions and other operations		(18	)		–			6			–			8			–
		6,842			100			6,604			100			6,205			100
Non interest income(b)
UK Banking		2,180			31			2,204			38			1,999			39
UK Retail Banking UK Business Banking		1,356 824			19 12			1,439 765			25 13			1,328 671			26 13
Private Clients and International		946			13			679			12			713			14
Private Clients – ongoing Private Clients – closed life assurance activities International		537 49 360			7 1 5			398 (40 321	)		7 (1 6	)		488 (64 289	)		9 (1 6	)
Barclaycard		764			11			673			12			586			11
Barclays Capital		2,375			33			1,702			29			1,387			27
Barclays Global Investors		888			13			663			11			538			11
Head office functions and other operations		(50	)		(1	)		(114	)		(2	)		(101	)		(2	)
		7,103			100			5,807			100			5,122			100
Total income(c)
UK Banking		5,646			40			5,505			45			5,225			46
UK Retail Banking UK Business Banking		3,415 2,231			24 16			3,439 2,066			28 17			3,307 1,918			29 17
Private Clients and International		1,729			12			1,388			11			1,382			12
Private Clients – ongoing Private Clients – closed life assurance activities International		839 (4 894	)		6 – 6			686 (80 782	)		6 (1 6	)		769 (93 706	)		7 (1 6	)
Barclaycard		2,364			17			2,228			18			1,940			17
Barclays Capital		3,381			25			2,726			22			2,326			21
Barclays Global Investors		893			6			672			5			547			5
Head office functions and other operations		(68	)		–			(108	)		(1	)		(93	)		(1	)
		13,945			100			12,411			100			11,327			100
Profit/(loss) on ordinary activities before tax(d)(e)
UK Banking		2,298			50			2,103			55			1,904			59
UK Retail Banking UK Business Banking		969 1,329			21 29			983 1,120			26 29			923 981			29 30
Private Clients and International		380			8			238			6			249			8
Private Clients – ongoing Private Clients – closed life assurance activities International		104 (4 280	)		2 – 6			73 (80 245	)		2 (2 6	)		162 (93 180	)		5 (3 6	)
Barclaycard		760			17			723			19			613			19
Barclays Capital		1,042			23			836			22			646			20
Barclays Global Investors		329			7			178			5			94			3
Head office functions and other operations		(206	)		(5	)		(233	)		(7	)		(301	)		(9	)
		4,603			100			3,845			100			3,205			100

174

Barclays PLC Annual Report 2004 

48 Segmental analysis (continued)

	2004				2003				2002
By class of business(a)(c)	£m		%		£m		%		£m		%
Total assets
UK Banking		122,425		24		113,788		26		110,298		27
UK Retail Banking UK Business Banking		71,614 50,811		14 10		69,745 44,043		16 10		70,462 39,836		17 10
Private Clients and International		31,703		6		27,647		6		16,095		4
Private Clients – ongoing Private Clients – closed life assurance activities International		5,653 653 25,397		1 – 5		4,564 528 22,555		1 – 5		4,484 – 11,611		1 – 3
Barclaycard		23,419		4		20,639		5		19,014		5
Barclays Capital		332,606		64		268,702		61		241,565		60
Barclays Global Investors		970		–		695		–		656		–
Head office functions and other operations		2,588		–		3,714		1		8,095		2
Retail life-fund assets		8,378		2		8,077		1		7,284		2
		522,089		100		443,262		100		403,007		100
Net assets
UK Banking		8,572		47		8,230		49		8,060		53
UK Retail Banking UK Business Banking		5,391 3,181		30 17		5,298 2,932		31 18		5,362 2,698		35 18
Private Clients and International		2,929		16		2,495		15		1,600		11
Private Clients – ongoing Private Clients – closed life assurance activities International		1,063 158 1,708		6 1 9		940 160 1,395		6 1 8		714 169 717		5 1 5
Barclaycard		3,569		19		2,828		17		2,503		16
Barclays Capital		2,662		15		2,464		15		2,510		16
Barclays Global Investors		335		2		334		2		325		2
Head office functions and other operations		251		1		306		2		304		2
		18,318		100		16,657		100		15,302		100

175

Notes to the accounts
For the year ended 31st December 2004

48 Segmental analysis (continued)

	2004				2003				2002
By geographical segments(a)	£m		%		£m		%		£m		%
Interest receivable
United Kingdom		11,889		87		10,887		88		10,429		87
Other European Union		921		7		865		7		737		6
United States		270		2		152		1		262		2
Rest of the World		585		4		523		4		616		5
		13,665		100		12,427		100		12,044		100
Fees and commissions receivable
United Kingdom		4,154		73		3,653		75		3,396		76
Other European Union		388		7		343		7		247		6
United States		799		14		609		12		537		12
Rest of the World		331		6		291		6		274		6
		5,672		100		4,896		100		4,454		100
Dealing profits
United Kingdom		1,348		90		889		84		642		77
Other European Union		2		–		11		1		8		1
United States		75		5		122		12		136		16
Rest of the World		68		5		32		3		47		6
		1,493		100		1,054		100		833		100
Other operating income
United Kingdom		248		38		86		18		150		41
Other European Union		380		59		399		81		207		57
United States		6		1		1		–		2		1
Rest of the World		10		2		4		1		5		1
		644		100		490		100		364		100
Gross income(c)
United Kingdom		17,639		82		15,515		82		14,617		83
Other European Union		1,691		8		1,618		8		1,199		7
United States		1,150		5		884		5		937		5
Rest of the World		994		5		850		5		942		5
		21,474		100		18,867		100		17,695		100

176

Barclays PLC Annual Report 2004 

48 Segmental analysis (continued)

	2004				2003				2002
By geographical segments(a)	£m		%		£m		%		£m			%
Profit on ordinary activities before tax
United Kingdom		3,443		75		2,742		71		2,898			91
Other European Union		550		12		632		16		351			11
United States		250		5		257		7		(218	)		(7	)
Rest of the World		360		8		214		6		174			5
		4,603		100		3,845		100		3,205			100
Attributable profit
United Kingdom		2,396		73		1,886		69		2,025			90
Other European Union		469		15		547		20		284			13
United States		143		4		179		6		(161	)		(7	)
Rest of the World		260		8		132		5		82			4
		3,268		100		2,744		100		2,230			100
Total assets
United Kingdom		389,977		75		341,471		77		302,327			75
Other European Union		27,658		5		29,671		7		26,126			6
United States		80,135		15		49,852		11		51,919			13
Rest of the World		24,319		5		22,268		5		22,635			6
		522,089		100		443,262		100		403,007			100
Net assets
United Kingdom		13,367		73		12,434		75		11,025			72
Other European Union		2,593		14		2,730		16		2,521			16
United States		1,341		7		667		4		1,074			7
Rest of the World		1,017		6		826		5		682			5
		18,318		100		16,657		100		15,302			100

Notes

(a)	Basis of class of business and geographical analysis – see Accounting Presentation on page 117.
(b)	Barclays Capital non-interest income includes £63m (2003: £89m, 2002: £87m) in respect of structured capital market activities on behalf of the Group which are charged to Head office functions and other operations.
(c)	Total income for class of business disclosure analyses operating income from the profit and loss account. Gross income for geographical disclosure includes interest receivable, fees and commissions receivable, dealing profits and other operating income.
(d)	The profit/(loss) on ordinary activities before tax by class of business reflects the following amounts for profit/(losses) from associated undertakings and joint ventures; UK Banking £4m (2003: £10m), Private Clients and International £49m (2003: £17m), Barclaycard £4m (2003: £2m), Barclays Capital £nil (2003: £1m) and Barclays Global Investors (£2m) (2003: (£1m)).
(e)	Goodwill amortisation included in the profit/(loss) on ordinary activities before tax, by class of business, is shown in the Analysis of Results by Business on pages 92 to 98.

49 Retirement benefits

As disclosed in Note 4, Barclays accounts for pensions in accordance with SSAP 24. The disclosure in Note 4 sets out details of the assumptions underlying the SSAP 24 valuation.

FRS 17 ‘Retirement Benefits’ will be effective for companies subject to UK accounting standards for years beginning on or after 1st January 2005. In 2004, the standard requires disclosures to be made of the amount of the asset or liability that would have been recognised in the balance sheet and the amounts that would have been recognised in the performance statements if the standard had been implemented.

As described in Note 4, Barclays provides pension plans for employees in most parts of the world. For the purposes of the standard, the UK Retirement Fund (UKRF) and other defined benefit pension schemes in the UK, US, Germany and Spain, are considered to be material. The scheme in Germany and one of the US schemes are unfunded. The disclosures below reflect interim actuarial valuations as at 31st December 2004 by a professionally qualified independent actuary using the projected unit method. This method results in the current service cost in respect of closed schemes (primarily 1964 Pension Scheme) increasing as the members of the scheme approach retirement.

177

Notes to the accounts
For the year ended 31st December 2004

49 Retirement benefits (continued)

The protected rights contributions in respect of RIS and PIP were £2.4m for RIS and PIP members in 2004. Other UKRF payments include a £250m contribution in December 2004 as described in Note 4. Other UK schemes paid contributions of £9m in the year (2003: £14m). Overseas schemes paid contributions of £5m in the year (2003: £3m).

The main financial assumptions used in the actuarial valuations were:

	2004				2003				2002
	UK		Overseas		UK		Overseas		UK		Overseas
	schemes		schemes		schemes		schemes		schemes		schemes
	% p.a.		% p.a.		% p.a.		% p.a.		% p.a.		% p.a.
Inflation		2.75		2.0-2.7		2.75		2.0-2.7		2.3		2.0-2.5
Rate of increase in salaries		4.3		3.5-4.5		4.3		3.5-4.5		3.8		3.5-4.5
Rate of increase for pensions in payment and deferred pensions		2.75-3.25		0.0-2.0		2.75-3.25		0.0-2.0		2.3-3.25		0.0-2.0
Rate used to discount scheme liabilities		5.4		4.6-5.75		5.5		5.25-6.25		5.7		5.5-6.75

The value of the assets and liabilities of the schemes, the assumed long-term real rates of return and the assets and liabilities at 31st December 2004, 31st December 2003 and 31st December 2002 were as follows:

	2004										2003										2002
	UK schemes					Overseas schemes					UK schemes					Overseas schemes					UK schemes					Overseas schemes
	Real					Real					Real					Real					Real					Real
	rate of					rate of					rate of					rate of					rate of					rate of
	return		Value			return		Value			return		Value			return		Value			return		Value			return		Value
	%		£m			%		£m			%		£m			%		£m			%		£m			%		£m
United Kingdom equities		5.1		2,636			5.1		10			5.25		2,504			–		–			6.0		2,492			6.0		6
US equities		5.1		1,523			5.1		77			5.25		1,369			5.25		90			6.0		795			6.0		78
Other equities		5.1		2,407			5.1		29			5.25		2,268			5.25		29			6.3		2,077			6.3		15
United Kingdom corporate bonds		2.4		1,624			–		–			2.5		1,391			–		–			3.2-3.3		927			–		–
United Kingdom fixed interest gilts		1.8		117			–		–			2.0		287			–		–			2.1		448			–		–
United Kingdom index-linked gilts		1.7		2,326			–		–			2.0		2,188			–		–			2.1		1,779			–		–
Property		3.8		1,409			–		–			3.9		1,157			–		–			4.7		1,159			–		–
US debt fund		–		–			1.7		31			–		–			1.8		28			–		–			1.9		42
US Treasury stock		1.4		91			–		–			1.4		39			–		–			1.5		61			0.7		34
Other overseas bonds and government stock		1.5-2.8		718			2.2-2.8		80			2.5-3.3		592			2.3-3.3		78			3.3-4.1		475			–		–
Cash		1.5		431			1.5		23			1.5		430			1.0-1.5		14			2.0		231			–		–
Other(a)		–		385			–		–			–		325			–		–			–		205			–		–
Asset transfer following the creation of FirstCaribbean		–		–			–		–			–		(103	)		–		–			–		(121	)		–		–
Fair value of scheme assets				13,667					250					12,447					239					10,528					175
Present value of scheme liabilities(b)				(15,844	)				(303	)				(14,037	)				(273	)				(12,017	)				(214	)
Net (deficit)/surplus in the schemes(c)				(2,177	)				(53	)				(1,590	)				(34	)				(1,489	)				(39	)

Net deficit in UK schemes at 31st December 2004 includes a deficit of £2,173m (2003: deficit of £1,586m) relating to the UKRF.

Notes

(a)	Other includes £375m (2003: £316m) representing the money purchase assets of the UKRF.
(b)	Present value of scheme liabilities includes £375m (2003: £316m) representing money purchase liabilities of the UKRF.
(c)	The increased UKRF deficit is primarily attributable to a change in mortality assumptions at 31st December 2004. A reduction in corporate bond yields also resulted in a reduced discount rate for valuing liabilities and a further increase in the deficit. These factors more than offset the £250m contribution and better than assumed investment performance over the year.

178

Barclays PLC Annual Report 2004 

49 Retirement benefits (continued)

The surpluses and deficits relating to pension schemes would be presented in the balance sheet as follows:

	2004						2003
	Pension			Pension			Pension			Pension
	asset			liability			asset			liability
	£m			£m			£m			£m
Scheme surpluses/(deficits)		61			(2,291	)		52			(1,676	)
Related deferred tax (liability)/asset		(18	)		687			(16	)		503
Net pension asset/(liability)		43			(1,604	)		36			(1,173	)

As described in Note 4, the Group also provides post-retirement health care to certain UK and US pensioners. Where appropriate, provisions for such benefits are recognised on an actuarial basis. The disclosures below reflect actuarial valuations as at 31st December 2004 by a professionally qualified independent actuary. The long-term rate of increase in medical expenses used in the actuarial valuation was 5% (trending down over five years from 10% in the short term) in the UK (2003: 5.75%) and 5% (trending down over five years from 10% in the short term) in the US (2003: 5%) and the discount rate used was 5.4% in the UK (2003: 5.5%) and 5.75% in the US (2003: 6.25%).

The deficit relating to post-retirement health care would be presented in the balance sheet as follows:

	2004			2003
	£m			£m
Deficit		(66	)		(62	)
Related deferred tax asset		20			19
Net post-retirement liability		(46	)		(43	)

The net reserve for pension schemes and post-retirement health care is £1,607m (2003: £1,180m).

The amounts that would have been recognised in the profit and loss account and statement of total recognised gains and losses in respect of pension schemes and post-retirement health care in 2004 were as follows:

	2004			2003
Analysis of amounts which would have been charged to operating profit	£m			£m
Current service cost(a)		331			289
Past service cost		5			12
Gains and losses on settlements and curtailments		(23	)		(13	)
Total operating charge		313			288

Note

(a) Current service cost includes £30m (2003: £55m) relating to the money purchase sections of the UKRF.

	2004			2003
Analysis of amounts which would have been included as other finance income	£m			£m
Expected return on scheme assets		814			720
Interest on scheme liabilities		(760	)		(680	)
Net return		54			40

2004

2004

UK schemes

Overseas schemes

As % of

As % of

present

present

As % of

value of

As % of

value of

scheme

scheme

scheme

scheme

Analysis of amounts which would have been included in the

assets

liabilities

assets

liabilities

Statement of total recognised gains and losses

£m

%

%

£m

%

%

Actual return less expected return on scheme assets

577

4

–

11

4

–

Experience gains and losses arising on the scheme liabilities

36

–

–

–

–

–

Changes in assumptions underlying the present value of scheme liabilities

(1,224

)

–

8

(36

)

–

10

Actuarial (loss)/gain recognised in statement of total recognised gains and losses

(611

)

–

4

(25

)

–

7

179

Notes to the accounts
For the year ended 31st December 2004

49 Retirement benefits (continued)

	2003							2003
	UK schemes							Overseas schemes
						As % of							As % of
						present							present
				As % of		value of					As % of		value of
				scheme		scheme					scheme		scheme
Analysis of amounts which would have been included in the				assets		liabilities					assets		liabilities
statement of total recognised gains and losses	£m			%		%		£m			%		%
Actual return less expected return on scheme assets		938			8		–		17			7		–
Experience gains and losses arising on the scheme liabilities		155			–		1		(1	)		–		–
Changes in assumptions underlying the present value of scheme liabilities		(1,624	)		–		12		(23	)		–		8
Actuarial loss recognised in statement of total recognised gains and losses		(531	)		–		4		(7	)		–		3

	2002							2002
	UK schemes							Overseas schemes
						As % of							As % of
						present							present
				As % of		value of					As % of		value of
				scheme		scheme					scheme		scheme
Analysis of amounts which would have been included in the				assets		liabilities					assets		liabilities
statement of total recognised gains and losses	£m			%		%		£m			%		%
Actual return less expected return on scheme assets		(2,153	)		21		–		(31	)		18		–
Experience gains and losses arising on the scheme liabilities		36			–		–		(2	)		–		1
Changes in assumptions underlying the present value of scheme liabilities		295			–		2		2			–		1
Actuarial loss recognised in statement of total recognised gains and losses		(1,822	)		–		15		(31	)		–		14

	2004									2003
							Post-									Post-
	UK			Overseas			retirement			UK			Overseas			retirement
	pension			pension			health			pension			pension			health
Analysis of movements in pension scheme and post-retirement	schemes			schemes			care			schemes			schemes			care
health care surpluses/(deficits) during 2004	£m			£m			£m			£m			£m			£m
Deficit in the schemes at beginning of year		(1,590	)		(34	)		(62	)		(1,489	)		(39	)		(59	)
Contributions		270			5			4			669			3			4
Current service cost		(324	)		(6	)		(1	)		(284	)		(4	)		(1	)
Past service cost		(5	)		–			–			(9	)		(3	)		–
Settlements and curtailments		23			–			–			13			–			–
Exchange movements		–			3			3			–			1			5
Other finance income/(cost)		59			(1	)		(4	)		47			(3	)		(4	)
Actuarial loss		(610	)		(20	)		(6	)		(528	)		(3	)		(7	)
Acquisition (loss)/gain		–			–			–			(9	)		14			–
Deficit in the schemes at end of year		(2,177	)		(53	)		(66	)		(1,590	)		(34	)		(62	)

Contributions of £270m include a payment of £250m in December 2004, as described in Note 4.

180

Barclays PLC Annual Report 2004 

50 Subsidiary undertakings

			Percentage
			of equity
Country of registration			capital held
or incorporation	Company name	Nature of Business	%
Botswana	Barclays Bank of Botswana Limited	Banking		74.9
Cayman Islands	Barclays Capital Japan Limited	Securities dealing		100	*
Egypt	Barclays Bank Egypt SAE	Banking		100
England	Barclays Bank PLC	Banking, holding company		100	*
England	Barclays Private Bank Limited	Banking		100	*
England	Barclays Mercantile Business Finance Limited	Commercial finance, holding company, leasing		100
England	Barclays Global Investors UK Holdings Limited	Holding company		88.9
England	Barclays Global Investors Limited	Investment management		94.8	*
England	Barclays Life Assurance Company Limited	Life and pensions business		100
England	Barclays Bank Trust Company Limited	Banking, securities industries and trust services		100
England	Barclays Stockbrokers Limited	Stockbroking		100
England	Barclays Capital Securities Limited	Securities dealing		100
England	Barclays Global Investors Pensions Management Limited	Investment management		94.8	*
England	FIRSTPLUS Financial Group PLC	Consumer finance		100	*
England	Gerrard Limited	Banking		100
England	Barclays Financial Planning Limited	Financial advisory services		100	*
Ghana	Barclays Bank of Ghana Limited	Banking		100
Ireland	Barclays Insurance (Dublin) Limited	Insurance		100	*
Ireland	Barclays Assurance (Dublin) Limited	Insurance		100	*
Isle of Man	Barclays Private Clients International Limited	Banking		100
Jersey	Barclays Private Bank and Trust Limited	Banking, holding company		100	*
Kenya	Barclays Bank of Kenya Limited	Banking		68.5
Spain	Barclays Bank SA	Banking		99.8
Switzerland	Barclays Bank (Suisse) SA	Banking and trust services		100	*
USA	Juniper Financial Corporation	Banking		100
USA	Barclays Capital Inc.	Securities dealing		100	*
USA	Barclays Global Investors, National Association	Investment management		94.8	*
Zimbabwe	Barclays Bank of Zimbabwe Limited	Banking		65.8	*

In accordance with Section 231(5) of the Companies Act 1985, the above information is provided solely in relation to principal subsidiary undertakings.

With the exception of Barclays Capital Japan Limited which operates in Japan, the country of registration or incorporation is also the principal area of operation for each of the above undertakings. Investments in these undertakings are held directly by Barclays Bank PLC except where marked*.

Full information of all subsidiaries will be included in the Annual Return.

51 Legal proceedings

Proceedings have been brought in the United States against a number of defendants including Barclays following the collapse of Enron. In each case the claims are against groups of defendants. Barclays considers that the claims against it are without merit and is defending them vigorously. A court ordered mediation commenced in September 2003 but no material progress has been made towards a resolution of the litigation. In addition, in respect of investigations relating to Enron, Barclays is continuing to provide information in response to enquiries by regulatory and governmental authorities in the US and elsewhere including subpoenas from the US Securities and Exchange Commission. It is not possible to estimate Barclays possible loss in relation to these matters, nor the effect that it might have upon operating results in any particular financial period.

Barclays is engaged in various other litigation proceedings both in the United Kingdom and a number of overseas jurisdictions, including the United States, involving claims by and against it, which arise in the ordinary course of business. Barclays does not expect the ultimate resolution of any of the proceedings to which Barclays is party to have a significant adverse effect on the financial position of the Group.

181

Notes to the accounts
For the year ended 31st December 2004

52 Differences between UK GAAP and US GAAP accounting principles

The accounts presented in this report have been prepared in accordance with accounting principles generally accepted in the UK (UK GAAP). Such principles vary in significant respects from those generally accepted in the United States (US GAAP). The significant differences applicable to the Group’s accounts are summarised below.

UK GAAP US GAAP

Goodwill
Goodwill arising on acquisitions of subsidiary and associated undertakings and joint ventures is capitalised and amortised through the profit and loss account over its expected useful economic life (with a maximum of 20 years). Capitalised goodwill is written off when judged to be irrecoverable for acquisitions prior to 1st January 1998, goodwill was charged directly against reserves in accordance with SSAP 22. In the event of a subsequent disposal, any goodwill previously charged directly against reserves will be written back and reflected in the profit or loss on disposal.

Prior to 1st January 2002, goodwill was capitalised and amortised over its useful economic life under the provisions of APB16.

SFAS 141 and SFAS 142 require intangible assets to be separately identified, no amortisation to be charged on goodwill balances and goodwill balances to be reviewed at least annually for impairment.

US GAAP can require the recognition of certain assets and liabilities that would either not be recognised or have a different measurement value under UK GAAP. This will lead to a different value of goodwill for US purposes.

Intangible assets
Intangible assets are recognised under UK GAAP only if they are separately identifiable and can be disposed of without disposing of a business of the entity.

Intangible assets are recognised as an asset apart from goodwill if they arise from contractual or other legal rights regardless of whether these rights are transferable or separable from the acquired entity or from other rights and obligations. If an intangible asset does not arise from contractual or other legal rights it is recognised only if it is capable of being separated.

Intangible assets are initially recognised at fair value. An intangible asset with a finite useful life is amortised over the period for which it contributes to the future cash flows of the entity. An intangible asset with an indefinite useful life is not amortised, but is tested annually for impairment or more frequently if events or changes in circumstances indicate that its carrying value may not be recoverable.

Pensions
In respect of defined benefit schemes, consistent with the requirements of SSAP 24, the assets are assessed at fair value, while the projected liabilities are discounted to a present value at a long-term interest rate reflecting the expected return on the scheme’s assets. Any variation between the SSAP 24 calculation described above and the amount held on the Bank’s balance sheet is allocated over the expected average remaining service lives of current employees.

For defined contribution schemes, the net pension cost recognised in the profit and loss account represents the contributions payable along with an allowance for risk and expense costs.

In respect of defined benefit schemes, the same actuarial calculation approach is used under SFAS 87 as under UK GAAP, but to comply with the relevant standards, differences arise in certain assumptions and methodologies and in the measurement date adopted for calculation purposes. In particular, under SFAS 87, assets are assessed at a fair value and the present value of the projected liabilities are assessed at a current settlement rate as at a measurement date of 30th September each year. The current settlement rate for this purpose reflects the yield on high-quality corporate bonds as at the measurement date. Variations between the funded status of the scheme and the amount held on the Bank’s balance sheet falling outside of the allowable corridor under SFAS 87 are allocated over the average remaining service lives of current employees.

For defined contribution schemes, SFAS 87 provides for the same treatment as under UK GAAP.

182

Barclays PLC Annual Report 2004 

52 Differences between UK GAAP and US GAAP accounting principles (continued)

UK GAAP US GAAP

Post-retirement benefits
Where appropriate, post-retirement benefits are assessed actuarially on a similar basis to pension liabilities under SSAP 24 and are discounted at a long-term rate. Variations from regular cost are expressed as a percentage of payroll and spread over the average remaining service lives of current eligible employees.

Where an actuarial basis is not appropriate, provisions are recognised for present obligations arising as consequences of past events where it is probable that a transfer of economic benefit will be necessary to settle the obligation and it can be reliably estimated.

Under SFAS 106, there are certain differences in the actuarial method used and variations in the computation of regular cost as compared with UK GAAP.

Where an actuarial basis is not appropriate the treatment is the same as under UK GAAP.

Leasing – lessor
Gross earnings under finance leases are allocated to accounting periods in such a way as to give a constant periodic rate of return on the (post-tax) net cash investment.

Application of SFAS 13 gives rise to a level rate of return on the investment in the lease, but without taking into account tax payments and receipts. This results in income being recognised in different periods than under UK GAAP, the magnitude of the difference depending upon the value and average age of the leasing portfolio at each period end.

Leasing – lessee
In accordance with FRS 5 and SSAP 21, leases are categorised as finance leases when the substance of the agreement is that of a financing transaction and the lessee assumes substantially all of the risks and benefits relating to the asset. All other leases are categorised as operating leases.

Leases are classified as capital leases when certain criteria are met as outlined under SFAS 13. All other leases are classified as operating leases.

Deferred tax
Prior to 1st January 2002 deferred tax was recognised using the liability method on timing differences that have originated but not reversed at the balance sheet date.

Following the introduction of FRS 19, deferred tax is provided in full in respect of timing differences that have originated but not reversed at the balance sheet date. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recoverable.

Under SFAS 109, a liability method is used, but deferred tax assets and liabilities are calculated for all temporary differences. A valuation allowance is raised against a deferred tax asset where it is more likely than not that some portion of the deferred tax asset will not be realised.

Compensation arrangements
Where shares are purchased, the difference between the purchase price and any contribution made by the employee is charged to the profit and loss account in the period to which it relates. Where shares are issued, or options granted, the charge made to the profit and loss account is the difference between the fair value at the time the award is made and any contribution made by the employee. For these purposes fair value is equal to the intrinsic value of the option.

Non-share-based compensation arrangements awarded to employees where no performance criteria, other than continued service, are required to be met, are accrued fully on the date of grant.

The Group adopted SFAS 123 which encourages the adoption of accounting for share compensation schemes, based on their estimated fair values at the date of the grant. Accordingly, the Group charges this fair value to the profit and loss account over the period to their vesting dates.

Non-share-based compensation arrangements awarded to employees where no performance criteria, other than continued service, are required to be met, are accrued evenly over the period of grant to date of payout.

Shareholders’ interest in the retail long-term assurance fund
The value of the shareholders’ interest in the retail long-term assurance fund represents an estimate of the net present value of the profits inherent in the in-force policies.

The net present value of the profits inherent in the in-force life and pensions policies of the long-term assurance fund is not recognised by the Group under US GAAP. An adjustment is made for the amortisation of acquisition costs and fees in accordance with SFAS 60 and SFAS 97.

183

Notes to the accounts
For the year ended 31st December 2004

52 Differences between UK GAAP and US GAAP accounting principles (continued)

UK GAAP US GAAP

Restructuring of business provisions
In accordance with FRS 3 and FRS 12, provisions have been made for any direct costs and net future operating losses arising from a business that management is committed to restructure, sell or terminate, has a detailed formal plan for exit, and has raised a valid expectation of carrying out the restructuring plan.

Prior to the issuance of SFAS 146, Emerging Issues Task Force (EITF) 94-3 and Staff Accounting Bulletin (SAB) 100 set out specific conditions which must be met to enable liabilities relating to restructuring, sale or involuntary terminations to be recognised in the period management approve the termination plan. In respect of costs other than employee termination benefits, the basic requirements for recognition at the date of commitment to the plan to terminate are that they are not associated with, or do not benefit from, activities that will be continued.

SFAS 146 is effective for exit or disposal activities initiated after 31st December 2002. Liabilities recognised prior to the initial application of SFAS 146 continue to be accounted for in accordance with EITF 94-3.

Extinguishment of liabilities
Under FRS 5, a liability is extinguished if an entity’s obligation to transfer economic benefits is satisfied, removed or is no longer likely to occur. Satisfaction would encompass an ‘in-substance’ defeasance transaction where liabilities are satisfied from the cash flows arising from essentially risk free assets transferred by the debtor to an irrevocable defeasance trust.

Under SFAS 140, a debtor may derecognise a liability if and only if either (a) the debtor pays the creditor and is relieved of its obligation for the liability, or (b) the debtor is legally released from being the primary obligor under the liability either financially or by the creditor. SFAS 140 does not allow for the derecognition of a liability by means of an ‘in-substance’ defeasance transaction or if it is no longer believed likely that the liability will be settled.

Revaluation of property
Property is carried either at original cost or at subsequent valuation less related depreciation, calculated on the revalued amount where applicable. Prior to 1st January 2000, revaluation surpluses were taken directly to shareholders’ funds, with deficits below cost, less any related depreciation, included in attributable profit.

Following the introduction of FRS 15 in 2000, the revalued book amounts are retained without subsequent revaluation subject to the requirement to test for impairment.

Depreciation is charged on the cost or revalued amounts of freehold and long-leasehold properties over their estimated useful economic lives.

Revaluations of property are not permitted under US GAAP.

Freehold and long-leasehold property is depreciated over its estimated useful economic life based on the historical cost.

Computer software developed or obtained for internal use
The Group’s general policy is to write-off such expenditure as incurred except where the software is required to facilitate the use of new hardware. Capitalised amounts are recorded as tangible fixed assets and amortised over the useful life of the hardware.

AICPA Statement of Position (SOP) 98-1 requires certain costs incurred in respect of software for internal use to be capitalised and subsequently amortised over its useful life. Capitalised amounts are reviewed regularly for impairment.

184

Barclays PLC Annual Report 2004 

52 Differences between UK GAAP and US GAAP accounting principles (continued)

UK GAAP US GAAP

Derivatives
Derivatives used for hedging purposes are measured on an accruals basis consistent with the assets, liabilities, positions or future cash flows being hedged. The gains and losses on these instruments (arising from changes in fair value) are not recognised in the profit and loss account immediately as they arise. Such gains are either not recognised in the balance sheet or are recognised and carried forward. When the hedged transaction occurs, the gain or loss is recognised in the profit and loss account at the same time as the hedged item.

Derivatives entered into as trading transactions, together with any associated hedging, are measured at fair value, and the resultant profits and losses are included in dealing profits.

Products which contain embedded derivatives are valued with reference to the total product inclusive of the derivative element.

SFAS 133 requires all derivatives to be recorded at fair value as adjusted by the requirements of EITF 02-03. If certain conditions are met then the derivative may be designated as a fair value hedge, cash flow hedge or hedge of the foreign currency exposure of a net investment in a foreign subsidiary. The change in value of the fair value hedge is recorded in income along with the change in fair value of the hedged asset or liability. The change in value of a cash flow hedge is recorded in other comprehensive income and reclassified to income as the hedged cash flows affect earnings. The change in the value of a net investment hedge is recorded in the currency translation reserve and only released to income when the underlying investment is sold. With a limited number of exceptions, Barclays has chosen not to update the documentation of derivative hedges to comply fully with the requirements of SFAS 133.

Certain terms and conditions of hybrid contracts which themselves would be standalone derivatives are bifurcated from the underlying hybrid contract and fair valued if they are not clearly and closely related to the contract in which they are contained. These are referred to as embedded derivatives.

Fair value of securities
Positions in investment debt securities and investment equity shares are stated at cost less any provision for impairment. The cost of dated investment securities is adjusted for the amortisation of premiums or discount on purchase over the period to redemption. Investment securities are those intended for use on a continuing basis by the Group.

Under SFAS 115, debt and marketable equity securities are classified as one of three types. Trading securities are carried at fair value with changes in fair value taken through profit and loss; held to maturity debt securities are carried at amortised cost where there is the ability and intent to hold to maturity; available for sale securities that are held for continuing use in the business are carried at fair value with movements in fair value recorded in shareholders’ equity. Declines in fair value below cost that are deemed other-than-temporary impairment are recognised on the held to maturity and available for sale categories and are reflected in the profit and loss account.

Non-marketable securities held by investment companies are carried at fair value with movements in fair value recorded in net income.

Foreign exchange on investment debt securities
Movements resulting from changes in foreign currency exchange rates are reflected in the profit and loss account.

Under EITF 96-15, as amended by SFAS 133, the change in value of available for sale debt securities as a result of changes in foreign currency exchange rates is reflected in shareholders’ equity.

Loan origination
Fee income relating to the origination of loans is recognised in the profit and loss account to match the cost over the period in which the service is provided, together with a reasonable profit margin.

The cost of mortgage incentives, which comprise cashbacks and interest discounts, are charged to the profit and loss account as a reduction to interest receivable as incurred.

SFAS 91 requires loan origination fees and incremental direct costs of loan origination to be deferred and amortised over the life of the loan as an adjustment to interest income.

185

Notes to the accounts
For the year ended 31st December 2004

52 Differences between UK GAAP and US GAAP accounting principles (continued)

UK GAAP US GAAP

Consolidation
Entities should be consolidated when they are under the control of the reporting entity. Under FRS 2, control is the ability to direct the financial and operating policies of the entity with a view to gaining economic benefit and may be exercised through majority voting rights or other means. In addition, under FRS 5, entities which give rise to benefits that are, in substance, no different from those that would arise were the entity a subsidiary are included in the consolidated accounts.

Under US GAAP, the Group determines whether it has a controlling financial interest in an entity by initially evaluating whether the entity is a variable interest entity (VIE), voting interest entity, or a qualifying special purpose entity (QSPE).

Under FIN 46-R, a controlling financial interest in a variable interest entity is present where an enterprise has a variable interest, or a combination of variable interests, that will absorb the majority of the entity’s expected losses, receive a majority of the entity’s expected residual returns, or both. The enterprise with a controlling financial interest is the primary beneficiary and is required to consolidate the VIE.

Voting interest entities are evaluated for consolidation in accordance with ARB 51. ARB 51 states that the usual condition for a controlling financial interest in an entity is ownership of a majority voting interest.

In accordance with SFAS 140 and FIN 46-R, QSPEs are not consolidated.

Securitisations
Where undertakings have issued debt securities or entered into funding arrangements with lenders through special-purpose entities in order to finance specific loans and advances to customers, the balances are either accounted for on the basis of linked presentation or through separate recognition of the gross assets and related funding, in accordance with FRS 5. The special-purpose entities are treated as ‘quasi-subsidiaries’ and are consolidated in accordance with FRS 5.

Transfers of financial assets deemed as sales under SFAS 140 are derecognised and, where appropriate, a servicing asset/liability and retained interest are recognised. The asset/liability is amortised over the period in which the benefits are expected to be received.

Guarantees
Under UK GAAP, a provision will be set up only if it is probable that a transfer of economic benefits will be required to settle the obligation. Where this is not the case, no liability is recognised.

Under FIN 45, guarantees issued or modified from 1st January 2003 are recognised at inception at fair value as a liability on the balance sheet.

Revenue recognition
The Group recognises revenue on both external and internal transactions executed on an arm’s-length basis in accordance with current market practice, FRS 5 and appropriate industry SORPs.

Under US GAAP, there are several sources of guidance on income recognition including SAB 101. The application of this guidance in certain circumstances may lead to an alternative recognition profile, particularly the elimination of intra-Group transactions.

Dividend payable
Dividends declared after the period end are recorded in the period to which they relate.

Dividends are recorded in the period in which they are declared.

Classification of debt and equity and related translation differences
Under UK GAAP, the Reserve Capital Instruments are classified as liabilities.

Certain debt issuances, including Reserve Capital Instruments, are treated as hedges of foreign operations and exchange differences are taken directly to reserves.

Under US GAAP, the Reserve Capital Instruments are classified as equity instruments and are translated at the rate ruling on date of issue.

Other debt issuances designated as hedges under UK GAAP are similarly treated under US GAAP in the instances where the SFAS 133 hedge accounting criteria are met.

186

Barclays PLC Annual Report 2004 

52 Differences between UK GAAP and US GAAP accounting principles (continued)

UK GAAP US GAAP

Taxation
Profit before tax and the tax charge for the year includes tax at the effective rate on certain transactions including the shareholders’ interest in the long-term assurance fund.

Income before tax and the tax charge do not include such adjustments for tax.

Earnings per share
Basic earnings per share (EPS) is net income per weighted average share in issue. Diluted EPS reflects the effect that existing options would have on the basic EPS if they were to be exercised, by increasing the number of ordinary shares.

The basic EPS under US GAAP differs to the extent that income under US GAAP differs. In addition, the diluted EPS differs as the increased shares are reduced by the number of shares that could be bought (using the average market price over the year) with the assumed exercise proceeds (actual proceeds arising on exercise plus unamortised compensation costs, where appropriate). Any options that are antidilutive are excluded from this calculation.

Acceptances
Acceptances are bills that the drawee has agreed to pay. They are not recorded within the balance sheet.

Acceptances and the related customer liabilities are recorded within the balance sheet.

Transfer and servicing of financial assets
Under FRS 5, where a transaction involving a previously recognised asset transfers to others (a) all significant rights or other access to benefits relating to that asset and (b) all significant exposure to the risks inherent in those benefits, the entire asset should cease to be recognised.

Under SFAS 140, control passes where the following criteria are met: (a) the assets are isolated from the transferor (the seller), i.e. they are beyond the reach of the transferor, even in bankruptcy or other receivership; (b) the transferee (the buyer) has the right – free of any conditions that constrain it from taking advantage of the right – to pledge or exchange the assets, and (c) the transferor does not maintain effective control over the transferred assets.

Transfers of assets not deemed as sales cause a gross-up of the balance sheet to show the assets transferred as remaining on the balance sheet. In addition, non-cash collateral received on certain stock lending transactions results in a balance sheet gross-up under the provisions of SFAS 140.

Netting
Under FRS 5, items should be aggregated into a single item where there is a right to insist on net settlement and the debit balance matures no later than the credit balance.

Under FASB interpretation No. (FIN) 39, netting is only permitted where there is a legal right of set-off and an intention to settle on a net basis. In addition, under FIN 41, repurchase and reverse repurchase agreements may only be netted where they have the same explicit settlement date specified at the inception of the agreement.

Netting presentation differences exist between UK and US GAAP in relation to repurchase and reverse repurchase agreements, securities lending and borrowing agreements, receivables and payables in respect of unsettled trades, long and short securities, and cash collateral held against derivatives.

Investment contracts
In accordance with FRS 5, certain products offered to institutional pension funds are accounted for as investment products when the substance of the investment is that of managed funds. The assets and related liabilities are excluded from the consolidated balance sheet.

Where the legal form of these products is similar to insurance contracts, they are accounted for in accordance with SFAS 97. Accordingly, the assets and liabilities are recorded on the balance sheet.

187

Notes to the accounts
For the year ended 31st December 2004

52 Differences between UK GAAP and US GAAP accounting principles (continued)

UK GAAP US GAAP

Own shares
The number of own shares held in the ESOP trust, which are included in the Group’s accounts, is reduced to the extent that the shares have vested in accordance with GAAP.

The number of shares which have vested under the ESAS plan has been reduced for the anticipated level of forfeitures.

Under SFAS 123, the basic awards under ESAS are fully vested at the date of grant, and no adjustment is made for forfeitures. Consequently, the number of own shares held in the ESOP trust which are included in the Group’s accounts is lower.

Cash flow statement
The cash flow statement is prepared according to the requirements of FRS 1 (revised). It defines cash as cash and balances at central banks and loans and advances to banks repayable on demand.

The cash flow statement for US GAAP is prepared under SFAS 95, as amended by SFAS 104. This defines cash as inclusive of cash equivalents which are short-term highly liquid investments that are both readily convertible into known amounts of cash and are so near maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally only investments with original maturities of three months or less are included as cash equivalents.

The two statements differ with regard to the classification of items within the cash flow statement and with regard to the definition of cash.

	Classification	Classification
	under FRS 1 (revised)	under SFAS 95/104
Dividends received	Returns on investment and servicing of finance	Operating activities
Dividends paid – equity	Equity dividends paid	Financing activities
Tax paid	Taxation	Operating activities
Net change in loans and advances, including finance lease receivables	Operating activities	Investing activities
Net change in deposits and debt securities in issue	Operating activities	Financing activities

188

Barclays PLC Annual Report 2004 

52 Differences between UK GAAP and US GAAP accounting principles (continued)

Applicable developments in US GAAP

FIN 46-R: Consolidation of Variable Interest Entities
In December 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 46(R) (Revised December 2003) ‘Consolidation of Variable Interest Entities, an interpretation of ARB No. 51’ (FIN 46-R). FIN 46-R is an update of FASB Interpretation No. 46 ‘Consolidation of Variable Interest Entities, an interpretation of ARB No. 51’ (FIN 46) and contains different implementation dates based on the types of entities subject to the standard and based on whether a company had already adopted FIN 46. The Group originally adopted FIN 46 for all Variable Interest Entities (VIEs) created or acquired after 31st January 2003 during the year ended 31st December 2003. The Group has adopted FIN 46-R for all VIEs, including those created or acquired prior to 31st January 2003 from 1st January 2004.

The impact of the adoption of FIN 46-R in 2004 was a net credit to pre-tax income of £138m, resulting from the release of the majority of the shareholders’ equity adjustment for leasing-lessor to income (£123m) offset by an additional adjustment under US GAAP from differing consolidation treatment of certain entities which gave rise to a pre-tax credit of £15m included in the consolidation adjustment.

For additional information on VIEs see Note 52 on pages 202 and 203.

SFAS 150: Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity
Statement of Financial Accounting Standards No. 150 (SFAS 150) was issued in May 2003. The Statement sets out the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity and requires that these instruments be classified as liabilities in statements of financial position. The Group adopted the Statement prospectively for financial instruments entered into or modified after 31st May 2003 during the year ended 31st December 2003. It has adopted the Statement for all other financial instruments from 1st January 2004. Adoption did not have a material effect on the Group’s results of operations or financial condition as determined under US GAAP for the year ended and as of 31st December 2004.

SOP 03-01: Accounting and Reporting by Insurance Enterprises for Certain Non traditional Long-Duration Contracts and for Separate Accounts
The Statement of Position 03-01 (SOP 03-01) provides guidance on the classification and valuation of long-duration contract liabilities, the accounting for sales inducements and separate account presentation and valuation. The Group adopted SOP 03-01 from 1st January 2004. Adoption did not have a material impact on the Group’s results of operations or financial condition as determined under US GAAP for the year ended and as of 31st December 2004.

SFAS 132: Employers’ disclosures about pensions and other post-retirement benefits
In December 2003, the FASB issued SFAS No. 132 (revised 2003), ‘Employers’ Disclosures about Pensions and Other Post-Retirement Benefits.’ SFAS No. 132 revises employers’ disclosures about pension plans and other post-retirement benefits by requiring additional disclosures such as descriptions of the types of plan assets, investment strategies, measurement dates, plan obligations, cash flows and components of net periodic benefit costs recognised during interim periods. The statement does not change the measurement or recognition of the plans.

The additional disclosures for plans established in the UK were required for the year ended 31st December 2003. The remaining disclosures are required for years ending after 15th June 2004 and therefore included in Note 52 (c) below.

SOP 03-03: Accounting for Certain Loans or Debt Securities Acquired in a Transfer
The Statement of Position 03-03 (SOP 03-03) addresses accounting for differences between the contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans or debt securities acquired in a transfer if those differences are attributable to credit quality. This SOP is effective for loans acquired in accounting periods beginning after 15th December 2004. Barclays is currently assessing the impact of this SOP on its US GAAP reconciliations.

SAB 105: Application of Accounting Principles to Loans Commitments
In March 2004, the SEC issued Staff Accounting Bulletin No. 105 (SAB 105). The SAB addresses the initial recognition and measurement of loan commitments that meet the definition of a derivative. The SAB is effective for all applicable loan commitments entered into, or substantially modified, on or after 1st April 2004. Adoption did not have a material effect on the Group’s results of operations or financial condition as determined under US GAAP for the year ended and as of 31st December 2004.

EITF Issue 03-01: The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments
The EITF Issue 03-01 (EITF 03-01) provides guidance on recognising other-than-temporary impairments on securities classified as either available for sale or held to maturity under SFAS 115 and for investments accounted for under the cost method. In September 2004, the FASB issued FSP EITF 03-01-1 which delayed the effective date of EITF 03-01 until the FASB staff addresses additional measurement issues affecting the consensus.

189

\

Notes to the accounts
For the year ended 31st December 2004

52 Differences between UK GAAP and US GAAP accounting principles (continued)

				2004			2003			2002
	Note			£m			£m			£m
Attributable profit of Barclays PLC Group (UK GAAP)					3,268			2,744			2,230
Goodwill		(a	)		246			272			237
Intangible assets		(b	)		(141	)		(175	)		(64	)
Pensions		(c	)		(180	)		(139	)		(187	)
Post-retirement benefits		(c	)		12			27			(18	)
Leasing – lessor					120			21			(7	)
Leasing – lessee					–			–			(10	)
Deferred tax		(d	)		–			–			(32	)
Compensation arrangements		(e	)		(15	)		(74	)		(82	)
Shareholders’ interest in the long-term assurance fund		(f	)		(146	)		(6	)		109
Provisions for restructuring of business		(l	)		–			(16	)		(22	)
Extinguishment of liabilities					(32	)		(135	)		(159	)
Revaluation of property					11			7			5
Business combinations		(k	)		13			(4	)		206
Internal use software		(m	)		(47	)		(14	)		(207	)
Derivatives		(o	)		(364	)		(1,102	)		553
Fair value of securities		(h	)		80			374			(276	)
Foreign exchange on available for sale securities		(n	)		428			(443	)		152
Loan origination					(66	)		(114	)		31
Consolidation		(p	)		15			–			–
Securitisations		(q	)		21			130			–
Guarantees		(t	)		(9	)		(8	)		–
Revenue recognition					(180	)		–			–
Tax effect on the above UK/US GAAP reconciling items					(2	)		395			17
Net income (US GAAP)					3,032			1,740			2,476

Barclays PLC Group	Note			p		p		p
Basic earnings per 25p ordinary share		(g	)		47.5		26.8		37.4
Diluted earnings per 25p ordinary share		(g	)		46.8		26.5		37.2

				2004			2003
	Note			£m			£m
Shareholders’ funds (UK GAAP)					17,417			16,473
Prior year adjustment (UK GAAP)		(y	)					(99	)
					17,417			16,374
Goodwill		(a	)		812			570
Intangible assets		(b	)		(452	)		(315	)
Pensions		(c	)		(1,249	)		(988	)
Post-retirement benefits		(c	)		(11	)		(23	)
Leasing – lessor					(25	)		(145	)
Compensation arrangements		(e	)		45			(1	)
Shareholders’ interest in the long-term assurance fund		(f	)		(621	)		(555	)
Extinguishment of liabilities					(326	)		(294	)
Revaluation of property		(i	)		(212	)		(224	)
Internal use software		(m	)		20			67
Derivatives		(o	)		(78	)		341
Fair value of securities		(h	)		491			876
Dividend payable					1,011			883
Loan origination					(89	)		(23	)
Consolidation		(p	)		8			–
Securitisations		(q	)		151			130
Guarantees		(t	)		(17	)		(8	)
Revenue recognition					(180	)		–
Translation differences					(260	)		–
Own shares					45			–
Tax effect on the above UK/US GAAP reconciling items					473			165
Shareholders’ equity (US GAAP)					16,953			16,830

Selected financial data, adjusted from UK GAAP to reflect the main differences from US GAAP, is given on page 225.

190

Barclays PLC Annual Report 2004 

52 Differences between UK GAAP and US GAAP accounting principles (continued)

The following table provides the Group’s balance sheet on a UK presentation, incorporating only those adjustments required under US GAAP that are discussed on pages 182 to 188.

	2004		2003
	£m		£m
Cash and balances at central banks		48,855		50,518
Items in course of collection from other banks		1,772		2,006
Treasury bills and other eligible bills		5,002		5,359
Loans and advances to banks		57,380		48,830
Loans and advances to customers		279,438		229,562
Debt and equity securities		151,242		112,450
Interests in associated undertakings and joint ventures		448		428
Intangible and tangible fixed assets		6,537		6,377
Other assets (including prepayments and accrued income)		35,128		29,263
Retail life-fund assets attributable to policyholders		68,778		57,176
Total assets		654,580		541,969
Deposits by banks		139,461		127,591
Customer accounts		235,599		188,218
Items in course of collection to other banks		1,205		1,286
Debt securities in issue		78,989		54,647
Other liabilities (including accruals and deferred income)		97,826		81,637
Provisions for liabilities and charges
– deferred taxation		575		636
– other provisions for liabilities and charges		1,750		1,380
Subordinated liabilities		10,693		10,634
Minority interests – equity and non-equity		2,751		1,934
Shareholders’ equity		16,953		16,830
Retail life-fund liabilities attributable to policyholders		68,778		57,176
Total liabilities and shareholders’ funds		654,580		541,969

Segmental analysis of the Group is provided in Note 48, Segmental analysis. The significant differences for each segment under US GAAP are in respect of netting adjustments as disclosed in Note 52(w), the treatment of insurance products, the consolidation of certain entities and securitisation adjustment. The impact of these adjustments is to increase the total assets of Barclays Capital by £46,750m (2003: £29,672m), increase the total assets of Barclays Global Investors by £68,534m (2003: £58,062m) and decrease the total assets of Barclaycard by £3,122m (2003: £2,350m).

(a) Goodwill
During the year, the Group has reviewed the carrying value of its goodwill based on expected future earnings and considered that there was no impairment to be recognised, with the following exceptions. Goodwill recorded by the Group under US GAAP includes amounts related to interests acquired following the restructuring of businesses to which the Group had previously advanced funds. During 2004, the Group identified an excess in the carrying value of the reporting units over their implied fair value and recorded an impairment charge of £56m (2003: £nil). The impairment was based on revised cash flow projections which were lower than forecasted due to going concern issues within these businesses. Further, a partial write-down of £12m (2003: £nil) was recorded in relation to a Group entity acquired prior to 1st January 1998 in respect of which the goodwill has been written off to reserves under UK GAAP. The impairment was due to achieved cash flows being lower than those required to support the carrying value of goodwill.

The current carrying value of goodwill for US GAAP purposes has been allocated to the reportable business clusters of the Group:

			Reallocation
	At beginning		between											Exchange
	of year		clusters			Additions		Disposals			Impairment			and other			2004
	£m		£m			£m		£m			£m			£m			£m
UK Retail Banking		2,692		–			–		–			–			–			2,692
UK Business Banking		63		–			17		(1	)		(17	)		–			62
Private Clients		546		–			2		–			–			–			548
International		461		8			16		–			(12	)		(19	)		454
Barclaycard		245		–			90		–			–			1			336
Barclays Capital		81		–			–		–			(39	)		–			42
Barclays Global Investors		80		(8	)		47		–			–			(3	)		116
Head office functions and other operations		10		–			–		–			–			–			10
		4,178		–			172		(1	)		(68	)		(21	)		4,260

191

Notes to the accounts
For the year ended 31st December 2004

52 Differences between UK GAAP and US GAAP accounting principles (continued)

(b) Intangible assets

	Core							Purchased		Licences		Merchant
	deposit				Customer			credit card		and other		credit card
	intangible		Brand		lists			relationship		contracts		partnerships		Software		2004
	£m		£m		£m			£m		£m		£m		£m		£m
Cost or valuation
At beginning of year		521		33		184			112		19		–		12		881
Additions		–		–		–			22		1		37		–		60
Exchange/other		–		–		(5	)		–		–		–		–		(5	)
Cost carried forward		521		33		179			134		20		37		12		936
Accumulated amortisation and impairment
At beginning of year		211		9		55			39		1				–		315
Current year charge		75		20		17			22		5		–		4		143
Exchange/other		–		–		(4	)		–		–		–		–		(4	)
Amortisation carried forward		286		29		68			61		6		–		4		454
Net book value 2004		235		4		111			73		14		37		8		482
Weighted average amortisation period for additions (months)									120		45		60

The amortisation expense for the net carrying amount of intangible assets is estimated to be £134m in 2005, £131m in 2006, £95m in 2007, £33m in 2008 and £28m in 2009.

(c) Pensions and post-retirement benefits
The disclosures below reflect the amendments to the requirements of SFAS 87 and SFAS 106 arising from SFAS 132 (revised 2003) ‘Employers’ Disclosures about Pensions and Other Post-retirement Benefits’.

The excess of pension plan assets over the projected benefit obligation, as at the transition date, was recognised as a reduction of pension expense on a prospective basis over approximately 15 years, which ended in 2003.

The provisions of US GAAP have been applied to the main UK pension scheme, the UK Retirement Fund (UKRF) based on a valuation date of 30th September 2004. Consequently the £500m contribution made to the UKRF in December 2003 is included in the US GAAP analysis of the plan assets and the £250m contribution made to the UKRF in December 2004 is excluded from the US GAAP analysis of plan assets. The following analysis relates to the UKRF (1964 Pension Scheme, Retirement Investment Scheme, Pension Investment Plan, afterwork and the Career Average Section) which makes up approximately 95% of all the Group’s schemes in terms of assets and actuarial liabilities.

Under the terms of an agreement between the Bank, the Trustees of the Woolwich Pension Fund (WPF) and the Trustees of the UKRF, the final transfer of the liabilities of the WPF into the UKRF was made on 1st May 2004, following which the remaining £56.2m assets in the WPF were transferred to the UKRF and a special contribution of £2m was paid into the UKRF.

The components of the pension and post-retirements expense (where an actuarial basis is appropriate) which arise under US GAAP are as follows:

	2004					2003					2002
				Post-										Post-
				retirement										retirement
	Pensions			benefits		Pensions			Benefits		Pensions			benefits
	£m			£m		£m			£m		£m			£m
Components of net periodic benefit cost
Service cost		319			1		292			1		275			1
Interest cost		692			5		630			5		624			5
Expected return on plan assets		(738	)		–		(664	)		–		(807	)		–
Amortisation of transition adjustment		–			–		(12	)		1		(23	)		1
Curtailment and termination benefits		–			–		–			–		76			2
Recognised net actuarial deficit		27			2		33			2		–			1
Net periodic benefit cost		300			8		279			9		145			10

For measurement purposes, the calculation assumes a 10.6% and 5% annual rate of increase in the per capita cost of covered medical benefits and dental benefits respectively for pensioners in the US at the end of the 2004 year (12% and 5% at the end of 2003). The rate for 2005 is assumed to be 10% and to decrease 1% annually to 5% in 2010 and remain at that level thereafter.

192

Barclays PLC Annual Report 2004 

52 Differences between UK GAAP and US GAAP accounting principles (continued)

(c) Pensions and post-retirement benefits (continued)
For pensioners in the UK the same assumption for the increase in the per capita cost of covered medical benefits is adopted for the 2004 year-end as in the US (5.6% annual rate as at the end of 2003).

A one percentage point change in assumed health care trend rates would have the following effects for 2004:

	1% increase		1% decrease
	£m		£m
Effect on total of service and interest cost components		1		(1	)
Effect on post-retirement benefit obligation		18		(15	)

The following table presents the estimated funded status of the pension schemes and post-retirement benefits (the latter are unfunded) under US GAAP:

	2004						2003						2002
				Post-						Post-						Post-
				retirement						retirement						retirement
	Pensions			benefits			Pensions			benefits			Pensions			benefits
	£m			£m			£m			£m			£m			£m
Change in benefit obligation Benefit obligation at beginning of period		13,331			85			12,296			79			10,789			70
Service cost		319			1			292			1			275			1
Interest cost		692			5			630			5			624			5
Plan participants’ contributions		26			–			17			–			6			–
Curtailment and termination benefits		–			–			–			–			76			–
Prior period service cost		1			–			2			–			–			–
Actuarial loss		843			16			559			8			941			12
Benefits paid		(445	)		(4	)		(465	)		(5	)		(415	)		(4	)
Exchange and other		–			(3	)		–			(3	)		–			(5	)
Benefit obligation at end of period		14,767			100			13,331			85			12,296			79
Change in plan assets Fair value of plan assets at beginning of period		10,980			–			10,152			–			11,135			–
Actual return on plan assets		1,284			–			1,102			–			(618	)		–
Employer contribution/transfers		511			4			174			5			44			4
Plan participants’ contributions		26			–			17			–			6			–
Benefits paid		(445	)		(4	)		(465	)		(5	)		(415	)		(4	)
Fair value of plan assets at end of period		12,356			–			10,980			–			10,152			–
Funded status — deficit		(2,411	)		(100	)		(2,351	)		(85	)		(2,144	)		(79	)
Unrecognised transition amount		–			5			–			6			(12	)		8
Unrecognised net actuarial loss		1,948			46			1,678			31			1,590			24
Unrecognised prior service cost		3			–			2			–			–			–
Accrued benefit cost		(460	)		(49	)		(671	)		(48	)		(566	)		(47	)

193

Notes to the accounts
For the year ended 31st December 2004

52 Differences between UK GAAP and US GAAP accounting principles (continued)

(c) Pensions and post-retirement benefits (continued)

The minimum liability, prior period service cost and other comprehensive income as at the Measurement Date for the pension schemes is shown in the table below:

	2004			2003
	UKRF			UKRF			WPF
	£m			£m			£m
Scheme assets at market value		12,356			10,943			37
Accumulated Benefit Obligation (ABO)		13,109			11,749			31
Minimum liability (excess of ABO over market value of assets)		753			806			(6	)
(Accrued) pension cost		(460	)		(595	)		(76	)
Minimum additional liability		293			211			–
Prior period service cost		(3	)		(2	)		–
Accumulated other comprehensive income		290			209			–

A long-term strategy has been set for the pension plan asset allocation which comprises a mixture of equities, bonds, property and other appropriate assets. This recognises that different asset classes are likely to produce different long-term returns, and some asset classes will be more volatile than others.

One of the factors in the choice of a long-term strategy is to ensure that the investments are adequately diversified. The managers are permitted some flexibility to vary the asset allocation from the long-term strategy within control ranges agreed with the Trustee from time to time.

The table below shows the percentage of the fair value of each major category as at the measurement date.

	UKRF (defined benefits only)
	Target
	(2004)		30/9/04		30/9/03
	%		%		%
Equity securities		51		48		50
Debt securities		37		38		36
Property		12		11		11
All other assets		–		3		3
Total		100		100		100

The expected return on assets is determined by calculating a total return estimate based on a weighted average of estimated returns for each asset class. Asset class returns are estimated using current and projected economic and market factors such as inflation, credit spreads and equity risk premiums.

Employer cash contributions for the year to 31st December 2005 for the UKRF scheme is expected to be £352m.

Estimated future benefit payments
The following benefit payments, which reflect future service, as appropriate, are expected to be paid:

			Post-
			retirement
	Pensions		benefits
	£m		£m
2005		407		1
2006		417		1
2007		431		2
2008		446		2
2009		461		2
Years 2010 - 2014		2,704		11

194

Barclays PLC Annual Report 2004 

52 Differences between UK GAAP and US GAAP accounting principles (continued)

(c) Pensions and post-retirement benefits (continued)
The weighted-average assumptions used to determine net periodic benefit cost for pensions are as follows:

	2004		2003		2002
	%		%		%
Discount rate		5.4		5.3		6.0
Rate of compensation increase		4.1		3.8		4.0
Expected long-term return on plan assets		6.8		6.8		7.5

The weighted-average assumptions used to determine benefit obligations for pensions are as follows:

	As at 31st December
	2004		2003		2002
	%		%		%
Discount rate		5.6		5.4		5.3
Rate of compensation increase		4.3		4.1		3.8

Details of the post-retirement health care expense under UK GAAP are given in Note 49 to the accounts.

The accounting for the post-retirement benefits charge assumed a discount rate of 6.25% (2003: 6.25%, 2002: 6.75%) for US benefits and 5.6% (2003: 5.4%, 2002: 5.3%) for UK benefits on a weighted average basis.

The additional pensions cost of £180m (2003: £139m, 2002: £187m) includes a £8m credit (2003: £8m, 2002: £8m) relating to amortisation of an additional fair value adjustment under US GAAP. This is being amortised over the expected life of the relevant pension liability.

(d) Deferred tax
In accordance with SFAS No. 109 ‘Accounting for Income Taxes’, the components of the net US GAAP deferred tax liability are as follows:

	2004			2003
	£m			£m
Deferred tax liabilities: Leasing transactions		(759	)		(739	)
In respect of UK/US GAAP reconciling items		(224	)		(336	)
Other		(630	)		(592	)
Total deferred tax liabilities		(1,613	)		(1,667	)
Deferred tax assets:
Specific allowances		26			25
General allowance		226			252
Tax losses		299			236
Capital allowances		107			90
In respect of UK/US GAAP reconciling items		387			311
Other		210			224
Total deferred tax assets before valuation allowance		1,255			1,138
Less: valuation allowance		(217	)		(107	)
Deferred tax assets less valuation allowance		1,038			1,031
Net deferred tax liability under US GAAP		(575	)		(636	)

The main components of the tax charge attributable to continuing operations are shown in Note 8 to the accounts on pages 129 and 130. Included in the tax effect on net income of UK/US GAAP reconciling items for 2004 is a credit amount of £19m relating to deferred tax (2003: £4m, 2002: £59m).

The valuation allowance relates to the Group’s capital losses and unrelieved overseas tax losses. These assets will be recognised in the future when it becomes likely that they will be utilised.

195

Notes to the accounts
For the year ended 31st December 2004

52 Differences between UK GAAP and US GAAP accounting principles (continued)

(e) Compensation arrangements
The additional US GAAP charge arising from the application of SFAS 123 in respect of the fair value of options granted since 1995 is £79m (2003: £73m, 2002: £82m). A net credit of £50m (2003: £nil) relates to the write-back of National Insurance liability which will be recognised on exercise of the relevant options.

The net credit with respect to other deferred compensation plans is £14m (2003: charge of £1m, 2002: £nil).

The Executive Share Option Scheme (ESOS), Save As You Earn (SAYE), Incentive Share Option Plan (ISOP), the BGI Equity Ownership Plan (BGI EOP), Executive Share Award Scheme (ESAS), the Woolwich Executive Share Option Plan (Woolwich ESOP) and the Woolwich SAYE scheme fall within the scope of SFAS 123.

Analysis of the movement in the number and weighted average exercise price of options is set out below.

	ESOS (a)										SAYE (a)
	Number						Weighted average				Number						Weighted average
	(000’s)						ex. price (£)				(000’s)						ex. price (£)
	2004			2003			2004		2003		2004			2003			2004		2003
Outstanding at beginning of year		5,952			8,168			4.11		4.09		105,853			126,895			3.59		3.34
Granted in the year		–			–			–		–		21,353			22,284			4.08		3.73
Exercised in the year		(1,296	)		(1,134	)		4.01		3.73		(22,637	)		(32,617	)		3.59		2.71
Forfeited or expired in the year		(110	)		(1,082	)		4.25		4.36		(7,303	)		(10,709	)		3.66		3.56
Outstanding at end of year		4,546			5,952			4.13		4.11		97,266			105,853			3.69		3.59

	ISOP (a)										BGI EOP (b)
	Number						Weighted average				Number						Weighted average
	(000’s)						ex. price (£)				(000’s)						ex. price (£)
	2004			2003			2004		2003		2004			2003			2004		2003
Outstanding at beginning of year		98,932			77,593			4.56		4.98		13,525			17,809			9.51		8.91
Granted in the year		61,937			28,122			4.80		3.33		2,009			545			20.11		10.92
Exercised in the year		(4,502	)		(2,613	)		4.18		3.91		(7,783	)		(4,122	)		9.05		7.10
Forfeited or expired in the year		(18,497	)		(4,170	)		5.18		4.49		(176	)		(707	)		12.19		9.44
Outstanding at end of year		137,870			98,932			4.59		4.56		7,575			13,525			12.74		9.51

	Woolwich SAYE (a)										Woolwich ESOP (a)
	Number						Weighted average				Number						Weighted average
	(000’s)						ex. price (£)				(000’s)						ex. price (£)
	2004			2003			2004		2003		2004			2003			2004		2003
Outstanding at beginning of year		609			3,764			3.34		3.16		4,416			8,785			3.80		3.77
Exercised in the year		(393	)		(2,898	)		3.35		3.12		(2,089	)		(4,160	)		3.79		3.73
Forfeited or expired in the year		(52	)		(257	)		3.34		3.20		(26	)		(209	)		4.02		3.89
Outstanding at end of year		164			609			3.32		3.34		2,301			4,416			3.80		3.80

	ESAS (a)(c)
	Number						Weighted average
	(000’s)						ex. price (£)
	2004			2003			2004		2003
Outstanding at beginning of year		70,967			51,515			–		–
Granted in the year		42,885			34,735			–		–
Exercised in the year		(12,071	)		(13,111	)		–		–
Forfeited or expired in the year		(1,497	)		(2,172	)		–		–
Outstanding at end of year		100,284			70,967			–		–

Notes

(a)	Options granted over Barclays PLC shares.
(b)	Options granted over BGI UK Holdings Limited shares.
(c)	ESAS is a nil cost award.

196

Barclays PLC Annual Report 2004 

52 Differences between UK GAAP and US GAAP accounting principles (continued)

(e) Compensation arrangements (continued)
The range of exercise prices, weighted average fair values at the date of grant and the weighted average remaining contractual life for options outstanding at the balance sheet date are as follows:

	2004								2003
			Weighted				Weighted				Weighted				Weighted
	Exercise		average		Weighted		average		Exercise		average		Weighted		average
	price		exercise		average		remaining		price		exercise		average		remaining
	range		price		fair value		life		range		price		fair value		life
	£		£		£		Years		£		£		£		Years
ESOS(a)		1.76-4.45		4.13		1.13		4		1.76-4.45		4.11		1.14		4
SAYE(a)		1.57-4.11		3.69		1.84		4		1.57-4.11		3.59		1.92		3
ISOP(a)		3.26-5.62		4.59		1.71		8		3.26-5.62		4.56		1.71		8
BGI EOP(b)		6.11-20.11		12.74		4.12		8		6.11-10.92		9.51		3.23		8
Woolwich SAYE(a)		3.08-3.37		3.32		2.75		5		3.08-3.37		3.34		2.60		1
Woolwich ESOP(a)		3.29-4.22		3.80		2.68		5		3.29-4.22		3.80		2.69		6
ESAS(a)(c)		–		–		4.15		3		–		–		3.99		3

Fair values for the ISOP, ESOS, SAYE, the Woolwich ESOP, the Woolwich SAYE and the BGI EOP are calculated at the date of grant using the appropriate option pricing model. The significant weighted average assumptions used to estimate the fair value of the options granted in 2004 are as follows:

	ISOP		SAYE		BGI EOP(b)
Risk-free interest rate		4.65%		5.12%		2.81%
Expected life (years)		5		5		5
Expected volatility		34%		25%		25%

ESAS provides nil cost awards on which the performance conditions are substantially completed at the date of grant. Consequently the fair value of these awards is the market value at that date.

The range, weighted average exercise price, weighted average remaining contractual life and number of options outstanding, including those exercisable at year-end (see page 196), are as follows:

	Weighted		Weighted
	average		average
	exercise		remaining		Number of
	price		life		options
Exercise Price Range	£		Years		outstanding
ESOS(a)
£1.50 – £2.49		1.90		1		87,024
£2.50 – £3.49		3.47		1		97,176
£3.50 – £4.49		4.19		4		4,362,014
SAYE(a)
£2.50 – £3.49		3.14		1		17,032,334
£3.50 – £4.49		3.81		4		80,234,128
ISOP(a)
£2.50 – £3.49		3.26		8		25,568,000
£3.50 – £4.49		3.90		6		8,084,068
£4.50 – £5.49		4.97		8		103,895,508
£5.50 – £6.49		5.62		7		322,192
BGI EOP(b)
£6.00 – £13.99		10.15		7		5,605,697
£14.00 – £21.99		20.11		9		1,969,000
ESAS(a)(c)		–		3		100,283,752
Woolwich SAYE(a)
£2.50 – £3.49		3.32		5		164,040
Woolwich ESOP(a)
£2.50 – £3.49		3.29		5		422,648
£3.50 – £4.49		3.92		5		1,878,016

Notes

(a)	Options granted over Barclays PLC shares.
(b)	Options granted over BGI UK Holdings Limited shares.
(c)	ESAS is a nil cost award.

197

Notes to the accounts
For the year ended 31st December 2004

52 Differences between UK GAAP and US GAAP accounting principles (continued)

(e) Compensation arrangements (continued)
The range, weighted average exercise price and number of options exercisable at the year end are as follows:

	Weighted
	average
	exercise		Number of
	price		options
Exercise Price Range	£		exercisable
ESOS(a)
£1.50 – £2.49		1.90		87,024
£2.50 – £3.49		3.47		97,176
£3.50 – £4.49		4.19		4,362,014
SAYE(a)
£2.50 – £3.49		3.17		268,152
£3.50 – £4.49		3.78		1,141,460
ISOP(a)
£4.50 – £5.49		5.31		9,929,900
BGI EOP(b)
£6.00 – £13.99		9.67		3,482,272
ESAS(a)(c)		–		10,144,101
Woolwich SAYE(a)
£3.50 – £4.49		3.32		164,040
Woolwich ESOP(a)
£2.50 – £3.49		3.29		422,648
£3.50 – £4.49		3.92		1,878,016

Notes

(a)	Options granted over Barclays PLC shares.
(b)	Options granted over BGI UK Holdings Limited shares.
(c)	ESAS is a nil cost award.

The expected dividends for all schemes are assumed to grow in line with the expected increases in share prices for the industry sector until exercise.

The ESOS is a long-term incentive scheme and was available by invitation to certain senior executives of the Group with grants usually made annually. Options were issued at the market price at the date of the grant without any discount, calculated in accordance with the rules of the Scheme, and are normally exercisable between three and ten years from that date. No further awards are made under ESOS.

Eligible employees in the UK may participate in the SAYE. Under this Scheme, employees may enter into contracts to save up to £250 per month and, at the expiry of a fixed term of three, five or seven years, have the option to use these savings to acquire shares in the Company at a discount, calculated in accordance with the rules of the Scheme. The discount is currently 20% of the market price at the date the options were granted.

The ISOP was introduced to replace the ESOS. It is open by invitation to the employees and Directors of Barclays PLC. Options are granted at the market price at the date of grant calculated in accordance with the rules of the Plan, and are normally exercisable between three and ten years from that date. The final number of shares over which the option may be exercised will be determined by reference to set performance criteria. The number of shares under option represents the expected number that will be exercised.

The BGI Equity Ownership Plan is extended to senior employees of BGI. The exercise price of the options is determined by the Remuneration Committee of Barclays PLC based on the fair value as determined by an independent appraiser. The options are granted over shares in BGI UK Holdings Limited, a subsidiary of Barclays Bank PLC. Options are normally not exercisable until vesting, with a third of the options generally becoming exercisable at each anniversary of grant. Options lapse ten years after grant. At 31st December 2004 7.6 million (2003: 13.5 million) options were outstanding under the terms of the BGI Equity Ownership Plan enabling certain members of staff to subscribe for shares in BGI UK Holdings Limited between 2005 and 2014 at prices between £6.11 and £20.11.

For certain employees of the Group an element of their annual bonus is in the form of a deferred award of Barclays PLC shares under ESAS. The total value of the bonus made to the employee of which ESAS is an element is dependent upon the business unit, Group and individual employee performance. The ESAS element of the annual bonus must be held for at least three years and is subject to potential forfeit if the individual resigns and commences work with a competitor business.

(f) Shareholders’ interest in the long-term assurance fund
The adjustment to US GAAP net income in 2004 is £(146)m (2003: £(6)m, 2002: £109m). The difference primarily reflects favourable persistency, mortality and investment experience recognised in UK profits that cannot be recognised in US GAAP net income and the impact of SOP 03-01.

198

Barclays PLC Annual Report 2004 

52 Differences between UK GAAP and US GAAP accounting principles (continued)

(g) Earnings per share

	2004						2003						2002
			Weighted						Weighted						Weighted
			average		Per-share				average		Per-share				average			Per-share
	Income		share no.		amount		Income		share no.		amount		Income		share no.			amount
	£m		(in millions)		pence		£m		(in millions)		pence		£m		(in millions)			pence
Basic EPS
US GAAP net income available to ordinary shareholders		3,032		6,381		47.5		1,740		6,483		26.8		2,476		6,626			37.4
Effect of dilutive securities: – Employee share options				34						26						40
– Other schemes				65						61						(6	)
Diluted EPS		3,032		6,480		46.8		1,740		6,570		26.5		2,476		6,660			37.2

Of the total number of shares under option at year-end, the following were not included in the dilution calculation because of the circumstances prevailing at year-end:

	2004		2003		2002
	in millions		in millions		in millions
Number of options		216		224		181

Certain incentive plan shares have been excluded from the calculation of the basic EPS. These shares are subsequently brought into the diluted earnings per share calculation (called ‘Other schemes’) above.

(h) Fair value of securities
Unlisted investment equity securities are outside the scope of SFAS 115 ‘Accounting for Certain Investments in Debt and Equity Securities’. Where the securities are held by an investment company within the Group, the securities are carried at fair value. The unlisted equity securities have a cost of £1,194m at 31st December 2004 (2003: £944m), with a fair value of £1,333m (2003: £1,109m).

All long investment securities are classified as being ‘available for sale’ unless the Group has a clear intention and ability to hold them to maturity. Other securities are classified as trading securities (see Note 16).

The following table shows the gross unrealised losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealised loss position at 31st December 2004.

	Less than 12 months					12 months or more					Total
			Unrealised					Unrealised					Unrealised
	Fair value		losses			Fair value		losses			Fair value		losses
Description of securities	£m		£m			£m		£m			£m		£m
Other government		488		(5	)		127		(3	)		615		(8	)
Mortgage-backed securities		6,922		(31	)		347		(1	)		7,269		(32	)
Corporate issuers		1,100		(1	)		421		–			1,521		(1	)
Other issuers		1		–			–		–			1		-
Total		8,511		(37	)		895		(4	)		9,406		(41	)

The Group performs a review of each individual investment security on a regular basis to determine whether any evidence of impairment exists. This review considers factors such as the duration and amount at which fair value is below cost, the credit standing and prospects of the issuer, and the intent and ability of the Group to hold the investment security for such sufficient time to allow for any anticipated recovery in fair value.

Under US GAAP, 177 investment debt securities had unrealised losses as at 31st December 2004. Based on a review performed at 31st December 2004, management believes that the unrealised losses are temporary in nature. The unrealised losses are due to market movements in interest rates. The credit quality of the bond issuers remains strong with 100% rated as investment grade or higher and the Group has the ability and intent to hold these positions until recovery.

199

Notes to the accounts
For the year ended 31st December 2004

52 Differences between UK GAAP and US GAAP accounting principles (continued)

(i) Revaluation of property
In 1990, £449m of property revaluation reserve was capitalised by the issue of bonus shares.

(j) Loan impairment and disclosure
SFAS 114 applies only to impaired loans, the measurement of which is based upon the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market value, or the fair value of the collateral if the loan is collateral dependent. Smaller balance homogeneous consumer loans that are collectively evaluated for impairment are outside the scope of SFAS 114, as are debt securities and leases. At 31st December 2004, the element of impaired loans outside the scope of SFAS 114 amounted to £2,599m (2003: £2,605m).

In accordance with SFAS 114, the Group’s total impaired loans being non-performing, less impaired loans outside the scope of SFAS 114, amount to £1,386m at 31st December 2004 (2003: £1,700m). Credit risk provisions of £721m, estimated in accordance with SFAS 114, were held against these loans (2003: £762m). The average level of such impaired lendings in 2004 was £1,736m (2003: £1,832m).

Where cash received represents the realisation of security, or there is doubt regarding the recovery of a loan, such receipts are treated as repayments of the loan principal. Otherwise, cash received in respect of impaired loans is recognised as interest income. Estimated interest income which was recognised in 2004 on impaired loans within the scope of SFAS 114 was £24m (2003: £18m).

SFAS 114 modifies the accounting for in-substance foreclosure, in that collateralised debts where the Group takes physical possession of the collateral, regardless of formal insolvency procedures, would be reclassified as if the collateral had been acquired for cash. At 31st December 2004, under US GAAP, the amount of collateral recorded at the lower of the book value of the debt or the fair value of the collateral that would be reclassified as ‘other real estate owned’ was £7m (2003: £11m) and as debt and equity instruments was £34m (2003: £48m).

Mortgage loans of £3,482m are included within loans and advances to customers which are held with the intention of resale (2003: £nil). During the year £4,762m of loans were sold (2003: £645m) generating a net profit of £31m (2003: net loss of £10m).

(k) Business combination
In 2002, Barclays and Canadian Imperial Bank of Commerce completed the combination of their retail, corporate and offshore banking operations and created FirstCaribbean International Bank. Under both UK and US GAAP, Barclays accounts for the resulting interest as an associate. The transaction generated a gain of £206m under both UK and US GAAP, the gain being recorded through the Statement of Total Recognised Gains and Losses for UK GAAP under UITF 31 but in the income statement account under US GAAP (APB 29 and EITF 01-02). The net assets of the business transferred by Barclays to the new entity were not materially different under US GAAP.

In 2004, an adjustment of £13m (2003: £(4)m) was made to the gain of £206m, also recognised under UK GAAP in the Statement of Total Recognised Gains and Losses.

(l) Provisions for restructuring of business
During 2004, 2003 and 2002, the Group has continued its existing programmes to reduce the workforce. Costs under these programmes, in all three years, have primarily been incurred in UK Retail Banking, UK Business Banking and Private Clients and International. The restructuring programmes are largely focused on activities within the UK involving a reshaping of the Group’s operations through the centralisation of core processes and the application of new technologies.

The Group does not currently have any restructuring programmes which have to be accounted under SFAS 146 ‘Accounting for Costs Associated with Exit or Disposal Activities’.

200

Barclays PLC Annual Report 2004 

52 Differences between UK GAAP and US GAAP accounting principles (continued)

(m) Internal use software

	2004						2003						2002
	£m			£m			£m			£m			£m			£m
Additional US GAAP shareholders’ funds brought forward					67						81						288
Expenditure to be capitalised under US GAAP		23						74						60
Amortisation		(20	)					(64	)					(136	)
Write-offs		(50	)					(24	)					(131	)
Charge to US GAAP net income					(47	)					(14	)					(207	)
Additional US GAAP shareholders’ funds carried forward					20						67						81

A review of costs capitalised in previous years and useful lives assigned is undertaken annually. Capitalised costs which are no longer considered recoverable are written off.

(n) Foreign exchange on available for sale securities
Within individual legal entities Barclays holds securities in a number of different currencies which are classified as available for sale. In general, no foreign exchange exposure arises from this because, although the value of the assets changes in sterling terms according to the exchange rate, there is an identical offsetting change in the sterling value of the related funding. Under UK GAAP both the assets and the liabilities are generally translated at closing exchange rates and the differences between historical book value and current value are reflected in the profit and loss account.

Under US GAAP, the change in value of the investments is taken directly to reserves while the offsetting change in sterling terms of the borrowing is taken to the income statement.

A similar difference arises where foreign currency assets are covered using forward contracts but where the Group does not manage these hedges to conform with the detailed US designation requirements.

The impact of this requirement is to transfer net foreign exchange gains or losses on currency securities from net income to other comprehensive income. No difference between the Group’s UK and US GAAP shareholders’ equity arises from this transfer.

(o) Derivatives
SFAS 133 requires all derivatives to be recorded at fair value. If certain conditions are met then the derivative may be designated as a fair value hedge, cash flow hedge or hedge of the foreign currency exposure of a net investment in a foreign subsidiary. Barclays has chosen not to update the documentation of derivative hedges to fully comply with the requirements of SFAS 133 and therefore, with a limited number of exceptions, economic hedge relationships do not qualify for treatment as hedges under US GAAP. Accordingly, adjustments in current or past periods to US GAAP net income in respect of derivatives which qualify for hedge accounting under UK GAAP, are not necessarily indicative of the magnitude or direction of such adjustments to US GAAP net income in subsequent periods.

The adjustment to net income comprises the following elements:

	2004			2003			2002
	£m			£m			£m
Mark to market adjustment(a)		(586	)		(761	)		548
Embedded derivatives		182			(194	)		109
Deferred gains and losses		10			(46	)		12
Amortisation of fair value hedge		(10	)		(140	)		(156	)
Reclassification of gains and losses from Other comprehensive income to net income		40			39			40
		(364	)		(1,102	)		553

Note

(a) EITF 02-03 was clarified in November 2002 to require the measurement of the derivative fair values based on quoted market prices, or in the absence of quoted market prices, valuation techniques with observable inputs from active markets. For all Over The Counter derivatives which contain significant valuation inputs not currently evidenced by observable market inputs, inception gains and losses have been fully reserved. They will be released as and when the inputs become observable. The mark to market adjustment in the above table is shown net of the reversal of unrealised day 1 profit and loss on derivative contracts.

201

Notes to the accounts
For the year ended 31st December 2004

52 Differences between UK GAAP and US GAAP accounting principles (continued)

(p) Consolidation
Under US GAAP, the differences in the consolidation criteria to UK GAAP results in an increase in total assets of £9,672m (2003: £5,829m).

Under US GAAP, the Group consolidates entities in which it has a controlling financial interest. This is determined by initially evaluating whether the entity is a voting interest entity, a variable interest entity (VIE), or a qualifying special purpose entity (QSPE).

Voting interest entities
Voting interest entities are entities in which the total equity investment at risk is sufficient to enable each entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the rights to receive residual returns and the right to make decisions about the entity’s activities. Voting interest entities are consolidated in accordance with ARB 51 which states that the usual condition for a controlling financial interest in an entity is ownership of a majority voting interest.

Variable interest entities
As defined in FIN 46 and FIN 46-R, an entity is considered a VIE subject to consolidation if the equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support or if the equity investors lack one of three characteristics of a controlling financial interest described above. First, the equity investors lack the ability to make decisions about the entity’s activities through voting rights or similar rights. Second, they do not bear the obligation to absorb the expected losses of the entity if they occur. Lastly, they do not claim the right to receive expected returns of the entity if they occur, which are the compensation for the risk of absorbing the expected losses.

VIEs are consolidated by the interest holder that remains exposed to the majority of the entity’s expected losses or residual returns, that is, the primary beneficiary.

The business activities within the Barclays Group where VIEs are used include multi-seller conduit programmes, asset securitisations, client intermediation, credit structuring, asset realisations and fund management.

Multi-seller conduit programmes
Barclays creates, administers and provides liquidity and credit enhancements to several commercial paper conduit programmes, primarily in the United States. These conduits provide clients access to liquidity in the commercial paper markets by allowing them to sell consumer or trade receivables to the conduit, which then issues commercial paper to investors to fund the purchase. The conduits have sufficient collateral, credit enhancements and liquidity support to maintain an investment grade rating for the commercial paper.

Asset securitisations
The Group assists companies with the formation of asset securitisations. These entities have minimal equity and rely upon funding in the form of notes to purchase the assets for securitisation. The Group provides both senior and/or junior lending and derivative contracts to the entities, where junior notes are provided and in certain circumstances where derivative contracts are provided, the Group may be the primary beneficiary of the entity.

Client intermediation
As a financial intermediary, the Group is involved in structuring transactions to meet investor and client needs. These transactions may involve entities that fall within the scope of FIN 46-R structured by either Barclays or the client and that are used to modify cash flows of third-party assets to create investments with specific risk or return profiles, or to assist clients in the efficient management of other risks. These transactions may include derivative instruments, and often contain contractual clauses to enable Barclays to terminate the transaction under certain circumstances, for example, if the legal or accounting basis on which the transaction was completed changes. In addition, Barclays invests as a limited partner in lessor partnerships and as a parent in wholly owned subsidiaries specifically to acquire assets for leasing. In a portion of these leasing transactions, there may be risk mitigants in place which result in a third-party consolidating the entities as the primary beneficiary.

Credit structuring
The Group structures investments to provide specific risk profiles to investors. This may involve the sale of credit exposures, often by way of credit derivatives, to an entity which subsequently funds the credit exposures by issuing securities. These securities may initially be held by Barclays prior to sale outside of the Group.

Asset realisations
The Group establishes SPEs to facilitate the recovery of banking facilities in circumstances where the borrower has suffered financial loss.

Fund management
The Group provides asset management services to a large number of investment entities on an arm’s-length basis and at market terms and prices. The majority of these entities are investment funds that are owned by a large and diversified number of investors. In addition, there are various partnerships, funds and open-ended investment companies that are used by a limited number of independent third parties to facilitate their tailored private debt, debt securities or hedge fund investment strategies.

202

Barclays PLC Annual Report 2004 

52 Differences between UK GAAP and US GAAP accounting principles (continued)

(p) Consolidation (continued)
The Group is the primary beneficiary in the following VIEs, classified by type of activity:

	2004		2003(a)
	Total assets		Total assets
Activity	£m		£m
Asset securitisations(b)		3,926		4,982
Multi-seller conduit programmes		12,404		–
Client intermediation		216		–
Credit structuring		2,343		–
Asset realisations		68		–

The creditors do not have recourse to the general credit of the Group in respect of the variable interest entities consolidated by the Group.

Under UK GAAP, the Group consolidates all of the above entities with the exception of certain asset securitisation entities.

The Group also has significant variable interests in the following VIEs, classified by type of activity, where the Group is not the primary beneficiary.

	2004				2003(a)
	Total		Maximum		Total		Maximum
	assets		loss(c)		assets		loss
	£m		£m		£m		£m
Asset securitisations		10,199		282		4,435		2,271
Client intermediation		9,799		989		5,400		453
Credit structuring		281		6		–		–
Fund management		2,380		1,028		–		–

Notes

(a)	Due to the transitional arrangements of FIN 46, the disclosures provided for 31st December 2003 reflect only VIEs created after 31st January 2003 where Barclays either was the primary beneficiary or had a significant variable interest.
(b)	Resulting from a refinement of Group policy in respect of vanilla derivative transactions executed with VIEs, the Group no longer believes it is the primary beneficiary of certain entities consolidated in 2003, amounting to £2,978m, which have not been consolidated in 2004.
(c)	The maximum exposure to loss represents a ‘worst case’ scenario in the event that all such entities simultaneously fail. It does not provide an indication of ongoing exposure which is managed within the Group’s risk management framework. Where a maximum exposure to loss is quoted, this represents the Group’s total exposure and includes both drawn and undrawn lending facilities. The Group’s exposure is determined by changes in the value of the variable interests it holds within these entities, which primarily comprise liquidity, credit enhancements, derivative transactions and financing arrangements. Qualifying Special Purpose Entities (QSPEs)

Qualifying Special Purpose Entities (QSPEs)
In accordance with SFAS 140 and FIN 46-R, the Group does not consolidate QSPEs. QSPEs are passive entities used by the Group to hold financial assets transferred to them by the Group and are commonly used in mortgage and other securitisation transactions as described in Note 52(q) below.

(q) Securitisations
Credit card securitisations
The Group transfers portfolios of credit card receivable assets to Gracechurch Receivables Trustee Limited. Barclaycard Funding PLC, a subsidiary of Barclays Bank, has an equitable interest in the cash flows arising from the securitised assets and has issued Loan Note Certificates to the Gracechurch Card Funding vehicles which are Qualifying Special Purpose Entities (‘QSPEs’). QSPEs sell the Medium Term Notes to investors entitling them to receive specified cash flows during the life of the security. The proceeds of the issuance of Medium Term Notes are then distributed by the QSPEs to the Group as consideration for the Loan Note Certificates transferred. Following a securitisation, the Group receives fees for servicing the receivables and providing cash management services and payment of deferred consideration for the sale of the beneficial interest in the excess income over and above the interest paid to the noteholder. The Group maintains an interest in the pool of receivables that are available for securitisation, referred to as the seller’s interest.

Investors have no recourse against the Group if cash flows generated from the securitised assets are not sufficient to service the obligations of the QSPEs.

The Group has no right or obligation to repurchase the benefit of any securitised balance, except if certain representations and warranties given by the Group at the time of transfer are breached.

The Group has entered into interest rate currency swaps with the QSPEs. These swaps convert a proportion of the Sterling variable interest flows arising from the Loan Note Certificates to US Dollar variable and fixed rate interest flows to match the interest payable on the Medium Term Notes issued.

203

Notes to the accounts
For the year ended 31st December 2004

52 Differences between UK GAAP and US GAAP accounting principles (continued)

(q) Securitisations (continued)
The transfer of receivables is accounted for as a sale under US GAAP where control of the receivables has been relinquished. A gain or loss is recognised on securitisation of the receivables which is calculated based on the previous carrying amount of the loans involved in the transfer (allocated between the receivables sold and the seller’s interest based on their relative fair values at the date of sale).

The Group estimates the fair value of the retained interests by determining the present value of future expected cash flows using valuation models that incorporate management’s best estimates of key assumptions, which include:

(a) the expected prepayment rate of the receivables each year;

(b) the anticipated credit losses from the receivables; and

(c) a discount rate to calculate future income flows.

The retained interests that are subject to prepayment risk such that the Group may not recover substantially all of its investment are recorded at fair value with subsequent adjustments reflected in net income.

The servicing liability represents the shortfall of future servicing income from the Group’s obligation to service the transferred assets compared to the costs of servicing those assets. The servicing liability is amortised over the expected life of the receivables.

Securitisation activity during the year
During 2004, the Group securitised credit card receivables with a book value of £810m (2003: £2,508m) recognising a resultant pre-tax gain on sale of £38m (2003: £132m). The Group has recognised an interest only strip asset and a servicing liability in connection with the transfer.

The derecognition of the securitised assets results in a reduction in net loans and advances to customers of £3,270m (2003: £2,447m).

Mortgage Loans Securitisation
In 2004, Barclays acquired and then securitised ten static pools of residential mortgage loans which were originated by unaffiliated mortgage companies. All of the securitisations were affected through the sale of mortgage loans to Qualifying Special Purpose Vehicles (‘QSPEs’).

To fund the acquisition of these mortgage loans, the trust issued FRNs. The FRNs were underwritten by Barclays and sold to third party investors. The offering circulars for the issues of FRN’s stated that they are the obligations of the respective trust only and are not guaranteed by, or the responsibility of, any other party. A call right is held by the originator with the right to liquidate the trust if the principal balance of the mortgage shares has fallen below 10% of their initial amount, provided all obligations under the bonds can be satisfied in full.

Securitisation activity during the year
Non-returnable proceeds of these securitisations totalled £4,538m at issue. In 2004, Barclays recognised a net gain of £25m arising from the transfer of these assets to the QSPEs.

The retained interests that are subject to prepayment risk such that the Group may not recover substantially all of its investment are recorded at fair value with subsequent adjustments reflected in net income.

Interest only strip
The movement in fair value of retained interests during the period is as follows:

	2004			2003		2004			2003
	Mortgage			Mortgage		Credit card			Credit card
	loans			loans		receivables			receivables
	£m			£m		£m			£m
Value at 1st January		–			–		97			–
Value at inception of new securitisations		270			–		30			107
Transfer to net income		–			–		(10	)		(10	)
Cash flow from interests retained		(90	)		–		–			–
Foreign exchange differences		(9	)		–		–			–
Value at 31st December		171			–		117			97

Key economic assumptions used in measuring the interest only strip at the time of the securitisation were as follows:

	2004		2003		2004		2003
	Mortgage		Mortgage		Credit card		Credit card
	loans		loans		receivables		receivables
Fair value of interest only strip at inception of new securitisations		£270m		–		£30m		£107m
Constant prepayment rate per annum		15%-17%		–		100%		100%
Credit losses per annum(a)		2%-4.25%		–		5.5%		5.3%
Discount rate		15%-25%		–		5.0%		5.0%

Note

(a) Annual percentage credit loss is based only on positions in which expected credit loss is a key assumption in the determination of fair values.

204

Barclays PLC Annual Report 2004 

52 Differences between UK GAAP and US GAAP accounting principles (continued)

(q) Securitisations (continued)
Servicing liabilities
The following table shows the servicing liabilities recognised and amortised during the period:

	2004		2003
	Credit card		Credit card
	receivables		receivables
	£m		£m
Balance at 1st January		28		31
Balance at inception of new securitisations		11		–
Amortisation for the year		6		(3	)
Balance at 31st December		45		28

The fair value of the servicing liability is £45m (2003: £28m).

No servicing assets or liabilities arise on the securitisation of the mortgages, as the originator has retained the right to service these assets.

The cash flows between the Group and the securitisation vehicles were as follows during the year ended 31st December 2004:

	2004		2003		2004		2003
	Mortgage		Mortgage		Credit card		Credit card
	loans		loans		receivables		receivables
	£m		£m		£m		£m
Proceeds from new securitisations		4,538		–		810		2,508
Proceeds from collection reinvested in receivables		–		–		7,336		4,277
Cash inflow from servicing fees		–		–		22		13
Cash inflow on interests retained		90		–		216		149

Interest only strip at year end
At 31st December 2004, key economic assumptions and a sensitivity analysis showing the hypothetical effect on the fair value of those interests of two unfavourable variations from the expected levels for each key assumption are as follows:

	2004			2004
	Mortgage			Credit card
	loans			receivables
Fair value of interest only strip	£	171m		£	117m
Constant prepayment rate per annum		15%-17	%		100	%
Impact of 33% adverse change	£	(69)m		£	(18)m
Impact of 50% adverse change	£	(79)m		£	(50)m
Credit losses per annum(a)		2%-5	%		5.5	%
Impact of 10% adverse change	£	(15)m		£	(8)m
Impact of 20% adverse change	£	(29)m		£	(16)m
Discount rate		15%-25	%		5.0	%
Impact of 10% adverse change	£	(7)m		£	(11)m
Impact of 20% adverse change	£	(25)m		£	(20)m

Note

(a) Annual percentage credit loss is based only on positions in which expected credit loss is a key assumption in the determination of fair values.

The sensitivity analysis illustrates the potential magnitude of significant adverse changes in key assumptions used in valuing the interest only strip. However, changes in fair value based on a variation in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Furthermore, the sensitivities for each key variable are calculated independently of changes in the other key variables.

The following tables present information about principal balances of managed and securitised receivables as of and for the year ended 31st December 2004.

	2004									2003
	Credit card receivables									Credit card receivables
	Total			Delinquent			Net			Total			Delinquent			Net
	loans			loans(a)			write-offs(b)			loans			loans(a)			write-offs(b)
	£m			£m			£m			£m			£m			£m
Total receivables managed		14,146			235			515			11,078			228			438
Less: receivables securitised(c)		(3,317	)		(49	)		(92	)		(2,508	)		(36	)		(52	)
Assets on US GAAP balance sheet		10,829			186			423			8,570			192			386

205

Notes to the accounts
For the year ended 31st December 2004

52 Differences between UK GAAP and US GAAP accounting principles (continued)

(q) Securitisations (continued)

	2004 Mortgages
	Total			Delinquent		Net
	loans			loans		write-offs
	£m			£m		£m
Total receivables managed		8,020			–		–
Less: receivables securitised(c)		(4,538	)		–		–
Assets on US GAAP Balanced Sheet		3,482			–		–

Notes

(a)	Delinquent loans are loans 90 days or more past due.
(b)	Net of recoveries during the year.
(c)	Securitised and derecognised from the balance sheet under US GAAP.

(r) Collateral
Under a repo (sale and repurchase agreement), an asset is sold to a counterparty with a commitment to repurchase it at a future date at an agreed price. The Group engages in repos and reverse repos, which are the same transaction in the opposite direction, i.e. the Group buying an asset with a fixed commitment to resell.

The following amounts were included in the balance sheet for repos and reverse repos and are reported on a net basis where permitted:

	2004		2003		2002
	£m		£m		£m
Reverse repos (assets)
Loans and advances to banks		61,075		50,392		41,001
Loans and advances to customers		58,304		49,962		42,505
		119,379		100,354		83,506
Repos (liabilities)
Deposits by banks		42,969		39,810		37,857
Customer accounts		35,382		23,661		24,580
		78,351		63,471		62,437

The average and maximum amount of reverse repos for 2004 were £133,256m and £164,242m (2003: £109,315m and £137,025m, 2002: £76,215m and £103,895m) respectively. The average and maximum amount of repos for 2004 were £100,939m and £133,987m (2003: £84,040m and £109,445m, 2002: £61,416m and £92,219m).

Reverse repos and stock borrowing transactions are accounted for as collateralised loans. It is the Group’s policy to seek collateral at the outset equal to 100% to 105% of the loan amount. The level of collateral held is monitored daily and further collateral calls made to bring the level of cash held and the market value of collateral in line with the loan balance.

Under certain transactions including reverse repo and stock borrowing transactions the Group is allowed to sell or repledge the collateral held. At 31st December 2004, the fair value of collateral held was £167,033m (2003: £126,085m) of which £122,888m (2003: £91,280m) related to items that have been sold or repledged.

Repos and stock lending transactions are accounted for as secured borrowings. At 31st December 2004, the Group had given £114,568m (2003: £58,316m) of its assets as collateral in respect of these transactions. Of the total collateral given £85,611m (2003: £44,002m) was on terms which gave the recipient the right to sell or repledge, comprising debt securities of £83,833m (2003: £43,665m) and equity securities of £1,778m (2003: £337m). The residual £28,957m (2003: £14,314m) was on terms by which the counterparty cannot sell or repledge comprised £28,957m (2003: £14,024m) of debt securities and £nil (2003: £290m) of equity securities.

For the pledge of collateral to secure on-balance sheet liabilities see Note 35.

(s) Provisions for bad and doubtful debts
During 2004, there was a net write-back of £10m (2003: £nil, 2002: £2m write-back) in respect of credit losses on derivatives. £20m of the year end specific provisions related to credit losses on derivatives (2003: £nil).

During 2004, there was a net write-back of £nil (2003: £14m, 2002: £nil) of the general provision in the respect of off-balance sheet exposures (including derivatives). At 31st December 2004, £62m of the general provision (2003: £nil) was held in respect of off-balance sheet exposures (including derivatives).

The specific provision for contingent liabilities and commitments is £nil (2003: £12m).

206

Barclays PLC Annual Report 2004 

52 Differences between UK GAAP and US GAAP accounting principles (continued)

(t) Guarantees
An element of Barclays normal banking business is to issue guarantees on behalf of its customers. In almost all cases, Barclays will hold collateral against the exposure, have a right of recourse to the customer or both. In addition, Barclays issues guarantees on its own behalf. The major categories of these guarantees are:

Financial guarantees
These are given to banks and financial institutions on behalf of customers to secure loans, overdrafts and other banking facilities. These are commonly called facility guarantees.

Included within this category are stock borrowing indemnities. These relate to funds managed by Barclays on behalf of clients, which participate in stock lending programmes. Barclays indemnifies the clients against any losses incurred by the clients resulting from borrower default. Collateral, principally cash, is maintained against all stock borrowing transactions ranging from 102% to 105% of the securities loaned with adjustments to collateral made daily. It is possible that the exposure could exceed the collateral provided should the value of the security rise concurrently with the default of the borrowers.

Standby letters of credit
These are irrevocable commitments to pay a third party, on behalf of our customers, the value of which on demand is subject to certain criteria being complied with. Any amounts paid are debited to the customers accounts. These contracts are used when required in substitution of guarantees due to a greater acceptability in the beneficiary country.

Other guarantees
This category includes the following types of contracts:

Performance guarantees – a guarantee given by the bank on behalf of a customer, undertaking to pay a certain sum if our customer has failed to carry out the terms or certain terms of the contract.

Advance payment guarantees – enables the beneficiary to demand repayment of an advance in funds in certain circumstances.

Tender guarantees – provided during a tender process to lend support to a customer’s commitment to a tender process.

Customs and Excise – guarantees provided to HM Customs and Excise to cover a customer’s liability, most commonly for import duties.

Retention guarantees – similar to advance payments but are used to secure early release of retained contract payments.

The following table provides the maturity analysis of guarantees issued by the Group. The amounts disclosed represent the maximum potential amount of future payments (undiscounted) the Group could be required to make under the guarantee, before any recovery through recourse or collaterisation provisions.

	2004										2003
	Less than		One to		Four to		Over
	one year		three years		five years		five years		Total		Total
	£m		£m		£m		£m		£m		£m
Financial guarantees		19,842		367		292		826		21,327		18,812
Standby letters of credit		4,772		1,721		1,452		739		8,684		5,784
Other guarantees		6,227		1,156		379		483		8,245		8,427

Credit card guarantees
Under the Consumer Credit Act of 1974, Barclays may be liable to customers to refund payments made for unsatisfactory goods or services or unfulfilled contracts where payment was made through a credit card. The maximum liability that Barclays could have is the total credit limits marked to customers of £42,813m (2003: £32,734m). These limits are included within commitments with a maturity of less than one year, as the limit can be revoked at any time.

Warranties and indemnities given as part of acquisition and disposal activity
Warranties and indemnities are routinely provided to counterparties as part of the terms and conditions required in a business acquisition, disposal or investing in joint ventures. Most commonly, these relate to indemnification against tax liabilities arising from pre-transaction activities. Usually the total aggregate liability, in respect of warranties and indemnities for a transaction is capped and the maximum exposure under these is £2,686m (2003: £4,000m). No collateral or recourse to third parties is generally available.

Certain derivative contracts
In addition to the contracts described above, there are certain derivative contracts to which the Group is a counterparty that meet the characteristics of a guarantee under FIN 45. These derivatives are recorded in the Group’s balance sheet at fair value under US GAAP.

Included in other provisions for liabilities and charges is £26m (2003: £nil) in respect of guarantees. The Group considers the amounts provided in the balance sheet represent a reasonable estimate of amounts actually anticipated to be paid under such arrangements.

207

Notes to the accounts
For the year ended 31st December 2004

52 Differences between UK GAAP and US GAAP accounting principles (continued)

(u) Asset retirement obligation
The Group recognises a liability for an asset retirement obligation and capitalises an amount for asset retirement cost. The entity estimates the initial fair value of the liability using an expected present value technique.

	2004		2003
	£m		£m
Asset retirement obligations at beginning of year		4		–
Liability incurred in the period		36		4
Asset retirement obligations at end of year		40		4

(v) Assets held for sale
The Group acquired an interest in New World Networks International Ltd (NWN) following a debt for equity restructuring in February 2003 and has consequently classified it as an asset held for sale under Statement of Financial Accounting Standards 144. The Group is aiming to partially recover its exposure by disposing of its interest in NWN to a third party and has engaged a third party to find a buyer. The Group is currently in negotiations with several interested parties and anticipate a disposal to occur in 2005. NWN has property, plant and equipment of £76m and liabilities of £83m.

(w) Total assets
Netting
Certain transactions have been netted in the UK as required under FRS 5. To the extent these arrangements do not satisfy the requirement of FIN 39 and FIN 41, total assets have been increased by £65,505m (2003: £45,277m).

	2004			2003
	£m			£m
Repurchase and reverse repurchase agreements		18,572			9,684
Securities lending and borrowing agreements		21,824			18,743
Receivables and payables in respect of unsettled trades		(7,250	)		(6,030	)
Cash collateral held against derivatives		14,787			7,964
Loans and deposits		17,572			14,916
Total		65,505			45,277

Gross assets and liabilities have been increased by £60,400m (2003: £49,099m) due to inclusion of certain BGI insurance products. The legal form of these products is similar to insurance contracts, which are accounted for in accordance with SFAS 97. Accordingly, the assets and liabilities associated with these products are recorded on the balance sheet.

The inclusion of acceptances resulted in an increase in total assets under US GAAP of £263m (2003: £654m).

(x) Profit and loss account presentation
There are certain differences in the presentation of the profit and loss account between UK GAAP and US GAAP. Exceptional items (2004: £45m profit, 2003: £4m profit, 2002: £3m loss) would be classified as operating income or expense under US GAAP rather than being shown separately. Under US GAAP, net interest received (2004: £(219)m, 2003: £68m, 2002: £75m) relating to trading activities would be shown within net interest revenue, rather than included in dealing profits. Reconciling differences arising from associated undertakings (2004: £7m profit, 2003: £7m profit, 2002: £6m profit) would be included within a single component of net income.

(y) Changes in UK GAAP
During 2004, Barclays restated the 2003 shareholders’ funds under UK GAAP in respect of a change of accounting policy for shares held in ESOP trusts, as required by UITF 38, as described on page 115. The restatement had no impact on net income. There has been no effect on the reported US GAAP figures.

Shareholders’ funds

	Original
	reconciliation			Prior year		Reconciliation
	item			adjustment		item
	£m			£m		£m
2003
Own shares		(99	)		99		–
Total affected reconciling items		(99	)		99		–

208

Barclays PLC Annual Report 2004 

53 Consolidated statement of cash flows

Interest paid in the year, including amounts relating to trading activities, was £14,842m (2003: £10,768m, 2002: £10,167m).

For the purposes of the US GAAP cash flow, cash and cash equivalents are defined as short-term highly liquid investments which are readily convertible into known amounts of cash with original maturity of three months.

Set out below, for illustrative purposes, is a summary consolidated statement of cash flows presented on a US GAAP basis:

	2004			2003			2002
	£m			£m			£m
Net cash provided by operating activities		9,250			13,367			15,267
Net cash used in investing activities		(73,161	)		(30,683	)		(46,968	)
Net cash provided by financing activities		61,112			16,846			34,977
Effect of exchange rate changes on cash and due from banks		1,136			750			990
Net (decrease)/increase in cash and cash equivalents		(1,663	)		280			4,266
Cash and cash equivalents at beginning of year		50,518			50,238			45,972
Cash and cash equivalents at end of year		48,855			50,518			50,238

54 Regulatory capital requirements

Capital adequacy and the use of regulatory capital are monitored by the Group, employing techniques based on the guidelines developed by the Basel Committee on Banking Regulations and Supervisory Practices (the Basel Committee) and European Union Directives, as implemented by the Financial Services Authority (FSA) for supervisory purposes. The FSA regards the risk asset ratio calculation, originally developed by the Basel Committee, as a key supervisory tool and sets individual minimum ratio requirements for banks in the UK at or above the minimum of 8%. The concept of risk weighting and the basis for calculating eligible capital resources are described under capital ratios on page 100.

The following tables summarises capital resources and capital ratios, as defined for supervisory purposes:

Barclays PLC Group and Barclays Bank PLC Group

	Amount		Ratio
As at 31st December 2004	£m		%
Total net capital resources		25,216		11.5
Tier 1 capital resources		16,662		7.6

	Amount		Ratio
As at 31st December 2003	£m		%
Total net capital resources		24,223		12.8
Tier 1 capital resources		14,994		7.9

209

Notes to the accounts
For the year ended 31st December 2004

55 Significant Group concentration of credit risk

A concentration of credit risk exists when a number of counterparties are engaged in similar activities and have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions.

Barclays has three significant concentrations of exposures to credit risk: the UK economy, home loans and banks.

Credit exposure is concentrated in the UK where the majority of the Group’s activities are conducted. Gross credit exposure to borrowers on the banking book in the UK (based on the location of the office recording the transaction) was £159bn at 31st December 2004 (2003: £144bn). In the UK, the Group’s collateral policy differs by line of business and product but is broadly consistent with UK market practice. Netting agreements are made with wholesale counterparties whenever practical and to the extent that such agreements are legally enforceable.

Lending in respect of home loans totalled £78bn at 31st December 2004 (2003: £72bn). This represents 40% (2003: 42%) of loans to customers on the banking book. As collateral, Barclays requires a first mortgage over the residential property for the acquisition of which the loan is made.

As an active participant in the international financial markets, the Group has significant credit exposure to banks. In total, credit exposure to banks at 31st December 2004 was estimated to have amounted to £107bn (2003: £87bn) of which £75bn (2003: £62bn) consisted of loans and advances and £10bn (2003: £9bn) of mark-to-market balances in respect of derivatives. The remaining credit exposure is largely related to letters of credit and guarantees. The Group may require collateral before entering into a credit commitment with another bank, depending on the type of the financial product and the counterparty involved. Netting agreements are secured whenever possible and to the extent that such agreements are legally enforceable.

The concentrations of credit exposure described above are not proportionally related to credit loss. Some segments of the Group’s portfolio have and are expected to have proportionally higher credit charges in relation to the exposure than others. Moreover, the volatility of credit loss is different in different parts of the portfolio. Thus comparatively large credit charges could arise in parts of the portfolio not mentioned above.

56 Ratio of earnings to fixed charges and preference share dividends

	2004		2003		2002		2001		2000
Ratio of earnings to fixed charges
UK GAAP:
Excluding interest on deposits		1.48		1.55		1.50		1.40		1.49
Including interest on deposits		1.32		1.35		1.31		1.26		1.29
US GAAP:
Excluding interest on deposits		1.47		1.36		1.58		1.47		1.49
Including interest on deposits		1.31		1.23		1.36		1.30		1.29
Ratio of earnings to combined fixed charges, preference share dividends and payments to Reserve Capital Instrument holders
UK GAAP:
Excluding interest on deposits		1.48		1.55		1.50		1.40		1.48
Including interest on deposits		1.32		1.35		1.31		1.26		1.29
US GAAP:
Excluding interest on deposits		1.46		1.34		1.55		1.45		1.47
Including interest on deposits		1.31		1.22		1.35		1.29		1.28

210

Barclays PLC Annual Report 2004 

SEC Form 20-F cross reference and other information

SEC Form 20-F Cross Reference and Other Information

Form 20-F		Page reference
Item number		in this document
1	Identity of Directors, Senior Management and Advisors
	Not applicable
2	Offer Statistics and Expected Timetable
	Not applicable
3	Key Information
	Risk factors		28
	Currency of presentation		212
	Financial data		73/224
	Dividends		227
4	Information on the Company
	Presentation of information		27
	Glossary		213
	Business description		75
	Acquisitions and disposals		117
	Financial overview		78
	Recent developments		77
	Supervision and regulation		76
	Note 20 Tangible fixed assets		141
	Note 36 Contingent liabilities and commitments		155
	Note 50 Subsidiary undertakings		181
	Note 48 Segmental analysis		174
5	Operating and Financial Review and Prospects
	Financial Review		78
	Capital and liquidity risk management		51
6	Directors, Senior Management and Employees
	Directors and Officers		2
	Directors’ report		5
	Corporate governance report		7
	Barclays report on remuneration		13
	Audit and Accountability		26
	Note 3 Administrative expenses – staff costs		125
	Note 4 Pension costs		126
	Note 45 Related party transactions		170
	Note 46 Directors’ and officers’ emoluments and interests		172
7	Major Shareholders and Related Party Transactions
	Presentation of information		27
	Directors’ report		5
	Note 45 Related party transactions		170
	Trading market for ordinary shares of Barclays PLC		228
8	Financial Information
	Note 10 Dividends – Barclays PLC		130
	Note 51 Legal proceedings		181
	Post balance sheet events
	Not applicable
9	The Offer and Listing
	Trading market for ordinary shares of Barclays PLC		228

Form 20-F		Page reference
Item number		in this document
10	Additional Information
	Memorandum and Articles of Association		230
	Taxation		231
	Exchange controls and other limitations affecting security holders		233
	Documents on display		233
11	Quantitative and qualitative disclosure about market risk
	Risk management and control – overview		30
	Credit risk management		35
	Analysis of loans and advances		38
	Provisions for bad and doubtful debts		43
	Potential credit risk loans		42
	Loans and advances in non-local currencies		63
	Market risk management		47
	Derivatives		57
	Capital and liquidity risk management		51
	Note 37 Derivatives and other financial instruments		157
12	Description of Securities Other than Equity Securities
	Not applicable
13	Defaults, Dividends Arrearages and Delinquencies
	Not applicable
14	Material Modifications to the Rights of Security Holders and Use of Proceeds
	Not applicable
15	Controls and Procedures
	Disclosure controls and procedures		26
16A	Audit Committee Financial Expert		9
16B	Code of Ethics		12
16C	Principal Accountant Fees and Services		128
16E	Share Repurchases		151
17	Financial Statements
	Not applicable
18	Financial Statements
	US audit report		109
	Accounting policies		110
	Consolidated accounts Barclays PLC		118
	except page		124
	Notes to accounts of Barclays PLC		125
	Consolidated accounts Barclays Bank PLC		214
	Notes to consolidated accounts of Barclays Bank PLC		220
19	Exhibits
	Included in documents as filed with the SEC

211

SEC Form 20-F cross reference and other information

Currency of Presentation
In this report, unless otherwise specified, all amounts are expressed in pounds Sterling. For the months indicated, the high and low noon buying rates in New York City for cable transfers in pounds Sterling, as certified for customs purposes by the Federal Reserve Bank of New York (the noon buying rate), were:

		(US Dollars per pound Sterling)
		2005			2004
	February		January		December		November		October		September
High		1.92		1.91		1.95		1.91		1.84		1.81
Low		1.86		1.86		1.91		1.83		1.78		1.77

For the years indicated, the average of the noon buying rates on the last day of each month were:

	(US Dollars per pound Sterling)
	2004		2003		2002		2001		2000
Average		1.84		1.64		1.61		1.45		1.51

On 28th February 2005, the noon buying rate was US$1.92 per pound Sterling. No representation is made that pounds Sterling amounts have been, or could have been, or could be, converted into US Dollars at that rate or at any of the above rates. For the purpose of presenting financial information in this report, exchange rates other than those shown above may have been used.

212

Barclays PLC Annual Report 2004 

Glossary

Term used in Annual Report	US equivalent or brief description
Accounts	Financial statements
Allotted	Issued
Attributable profit	Net income
Called up share capital	Ordinary shares, issued and fully paid
Capital allowances	Tax term equivalent to US tax depreciation allowances
Cash at bank and in hand	Cash
Class of business	Industry segment
Fees and commissions receivable	Fee and commission income
Fees and commissions payable	Fee and commission expense
Finance lease	Capital lease
Freehold	Ownership with absolute rights in perpetuity
Interest receivable	Interest income
Interest payable	Interest expense
Loans and advances	Lendings
Loan capital	Long-term debt
Net asset value	Book value
Profit	Income
Profit and loss account	Income statement
Profit and loss account reserve	Retained earnings
Provisions	Allowances
Revaluation reserve	No direct US equivalent. Represents the increase in the valuation of certain assets as compared with historical cost
Share capital	Ordinary shares, capital stock or common stock issued and fully paid
Shareholders’ funds	Shareholders’ equity
Share premium account	Additional paid-up capital or paid-in surplus (not distributable)
Shares in issue	Shares outstanding
Tangible fixed assets	Property and equipment
Write-offs	Charge-offs

213

Barclays Bank PLC data
Consolidated profit and loss account

Consolidated profit and loss account

For the year ended 31st December

				2004			2003			2002
	Note			£m			£m			£m
Interest receivable:
Interest receivable and similar income arising from debt securities					2,414			2,384			2,030
Other interest receivable and similar income					11,251			10,043			10,014
					13,665			12,427			12,044
Interest payable					(6,823	)		(5,823	)		(5,839	)
Net interest income					6,842			6,604			6,205
Fees and commissions receivable					5,672			4,896			4,454
Less: fees and commissions payable					(706	)		(633	)		(529	)
Dealing profits		1			1,493			1,054			833
Other operating income		(a	)		653			490			364
Operating income					13,954			12,411			11,327
Administrative expenses – staff costs		(b	)		(4,998	)		(4,295	)		(3,757	)
Administrative expenses – other		5			(2,758	)		(2,404	)		(2,312	)
Depreciation		6			(295	)		(289	)		(303	)
Goodwill amortisation		6			(299	)		(265	)		(254	)
Operating expenses					(8,350	)		(7,253	)		(6,626	)
Operating profit before provisions					5,604			5,158			4,701
Provisions for bad and doubtful debts		15			(1,091	)		(1,347	)		(1,484	)
Provisions for contingent liabilities and commitments					(2	)		1			(1	)
Provisions					(1,093	)		(1,346	)		(1,485	)
Operating profit					4,511			3,812			3,216
(Loss)/profit from joint ventures					(3	)		1			(5	)
Profit/(loss) from associated undertakings					59			28			(5	)
Exceptional items		7			45			4			(3	)
Profit on ordinary activities before tax					4,612			3,845			3,203
Tax on profit on ordinary activities		8			(1,289	)		(1,076	)		(955	)
Profit on ordinary activities after tax					3,323			2,769			2,248
Minority interests – equity		9			(44	)		(25	)		(20	)
Profit attributable to the members of Barclays Bank PLC					3,279			2,744			2,228
Profit attributable to non-equity shareholders					(2	)		–			–
Dividends payable to Barclays PLC		(d	)		(2,247	)		(1,580	)		(1,798	)
Profit retained for the financial year					1,030			1,164			430

The Note numbers refer to the Notes on pages 125 to 210, whereas the Note letters refer to those on pages 220 to 223.

All results arise from continuing operations. For each of the years reported above, there was no material difference between profit before tax and profit retained and profit on an historical cost basis.

The consolidated profit and loss account of Barclays Bank PLC for the year ended 31st December 2004, contains a credit of £9m (2003: £nil, 2002: £nil) in respect of dividends on own shares within other operating income that is shown as a deduction against dividends in the consolidated accounts of Barclays PLC. Additionally, a charge of £nil (2003: £nil, 2002: £2m) is included within staff costs which is debited directly to revenues in the consolidated accounts of Barclays PLC.

214

Barclays PLC Annual Report 2004 

Barclays Bank PLC data
Statement of total recognised gains and losses

Statement of total recognised gains and losses

For the year ended 31st December

	2004			2003			2002
	£m			£m			£m
Profit for the financial year attributable to the members of Barclays Bank PLC		3,279			2,744			2,228
Exchange rate translation differences		(33	)		(4	)		(61	)
Gain/(loss) arising from transactions with third parties		13			(4	)		206
Other items		5			(3	)		8
Joint ventures and associated undertakings		(30	)		(22	)		2
Total recognised gain relating to the period		3,234			2,711			2,383

215

Barclays Bank PLC data
Consolidated balance sheet

Consolidated balance sheet

As at 31st December

			2004					2003
	Note		£m			£m		£m			£m
Assets
Cash and balances at central banks							1,753					1,726
Items in course of collection from other banks							1,772					2,006
Treasury bills and other eligible bills		12					6,658					7,177
Loans and advances to banks – banking				24,986					17,254
– trading				50,145					44,670
		13					75,131					61,924
Loans and advances to customers – banking				189,847					167,858
– trading				65,099					58,961
		14					254,946					226,819
Debt securities		16					127,428					97,393
Equity shares		17					12,177					7,871
Interests in joint ventures – share of gross assets				147					266
– share of gross liabilities				(119	)				(208	)
		18					28					58
Interests in associated undertakings		18					381					370
Intangible fixed assets		19					4,295					4,406
Tangible fixed assets		20					1,921					1,790
Other assets		21					22,307					19,835
Prepayments and accrued income		21					5,078					3,921
							513,875					435,296
Retail life-fund assets attributable to policyholders		22					8,378					8,077
Total assets							522,253					443,373

The Note numbers refer to the Notes on pages 125 to 210.

Equity shares for Barclays Bank PLC differ from Barclays PLC by £11m (2003: £12m) due to treasury shares. Other assets for Barclays Bank PLC differ from Barclays PLC by £153m (2003: £99m) due to ESOP shares. The balances reported in Notes 17 and 21 are for Barclays PLC. Additionally, minority interests differ by £690m (2003: £nil). All these differences are matched by a commensurate change in shareholders’ funds.

216

Barclays PLC Annual Report 2004 

Consolidated balance sheet

As at 31st December

				2004				2003
	Note			£m		£m		£m		£m
Liabilities
Deposits by banks – banking					74,211				57,641
– trading					36,813				36,451
		23					111,024				94,092
Customer accounts – banking					171,963				155,814
– trading					45,755				29,054
		24					217,718				184,868
Debt securities in issue		25					67,806				49,569
Items in course of collection due to other banks							1,205				1,286
Other liabilities							76,550				69,497
Balances due to Barclays PLC							1,026				879
Accruals and deferred income		26					6,582				4,983
Provisions for liabilities and charges – deferred tax		27					738				646
Provisions for liabilities and charges – other		28					467				369
Subordinated liabilities:
Undated loan capital – non-convertible		29					6,149				6,310
Dated loan capital – convertible to preference shares					15				17
– non-convertible					6,113				6,012
		30					6,128				6,029
							495,393				418,528
Minority and other interests and shareholders’ funds
Minority interests – equity							211				283
Called up share capital		(c	)		2,316				2,302
Share premium account					6,531				5,743
Revaluation reserve					24				24
Profit and loss account					9,400				8,416
Shareholders’ funds – equity					17,581				16,485
– non-equity					690				–
							18,271				16,485
							18,482				16,768
							513,875				435,296
Retail life-fund liabilities to policyholders		22					8,378				8,077
Total liabilities and shareholders’ funds							522,253				443,373

			2004		2003
	Note		£m		£m
Memorandum items		36
Contingent liabilities:
Acceptances and endorsements				303		671
Guarantees and assets pledged as collateral security				30,011		24,596
Other contingent liabilities				8,245		8,427
				38,559		33,694
Commitments – standby facilities, credit lines and other				134,051		114,847

The Note numbers refer to the Notes on pages 125 to 210, whereas the Note letters refer to those on pages 220 to 223.

Equity shares for Barclays Bank PLC differ from Barclays PLC by £11m (2003: £12m) due to treasury shares. Other assets for Barclays Bank PLC differ from Barclays PLC by £153m (2003: £99m) due to ESOP shares. The balances reported in Notes 17 and 21 are for Barclays PLC. Additionally, minority interests differ by £690m (2003: £nil). All these differences are matched by a commensurate change in shareholders’ funds.

217

Barclays Bank PLC data
Consolidated statement of changes in reserves

Consolidated statement of changes in reserves

As at 31st December

	2004			2003			2002
	£m			£m			£m
Share premium account
At beginning of year		5,743			5,603			5,475
Premium arising on shares issued		788			140			128
At end of year		6,531			5,743			5,603
Revaluation reserve
At beginning of year		24			24			30
Exchange rate translation differences		–			2			–
Released on transaction with third parties		–			(2	)		(6	)
At end of year		24			24			24
Profit and loss account
At beginning of year		8,416			7,285			6,694
Profit retained		1,030			1,164			430
Exchange rate translation differences		(58	)		(31	)		(61	)
Goodwill written-back on disposals		–			–			10
Gain/(loss) arising from transaction with third parties		13			(4	)		212
Other items		(1	)		2			–
At end of year		9,400			8,416			7,285
Total reserves		15,955			14,183			12,912

The Group operates in a number of countries subject to regulations under which a local subsidiary undertaking has to maintain a minimum level of capital. The current policy of the Group is that local capital requirements are met, as far as possible, by the retention of profit. Certain countries operate exchange control regulations which limit the amount of dividends that can be remitted to non-resident shareholders. It is not possible to determine the amount of profit retained and other reserves that is restricted by these regulations, but the net profit retained of overseas subsidiaries, associated undertakings and joint ventures at 31st December 2004 totalled £1,417m (2003: £925m, 2002: £1,038m). If such overseas reserves were to be remitted, other tax liabilities, which have not been provided for in the accounts, might arise.

Accumulated exchange rate translation differences are £578m debit (2003: £520m debit, 2002: £491m debit).

Goodwill amounting to £205m (2003: £205m, 2002: £205m) has been charged directly against reserves in the current and prior years in respect of acquisitions. This amount is net of any goodwill attributable to subsidiary undertakings disposed of prior to the balance sheet date.

218

Barclays PLC Annual Report 2004 

Barclays Bank PLC data
Consolidated cash flow statement

Consolidated cash flow statement

For the year ended 31st December

				2004						2003						2002
	Note			£m			£m			£m			£m			£m			£m
Net cash inflow/(outflow) from operating activities		(e	)					6,122						(2,379	)					6,803
Dividends received from joint ventures and associated undertakings								15						7						1
Returns on investments and servicing of finance:
Interest paid on loan capital and other
subordinated liabilities					(652	)					(606	)					(607	)
Preference dividends paid					–						–						–
Dividends paid to minority shareholders					(19	)					(14	)					(23	)
Net cash outflow from returns on investment and servicing of finance								(671	)					(620	)					(630	)
Tax paid								(690	)					(910	)					(828	)
Capital expenditure and financial investment:
Capital expenditure					(532	)					(310	)					(301	)
Sale of property and equipment					125						97						289
Purchase of investment securities					(47,520	)					(36,886	)					(28,128	)
Redemption of investment securities					18,441						17,137						10,247
Sale of investment securities					22,722						21,394						11,137
Net cash (outflow)/inflow from capital expenditure and financial investment								(6,764	)					1,432						(6,756	)
Acquisitions and disposals:
Net cash outflow from formation of FirstCaribbean International Bank Limited		42			–						–						(160	)
Acquisition of subsidiary undertakings		41			(211	)					(985	)					(451	)
Acquisition of associated undertakings and joint ventures					(21	)					–						–
Sale of Group undertakings		42			–						39						(1	)
Sale of other associated undertakings					47						16						–
Net cash (outflow)/inflow from acquisitions and disposals								(185	)					(930	)					(612	)
Equity dividend paid								(2,139	)					(1,400	)					(1,796	)
Net cash outflow before financing								(4,312	)					(4,800	)					(3,818	)
Financing:
Issue of loan capital and other subordinated liabilities (net of expenses)					666						1,926						2,173
Redemption/repurchase of loan capital and other subordinated liabilities					(611	)					(974	)					(376	)
Net cash inflow from non-recourse financing					4,264						3,262						644
Issue of ordinary shares					61						149						135
Redemption of preference shares					–						–						–
Issue of preference shares					688						–						–
Issue of shares to minority interests					52						65						35
Net cash inflow from financing								5,120						4,428						2,611
Increase/(decrease) in cash		44						808						(372	)					(1,207	)

The Note numbers refer to the Notes on pages 125 to 210, whereas the Note letters refer to those on pages 220 to 223.

219

Barclays Bank PLC data
Notes to the accounts

(a) Other operating income

	2004		2003			2002
	£m		£m			£m
Premium income on insurance underwriting		211		264			178
Net gain on disposal of investment securities		181		73			58
Income/(loss) from the long-term assurance business		58		(33	)		(51	)
Property rentals		9		15			20
Dividend income from equity shares		17		6			7
Other income		177		165			152
		653		490			364

(b) Administrative expenses – staff costs

	2004		2003		2002
	£m		£m		£m
Salaries and accrued incentive payments		4,043		3,441		3,159
Social security costs		339		278		240
Pension costs		160		180		(27	)
Post-retirement health care		22		19		15
Other staff costs		434		377		370
		4,998		4,295		3,757

(c) Called up share capital
Ordinary shares
The authorised ordinary share capital of the Bank, as at 31st December 2004, was 3,000 million (2003: 3,000 million) ordinary shares of £1 each.

Preference shares
The authorised preference share capital of Barclays Bank PLC, at 31st December 2004, was 150 million (2003: 150 million) preference shares of US$0.01 each together with 1,000 preference shares of £1 each and 400,000 preference shares of €100 each.

The issued preference share capital of Barclays Bank PLC, at 31st December 2004, comprised 1,000 (2003: nil) preference shares of £1 each and 100,000 (2003: nil) preference shares of €100 each.

	2004		2003
	£m		£m
Called up share capital, allotted and fully paid
At beginning of year		2,302		2,293
Issued for cash		7		9
At end of year		2,309		2,302
Called up preference share capital, allotted and fully paid
At beginning of year		–		–
Issued for cash		7		–
At the end of year		7		–
Called up share capital		2,316		2,302

Sterling preference shares
1,000 sterling cumulative callable preference shares of £1 each (the ‘Sterling Preference Shares’) were issued on 31st December 2004 at nil premium.

The Sterling 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 1985 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 (i) it is able to pay its debts to senior creditors as they fall due and (ii) its auditors have reported within the previous six months that its assets exceed its liabilities.

220

Barclays PLC Annual Report 2004 

(c) Called up share capital (continued)
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 Sterling 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 Sterling Preference Shares for the recovery of amounts owing in respect of Sterling 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 Sterling 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 Sterling Preference Shares on a winding-up or other such return of capital), in payment to the holders of the Sterling Preference Shares of a sum equal to the aggregate of: (1) an amount equal to the dividends accrued thereon for the then current dividend period (and any accumulated arrears thereof) to the date of the commencement of the winding-up or other such return of capital; and (2) an amount equal to £1 per Sterling Preference Share.

After payment of the full amount of the liquidating distributions to which they are entitled, the holders of the Sterling 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 Sterling Preference Shares are redeemable at the option of Barclays Bank PLC, in whole but not in part only, subject to the Companies Act and its Articles.

Holders of the Sterling Preference Shares are not entitled to receive notice of, or to attend, or vote at, any general meeting of Barclays Bank PLC.

Euro preference shares
100,000 euro 4.875% non-cumulative callable preference shares of €100 each (the ‘4.875% Preference Shares’) were issued on 8th December 2004 for a consideration of €993.6m (£688.4m), of which the nominal value was €10m and the balance was share premium.

The 4.875% Preference Shares entitle the holders thereof to receive euro non-cumulative cash dividends out of distributable profits of Barclays Bank PLC, annually at a fixed rate of 4.875% per annum until 15th December 2014, and thereafter quarterly at a rate reset quarterly equal to 1.05% per annum above the euro interbank offered rate for three-month euro deposits.

The 4.875% Preference Shares are redeemable at the option of Barclays Bank PLC, in whole but not in part only, on 15th December 2014, and on each dividend payment date thereafter at €10,000 per share plus any dividends accrued for the then current dividend period to the date fixed for redemption.

No redemption or purchase of any 4.875% Preference Shares may be made by Barclays Bank PLC without the prior consent of the UK Financial Services Authority and any such redemption will be subject to the Companies Act 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 4.875% 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 4.875% 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 4.875% Preference Share and (3) in priority to the holders of ordinary shares and any other shares of Barclays Bank PLC in issue ranking junior to the 4.875% Preference Shares.

The holders of the £400m 6% Callable Perpetual Core Tier One Notes and the US$1,000m 6.86% Callable Perpetual Core Tier One Notes of Barclays Bank PLC (together, the ‘TONs’) and the holders of the US$1,250m 8.55% Step-up Callable Perpetual Reserve Capital Instruments, the US$750m 7.375% Step-up Callable Perpetual Reserve Capital Instruments and the €850m 7.50% 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 4.875% 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 4.875% 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 4.875% Preference Shares).

Subject to such ranking, in such event holders of the 4.875% Preference Shares will be entitled to receive out of assets of Barclays Bank PLC available for distributions to shareholders, liquidating distributions in the amount of €10,000 per 4.875% Preference Share plus 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 4.875% Preference Shares on any dividend payment date, then a dividend restriction shall apply. This dividend restriction will mean that neither Barclays Bank PLC nor Barclays PLC may (a) declare or pay a dividend (other than payment by Barclays PLC of a final dividend declared by its shareholders prior to the relevant dividend payment date, or a dividend paid by Barclays Bank PLC to Barclays PLC or to a wholly-owned subsidiary) on any of their respective ordinary shares, other preference shares or other share capital

221

Barclays Bank PLC data
Notes to the accounts

(c) Called up share capital (continued)
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 4.875% Preference Shares are redeemed in full or purchased by Barclays Bank PLC.

Holders of the 4.875% 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 4.875% Preference Shares, save with the sanction of a special resolution of a separate general meeting of the holders of the 4.875% Preference Shares (requiring a majority of not less than three-fourths of the holders of the 4.875% Preference Shares voting at the separate general meeting), or with the consent in writing of the holders of three-fourths of the 4.875% Preference Shares.

Except as described above, the holders of the 4.875% Preference Shares have no right to participate in the surplus assets of Barclays Bank PLC.

(d) Dividends

	2004		2003		2002
	£m		£m		£m
On ordinary shares
Interim dividends		1,270		697		1,010
Final dividend		977		883		788
		2,247		1,580		1,798

These dividends are paid to enable Barclays PLC to fund its dividends to its shareholders and, in 2004, to fund the repurchase by Barclays PLC of ordinary share capital at a total cost of £699m (2003: total cost of £204m), and to fund £1m (2003: £36m) for the QUEST (see page 122).

(e) Reconciliation of operating profit to net cash flow from operating activities

	2004		2003			2002
	£m		£m			£m
Net cash inflow/(outflow) from operating activities of Barclays PLC (see Note 39)		6,089		(2,290	)		6,747
Increase/(decrease) in balance due by Barclays Bank PLC to Barclays PLC		33		(89	)		56
Net cash inflow/(outflow) from operating activities of Barclays Bank PLC		6,122		(2,379	)		6,803

The detailed movements disclosed in Note 39 differ for Barclays Bank PLC in the following respects; net increase in debt securities and equity shares by £11m (2003: £8m), dividends paid to own shares of £9m (2003: £nil) and other non-cash movements by £(2)m (2003: £(8)m).

(f) Changes in financing during the year
The following table takes account of the Group’s contribution to the Employee Share Option Plan (ESOP) of £54m.

	Non-		Undated			Dated
	recourse		loan			loan		Ordinary		Preference		Share		Minority
	financing		capital			capital		shares		Shares		premium		interests
	£m		£m			£m		£m		£m		£m		£m
Barclays Bank PLC
At beginning of year		4,513		6,310			6,029		2,302		–		5,743		283
Exchange rate and other movements		–		(161	)		44		–		–		–		(124	)
Net cash inflow from financing		4,264		–			55		7		7		788		52
At end of year		8,777		6,149			6,128		2,309		7		6,531		211

(g) Segmental analysis

	2004				2003				2002
	£m		%		£m		%		£m			%
By geographical segments(a)
Attributable profit
UK		2,407		73		1,886		69		2,023			90
Other European Union		469		15		547		20		284			13
United States		143		4		179		6		(161	)		(7	)
Rest of the World		260		8		132		5		82			4
		3,279		100		2,744		100		2,228			100

Note

(a) For the basis of the geographical analysis, see Analyses by geographical segments and classes of business on page 176.

222

Barclays PLC Annual Report 2004 

(h) Differences between UK and US accounting principles – Barclays Bank PLC
The following table summarises the significant adjustments to consolidated attributable profit (net income under US GAAP) and shareholders’ funds (shareholders’ equity under US GAAP) which would result from the application of US GAAP instead of UK GAAP.

	2004		2003		2002
	£m		£m		£m
Net income (US GAAP) of Barclays PLC Group (from page 190)		3,032		1,740		2,476
Preference share dividends and other appropriations of Barclays Bank PLC		96		102		104
Share compensation charge in Barclays Bank PLC
shown as reserve movement in Barclays PLC		–		–		(2	)
Other income in Barclays Bank PLC recorded as reduction in dividend in
Barclays PLC		9		–		–
Net income (US GAAP) of Barclays Bank PLC Group		3,137		1,842		2,578

				2004			2003
	Note			£m			£m
Shareholders’ funds (UK GAAP) of Barclays Bank PLC Group					18,271			16,485
Goodwill		(a	)		812			570
Intangible assets		(b	)		(452	)		(315	)
Pensions		(c	)		(1,249	)		(988	)
Post-retirement benefits		(c	)		(11	)		(23	)
Leasing – lessor					(25	)		(145	)
Compensation arrangements		(e	)		45			(1	)
Shareholders’ interest in the long-term assurance fund		(f	)		(621	)		(555	)
Extinguishment of liabilities					(326	)		(294	)
Revaluation of property		(i	)		(212	)		(224	)
Internal use software		(m	)		20			67
Derivatives		(o	)		(78	)		341
Fair value on securities		(h	)		491			876
Dividend payable					971			883
Loan origination					(89	)		(23	)
Consolidation					8			–
Securitisations		(q	)		151			130
Guarantees		(t	)		(17	)		(8	)
Revenue recognition					(180	)		–
Reserve Capital Instruments					1,612			1,705
Tax effect on the above UK/US GAAP reconciling items					473			165
Shareholders’ equity (US GAAP) of Barclays Bank PLC Group					19,594			18,646

	2004		2003
	£m		£m
Total assets (US GAAP) of Barclays PLC Group (from page 191)		654,580		541,969
Shares in Barclays PLC		119		111
		654,699		542,080

The Notes refer to those parts of Note 52 on pages 191 to 208.

223

Barclays Bank PLC data
Financial data

	2004			2003			2002			2001			2000
Selected financial statistics	%			%			%			%			%
Attributable profit as a percentage of:
average total assets(a)		0.5			0.6			0.5			0.6			0.8
average shareholders’ funds		19.2			17.0			14.7			17.3			24.6
Average shareholders’ funds as a
percentage of average total assets(a)		2.7			3.3			3.5			3.7			3.3
Selected profit and loss account data		£m			£m			£m			£m			£m
Interest receivable		13,665			12,427			12,044			13,458			11,788
Interest payable		(6,823	)		(5,823	)		(5,839	)		(7,492	)		(6,682	)
Profit on redemption/repurchase of loan capital		–			–			–			–			2
Non-interest income		7,112			5,807			5,122			5,176			4,386
Operating expenses		(8,350	)		(7,253	)		(6,626	)		(6,556	)		(5,492	)
Provisions – bad and doubtful debts		(1,091	)		(1,347	)		(1,484	)		(1,149	)		(817	)
– contingent liabilities and commitments		(2	)		1			(1	)		(1	)		1
(Loss)/profit from joint ventures		(3	)		1			(5	)		(1	)		(1	)
Profit/(loss) from associated undertakings		59			28			(5	)		(8	)		(7	)
Exceptional items		45			4			(3	)		(4	)		214
Profit before tax		4,612			3,845			3,203			3,423			3,392
Profit attributable to members of BB Plc		3,279			2,744			2,228			2,449			2,469
Selected balance sheet data		£m			£m			£m			£m			£m
Shareholders’ funds – equity		17,581			16,485			15,205			14,485			13,183
– non-equity		690			–			–			–			–
Dated and undated loan capital		12,277			12,339			11,537			9,987			7,720
Deposits by banks, customer accounts, debt securities in issue and items in course of collection		397,753			329,815			304,817			273,073			240,607
Loans and advances to banks and customers		330,077			288,743			260,572			228,382			198,536
Total assets		522,253			443,373			403,066			356,612			316,186

Note

(a) For the purposes of this summary, the retail life-fund assets attributable to policyholders have been excluded from average total assets.

224

Barclays PLC Annual Report 2004 

US GAAP financial data

US GAAP Financial Data
The following financial information has been adjusted from data prepared under UK GAAP to reflect significant differences from accounting principles generally accepted in the US (US GAAP). See Note 52 for an explanation of these differences.

Selected financial statistics

	2004(a)		2004		2003		2002		2001		2000
	¢		p		p		p		p		p
Barclays PLC Group
Earnings per 25p ordinary share		91.2		47.5		26.8		37.4		40.5		36.3
Dividends per 25p ordinary share		41.7		21.7		19.1		17.3		15.3		13.1
Book value per 25p ordinary share		511		266		260		242		246		196
				%		%		%		%		%
Net income as a percentage of:
average total assets				0.45		0.33		0.52		0.60		0.62
average shareholders’ equity				18.02		10.57		16.57		19.00		22.72
Dividends as a percentage of net income				46.54		71.49		44.67		37.63		35.49
Average shareholders’ equity as a percentage of average total assets				2.51		3.16		3.12		3.16		2.75
Barclays Bank PLC Group
Net income as a percentage of:
average total assets				0.47		0.35		0.54		0.62		0.64
average shareholders’ equity				17.16		10.08		15.60		17.73		21.37
Average shareholders’ equity as a percentage of average total assets				2.73		3.50		3.44		3.52		3.00

Selected financial statement data

	2004(a)		2004		2003		2002		2001		2000
	$m		£m		£m		£m		£m		£m
Net income:(b)
Barclays PLC Group		5,821		3,032		1,740		2,476		2,695		2,195
Barclays Bank PLC Group		6,023		3,137		1,842		2,578		2,795		2,252
Shareholders’ equity:(b)
Barclays PLC Group		32,550		16,953		16,830		16,015		14,813		13,029
Barclays Bank PLC Group		37,620		19,594		18,646		17,846		16,645		14,513
Total assets:(b)
Barclays PLC Group		1,256,794		654,580		541,969		491,466		413,580		368,980
Barclays Bank PLC Group		1,257,022		654,699		542,080		491,586		413,586		368,985

Notes

(a)	The Dollar financial information has been translated for convenience at the rate of US$1.92 to £1, the noon buying rate for cable transfers in New York City, payable in pounds Sterling, at 31st December 2004.
(b)	Net income and shareholders’ equity have been adjusted to reflect significant differences between UK and US GAAP, as shown on pages 223 and 224 to the accounts. Total assets have been adjusted to reflect such differences together with adjustments set out in footnotes (s) and (y) to Note 52.

225

Reconciliation of economic profit

Reconciliation of economic profit
Economic profit for 2004 was £1.9bn. The cumulative total of £5.3bn was generated for the preceding goal period, 2000-2003.

For the new goal period cycle, 2004-2007, the first year of the new goal cycle generated economic profit of £1.9bn.

The 2000-2004 breakdown of economic profit performance is shown below and its reconciliation to profit after tax and minority interests.

	2004			2003			2002			2001			2000
	£m			£m			£m			£m			£m
Profit after tax and minority interests		3,268			2,744			2,230			2,446			2,445
Goodwill amortisation		299			265			254			229			51
Tax credit on goodwill		(11	)		(7	)		(5	)		(5	)		–
Goodwill relating to associated undertakings		7			7			1			–			–
Goodwill on disposals		–			–			10			–			–
Profit after tax and minority interests excluding goodwill amortisation		3,563			3,009			2,490			2,670			2,496
Gain/(loss) on disposal recognised in the statement of total recognised gains and losses		13			(4	)		206			–			–
		3,576			3,005			2,696			2,670			2,496
Average shareholders’ funds including average historical goodwill		18,237			17,019			15,800			14,514			10,117
Post-tax cost of equity		9.5%			9.5%			9.5%			10.5%			11.0%
Cost of average shareholders’ funds including average historical goodwill		(1,691	)		(1,575	)		(1,458	)		(1,441	)		(1,094	)
Economic profit		1,885			1,430			1,238			1,229			1,402

The difference between the average shareholders’ funds (excluding minority interests) and that reported above represents cumulative goodwill amortisation charged and goodwill previously written off to reserves.

The cost of average shareholders’ funds includes a charge for purchased goodwill. A post-tax cost of equity of 8.5% has been used for goodwill associated with the acquisition of Woolwich plc. A post-tax cost of equity of 9.5% (2003: 9.5%, 2002: 9.5%, 2001: 10.5%) has been used for all other goodwill.

226

Barclays PLC Annual Report 2004 

Shareholder information

Dividends on the ordinary shares of Barclays PLC

Barclays PLC has paid dividends on its ordinary shares every year without interruption since its incorporation in 1896.

The dividends declared for each of the last five years were:

Pence per 25p ordinary share

	2004		2003		2002		2001		2000
Interim		8.25		7.05		6.35		5.75		5.00
Final		15.75		13.45		12.00		10.88		9.50
		24.00		20.50		18.35		16.63		14.50

US Dollars per 25p ordinary share

	2004		2003		2002		2001		2000
Interim		0.15		0.12		0.10		0.08		0.07
Final		0.30		0.24		0.19		0.16		0.13
		0.45		0.36		0.29		0.24		0.20

The gross dividends applicable to an American Depositary Share (ADS) representing four ordinary shares, before deduction of withholding tax, are as follows:

US Dollars per American Depositary Share

	2004		2003		2002		2001		2000
Interim		0.60		0.48		0.40		0.34		0.29
Final		1.21		0.95		0.76		0.64		0.54
		1.81		1.43		1.16		0.98		0.83

Dividends expressed in Dollars are translated at the noon buying rates in New York City for cable transfers in pounds Sterling as certified for customs purposes by the Federal Reserve Bank of New York (the ‘noon buying rate’) for the days on which dividends are paid, except for the 2004 final dividend, payable in the UK on 29th April 2005, which is translated at noon buying rate applicable on 28th February 2005. No representation is made that pounds Sterling amounts have been, or could have been, or could be, converted into Dollars at these rates.

227

Shareholder information

Trading Market for Ordinary Shares of Barclays PLC

The nominal capital of Barclays PLC is divided into 9,996,000,000 ordinary shares of 25p each (ordinary shares) and 1,000,000 staff shares of £1 each (staff shares). At the close of business on 31st December 2004, 6,453,561,180 25p ordinary shares and 875,000 staff shares were outstanding.

The principal trading market for Barclays PLC ordinary shares is the London Stock Exchange. Ordinary share listings were also obtained on the Tokyo Stock Exchange with effect from 1st August 1986 and the New York Stock Exchange (NYSE) with effect from 9th September 1986.

Trading on the NYSE is in the form of ADSs under the symbol ‘BCS’. Each ADS represents four 25p ordinary shares and is evidenced by an American Depositary Receipt (ADR). The ADR depositary is The Bank of New York. Details of trading activity are published in the stock tables of leading daily newspapers in the US.

There were 144 ADR holders and 1,224 recorded holders of ordinary shares with US addresses at 31st December 2004, whose shareholdings represented approximately 2.21% of total outstanding ordinary shares on that date. Since certain of the ordinary shares and ADRs were held by brokers or other nominees, the number of recorded holders in the US may not be representative of the number of beneficial holders or of their country of residence.

The following table shows the high and low sales prices for the ordinary shares of 25p during the periods indicated, based on mid-market prices at close of business on the London Stock Exchange and the high and low sale prices for ADSs as reported on the NYSE composite tape.

					American
	25p ordinary shares				Depositary Shares
	High		Low		High		Low
	p		p		US$		US$
2005
By month:
January		604		574		45.97		43.33
February		614		565		47.00		43.74
2004
By month:
December		586		545		45.99		42.15
November		577		540		43.15		39.52
October		572		532		41.72		39.04
September		545		520		39.59		37.38
August		524		460		38.81		33.52
July		468		443		35.05		32.78
By quarter:
Fourth quarter		586		532		45.99		39.04
Third quarter		545		443		39.59		32.78
Second quarter		514		470		37.78		34.49
First quarter		536		473		39.88		34.94
2003
Fourth quarter		527		476		36.57		32.04
Third quarter		503		436		33.24		28.28
Second quarter		475		373		32.37		23.34
First quarter		397		311		25.87		20.30
2004		586		443		45.99		32.78
2003		527		311		36.57		20.30
2002		624		355		38.00		21.37
2001		582		379		34.12		22.25
2000		528		334		32.19		22.72

This section incorporates information on the prices at which securities of Barclays PLC and Barclays Bank PLC have traded. It is emphasised that past performance cannot be relied upon as a guide to future performance.

228

Barclays PLC Annual Report 2004 

Shareholdings at 31st December 2004^(a)

							Shares held
							as a
	Shareholders						percentage
			Percentage		Number of		of issued
			of total		shares held		ordinary
	Number		holders		(millions)		shares
Classification of shareholders
Personal holders		822,286		97.59		767.1		11.89
Banks and nominees		18,069		2.14		5,493.0		85.11
Other companies		2,119		0.25		136.9		2.12
Insurance companies		18		0.01		23.3		0.36
Pensions funds		40		0.01		33.3		0.52
Totals		842,532		100.00		6,453.6		100.00
Shareholding range
1 – 100		26,632		3.16		1.3		0.02
101 – 250		337,130		40.01		71.7		1.11
251 – 500		234,947		27.89		83.1		1.29
501 – 1,000		113,350		13.45		79.3		1.23
1,001 – 5,000		97,277		11.55		196.6		3.05
5,001 – 10,000		17,274		2.05		121.9		1.89
10,001 – 25,000		10,664		1.27		161.5		2.50
25,001 – 50,000		2,689		0.32		92.3		1.43
50,001 and over		2,569		0.30		5,645.9		87.48
Totals		842,532		100.00		6,453.6		100.00
United States holdings		1,224		0.15		1.9		0.03

Note

(a) These figures include Barclays Sharestore members.

229

Shareholder information

Memorandum and Articles of Association
The Company was incorporated in England and Wales on 20th July 1896 under the Companies Acts 1862 to 1890 as a company limited by shares and was re-registered in 1982 as a public limited company under the Companies Acts 1948 to 1980. The Company is registered under company number 48839. The Company was re-registered as Barclays PLC on 1st January 1985.

The objects of the Company are set out in full in clause 4 of its Memorandum of Association which provides, among other things, that the Company’s objects are to carry on business as an investment and holding company in all its aspects.

Directors
A Director may not vote or count towards the quorum on any resolution concerning any proposal in which he (or any person connected with him) has a material interest (other than by virtue of his interest in securities of the Company) or if he has a duty which conflicts or may conflict with the interests of the Company, unless the resolution relates to any proposal:

(i) to indemnify a Director in respect of any obligation incurred for the benefit of the Company (or any other member of the Group);

(ii) to indemnify a third party in respect of any obligation for which the Director has personally assumed responsibility;

(iii) to indemnify a Director for any liability which he may incur in the performance of his duties or to obtain insurance against such a liability;

(iv) involving the acquisition by a Director of any securities of the Company pursuant to an offer to existing holders of securities or to the public;

(v) that the Director underwrite any issue of securities of the Company (or any of its subsidiaries);

(vi) concerning any other company in which the Director is interested as an officer or creditor or shareholder, but only if he owns less than 1% of either the issued equity share capital or of the voting rights of that company;

(vii) concerning any superannuation fund or retirement, death or disability benefits scheme or employees’ share scheme, so long as any such fund or scheme does not give additional advantages to the Directors which are not granted to the employees who are in the fund or scheme; and

(viii) concerning any other arrangement for the benefit of employees of the Company or any other member of the Group under which the Director benefits in a similar manner to the employees concerned and which does not give the Director any advantage which the employees to whom the arrangement relates would not receive.

A Director may not vote or be counted in the quorum on any resolution which concerns his own employment with the Company or any other company in which the Company is interested.

The Directors may exercise all the powers of the Company to borrow money.

A Director must retire from office at the conclusion of the first AGM after he reaches the age of 70. He is however, eligible to stand for re-election at that meeting.

A Director is required to hold an interest in ordinary shares having a nominal value of at least £500. A Director may act before acquiring those shares but must acquire the qualification shares within two months from his or her appointment.

At each AGM one-third of the Directors for the time being (rounded down if necessary) are required to retire from office.

Classes of share
The Company has two classes of shares, ordinary shares and staff shares, to which the provisions set out below apply.

(a) Dividends
Under English law, dividends are payable on the Company’s ordinary shares only out of profits available for distribution, as determined in accordance with accounting principles generally accepted in the UK and by the Companies Act 1985. The Company in general meeting may declare dividends by ordinary resolution, but such dividend may not exceed the amount recommended by the Directors. The Directors may pay interim or final dividends if it appears they are justified by the Company’s financial position.

The profits which are resolved to be distributed in respect of any financial period are applied first in payment of a fixed dividend of 20% per annum on the staff shares and then in payment of dividends on the ordinary shares.

If a dividend is not claimed after 12 years of it becoming payable, it is forfeited and reverts to the Company.

The Directors may, with the approval of an ordinary resolution of the Company, offer shareholders the right to choose to receive an allotment of new ordinary shares credited as fully paid instead of cash in respect of all or part of any dividend.

(b) Voting
Every member who is present in person or represented at any general meeting of the Company and who is entitled to vote has one vote on a show of hands. On a poll, every member who is present or represented has one vote for every share held.

If any sum remains unpaid in relation to a member’s shareholding, that member is not entitled to vote that share unless the Board otherwise determines.

If any member, or any other person appearing to be interested in any shares in the Company, is served with a notice under Section 212 of the Companies Act 1985 and does not supply the Company with the information required in the notice, then the Board, in its absolute discretion, may direct that that member shall not be entitled to attend or vote at any meeting of the Company.

(c) Liquidation
In the event of any return of capital on liquidation the ordinary shares and the staff shares rank equally in proportion to the amounts paid up or credited as paid up on the shares of each class, except that in the event of a winding up of the Company the holders of the staff shares are only entitled to participate in the surplus assets available for distribution up to the amount paid up on the staff shares plus 10%.

230

Barclays PLC Annual Report 2004 

(d) Redemption provisions
Subject to the Companies Act 1985, any share may be issued on terms that it is, at the option of the Company or the holder of such share, redeemable. The Company has no redeemable shares in issue.

(e) Calls on capital
The Directors may make calls upon the members in respect of any monies unpaid on their shares. A person upon whom a call is made remains liable even if the shares in respect of which the call is made have been transferred.

(f) Variation of rights
The rights attached to any class of shares may be varied with the sanction of an extraordinary resolution passed at a separate meeting of the holders of the shares of that class.

Annual and extraordinary general meetings
The Company is required to hold a general meeting each year as its AGM in addition to other meetings (called extraordinary general meetings) as the Directors think fit. The type of the meeting will be specified in the notice calling it. Not more than 15 months may elapse between the date of one AGM and the next.

In the case of an AGM or a meeting for the passing of a special resolution (requiring the consent of a 75% majority) 21 clear days’ notice is required. In other cases 14 clear days’ notice is required. The notice must specify the place, the day and the hour of the meeting, and the general nature of the business to be transacted.

Subject as noted in (b) above, all shareholders are entitled to attend and vote at general meetings. The articles of association do, however, provide that arrangements may be made for simultaneous attendance at a general meeting at a place other than that specified in the notice of meeting, in which case some shareholders may be excluded from the specified place.

Limitations on foreign shareholders
There are no limitations imposed by English law or the Company’s memorandum or articles of association on the right of non-residents or foreign persons to hold or vote the Company’s ordinary shares other than the limitations that would generally apply to all of the Company’s shareholders.

Taxation
The following is a summary of the principal tax consequences for holders of ordinary shares of Barclays PLC, preference shares of the Bank, ADSs representing such ordinary shares or preference shares, who are citizens or residents of the UK or US, or otherwise who are subject to UK tax or US federal income tax on a net income basis in respect of such securities, that own the shares or ADSs as capital assets for tax purposes. It is not, however, a comprehensive analysis of all the potential tax consequences for such holders, and it does not discuss the tax consequences of members of special classes of holders subject to special rules or holders that, directly or indirectly, hold 10% or more of Barclays voting stock. Investors are advised to consult their tax advisers regarding the tax implications of their particular holdings, including the consequences under applicable state and local law, and in particular whether they are eligible for the benefits of the Treaty, as defined below.

A US holder is a beneficial owner of shares or ADSs that is for US federal income tax purposes (i) a citizen or resident of the US, (ii) a US domestic corporation, (iii) an estate whose income is subject to US federal income tax regardless of its source, or (iv) a trust if a US court can exercise primary supervision over the trust’s administration and one or more US persons are authorised to control all substantial decisions of the trust.

Unless otherwise noted, the statements of tax laws set out below are based on the tax laws of the UK in force as at 28th February 2005 and are subject to any subsequent changes in UK law, in particular any announcements made in the Chancellor’s UK Budget on 16th March 2005. This section is also based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions (the Code), and on the Double Taxation Convention between the UK and the US as entered into force in March 2003 (the Treaty), all of which are subject to change, possibly on a retroactive basis.

This section is based in part upon the representations of the ADR Depositary and the assumption that each obligation of the Deposit Agreement and any related agreement will be performed in accordance with its terms.

For purposes of the Treaty, the estate and gift tax convention (the Estate Tax Convention) and for the purposes of the Code, the holders of ADRs evidencing ADSs will be treated as owners of the underlying ordinary shares or preference shares, as the case may be. Generally, exchanges of shares for ADRs, and ADRs for shares, will not be subject to US federal income tax or to UK tax, other than stamp duty or stamp duty reserve tax, as described overleaf.

231

Shareholder information

Taxation of UK holders
Taxation of dividends
In accordance with UK law, Barclays PLC and the Bank pay dividends on ordinary shares and preference shares without any deduction or withholding tax in respect of any taxes imposed by the UK government or any UK taxing authority.

If the shareholder is a UK resident individual liable to income tax only at the basic rate or the lower rate, then there will be no further tax liability in respect of the dividend received. If, however, the individual shareholder is subject to income tax at the higher rate (currently 40%), there will be a further liability to tax. Higher rate taxpayers are taxable on dividend income at a special rate of (currently 32.5%) against which can be offset a tax credit of one-ninth of the dividend paid. Tax credits are no longer repayable to shareholders with no tax liability.

Taxation of shares under the Dividend Reinvestment Plan
Where a shareholder elects to purchase shares using their cash dividend, the individual will be liable for income tax on dividends reinvested in the Plan on the same basis as if they had received the cash and arranged the investment themselves. They should accordingly include the dividend received in their annual tax return in the normal way. The tax consequences for a UK individual are the same as described in ‘Taxation of dividends’ above.

Taxation of capital gains
Where shares are disposed of by open market sale, a capital gain may result if the disposal proceeds exceed the sum of the base cost of the shares sold and any other allowable deductions such as share dealing costs, indexation relief (up to 5th April 1998) and taper relief (generally on shares held at 16th March 1998 and subsequent acquisitions). To arrive at the total base cost of any Barclays PLC shares held, the amount subscribed for rights taken up in 1985 and 1988 must be added to the cost of all other shares held. For this purpose, current legislation permits the market valuation at 31st March 1982 to be substituted for the original cost of shares purchased before that date.

The calculations required to compute chargeable capital gains, particularly taper and indexation reliefs, may be complex. Capital gains may also arise from the gifting of shares to connected parties such as relatives (although not spouses) and family trusts. Shareholders are advised to consult their personal financial adviser if further information regarding a possible tax liability in respect of their holdings of Barclays PLC shares is required.

Stamp duty
On the purchase of shares, stamp duty or stamp duty reserve tax at the rate of 0.5% is normally payable on the purchase price of the shares.

Inheritance tax
An individual may be liable to inheritance tax on the transfer of ordinary shares or preference shares. Where an individual is liable, inheritance tax may be charged on the amount by which the value of his or her estate is reduced as a result of any transfer by way of gift or other gratuitous transaction made by them or treated as made by them.

Taxation of US holders
Taxation of dividends
A US holder is subject to US federal income taxation on the gross amount of any dividend paid by Barclays out of its current or accumulated earnings and profits (as determined for US federal income tax purposes). Dividends paid to a non-corporate US holder in taxable years beginning before 1st January 2009 that constitute qualified dividend income will be taxable to the holder at a maximum tax rate of 15%, provided that the holder has a holding period of the shares or ADSs of more than 60 days during the 121-day period beginning 60 days before the ex-dividend date. Dividends paid by Barclays with respect to the shares or ADSs will generally be qualified dividend income.

A US holder will not be subject to UK withholding tax. The US holder will include in gross income for US federal income tax purposes the amount of the dividend actually received from Barclays.

Dividends must be included in income when the US holder, in the case of shares, or the Depositary, in the case of ADSs, actually or constructively receives the dividend, and will not be eligible for the dividends-received deduction generally allowed to US corporations in respect of dividends received from other US corporations. Dividends will be income from sources outside the US, and will generally be ‘passive income’ or ‘financial services income,’ which is treated separately from other types of income for the purposes of computing any allowable foreign tax credit.

The amount of the dividend distribution will be the US Dollar value of the pound Sterling payments made, determined at the spot Pound Sterling/US Dollar rate on the date the dividend distribution is includable in income, regardless of whether the payment is in fact converted into US Dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is includable in income to the date the payment is converted into US Dollars will be treated as ordinary income or loss and, for foreign tax credit limitation purposes, from sources within the US.

Distributions in excess of Barclays current or accumulated earnings and profits, as determined for US federal income tax purposes, will be treated as a return of capital to the extent of the US holder’s basis in the shares or ADSs and thereafter as capital gain.

Taxation of capital gains
Generally, US holders will not be subject to UK tax, but will be subject to US tax on capital gains realised on the sale or other disposition of ordinary shares, preference shares or ADSs. Capital gain of a non-corporate US holder that is recognised before 1st January 2009 is generally taxed at a maximum rate of 15% where the holder has a holding period of greater than one year.

Taxation of premium on redemption or purchase of shares
No refund of tax will be available under the Treaty in respect of any premium paid on a redemption of preference shares by the Bank or on a purchase by Barclays PLC of its own shares. For US tax purposes, redemption premium generally will be treated as an additional amount realised in the calculation of gain or loss.

232

Barclays PLC Annual Report 2004 

Stamp duty
No UK stamp duty is payable on the transfer of an ADS, provided that the separate instrument of transfer is not executed in, and remains at all times outside, the UK.

Estate and gift tax
Under the Estate Tax Convention, a US holder generally is not subject to UK inheritance tax.

Exchange Controls and Other Limitations Affecting Security Holders
Other than certain emergency restrictions which may be in force from time to time, there are currently no UK laws, decrees or regulations which would restrict the transfer of capital or remittance of dividends, interest and other payments to holders of Barclays securities who are not residents of the UK. There are also no restrictions under the Articles of Association of either Barclays PLC or the Bank, or under current UK laws, which limit the right of non-resident or foreign owners, to hold Barclays securities or, when entitled to vote, to do so.

Documents on Display
It is possible to read and copy documents that have been filed by Barclays PLC and Barclays Bank PLC with the US-Securities and Exchange Commission at the US Securities and Exchange Commission’s public reference room located at 450 5th Street, NW, Washington, DC20549. Please call the US Securities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. Filings with the US Securities and Exchange Commission are also available to the public from commercial document retrieval services, and in the website maintained by the SEC at www.sec.gov.

Shareholder Enquiries
Investors who have any questions about their investment in Barclays, or about Barclays in general, may write to the Director, Investor Relations at our Head office as follows:

Director, Investor Relations
Barclays PLC
54 Lombard Street
London EC3P 3AH

or, in the United States of America,

The Corporate Communications Department
Barclays Bank PLC
222 Broadway
New York, NY 10038, USA

Registered and Head office:
54 Lombard Street
London
EC3P 3AH
Tel: +44 (0) 20 7699 5000


Please note that from 31st May 2005, the registered and head office will move to:
1 Churchill Place
London
E14 5HP
Tel: +44 (0) 20 7116 1000



Registrar:
The Registrar to Barclays PLC
The Causeway
Worthing
BN99 6DA
Tel: 0870 609 4535
E-mail: questions@share-registers.co.uk


ADR Depositary:
The Bank of New York
PO Box 11258
Church Street Station
New York
NY 10286-1258
Tel: 1-888-BNY-ADRS (toll-free for US domestic callers)
or +1 610 382 7836
E-mail: shareowner-svcs@bankofny.com

233

Group senior management and principal offices

Group Senior Management and Principal Offices

Barclays PLC and Barclays Bank PLC
54 Lombard Street*
London
EC3P 3AH
Tel: +44 (0) 20 7699 5000

Matthew W Barrett Chairman
John Varley Group Chief Executive

Group Executive Committee
John Varley Group Chief Executive
Naguib Kheraj Group Finance Director
Paul Idzik Chief Operating Officer
Roger Davis Chief Executive, UK Banking
Robert E Diamond Jr Chief Executive, Barclays Capital, Chairman, Barclays Global Investors
and Chief Executive, Private Clients
Gary Hoffman Chief Executive, Barclaycard
David Roberts Chief Executive, International Retail and Commercial Banking

Central Support
54 Lombard Street
London
EC3P 3AH
Tel: +44 (0) 20 7699 5000


Leigh Bruce Communications Director
Mark Carawan Internal Audit Director
Mike Davis Public Policy Director
Heather Devine Tax Director
Lawrence Dickinson Company Secretary
Peter Goshawk Treasurer
Mark Harding General Counsel
Brian Harte Head of Compliance
Robert Le Blanc Risk Director
Ian Menzies-Conacher Senior Tax Adviser
Mark Merson Financial Controller
Cathy Turner Director, Investor Relations
Colin Walklin Director of Finance
David Weymouth Corporate Responsibility Director

UK Banking
54 Lombard Street
London
EC3P 3AH
Tel: +44 (0) 20 7699 5000


Roger Davis Chief Executive
Wai Au Chief Operating Officer
Alistair Camp Managing Director, Medium Business and Agriculture
Angus Grant Finance Director
Peter Harvey Managing Director, Larger Business
Jim Hytner Group Brand and UK Banking Marketing Director
Frederic Nze Managing Director, Products
Mike Rogers Managing Director, Personal
and Small Business Customers
Andy Simmonds Risk Director
Rachael Yates Human Resources Director

International Retail and Commercial Banking
Murray House
1 Royal Mint Court
London
EC3N 4HH
Tel: +44 (0) 20 7977 7000


David Roberts Chief Executive
John Eaton Chief Operating Officer
Jon Anderson Finance Director
Robert East Risk Director
Allan Fielder Human Resources Director
Dominic Bruynseels Chief Executive, Africa
and Middle East
Jacobo González-Robatto Chief Executive, Southern Europe
Pascal Roché Managing Director and
Country Manager, France

Private Clients
Robert E Diamond Jr Chief Executive
Ray Greenshields Managing Director, Wealth Solutions
Mike Pedersen Managing Director,
International and Private Banking
Richard Ricci Chief Operating Officer

Barclaycard
1234 Pavilion Drive
Northampton
NN4 7SG
Tel: +44 (0) 1604 234 234


Gary Hoffman Chief Executive
Keith Coulter Managing Director, UK Consumer Cards and Loans
Richard Davies Acting Managing Director, Barclaycard Partnerships
Mark Evans Chief Operating Officer,
UK Consumer
Peter Herbert Managing Director, Barclaycard International
Gerald Kitchen Acting Managing Director, Barclaycard Business
Dale Roskom Director, UK Consumer
Credit Risk
Richard Sommers Finance Director
Sue Turner Human Resources Director


Juniper Financial Corporation
100 S. West Street
Wilmington
Delaware 19801
Tel: +1 302 255 8100


Richard Vague Chief Executive
Jim Stewart President

* With effect from 31st May 2005
our registered office will be:
1 Churchill Place
London
E14 5HP
Tel: +44 (0) 20 7116 1000

234

Barclays PLC Annual Report 2004 

Barclays Capital
5 The North Colonnade,
Canary Wharf
London E14 4BB
Tel: +44 (0) 20 7623 2323


Robert E Diamond Jr Chief Executive
Patrick Clackson Chief Financial Officer
Richard Ricci Chief Operating Officer
Hans-Joerg Rudloff Chairman
Jerry del Missier Head of Rates and Private Equity, Regional Head of Europe
Roger Jenkins Head of Structured Capital Markets
Thomas L Kalaris Head of Distribution and Research and Chief Executive, Americas
Grant Kvalheim Head of Investment Banking and Credit Products
Robert Morrice Chairman and Chief Executive, Asia Pacific

Barclays Global Investors
45 Fremont Street
San Francisco
CA 94105 USA
Tel: +1 415 597 2000


Robert E Diamond Jr Chairman
Blake Grossman Global Co-Chief Executive
Andrew Skirton Global Co-Chief Executive
Richard Ricci Chief Operating Officer
Frank Ryan Chief Financial Officer
Lindsay Tomlinson Vice-Chairman, Europe

Barclays Bank PLC and Barclays Capital, Australia
Suite 1, Level 24
400 George Street
Sydney, NSW 2000
Australia
Tel: +61 2 9220 6000


Nicholas Johnson Chief Executive Officer, Australia

Barclays Bank of Botswana Limited,
Botswana
PO Box 478
Gaborone
Botswana
Tel: +267 395 2041


Thulisizwe Johnson Country Managing Director

Barclays Bank Egypt SAE
PO Box 110
Maglis EL Shaab
Cairo
Egypt
Tel: +20 2 366 2600


Colin Plowman Country Managing Director

Barclays Bank PLC, France
32 avenue George V
75008
Paris
France
Tel: +33 1 55 78 78 78


Pascal Roché Managing Director and Country Manager, France

Barclays Capital, France
21 Boulevard de la Madeleine
75038 Paris
Cedex 01
France
Tel: +33 1 44 58 32 32


Jean Barbizet Managing Director

Barclays Bank PLC and Barclays Capital, Germany
Bockenheimer Landstrasse 38-40
60323, Frankfurt am Main
Germany
Tel: +49 69 71 61 00


Dr Rainer Stephan Chairman of the Barclays Capital Board in Germany

Barclays Bank of Ghana Limited, Ghana
PO Box 2949
Accra
Ghana
Tel: +233 21 664 901-4


Margaret Mwanakatwe Country Managing Director

Barclays Bank PLC, Gibraltar
1st Floor, Regal House
3 Queensway
PO Box 187
Gibraltar
Tel: +350 78565


Tim Streatfeild-James Country Director

Barclays Bank PLC, Hong Kong and Barclays Capital Asia Limited
42nd Floor, Citibank Tower
3 Garden Road
Hong Kong
Tel: +852 2903 2000


Robert Morrice Chairman and Chief Executive, Asia Pacific

Barclays Bank PLC and Barclays Capital Securities Limited, India
21/23 Maker Chambers VI,
Nariman Point
Mumbai 400 021
India
Tel: +91 22 5638 7100


Mani Subramanian Co-Chief Executive Officer, India
Madan Menon Co-Chief Executive Officer, India

Barclays Bank PLC, Dublin, Ireland
47/48 St. Stephen’s Green
Dublin 2
Republic of Ireland
Tel: +353 1 6611777


Tom McAleese Managing Director, Ireland and Country Manager

Barclays Private Clients International Limited, Isle of Man
Eagle Court
25 Circular Road
Douglas
Isle of Man
IM99 1RH
Tel: +44 (0) 1624 684444


Tim Parkes Managing Director

Barclays Bank PLC and Barclays Capital, Italy
Via della Moscova 18
20121 Milan
Italy
Tel: +39 02 63 721


Hugh Malim Country Head, Italy
Colin Vincent Managing Director,
Banca Woolwich

235

Group senior management and principal offices

Barclays Bank PLC and Barclays Capital Limited, Japan
15F Urbannet Otemachi Building
2-2-2 Otemachi
Chiyoda-Ku
Tokyo 100-0004
Japan
Tel: +81 3 3276 1100


Jeffrey Deck Country Head, Japan and Chief Operating Officer, Asia Pacific

Barclays Private Bank and Trust Limited, Jersey
39/41 Broad Street
St. Helier
Jersey
JE4 8PU
Tel: +44 (0) 1534 873741


Leslie W Cunliffe Managing Director

Barclays Bank of Kenya Limited, Kenya
PO Box 30120
Nairobi
Kenya
Email: barclays.kenya@barclays.com


Adan Mohamed Country Managing Director

Barclays Bank PLC and Barclays Capital Securities Limited, Korea
Seoul Representative Office
23rd Floor, Seoul Finance Center
84 Tapeyungro 1-ga
Chung-gu
Seoul 100-768
Korea
Tel: +82 2 2126 2600


Jin Sool Joo Country Manager, Korea

Barclays Bank PLC Mauritius, Mauritius
8th Floor, Harbour Front Building
President J Kennedy Street
Port Louis
Mauritius
Tel: +230 208 9070


Kamal Taposeea Country Managing Director

Barclays Bank PLC, Portugal
Avenida da Republica
50-3rd Floor
1050-196 Lisbon
Portugal
Tel: +351 21 7911100


Rui Semedo Country Manager

Barclays Bank (Seychelles) Limited,
Seychelles
PO Box 167
Independence Avenue
Victoria
Mahe
Seychelles
Tel: +248 383 838


Frank Hoareau Country Managing Director

Barclays Bank PLC and Barclays Capital, Singapore
23 Church Street
13-08 Capital Square
Singapore 049 481
Tel: +65 6 395 3000


Quek Suan Kiat Chief Operating Officer and Country Manager

Barclays Bank PLC and Barclays Capital, South Africa
8 Rivonia Road
Illovo 2196
Johannesburg
South Africa
Tel: +27 11 772 7000


Marcus Andrade Country Managing Director

Barclays Bank SA, Barclays Bank PLC and Barclays Capital, Spain
3rd Floor
Plaza de Colón 1
28046 Madrid
Spain
Tel: +34 91 336 1000


Jacobo González-Robatto Chief Executive, Southern Europe and Country Head
Pedro Fernandez de Santaella Head of Barclays Capital for Spain and Portugal

Barclays Bank (Suisse) SA
PO Box 3941
CH-1211 Geneva 3
Switzerland
Tel: +41 22 81 95 11 1


Michael Morley Chief Executive Officer

Barclays Bank Tanzania Limited, Tanzania
PO Box 5137, TDFL Building
Ohio Street, Dar es Salaam
Tanzania
Tel: +25 5 22 2129381


Karl Stumke Country Managing Director

Barclays Bank PLC and Barclays Capital, Americas
200 Park Avenue
New York, NY 10166
USA
Tel: +1 212 412 4000


Thomas L Kalaris Chief Executive, Americas

Barclays Bank of Uganda Limited, Uganda
PO Box 2971
Kampala
Uganda
Tel: +(256) (41) 230972-6
Email: barclays.uganda@barclays.com


Nick Mbuvi Country Managing Director

Barclays Bank plc, United Arab Emirates
PO Box 1891
Emaar Business Park
Sheikh Zayed Road
Dubai
UAE
Tel: +971 (0) 4362 6888


Mark Petchell Group Country Manager

Barclays Bank of Zambia Limited, Zambia
Kafue House
Cairo Road
Lusaka
Zambia
Tel: +260 1 224 713


Andy Rigg Country Managing Director

Barclays Bank of Zimbabwe Limited, Zimbabwe
2nd Floor, Barclays House
Jason Moyo Avenue
Harare
Zimbabwe
Tel: +263 4 758 280/99


Charity Jinya Country Managing Director

236

Barclays PLC Annual Report 2004 

Annual Report 2004 index

Accountability and Audit	26
Accounting
developments	115
policies	110
Acquisitions and disposals	117
Administrative expenses
other costs	128
staff costs	125
Annual General Meeting	6
Annual Report and Accounts (approval)	118
Assets
analysis	154
by class of business	175
by geographical region	177
other	142
Auditors
report	109
Balance sheet
average	84
consolidated	120
consolidated (Barclays Bank)	216
Barclaycard
business analysis	96
business description	75
senior management	234
Barclays Bank PLC
consolidated accounts	214
financial data	224
notes to the accounts	220
Barclays Capital
business analysis	97
business description	75
senior management	235
Barclays Global Investors
business analysis	98
business description	76
senior management	235
Business description	75
Capital adequacy data
capital ratios and weighted risk assets	100
capital resources	99
Cash flow statement
consolidated	123
consolidated (Barclays Bank)	219
notes to the accounts	168
Competition and outlook	76
Contingent liabilities and commitments	155
Contractual obligations	53
Corporate governance report	7
Critical accounting estimates	80
Currency of presentation	212
Debt securities	137

Deposits
average balances	102
by banks	143
by customer accounts	143
Derivatives and other financial instruments
definitions	57
notes to the accounts	157
Directors’ and officers’
biographies	2
emoluments	17
interests	25
notes to the accounts	172
Directors’ report	5
Dividends	130
Earnings per ordinary share	131
Economic capital	34
Economic profit	226
Employees
equality and diversity	6
involvement	6
Equity shares	138
Fair values of financial instruments	166
Financial data
Barclays Bank PLC	224
Barclays PLC	73
Financial overview	78
Glossary (UK/US)	213
Goodwill	140
Group senior management and principal offices	234
Head office functions and other operations
business analysis	98
business description	76
Intangible fixed assets	140
Internal control	26
International
business analysis	95
business description	75
senior management	234
International Financial Reporting Standards	115
Legal proceedings	181
Liabilities
analysis	154
other	145
Life assurance business	105

237

Annual Report 2004 index

Loans and advances to banks
interest rate sensitivity	59
maturity analysis	59
notes to the accounts	131
Loans and advances to customers
interest rate sensitivity	60
maturity analysis	62
notes to the accounts	133
Loan capital
dated	149
undated	149
Memorandum and Articles of Association	230
Memorandum items	121
Minority interests	130
Net interest income	83
average balance sheet	84
Off balance sheet arrangements	106
Other operating income	125
Parent company accounts (Barclays PLC)	124
Pensions
directors	18
pension costs	126
Potential credit risk loans	42
Presentation of information	27
Private Clients
business analysis	94
business description	75
senior management	234
Private Clients and International
business analysis	94
business description	75
Profit and loss
consolidated	118
consolidated (Barclays Bank)	214
Provision for bad and doubtful debts
net charge to profit and loss account	44
notes to the accounts	136
risk management	43
Recent developments	77
Related party transactions	170
Remuneration report	13
Results by business	92
Results by nature of income and expense	78
Retirement benefits	177
Risk factors	28
Risk management	30
Risk tendency	36

SEC Form 20-F	211
Securitisation
UK disclosure	135
US disclosure	203
Segmental analysis
by class of business	174
by geographical segments	176
Share capital
called up	151
Shareholder information	227
Shareholders’ funds	153
Short-term borrowings	102
Statement of total recognised gains and losses
consolidated	119
consolidated (Barclays Bank)	215
Subsidiary undertakings	181
Supervision and regulation	76
Tangible fixed assets	141
Taxation
deferred tax	145
notes to the accounts	129
shareholder information	231
UK Banking
business analysis	92
business description	75
senior management	234
UK Business Banking
business analysis	93
business description	75
UK Retail Banking
business analysis	92
business description	75
US GAAP
Barclays Bank	223
differences from UK GAAP accounting principles	182
financial data	225

238

Signatures

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorised the undersigned to sign this annual report on its behalf.

Date   March 22, 2005	Barclays PLC (Registrant)
	By	/s/  Naguib Kheraj
		Naguib Kheraj, Group Finance Director

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorised the undersigned to sign this annual report on its behalf.

Date    March 22, 2005	Barclays Bank PLC (Registrant)
	By	/s/  Naguib Kheraj
		Naguib Kheraj, Group Finance Director

EXHIBIT INDEX

EXHIBIT
NUMBER	DESCRIPTION
1.1	Memorandum and Articles of Association of Barclays PLC (incorporated by reference to the 2002 Form 20-F filed on March 25th, 2003)
1.2	Memorandum and Articles of Association of Barclays Bank PLC
2.1	Long term debt instruments
4.1	Rules of the Barclays Group SAYE Share Option Scheme (incorporated by reference to the 2000 Form 20-F filed on April 16th, 2001)
4.2	Rules of the Barclays PLC Renewed 1986 Executive Share Option Scheme (incorporated by reference to the 2000 Form 20-F filed on April 16th, 2001)
4.3	Rules of the Barclays Group Performance Share Plan (incorporated by reference to the 2000 Form 20-F filed on April 16th, 2001)
4.4	Trust Deed constituting the Barclays PLC 1991 UK Profit Sharing Scheme (incorporated by reference to the 2000 Form 20-F filed on April 16th, 2001)
4.5	Rules of the Barclays PLC Approved and Unapproved Incentive Share Option Plans and Appendix relating to eligible employees resident in France
4.6	Trust Deed and Supplemental Trust Deed of the Barclays Group Share Incentive Plan
4.7	Service Contract – Sir Peter Middleton (incorporated by reference to the 2000 Form 20-F filed on April 16th, 2001)
4.8	Service Contract – Matthew Barrett
4.9	Service Contract – John Varley (incorporated by reference to the 2003 Form 20-F filed on March 26th, 2004)
4.10	Service Contract – Roger Davis (incorporated by reference to the 2003 Form 20-F filed on March 26th, 2004)
4.11	Service Contract – Naguib Kheraj (incorporated by reference to the 2003 Form 20-F filed on March 26th, 2004)
4.12	Service Contract – Gary Hoffman (incorporated by reference to the 2003 Form 20-F filed on March 26th, 2004)
4.13	Service Contract – David Roberts (incorporated by reference to the 2003 Form 20-F filed on March 26th, 2004)
4.14	Service Contract and Subsequent Amendment to Service Contract – Chris Lendrum
4.15	Appointment Letter and Subsequent Amendment to appoint as Senior Independent Director – Sir Richard Broadbent
4.16	Appointment Letter – Professor Sandra Dawson
4.17	Appointment Letter and Subsequent Amendment to appoint as Deputy Chairman – Sir Nigel Rudd
4.18	Appointment Letter – Stephen Russell
4.19	Appointment Letter – Dr Jurgen Zech
4.20	Appointment Letter – Leigh Clifford
4.21	Appointment Letter – Sir Andrew Likierman
4.22	Appointment Letter – Sir Brian Jenkins
4.23	Appointment Letter – Dame Hilary Cropper
7.1	Ratios of earnings under UK GAAP to fixed charges
7.2	Ratios of earnings under US GAAP to fixed charges
7.3	Ratios of earnings under UK GAAP to combined fixed charges and preference share dividends
7.4	Ratios of earnings under US GAAP to combined fixed charges, preference share dividends and payments to Reserve Capital Instrument Holders
8.1	List of subsidiaries
11.1	Code of Ethics (incorporated by reference to the 2003 Form 20-F file on March 26th, 2004)
12.1	Certifications filed pursuant to 17 CFR 240. 13(a)-14(a)
13.1	Certifications filed pursuant to 17 CFR 240. 13(a)-14b and 18 U.S.C 1350(a) and 1350(b)
14.1	Consent of PricewaterhouseCoopers

EX-1.2

Exhibit 1.2

Exhibit 1.2

The Barclays Bank Acts 1925 and 1984

The Companies Acts 1948 to 1983

COMPANY LIMITED BY SHARES

Memorandum of Association

of

BARCLAYS BANK PLC

(formerly Barclays Bank International Limited)

(Amended and adopted by ordinary resolution on 30 December 2004)

1.	The name of the Company is “Barclays Bank PLC”.
2.	The Company is to be a public company.
3.	The registered office of the Company will be situated in England and Wales.
4.	The objects for which the Company is established are -

(1) To carry on the business of banking in all its aspects, including but not limited to the transaction of all financial, monetary and other business which now is or at any time during the existence of the Company may be usually or commonly carried on in any part of the world by banks, discount houses, merchant banks or financiers; and in particular (but without prejudice to the generality of the foregoing)-

(a)	to receive money on current or deposit account or other-wise on any terms, and to borrow, raise or take up money with or without security and to employ and use the same;
(b)	to deposit, lend or advance money, securities or property, with or without security, and generally, to make or negotiate loans and advances of every kind;
(c)	to draw, make, accept, endorse, grant, discount, acquire, subscribe or tender for, buy, sell, issue, execute, guarantee, negotiate, transfer, hold, invest or deal in, honour, retire, pay, secure or otherwise dispose of obligations, instruments whether transferable or negotiable or not) and securities of every kind;
(d)	to grant, issue, negotiate and in any manner deal with or in letters of credit, travellers’ cheques and circular notes and drafts and other forms of credits and instruments of every kind;

(e)	to buy, sell and deal in bullion, specie, precious and other metals, foreign exchange and commodities (including futures) of every kind;
(f)	to receive on deposit or for safe custody or otherwise documents, cash, securities and valuables of every description;
(g)	to collect, hold and transmit money and securities and act as agents for the receipt or payment of money or for the receipt or delivery of securities and documents and to establish, maintain or participate in any kind of system for the transmission of funds;
(h)	to issue and transact business in respect of all types of bankers’ cards and debit and credit cards whether issued by the Company or by any other person or company;
(i)	to act as registrars and transfer agents for any company and to maintain for any company any records and accounts which may be requisite for the purpose, and to undertake any duties in relation to the registration of transfers, the issue and deposit of certificates or other documents evidencing title to securities, or otherwise;
(j)	to act as agents, brokers, advisers or consultants in relation to the investment of money, the management of property and all insurance, pension and taxation matters, and generally to transact all agency, broking, advisory or consultancy business of every kind.

(2)	To carry on the business of a holding and investment company and to acquire whether by purchase, subscription, exchange or otherwise), take options over and hold securities of any company or companies in any part of the world, and to vary, transpose, dispose of or otherwise deal with or turn to account from time to time as may be considered expedient any of the Company’s investments for the time being.
(3)	To co-ordinate the administration, policies, management, supervision, control, research, planning, business operations and any and all other activities of, and to act as financial advisers and consultants to, any company or companies or group of companies now or hereafter formed, incorporated or acquired which may be or may become associated in any way with the Company, directly or indirectly, and to perform any services or undertake any duties to or on behalf of or in any other manner assist any such company or group as aforesaid, in any such case with or without remuneration.
(4)	To undertake and execute the office of executor, administrator, attorney, judicial and custodian trustee, receiver, manager, committee, liquidator and treasurer and to establish, undertake and execute trusts of all kinds, whether private or public, including religious and charitable trusts, and generally to carry on trustee and executor business in all its aspects and on such terms as may be thought expedient and in particular, but without prejudice to the generality of the foregoing, to act as trustees for the holders of any securities of any company and as managers and trustees of unit trusts, investment trusts and pension, benevolent and other funds and to transact all kinds of business arising in connection with any of the foregoing offices and trusts, and to establish, settle and regulate and, if thought fit, undertake and execute any trusts with a view to the issue of any securities, certificates or other documents based on or representing any securities or other assets appropriated for the purposes of such trust.
(5)	To promote, effect, negotiate, offer for sale by tender or otherwise, guarantee, underwrite, secure the subscription or placing of, subscribe or tender for or procure the subscription of (whether absolutely or conditionally), participate in, manage or carry out, on commission or otherwise, any issue, public or private, of the securities of

	any company, and to lend money for the purposes of any such issue, and to act as dealers in securities whether as principal or agent.
(6)	To finance or assist in the financing of the acquisition, hire, lease or sale of real and personal property of every kind, and the provision of services in connection therewith, whether by way of personal loan, hire purchase, instalment finance, deferred payment or otherwise; to acquire by assignment or otherwise debts owing to any person or company and to collect such debts, and generally to act as traders, factors, carriers, merchants or in any other capacity, and to import, export, buy, sell, let on hire, charter, barter, make advances upon, pledge or otherwise deal in real and personal property of every kind.
(7)	To enter into any guarantee, bond, recognizance, contract of indemnity or suretyship and otherwise give security or become responsible for the performance of any obligation or duties by any person or company and in particular (without prejudice to the generality of the foregoing) to guarantee, support or secure, whether by personal covenant or by mortgaging or charging all or any part of the undertaking, property and assets, present and future, and uncalled capital of the Company, or by both such methods, the performance of the obligations of, and the payment of monies secured by, or payable under or in respect of the securities of, any company or person, including (but without limitation) the Company’s holding company or any subsidiary of the Company or of such holding company or any company otherwise associated with the Company in business, and to give and take counter-guarantees and indemnities, and to receive security for the implementation of any obligation, and to undertake the insurance, re-insurance and counter-insurance of all kinds of risks, and generally to carry on the business of an insurance and guarantee company in all its aspects.
(8)	To raise and borrow money by any means, including the issue of debentures, loan stocks, bonds, notes and other securities, upon and subject to such terms and conditions as may be considered expedient, and to secure all or any of the Company’s liabilities in respect of money raised or borrowed, or any other debt or obligation of or binding on the Company, by mortgaging or charging all or any part of the undertaking, property and assets, present and future, and uncalled capital of the Company.
(9)	To carry on the business of installing, selling, renting and providing computers, data processing and storage equipment and systems, computer bureau, programming, operating and consultancy services and communication systems of all kinds, and acquiring, leasing, hiring and disposing of electronic and mechanical equipment and machinery, and ancillary chattels and property of any kind or description.
(10)	To carry on the business of providing managerial, secretarial, accountancy, consultancy, statistical and any other supervisory executive and advisory services of whatsoever kind for or in relation to any person, company, property or business.
(11)	To act as forwarding agents., travel and shipping agents, commission agents, surveyors, architects, valuers, property consultants and managers, land and estate agents, insurance brokers and average adjusters, and generally to undertake all kinds of professional and agency business.
(12)	To purchase, take options over, take on lease or in exchange, hire or otherwise acquire, for any estate or interest and on such terms and for such consideration as may be considered expedient, construct and develop real and personal property of every kind.
(13)	To sell, exchange, mortgage, let on rent, royalty, share of profit or otherwise, improve, manage, turn to account, grant licences, easements, options or other rights over and in any manner deal with or dispose of the undertaking, property and assets (including uncalled capital) of the Company or any part thereof for such consideration

	as may be thought fit, and in particular for securities, whether fully or partly paid up, of any other company, and to hold, deal with or dispose of such consideration.
(14)	To amalgamate or enter into partnership or any profit-sharing arrangement with and to co-operate in any way with or assist or subsidise any company, and to purchase or otherwise acquire and undertake all or any part of the business, assets and liabilities of any person or company.
(15)	To enter into any arrangement with any company which is a subsidiary of or otherwise associated with the Company and through which any part of the Company’s business is or is to be conducted, for the taking of profits and bearing of losses of any business so carried on for financing any such subsidiary or associated company or guaranteeing its liabilities, and to make any other arrangement which may seem expedient with reference to any business so carried on, including power at any time, and either temporarily or permanently, to discontinue any such business.
(16)	To invest any monies of the Company in such investments, securities and any other kind of property (whether real or personal) as may be thought expedient and to hold, sell or otherwise deal with such investments, securities or property.
(17)	To establish or promote or concur in the establishment or promotion of any company.
(18)	To take or concur in taking all such steps and proceedings (including the undertaking of any obligation, monetary or other-wise) as may seem best calculated to uphold and support the credit of the Company or to obtain, maintain, restore and justify public confidence, or to avert or minimise financial disturbances which might affect the Company.
(19)	To procure the registration or incorporation of the Company in or under the laws of any place outside England and Wales.
(20)	To seek and secure, and generally to utilise and exploit, openings for the employment of capital in any part of the world, and with a view thereto to employ experts to investigate into and examine the conditions, prospects, value, character and circumstances of any business concerns and undertakings, and generally of any assets, concessions, properties and rights whether in existence Or contemplation.
(21)	To enter into any arrangement with any government or authority, international, supreme, municipal, local or otherwise, and to obtain any lights, concessions and privileges from any such government or authority and to carry out, exercise and comply with any such arrangements, rights, concessions and privileges.
(22)	To take all necessary and proper steps in Parliament or with any government or authority, international, supreme, municipal, local or otherwise, for the purpose of carrying out, extending or varying the objects and powers of the Company, or altering its constitution, and to oppose any proceedings or applications which may seem calculated directly or indirectly to prejudice the Company’s interests.
(23)	To distribute any of the property of the Company among its members in specie.
(24)	To subscribe, donate or guarantee money for any national, charitable, benevolent, public, general or useful object or for any exhibition or sporting activity or for any purpose which may be considered likely directly or indirectly to further the objects of the Company or the interests of its members and to subscribe or donate money to any association or fund for the protection, defence or benefit of any persons or companies carrying on businesses similar to those carried on by the Company or any of its subsidiaries.

(25)	To establish and maintain or procure the establishment and maintenance of any non-contributory or contributory pension or superannuation funds for the benefit of, and to give or procure the giving of donations, gratuities, bonuses, benefits, pensions, allowances or emoluments to, any persons who are or were at any time in the employment or service of the Company or of its holding company or of any company which is a subsidiary of the Company or of such holding company or is allied to or associated in business with the Company or with any such subsidiary or the predecessors in business of the Company or any other such company as aforesaid, or who are or were at any time directors or officers of the Company or of any such other company as aforesaid or their respective predecessors in business and the wives, widows, families, dependents and personal representatives of any such persons, and also to establish and subsidise or subscribe to any institutions, associations, building and housing schemes, clubs, funds or trusts calculated to be for the benefit of any such persons as aforesaid, or to advance the interest and well being of the Company or of any such other company as aforesaid, and to make payments for or towards the insurance of any such persons as aforesaid.
(26)	To carry on the business, whether for remuneration or not, of developing, installing, selling, renting, licensing or providing any type of equipment, smartcard, computer system, computer hardware, computer software, software development too or kit, encryption or decryption device or algorithm in any form, or any other thing of any kind or description, relating to electronic trading, encryption, decryption, electronic signatures, electronic data interchange, electronic commerce or the conduct of any business in or through any electronic or digital media.
(27)	To carry on the business, whether for remuneration or not, of providing any type of service comprising of or relating to, in whole or in part, computer systems, computer hardware, computer software, smartcards, electronic trading, electronic, settlement, encryption or decryption of data of any kind or description, electronic signatures, certification of such signatures, electronic data interchange, storage of electronic data, publication of information on electronic media, access to or use of the internet, electronic mail, electronic commerce or the conduct of any business in or through any electronic or digital media.
(28)	To carry on the business, whether for remuneration or not, of a certification authority, and of providing certification services, cryptography support services, software and software development tools and kits in connection with such services.
(29)	To carry on any other business or activity which may seem to the Directors capable of being advantageously carried on in connection or conjunction with or as ancillary to any of the foregoing businesses or which the Directors may consider expedient with a view to rendering profitable or more profitable or enhancing directly or indirectly the value of the Company’s undertaking or any of its property or assets, and to do all such other things as the Directors may consider incidental or conducive to the attainment of the Company’s objects.
(30)	To do all or any of the foregoing things in any part of the world and either as principals, agents, contractors, trustees or otherwise and by or through trustees, agents, subsidiary and associated companies or otherwise, and either alone or in conjunction with others.

It is hereby declared that-

(a) the expression “company’ (except where used in reference to the Company itself) shall be deemed to include any government or any statutory, municipal or public body, partnership, association, syndicate or other body of persons, whether incorporated or unincorporated and whether domiciled in England or elsewhere, and the expression “securities” includes shares, stocks, debentures, bonds, notes, debenture stocks, loan

stocks, loans, mortgages, certificates or other documents of title, depository receipts, certificates of deposit, funds or other obligations, interests, options, futures or participatory rights of any kind whatsoever;

(b)

the objects specified in each of the paragraphs of this Clause shall not, except where the context expressly so requires, be in anywise limited or restricted by reference to or inference from the terms of any other paragraph or the name of the Company, but may be carried out in as full and ample a manner and shall be construed in as wide a sense as if each of the said paragraphs defined the objects of a separate, distinct and independent company.

5.

The liability of the Members is limited.

6.

The share capital* of the Company is £3,000,001,000 divided into 3,000,000,000 Ordinary Shares of £1 each and 1000 Preference Shares of £1 each, U.S.$1,500,000 divided into 150,000,000 Preference Shares of U.S.$0.01 each and €40,000,000 divided into 400,000 Preference Shares of €100 each. The shares in the present or any increased capital of the Company may be issued, with such preferred, capital or otherwise, as the Company may from time to time determine.

(*Amended 30 December 2004)

THE COMPANIES ACTS 1948 TO 1967

and

THE COMPANIES ACTS 1985 AND 1989

A PUBLIC COMPANY LIMITED BY SHARES

ARTICLES OF ASSOCIATION

of

BARCLAYS BANK PLC
(formerly Barclays Bank International Limited)

(amended by Special Resolution
passed on 30 December 2004)

I. PRELIMINARY

Application

1. No regulations or articles for management of a company contained or set out in any Act of Parliament or statutory instrument concerning companies shall apply to the company and the following shall be the articles of association of the company.

Interpretation

2.	(a)	In these articles, if not inconsistent with the subject or context and save for those words and expressions defined solely for the purpose of a specific article, the words and expressions standing in the first column below shall bear the meanings set opposite to them respectively in the second column:
		“articles”	these articles of association as amended from time to time;
		“board”	the board of directors for the time being of the company or the directors of the company present at a duly convened meeting of directors at which a quorum is present or any of them acting as the board of directors in accordance with these articles;
		“chairman”	the chairman for the time being of the board;
		“clear days”	in relation to a period of notice, that period excluding both the day when the notice is served (or deemed to be served) in accordance with these articles and the day for which it is given or on which it is to take effect;
		“company”	Barclays Bank PLC or such other name by which the company may for the time being be registered in accordance with the provisions of the statutes;
		“connected”	in relation to a director of the company, has the meaning given to it in Section 346;

-1-

“deputy chairman”	a deputy chairman for the time being of the board;
“director”	a director for the time being of the company;
“dividend”	dividend and/or bonus;
“dollar preference shares”	the preference shares of US $0.01 each in the capital of the Company referred to in article 3(a) or, as the case may require, the number thereof for the time being in issue;
“euro business day”	the meaning given to it in article 3(e)(ix);
“euro preference shares”	the preference shares of €100 each in the capital of the company referred to in article 3(a) or, as the case may require, the number thereof for the time being in issue;
“further shares”	the meaning given to it in article 3(f);
“group”	the company and its subsidiary undertakings;
“holder”	in relation to shares, the member whose name is entered in the register as the holder of the shares;
“issue date”	the meaning given to it in article 3(e)(i);
“liquidation value”	the meaning given to it in article 3(g);
“London business day”	the meaning given to it in article 3(A)(h);
“member”	a member of the company;
“office”	the registered office for the time being of the company;
“ordinary shares”	the ordinary shares of £1 each in the capital of the company referred to in article 3 or, as the case may require, the number thereof for the time being in issue;
“overseas branch register”	branch register of members as defined in Section 362(2);
“paid up” or “paid”	paid up and/or credited as paid up in respect of the nominal amount of a share;
“prescribed period”	the meaning given to it in article 12(d);
“redemption date”	the meaning given to it in article 3(e)(i);
“register”	the register of members of the company;
“rights issue”	the meaning given to it in article 12(d);
“seal”	the common seal (if any) of the company;
“section 80 amount” and “Section 89 amount”	the meanings given to them in article 12(d);
“securities seal”	the official seal (if any) of the company permitted to be used by Section 40;

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“statutes”	the Companies Act 1985, the Companies Act 1989 and every other Act and statutory instrument for the time being in force concerning companies and affecting the company;
“statutory accounts”	the meaning given to it in article 147;
“sterling preference shares”	the preference shares of £1 each in the capital of the company referred to in article 3(a) or, as the case may require, the number thereof for the time being in issue;
“subsidiary”	a subsidiary as defined in Section 736;
“subsidiary undertaking”	a subsidiary undertaking as defined in Section 258;
“transfer office”	the address at which the register is for the time being kept;
“United Kingdom”	the United Kingdom of Great Britain and Northern Ireland;
“vice-chairman”	a vice-chairman for the time being of the board; and
“in writing”	written or produced by any method of representing or reproducing words in a legible and non-transitory form.

(b) The following provisions shall apply to the construction or interpretation of these articles or any part thereof:

(i)	any reference to any section or provision of any Act of Parliament shall, if not inconsistent with the subject or context, include every statutory modification, addition or re-enactment thereto or thereof for the time being in force;
(ii)	any reference to a numbered article shall be a reference to the article bearing that number in these articles and includes reference to such article as amended from time to time and any reference in an article to a paragraph or sub-paragraph shall, unless stated otherwise, be to a paragraph or sub-paragraph of such article;
(iii)	any reference to a numbered Section, Part or Schedule shall, unless stated otherwise, be a reference to the Section, Part or Schedule bearing that number in the Companies Act 1985 (subject to the provisions of paragraph (b)(i));
(iv)	words importing the singular number include the plural and vice versa;
(v)	words importing the masculine gender include the feminine gender and the neuter and vice versa;
(vi)	words importing persons include companies, corporations, firms and other unincorporated bodies;
(vii)	the expression “secretary” shall mean and include the secretary and any joint, deputy or assistant secretary for the time being of the company and any person qualified in accordance with the statutes appointed by the board to perform any of the duties of the secretary or a deputy or assistant secretary;
(viii)	save as aforesaid, any words or expressions defined in the statutes shall, if not inconsistent with the subject or context, bear the same meanings in these articles except that the word “company” includes any body corporate or unincorporate;
(ix)	a special or extraordinary resolution shall be effective for any purpose for which an ordinary resolution is expressed to be required under any provision of these articles and a special resolution shall be effective for any purpose for which an extraordinary resolution is so expressed to be required;

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(x)	the expression “meeting of the company” shall be deemed to include, unless the context otherwise requires, a separate meeting of the holders of any class of shares and the expression “meeting” shall be construed accordingly; and
(xi)	the headings contained in these articles are included for convenience only and shall not in any way affect their construction.

II. CAPITAL

A. ISSUES AND RIGHTS

Authorised share capital

3.	(a)	The share capital of the company at the date of the adoption of these articles consists of £3,000,001,000, divided into 3,000,000,000 ordinary shares of £1 each and 1000 sterling preference shares of £1 each, US$1,500,000 divided into 150,000,000 dollar preference shares of US$0.01 each and €40,000,000 divided into 400,000 euro preference shares of €100 each.
	(b)	The dollar preference shares may be issued with such rights, and subject to such restrictions, as may be determined prior to the issue thereof in accordance with article 5 and so that the dollar preference shares may be issued in one or more separate series in each case having attached thereto rights and restrictions which either are identical (save as to the date from which such shares rank for dividend) with the rights and restrictions attached to any other series of dollar preference shares or are different in any respect from the rights and restrictions attached to any such other series. The dollar preference shares of each series shall be designated in such manner as may be so determined.
	(c)	The euro preference shares may, subject to paragraphs (d) and (e) of this article, be issued with such rights, and subject to such restrictions, as may be determined prior to the issue thereof in accordance with article 5 and so that the euro preference shares may be issued in one or more separate series in each case having attached thereto rights and restrictions which either are identical (save as to the date from which such shares rank for dividend) with the rights and restrictions attached to any other series of euro preference shares or are different in any respect from the rights and restrictions attached to any such other series. The euro preference shares of each series shall be designated in such manner as may be so determined.
	(d)	Without prejudice to paragraph (f) of this article and save as may otherwise be prescribed by special resolution of the company determining, prior to the issue thereof, the terms and conditions of any series of euro preference shares, the euro preference shares shall rank, in regard to participation in profits, in priority to or pari passu with, but not (except with the consent or sanction of the holders of the euro preference shares given in accordance with article 6) junior to any other class of shares in the company and, on a return of capital on a winding up or (other than on a redemption or purchase of shares, or a reduction of share capital, permitted by the articles and under applicable law) otherwise, the euro preference shares shall rank in priority to or pari passu with, but not (except with the consent or sanction of the holders of the euro preference shares given in accordance with article 6) junior to any other class of shares in the company.
	(e)	Save as may otherwise be prescribed by special resolution of the company in regard to any series of the euro preference shares, the euro preference shares shall be governed by the following provisions as to redemption:

(i) The company shall have the right (subject to the statues) to redeem on any redemption date all but not some only of the euro preference shares of any series for the time being issued and fully paid by giving to the holders of the particular euro preference shares to be redeemed not less than 30 days’ nor more than 60 days’ prior notice in writing of the relevant redemption date. The expression “redemption date” means, in relation to euro preference

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	shares of any series, any date which falls not less than ten years after the date (the “issue date”) when such euro preference shares were first issued.
(ii)	Subject as mentioned in subparagraph (i) above, there shall be paid on each euro preference share so redeemed the liquidation value thereof, together with the accrued and unpaid instalment of dividend thereon (whether or not declared) in respect of the period from the dividend payment date last preceding the redemption date to the redemption date (but not in respect of any earlier period).
(iii)	Any notice of redemption given under subparagraph (i) above shall specify the applicable redemption date; the particular series of euro preference shares to be redeemed; the redemption price (specifying the amount of the accrued and unpaid dividend per share to be included therein); that dividends on the euro preference shares to be redeemed will cease to accrue on redemption; and the place or places at which documents of title in respect of such euro preference shares are to be presented and surrendered for redemption and payment of the redemption moneys is to be effected, and upon such redemption date the company shall redeem the particular euro preference shares to be redeemed on that date subject to the provisions of this paragraph (e) and of the statutes. No defect in the notice of redemption or in the giving thereof shall affect the validity of the redemption proceedings.
(iv)	The provisions of this and the following subparagraphs shall have effect in relation to euro preference shares of any series for the time being issued and outstanding in registered form (“registered shares”) and represented by certificates (“certificates”) and in relation to euro preference shares of any series which, in accordance with article 15 and the terms and conditions thereof, are for the time being issued and outstanding in bearer form (“bearer shares”) and represented by share warrants (“warrants”).
(v)	Payments in respect of the amount due on redemption of a registered share shall be made by euro cheque drawn on a branch of a bank in London or, upon the request of the holder or joint holders not later than the date specified for the purpose in the notice of redemption, by transfer to a euro account maintained by the payee with a branch of a bank in London. Such payment will be made against presentation and surrender of the relative certificate at the place or one of the places specified in the redemption notice.
(vi)	Payment in respect of the amount due on redemption of a bearer share shall be made by euro cheque drawn on a branch of a bank in London or, upon the request of the holder not later than the date specified for the purpose in the notice of redemption, by transfer to a euro account maintained by the payee with a branch of a bank in London. Such payment will be made against presentation and surrender of the relative warrant at the place or one of the places specified in the redemption notice. Upon the relevant redemption date all unmatured dividend coupons (if any), and any talon for additional dividend coupons, appertaining thereto (whether or not attached) shall become void and no payment will be made in respect thereof.
(vii)	All payments in respect of redemption moneys will in all respects be subject to any applicable fiscal or other laws and other regulations.
(viii)	As from the relevant redemption date the dividend on the euro preference shares due for redemption shall cease to accrue except on any such euro preference share in respect of which, upon the due surrender of the certificate or, as the case may be the warrant therefor in accordance with subparagraph (v) or, as the case may be, (vi) above, payment of the redemption moneys due on such redemption date shall be improperly withheld or refused in which case the said dividend, at the rate then applicable, shall be deemed to have continued and shall accordingly continue to accrue from the relevant redemption date to the date of payment of such redemption moneys. Such euro preference shares shall not

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	be treated as having been redeemed until the redemption moneys in question, together with the accrued dividend thereon, shall have been paid.
(ix)	If the due date for the payment of the redemption moneys on any euro preference share is not a day (other than a Saturday or Sunday) on which (1) banks in London are open for business (2) foreign exchange dealings may be conducted in euro and (3) the Trans-European Automated Real Time Gross Settlement (TARGET) system (or any successor thereto determined by the Issuer) is operating (a “euro business day”), then payment of such moneys will be made on the next succeeding day which is a euro business day (and without any interest or other payment in respect of such delay).
(x)	The receipt of the holder for the time being of any registered share (or in the case of joint holders the receipt of any of them) and the receipt of the person delivering any warrant to the place or one of the places specified in accordance with subparagraph (iii) above, in respect of the moneys payable on redemption of the registered share or, as the case may be, the bearer share, shall constitute an absolute discharge to the company.
(xi)	Subject to the provisions of the statutes and any other applicable laws, the company may at any time purchase any euro preference shares in issue upon such terms and conditions as the board may think fit or as may be prescribed by the terms of issue thereof.
(xii)	Upon the redemption or purchase of any euro preference shares the board shall have power to convert the authorised but unissued euro preference shares existing as a result of such redemption or purchase into shares of any other class of share capital into which the authorised share capital of the company is or may at any time be divided of the same nominal amount in euros as the euro preference shares or into unclassified shares of the same nominal amount in euros as the euro preference shares.

(f) The company may at any time or from time to time, without the consent or sanction of the holders of the sterling preference shares, the dollar preference shares or the euro preference shares of any series, create and issue further preference shares or other share capital (“further shares”) of one or more series ranking as regards participation in the profits and assets of the company pari passu with, or junior to, the sterling preference shares, the dollar preference shares and euro preference shares of any series, but not (other than on a redemption or purchase by the company of any such shares, or a reduction of share capital, permitted by the articles and under applicable law) in priority thereto unless the holders of each class of sterling preference shares, dollar preference shares and euro preference shares to which such shares are to rank in priority have so sanctioned or consented thereto in accordance with article 6, and so that, save as aforesaid and save as may otherwise be expressly provided by the terms of issue of the sterling preference shares, dollar preference shares or euro preference shares or further shares of any series, the further shares of any series may either carry rights identical in all respects (except as regards the date from which such shares rank for dividend) with the sterling preference shares, dollar preference shares or euro preference shares of any series or carry rights differing therefrom in any respect including, but without limitation, in that:

(i)	the rate and/or basis of calculating dividends may differ and the dividend may be cumulative or non-cumulative;
(ii)	such shares may rank for dividends as from such date as may be provided by the terms of issue thereof and the dates for payment of dividend may differ;
(iii)	such shares may be denominated in any currency or, if permitted by law, any basket of currencies;
(iv)	a premium may be payable on return of capital or there may be no such premium;

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(v)	such shares may be redeemable at the option of the Issuer or may be non-redeemable;
(vi)	different or no restrictions may apply in the event a dividend is not paid on such shares on a scheduled dividend payment date therefor; and
(vii)	such shares may be convertible into ordinary shares or any other class of shares ranking as regards participation in the profits and assets of the company pari passu with or junior to any class of the sterling preference shares, dollar preference shares or euro preference shares, in each case on such terms and conditions as may be prescribed by the terms of issue thereof.

(g) For the purposes of this article:

(i)	“liquidation value” means the fixed amount specified as such in the terms and conditions of the relevant class of euro preference shares;
(ii)	references to “US$”, “dollars” and “cents” are references to the lawful currency for the time being of the United States of America;
(iii)	references to “€” and “euro” are references to the lawful currency of the member states of the European Union that have adopted or adopt the single currency in accordance with the Treaty establishing the European Community, as amended from time to time.

3(A)	(a)	The sterling preference shares shall be issued with the rights and subject to the restrictions set out in this article 3(A) and with such other rights and subject to such other restrictions as may be determined prior to the issue thereof in accordance with article 5.
	(b)	The sterling preference shares shall rank, in regard to participation in profits, in priority to the ordinary shares and pari passu with the euro preference shares issued as 4.875% Non-Cumulative Callable Euro Preference Shares, Series 1 on 8 December 2004 (the “Series 1 Euro Preference Shares”) and, on a return of capital on a winding up or (other than on a redemption or purchase of shares, or a reduction of share capital, permitted by the articles and under applicable law) otherwise, the sterling preference shares shall rank in priority to the ordinary shares and pari passu with the Series 1 Euro Preference Shares.
	(c)	Save as may otherwise be prescribed by special resolution of the company, the sterling preference shares shall be governed by the following provisions as to redemption:

(i)	the company shall have the right (subject to the statutes) to redeem on any redemption date all but not some only of the sterling preference shares for the time being issued and fully paid by giving to the holders of the sterling preference shares to be redeemed not less than 5 days’ prior notice in writing of the relevant redemption date. The expression “redemption date” means, in relation to the sterling preference shares, any date which falls later than 1 January 2005.
(ii)	Subject as mentioned in subparagraph (i) above, there shall be paid on each sterling preference share so redeemed the nominal amount thereof, together with the accrued and unpaid instalment of dividend thereon (whether or not declared) in respect of the period from the dividend payment date last preceding the redemption date (or if none, the issue date) to the redemption date and any accumulated arrears of dividend thereon.
(iii)	Any notice of redemption given under subparagraph (i) above shall specify the applicable redemption date; the redemption price (specifying the amount of the accrued and unpaid dividend per share to be included therein); that dividends on the sterling preference shares to be redeemed

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will cease to accrue on redemption; and the place or places at which certificates (“certificates”) in respect of such sterling preference shares are to be presented and surrendered for redemption and payment of the redemption moneys is to be effected, and upon such redemption date the company shall redeem the particular sterling preference shares to be redeemed on that date subject to the provisions of this paragraph (iii) and of the statutes. No defect in the notice of redemption or in the giving thereof shall affect the validity of the redemption proceedings.

(d)	Sterling preference shares shall be issued in registered form only (“registered shares”) and shall be represented by certificates.
(e)	Payments in respect of the amount due on redemption of a registered share shall be made by pounds sterling cheque drawn on a branch of a bank in London or, at the request of the holder not later than the date specified for the purpose in the notice of redemption, by transfer to a pounds sterling account maintained by the payee with a branch of a bank in London. Such payment may, at the election of the company, be made against presentation and surrender of the relative certificate at the place or one of the places specified in the redemption notice.
(f)	All payments in respect of redemption moneys will in all respects be subject to any applicable fiscal or other laws and other regulations.
(g)	As from the relevant redemption date the sterling preference shares shall be redeemed and the dividend on the sterling preference shares due for redemption shall cease to accrue except on any such sterling preference share in respect of which, upon the due surrender of the certificate in accordance with paragraph (c)(iii) above, payment of the redemption moneys due on such redemption date shall be improperly withheld or refused in which case the said dividend, at the rate then applicable, shall be deemed to have continued and shall accordingly continue to accrue from the relevant redemption date to the date of payment of such redemption moneys. Such sterling preference shares shall not be treated as having been redeemed until the redemption moneys in question, together with the accrued dividend thereon, shall have been paid.
(h)	If the due date for the payment of the redemption moneys on any sterling preference share is not a day (other than a Saturday or Sunday) on which banks in London are open for business (a “London business day”), then payment of such moneys will be made on the next succeeding day which is a London business day (and without any interest or other payment in respect of such delay).
(i)	The receipt of the holder for the time being of any registered share (or in the case of joint holders the receipt of any of them) in respect of the moneys payable on redemption of the registered share shall constitute an absolute discharge to the company.
(j)	Subject to the provisions of the statutes and any other applicable laws, the company may at any time purchase any sterling preference shares in issue upon such terms and conditions as the board may think fit or as may be prescribed by the terms of issue thereof.

Redemption and purchase of the company’s shares

4.	(a)	Subject to the provisions of the statutes and to the rights conferred on the holders of any other shares and to any necessary amendment to these articles, any share may be issued on terms that it is, or at the option of the company or the holder thereof is to be liable, to be redeemed.
	(b)	The company may purchase its own shares (including any redeemable shares) subject to the provisions of the statutes and of these articles and, if there is in issue any class of convertible shares for the time being forming part of the capital of the company, to the holders of not less than three-quarters of such class giving their approval in writing or, alternatively, to an extraordinary resolution approving the

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purchase being passed at a separate meeting of the holders of such class, in each case in accordance with the terms of issue of such convertible shares.

Issue of shares with special rights or restrictions

5. Without prejudice to any rights for the time being conferred on the holders of any shares or class of shares (which rights shall not be varied or abrogated, except with such consent or sanction as is provided by article 6) any share in the company may be allotted and issued with such preferred, deferred or other rights, or such restrictions, whether in regard to dividend, return of capital, voting, conversion or otherwise, as the company may from time to time by ordinary or special resolution determine (or, failing such determination, as the board may determine) provided that no share shall be issued carrying any right of conversion into ordinary shares in the company without the approval of the company by special resolution.

Variation of rights attaching to a class of shares

6. If the capital shall be divided into different classes of shares, the special rights attached to any class of shares may, subject to the provision of the statutes, be varied or abrogated either with the consent in writing of the holders of three-fourths of the issued shares of the class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of the class (but not otherwise) and may be so varied or abrogated either whilst the company is a going concern or during or in contemplation of a winding up.

Conduct of class meetings

7. Any meeting for the purpose of article 6 shall be convened and conducted in all respects as nearly as possible in the same way as an extraordinary general meeting of the company, but no member not being a director shall be entitled to notice thereof, and no person not being a director or the duly appointed proxy of a member entitled to shares of the class shall be entitled to attend thereat, unless he holds shares of the class intended to be affected by the resolution, and votes shall only be given in respect of shares of that class; and at any such meeting the quorum shall be persons holding or representing by proxy at least one-third of the issued shares of the class (but so that if at any adjourned meeting a quorum as above defined is not present, any two holders of the shares of the class present in person or by proxy shall be a quorum), and a poll may be demanded at any such meeting by any holder of shares of the class present in person or by proxy and entitled to vote at the meeting. On a show of hands every holder of shares of the said class who (being an individual) is present in person or by proxy or (being a corporation) is present by a representative in accordance with article 84 shall have one vote, and on a poll every such holder who is present in person or by proxy or by representative as aforesaid shall have one vote in respect of every share of such class held by him.

Special rights not varied by an issue of further shares of the class

8. The special rights attached to any class of shares having preferential rights shall not (unless otherwise expressly provided by the terms of issue thereof) be deemed to be altered by the creation or issue of further shares ranking as regards participation in the profits or assets of the company in some or all respects pari passu therewith but in no respect in priority thereto.

Financial assistance for the acquisition of the company’s shares

9. Save to the extent prohibited by the statutes or otherwise by law, the company shall be entitled, subject to and in accordance with the provisions of the statutes, to give financial assistance directly or indirectly for the purpose of the acquisition or proposed acquisition of any shares in the company or any company of which it is a subsidiary or for the purpose of reducing or discharging any liability incurred by any person for the purpose of acquiring any shares in the company or any company of which it is a subsidiary.

Disqualification from voting

10. No member shall, unless the board otherwise determines, be entitled in respect of any share held by that member to vote either personally or by proxy at any meeting of the company or

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to exercise any other right conferred by membership in relation to any such meeting if any call or other sum presently payable by the member in respect of that share remains unpaid.

B. ALLOTMENT OF SHARES

Unissued shares at disposal of the board

11. Subject to the provisions of the statutes and to the board being duly authorised in accordance with article 12, all unissued shares for the time being in the capital of the company shall be at the disposal of the board which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times and on such terms as the board may decide.

Allotment authority of the board

12.  (a)  By an ordinary or special resolution of the company fixing the prescribed period and the Section 80 amount for the purposes of this article the board may be generally and unconditionally authorised pursuant to Section 80 to exercise for each prescribed period so fixed all the powers of the company to allot relevant securities up to an aggregate nominal amount equal to the Section 80 amount.

(b) Pursuant to and within the terms of the said authority the board shall be empowered during each prescribed period to allot equity securities wholly for cash:

(i)	in connection with a rights issue; and
(ii)	otherwise than under sub-paragraph (i), up to an aggregate nominal amount equal to the Section 89 amount (if any) fixed by a special resolution of the company in respect of the relevant prescribed period;

	as if Section 89(1) did not apply to such allotment.
(c)	The said authority and power shall permit the company to make any offer or agreement during a prescribed period which would or might require relevant securities or, as the case may be, equity securities to be allotted after the expiry of such period and the board may, notwithstanding such expiry, allot relevant securities or, as the case may be, equity securities in pursuance of such offer or agreement.
(d)	For the purposes of this article:

(i)	“rights issue” means an offer of securities open for acceptance for a period fixed by the board to holders of ordinary shares registered as such on a specified record date in proportion to their then holdings of such shares but subject to such exclusions or other arrangements as the board may deem necessary or expedient in relation to fractional entitlements or legal or practical problems or costs under the laws of, or the requirements of any regulatory or stock exchange authority in, any territory or in relation to shares represented by depositary receipts;
(ii)	“prescribed period” means any period (not exceeding 5 years from the passing of the relevant resolution on any occasion) for which the authority referred to in paragraph (a) is conferred by ordinary or special resolution of the company stating the Section 80 amount;
(iii)	“the Section 80 amount” shall for any prescribed period be that stated in the relevant ordinary or special resolution of the company or any increased amount fixed by ordinary resolution of the company;
(iv)	“the Section 89 amount” shall for any prescribed period be that stated in the relevant special resolution of the company; and

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(v) “relevant securities” and “equity securities” shall bear the meanings attributed thereto by Sections 80 and 94 respectively.

(e) Nothing in this article shall affect any authority or power conferred on the board for the purposes of Section 80 and/or Section 95 prior to the adoption of these articles.

Power to pay commission and brokerage on subscription of shares

13. In addition to all other powers of paying commissions, the company may pay commissions to persons subscribing or procuring subscriptions for shares in the company, or agreeing to do so whether absolutely or conditionally, in the manner and to the extent permitted by Section 97. The company may also, on any issue of shares, pay such brokerage as may be lawful. Such commission or brokerage may be satisfied in cash or by the allotment and issue of shares paid up fully or in part, or in a combination of cash and the allotment and issue of such shares.

Trusts in relation to shares not to be recognised

14. Except as required by law, no person shall be recognised by the company as holding any share upon any trust, and (except only as by these articles or by law otherwise provided) the company shall not be bound by or recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share, or any interest in any fractional part of a share, or any other right in respect of any share, except an absolute right to the entirety thereof in the holder.

Issue of warrants

15.	(a)	The company may, with respect to fully paid shares, issue share warrants stating that the bearer is entitled to the shares specified therein, and may provide by coupons or otherwise for the payment of future dividends or other moneys on or in respect of the shares included in such share warrants.
	(b)	A share warrant shall entitle the bearer thereof to the shares included in it, and the shares may be transferred by the delivery of the share warrant, and the provisions of these articles with respect to transfer and transmission of shares shall not apply thereto. The method or system of sealing (if required) and signature (if any) of warrants shall be as for share certificates under article 16.
	(c)	The board shall be at liberty to accept a certificate (in such form and from such person as the board may approve) to the effect that a specified person is shown in the records of the person issuing such certificate as being entitled to the shares comprised in a specified share warrant as sufficient evidence of the facts stated in such certificate, and may treat the deposit of such certificate at such place as is specified from time to time by the board as equivalent to the deposit thereat of the share warrant, and may (inter alia) allot to the person named in such certificate any shares to which the bearer of the share warrant referred to in such certificate may be entitled and the right of the allottee to the allotment shall not, after allotment, be questioned by any person.
	(d)	The board may determine, and from time to time vary, the conditions upon which share warrants shall be issued, and in particular (but without limitation) upon which a new share warrant or coupon will be issued in the place of one worn out, defaced, lost or destroyed (provided that no new share warrant may be issued to replace one that has been lost unless the board is satisfied beyond reasonable doubt that the original share warrant has been destroyed), upon which (subject as hereinafter provided) the bearer of a share warrant shall be entitled to attend and vote at meetings of the company, and upon which a share warrant may be surrendered and the name of the holder entered in the register in respect of the shares therein specified. Subject to such conditions and to these articles, the bearer of a share warrant shall be subject to the conditions for the time being in force relating to share warrants, whether made before or after the issue of such share warrant.
	(e)	Subject to any conditions for the time being in force relating to share warrants and as otherwise expressly provided in these articles, the bearer of a share warrant may at any time deposit the share warrant at such place as the board may from time to

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time appoint and so long as the share warrant remains so deposited, the depositor shall have the same right of signing a requisition for calling a meeting of the company, of giving notice of intention to submit a resolution to a meeting and of attending and voting, appointing a proxy and exercising the other privileges of a member at any meeting held after the expiration of 48 hours from the time of deposit, as if his or her name were inserted in the register as the holder of the shares included in the deposited share warrant, provided that in the case of a share warrant deposited elsewhere than at any office of the company the depositor shall have obtained from the person with whom the same is deposited a certificate of such deposit in such form as the board may require specifying, inter alia, the share warrants and the number of shares included therein, and shall have lodged the same at such first-mentioned place not less than 48 hours before the time of the meeting at which the depositor desires to attend or to be represented. Not more than one person shall be recognised as a depositor of any share warrant. Every share warrant which shall have been so deposited as aforesaid shall remain so deposited until after the closing of the meeting at which the depositor desires to attend or to be represented.

(f)

Subject to any conditions for the time being in force relating to share warrants and as otherwise expressly provided in these articles, no person shall, as bearer of a share warrant, be entitled to sign a requisition for calling a meeting of the company or give notice of intention to submit a resolution to a meeting or attend or vote or appoint a proxy or exercise any other privilege of a member at a meeting of the company, or be entitled to receive any notices from the company, but the bearer of a share warrant shall be entitled in all other respects to the same privileges and advantages, and shall be subject to the provisions of these articles, as if he or she were named in the register as the holder of the shares included in the share warrant, and he or she shall be deemed to be a member of the company.

C. CERTIFICATES

Form of share certificates and method of execution

16. Every share certificate shall be issued under the seal (or, in the case of shares on an overseas branch register, an official seal for use in the relevant territory) or signed (whether personally or otherwise and including by facsimile signature, howsoever applied) by a director and the secretary or by two directors. Each certificate shall specify the number and class of shares to which it relates, the amount paid up thereon and the distinguishing numbers (if any) of the shares to which it relates. No certificate shall be issued representing shares of more than one class.

Entitlement to receive share certificates

17.  (a)  Subject to the provisions of article 18, every person whose name is entered as a member in the register shall be entitled without payment to one certificate for all the shares of any one class registered in his or her name. Any certificate or certificates to which any person is entitled hereunder shall (unless the terms of issue of the relevant shares otherwise provide) be delivered:

(i)	in the case of issue, within one month after allotment; or
(ii)	in the case of a transfer of shares (whether fully or partly paid), within one month after lodgment of the relevant instrument of transfer.

	Every certificate despatched by the company shall be sent at the risk of the person entitled thereto.
(b)	If and so long as all the issued shares, or all the issued shares of a particular class, in the capital of the company are fully paid up and rank pari passu for all purposes, none of those shares shall bear a distinguishing number. In all other cases each share which is not fully paid up shall bear a distinguishing number.

Maximum number of joint holders

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18. The company shall not be bound to register more than four persons as the joint holders of any share or shares (except in the case of executors or trustees of a member) and in the case of a share held jointly by several persons the company shall not be bound to issue more than one certificate therefor and delivery of a certificate to one of joint holders shall be sufficient delivery to all.

Balance share certificates

19. Where a member has transferred some only of the shares comprised in a share certificate, the old certificate shall be cancelled and a new certificate for the balance of such shares shall be issued in lieu without charge.

Issue of replacement share certificates

20.	(a)	Any two or more certificates representing shares of any one class held by any member may at such member’s request be cancelled and a single new certificate for such shares issued in lieu subject, if the board so requires, to payment of the reasonable out of pocket expenses of the company in providing the same.
	(b)	If any member shall surrender for cancellation a share certificate representing shares held by him or her and request the company to issue in lieu two or more share certificates representing such shares in such proportions as he or she may specify, the board may, if it thinks fit, comply with such request upon payment of the reasonable out of pocket expenses of the company in providing the same.
	(c)	If a share certificate shall be damaged, defaced, worn out or alleged to have been lost, stolen or destroyed, a new certificate representing the same shares may be issued to the holder upon request subject, unless the board otherwise agrees, to delivery up of the old certificate or (if it shall be alleged to have been lost, stolen or destroyed) compliance with such conditions as to evidence and indemnity (if any) and the payment of any exceptional out of pocket expenses of the company in connection with the request as the board may think fit but without any further or other charge.
	(d)	In the case of shares held jointly by several persons any such request may be made by any one of the joint holders.

Uncertificated shares

21. Subject to the statutes, the company may issue shares in uncertificated form and permit the same (whether or not in such form) to be transferred without the production of written forms of transfer or the creation of certificates and the board may from time to time lay down regulations governing such issue and transfer, which regulations shall (to the extent they specify) operate in substitution for the relevant provisions of these articles governing certificates and the transfer of shares.

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D. CALLS ON SHARES

Board may make calls

22. Subject to the provisions of these articles and to the terms of allotment thereof, the board may from time to time make calls upon the members in respect of any moneys unpaid on their shares and each member shall (subject to receiving at least 14 days’ notice in writing specifying the time or times and place of payment) pay to the company at the time or times and place so specified the amount called on his or her shares. A call may at any time before receipt by the company of a sum due thereunder be revoked in whole or in part, and payment of a call may in whole or in part be postponed, as the board may determine. A person upon whom a call is made shall remain liable for calls made upon him or her notwithstanding the subsequent transfer of the shares in respect of which the call was made.

When a call is deemed to be made

23. A call shall be deemed to have been made at the time when the resolution of the board authorising the call was passed and may be required to be paid by instalments.

Liabilities of joint holders

24. The joint holders of a share shall be jointly and severally liable to pay all calls, instalments, interest and other monies payable in respect thereof.

Interest on unpaid calls

25. If a sum called in respect of any share or any money payable on a share under the terms of allotment is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest on the sum from the day appointed for payment thereof to the time of actual payment at such rate (not exceeding 20 per cent. per annum) as the board may determine and interest at that rate shall be payable after as well as before any order of a court. Such person shall also pay all costs, charges and expenses which the company may have incurred or become liable for in seeking payment of, or in consequence of such non-payment of, such call or instalment, but the board shall be at liberty to waive payment of such interest, costs, charges and expenses wholly or in part.

Sums payable on allotment or at any fixed time deemed to be a call

26. Any sum or non-cash consideration which by the terms of allotment of a share or pursuant to the statutes is or becomes due upon allotment or at any fixed date thereafter whether on account of the nominal amount of the share or by way of premium shall for all the purposes of these articles be deemed to be a call duly made and due on the date on which, by the terms of allotment or pursuant to the statutes, the same becomes due. In the case of non-payment, all the relevant provisions of these articles as to payment of interest, costs, charges and expenses, forfeiture or otherwise shall apply as if such sum had become due by virtue of a call duly made and notified.

Board’s power to differentiate regarding calls

27. The board may on the issue of shares differentiate between the shares issued as to the amount of calls to be paid and the times of payment.

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Payment for shares in advance of calls

28. The board may, if it thinks fit, receive from any member willing to advance the same all or any part of the money unpaid upon the shares held by such member beyond the sums actually called up thereon as a payment in advance of calls, and such payment in advance of calls shall to that extent extinguish the liability on the shares in respect of which it is advanced. The company may (but shall not be obliged to) pay interest upon the money so received (until and to the extent that such sum would but for such advance become payable) at such rate as the member paying such sum and the board agree upon.

E. FORFEITURE AND LIEN

Service of notice requiring payment of unpaid calls

29. If a member fails to pay in full any call or instalment of a call before or on the day appointed for payment thereof, the board may at any time thereafter serve a notice in writing on such member (or on the person becoming entitled to the share by transmission on death or bankruptcy or otherwise by operation of law) requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued and any costs, charges and expenses incurred by the company by reason of such non-payment.

Contents of notice requiring payment of unpaid calls

30. The notice shall name a further day (not earlier than 14 days from the date of service thereof) on or before which, and the place where, the payment required by the notice is to be made, and shall state that in the event of non-payment at or before the time and at the place appointed the shares on which the call was made or instalment is payable will be liable to be forfeited.

Forfeiture of shares

31. If the requirements of any such notice as aforesaid are not complied with, any share in respect of which such notice has been given may at any time thereafter, before payment of all amounts specified in such notice as being due has been received by the company, be forfeited by a resolution of the board to that effect. Such forfeiture shall include all dividends declared on the forfeited share and not actually paid before the forfeiture and any dividends on such share which may have been declared and paid but which have not been claimed by the payee at the date of the resolution of the board by which such share is forfeited. The board may accept the surrender of any share liable to be forfeited hereunder and in such case references in these articles to forfeiture shall include surrender.

Service of notice of forfeiture

32. When any share has been forfeited, notice in writing of the forfeiture shall be served upon the person who was before the forfeiture the holder of that share (or the person entitled thereto by transmission as aforesaid) and an entry of such notice having been given, and of the forfeiture, with the date thereof, shall be made forthwith in the register opposite the entry in respect of the share; but no forfeiture shall be in any manner invalidated by any omission or neglect to give such notice or make such entry as aforesaid.

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Forfeited shares to become the company’s property

33. Upon being forfeited a share shall become the property of the company and at any time thereafter may be sold, re-allotted (subject to the provisions of these articles) or otherwise disposed of, either to the person who was before forfeiture the holder thereof or entitled thereto, or to any other person, upon such terms and in such manner as the board shall think fit including the remission of the whole or any part of the interest made payable by article 25. At any time before such a sale, re-allotment or disposal the forfeiture may be annulled or cancelled on such terms as the board thinks fit. The board may, if necessary, authorise some person to transfer a forfeited share to any person as aforesaid.

Former holder of forfeited shares remains liable for unpaid calls

34. A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares but shall notwithstanding the forfeiture remain liable to pay to the company all moneys which at the date of forfeiture were presently payable by him or her to the company in respect of the shares, with interest thereon at such rate (not exceeding 20 per cent. per annum) as the board may determine, from the date of forfeiture until payment (after as well as before any order of court), but the board may waive payment of such interest either wholly or in part and the board may enforce payment without any allowance for the value of the shares at the time of forfeiture or for any consideration received on their disposal.

Company’s lien on partly paid shares

35. The company shall have a first and paramount lien on every share (not being a fully paid share) for all moneys (whether presently payable or not) payable at a fixed time or called in respect of that share. The company shall also have a first and paramount lien on all shares (other than fully paid shares) standing registered in the name of a single member for all the debts and liabilities of such member or his or her estate to the company. Such liens shall apply whether before or after notice is given to the company of any equitable or other interest of any person other than the holder or holders of such share, whether the time for payment or discharge of the same shall have arrived or not and notwithstanding that the same are joint debts or liabilities of such holder or his or her estate and any other person whether a member of the company or not; but the board at any time may waive any lien which has arisen and may resolve that any share shall be (or be issued on terms that it is) wholly or in part exempt from the provisions of this article. The company’s lien, if any, on a share shall extend to all dividends or other moneys payable thereon or in respect thereof.

Enforcement of lien by sale and application of proceeds of sale

36.	(a)	The company may sell, in such manner as the board thinks fit, all or any of the shares on which the company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable, nor until the expiration of 14 days after a notice in writing stating and demanding payment of the sum presently payable, and giving notice of intention to sell in default, shall have been given to the holder for the time being of the shares or the person entitled to the shares by reason of the death or bankruptcy of such holder or otherwise by operation of law.
	(b)	The net proceeds of such sale, after payment of the costs thereof, shall be applied in or towards payment or satisfaction of the debt or liability in respect whereof the lien exists, so far as the same is presently payable, and any residue shall (subject to a like lien for debts or liabilities not presently payable as existed upon the shares prior to the sale) be paid to the person entitled to the shares at the time of the sale. For

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giving effect to any such sale the board may authorise some person to transfer the shares sold to the purchaser.

Statutory declaration as evidence of forfeiture or enforcement of lien

37. A statutory declaration signed by the declarant stating that he or she is a director or the secretary of the company and that a share has been duly forfeited or sold to satisfy a lien of the company on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share. Such declaration and the receipt of the company for the consideration (if any) given for the share on the sale, re-allotment or disposal thereof, together with the certificate for the share delivered to a purchaser or allottee thereof, shall (subject to the execution of a transfer if the same be required) constitute a good title to the share and the person to whom the share is sold, re-allotted or disposed of shall be registered as the holder of the share and shall be discharged from all calls, interest and expenses (if any) in connection therewith made or incurred prior to such sale, re-allotment or disposal and shall not be bound to see to the application of the consideration (if any) nor shall his or her title to the share be affected by any irregularity or invalidity in the proceedings in relation to the forfeiture, sale, re-allotment or disposal of the share.

F. TRANSFER OF SHARES

Form of transfers

38. Subject to the provisions of article 21, all transfers of shares shall be effected by transfer in writing in any usual or common form or in any other form which the board may approve.

No registration fees payable

39. No fee shall be charged on the registration of any instrument of transfer or probate, letters of administration, certificate of death or marriage, power of attorney, stop notice or other instrument relating to or affecting the title to any shares or otherwise for making any entry in the register affecting the title to any shares.

Execution of transfers

40. The instrument of transfer of a share shall be executed by or on behalf of the transferor, and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register in respect thereof. In the case of a partly paid share the instrument of transfer must also be executed by or on behalf of the transferee.

Board’s power to refuse to register transfers in certain cases

41.	(a)	The board may, in its absolute discretion and without assigning any reason therefor, decline to register any transfer of shares (not being fully paid shares).
	(b)	The board may also decline to register any transfer of shares to an infant or person in respect of whom an order has been made by any competent court or official on the ground that such person is or may be suffering from mental disorder or is otherwise incapable of managing his or her own affairs.

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(c) If the board declines to register a transfer of any shares, it shall, within two months after the date on which the transfer was lodged with the company, send to the transferee notice in writing of the refusal.

General conditions as to transfer

42. Subject to the provisions of article 21, the board may also decline to register any instrument of transfer, unless the instrument of transfer:

(a)	is duly stamped (if required by law) and is deposited at the transfer office or such other place as the board may prescribe and is accompanied by the certificate for the shares to which it relates and such other evidence (if any) as the board may reasonably require to show the right of the transferor to make the transfer (and if the instrument of transfer is executed by some other person on the transferor’s behalf the authority of that person so to do); and
(b)	is in respect of one class of share only; and
(c)	is in favour of not more than four transferees (except in the case of executors or trustees of a member).

Temporary suspension of the registration of transfers

43. Subject to the statutes, the registration of transfers of shares or of any class of shares in the capital of the company may be suspended at such times and for such periods as the board may from time to time determine provided always that such registration shall not be suspended for more than 30 days in any calendar year.

Company to retain transfers and power of
company to destroy transfers and related documents

44.	(a)	Subject to paragraph (b), all instruments of transfer which are registered, and the certificates for the shares to which they relate, shall be retained by the company, but any instrument of transfer which the board may decline to register shall (except in any case of fraud or suspected fraud) be returned with any accompanying certificate to the person presenting the same.
	(b)	Subject as hereinafter provided, the company shall be entitled to destroy:

(i)	all instruments of transfer of shares which have been registered at any time after the expiration of six years from the date of registration thereof;
(ii)	registered share certificates and dividend mandates which have been cancelled or ceased to have effect at any time after the expiration of three years from the date of such cancellation or cessation;
(iii)	all notifications of change of name or address after the expiration of three years from the date of recording thereof;
(iv)	any other document on the basis of which any entry in the register is made at any time after the expiration of six years from the date when the first entry in the register was made in respect of it;

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(v)	all paid dividend warrants and cheques at any time after the expiration of one year from the date of actual payment thereof; and
(vi)	all share warrants and coupons issued under article 15, at any time after the expiration of six years from the date of surrender thereof to the company;

and it shall conclusively be presumed in favour of the company that every entry in the register purporting to have been made on the basis of an instrument of transfer or other document so destroyed was duly and properly made and that every instrument of transfer so destroyed was a valid and effective instrument duly and properly registered and that every share certificate, share warrant or coupon so destroyed was a valid and effective document duly and properly cancelled and that every other document so destroyed was a valid and effective document in accordance with the recorded particulars thereof in the books or records of the company provided that:

(aa)	the provisions of this article shall apply only to the destruction of a document in good faith and without notice in writing to the company of any claim (regardless of the parties thereto) to which the document might be relevant;
(bb)	nothing herein contained shall be construed as imposing upon the company any liability in respect of the destruction of any such document earlier than as aforesaid or in any case where the conditions of proviso (aa) above are not fulfilled; and
(cc)	references herein to the destruction of any document include references to the disposal thereof in any manner.

Renunciation of allotment permitted

45. The board may at any time after the allotment of any share but before any person has been entered in the register as the holder recognise a renunciation by the allottee in favour of some other person and may accord to any allottee of a share a right to effect such renunciation upon and subject to such terms and conditions as the board may think fit to impose. In this article “allottee” includes provisional allottee and any person in whose favour an allotment has been previously renounced.

G. TRANSMISSION OF SHARES

Surviving joint holders or personal representatives alone recognised upon death of a member

46. In the event of the death of a member, the survivors or survivor where the deceased was a joint holder, or the legal personal representatives of the deceased where he or she was a sole or only surviving holder, shall be the only persons recognised by the company as having any title to his or her interest in the shares held by such member, but nothing contained in these articles shall release the estate of a deceased member from any liability in respect of any share jointly or solely held by such member.

Person becoming entitled to share by operation of law may be registered

47. Subject to the provisions of these articles, any person becoming entitled to a share in consequence of the death or bankruptcy of a member or otherwise by operation of law may upon such evidence as to his or her title being produced as may from time to time be

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reasonably required by the board, and subject as hereinafter provided, elect either to be registered as holder of the share or to have some person nominated by him or her registered as the transferee thereof.

Person electing to be registered required to notify the company

48. If the person becoming entitled to a share shall elect to be registered under the provisions of article 47, he or she shall deliver or send to the company a notice in writing signed by him or her stating that he or she so elects. If he or she shall elect to have another person registered, he or she shall testify such election by executing a transfer to such person of such share. All the limitations, restrictions and provisions of these articles relating to the right to transfer and the registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the death or bankruptcy of the member or other event had not occurred and the notice or transfer were a transfer signed by such member.

Rights of persons entitled to a share by transmission

49.  (a)  Save as otherwise provided by or in accordance with these articles, a person becoming entitled to a share in consequence of the death or bankruptcy of a member or otherwise by operation of law shall (upon supplying to the company such evidence as the board may reasonably require to show his or her title to the share) be entitled to receive, and may give a good discharge for, any dividends and other moneys payable in respect thereof as if he or she were the registered holder thereof; such person shall also be entitled to all other advantages to which he or she would be entitled if he or she were the registered holder of the share, except that he or she shall not, before being registered as a member in respect of the share, be entitled in respect of it to receive notice of or to attend or vote at meetings of the company or to exercise any rights conferred by membership in relation to meetings of the company; provided that the board may at any time give notice requiring any such person to elect either to be registered or to transfer the share and, if the notice is not complied with within such period (being not less than 42 days) as the board may fix, the company may thereafter:

(i)	withhold payment of all dividends and other moneys payable in respect of the share (but any such action shall not constitute the company a trustee in respect of any such dividends or other moneys) and suspend any other advantages to which such person would otherwise be entitled in respect of the share until the requirements of the notice have been complied with; and/or
(ii)	sell the share at the best price reasonably obtainable in such manner as the board thinks fit and, subject to the provisions of these articles generally, the provisions of paragraph (b) shall apply to such sale.

(b) To give effect to any sale to be made pursuant to the provisions of this article, the board may appoint any person to execute as transferor an instrument of transfer of such share and such instrument of transfer shall be as effective as if it had been executed by the holder of, or person so entitled by transmission to, such share and the title of the transferee shall not be affected by any irregularity or invalidity in the proceedings relating thereto. The company shall account to the holder of, or other person so entitled to, such share for the net proceeds of such sale, subject to a demand to account therefor being received by the company within 12 years of the date of such sale, and the company shall be deemed to be his or her debtor, and not a trustee for him or her, in respect of the same. Any moneys not accounted for to the holder of, or other person so entitled to, such share shall be carried to a separate

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account. Moneys carried to such separate account may either be employed in the business of the company or invested in such investments as the board may from time to time think fit and any profits made thereby and interest or other income earned thereon shall belong to the company which shall have no obligation to account therefor to the holder of, or other person so entitled to, such share.

H. ALTERATIONS OF CAPITAL

Increase, consolidation, sub-division, cancellation and reduction

50. The company may by ordinary resolution:

(a)	increase its share capital by such sum to be divided into shares of such nominal amounts, and denominated in such currency or currencies, as the resolution shall prescribe; and/or
(b)	consolidate and divide all or any of its share capital into shares of larger nominal amount than its existing shares; and/or
(c)	subject to the provisions of the statutes, sub-divide all or any of its share capital into shares of smaller nominal amount, and so that the resolution whereby any share is sub-divided may determine that, as between the holders of the shares resulting from such sub-division, one or more of the shares may have any such preferred or other special rights over, or may have such deferred rights, or be subject to any such restrictions as compared with the others, as the company has power to attach to shares upon the allotment thereof; and/or
(d)	cancel any shares which, at the date of the passing of the resolution, have not been subscribed or agreed to be subscribed by any person, and diminish the amount of its share capital by the amount of the shares so cancelled;

and may by special resolution:

(e) reduce its share capital or any capital redemption reserve or any share premium account or any other undistributable reserve in any manner authorised by the statutes.

Treatment of any fractional entitlements arising on consolidation

51. Upon any consolidation of fully paid shares into shares of larger nominal amount the board may settle any difficulty which may arise with regard thereto as it thinks fit and in particular (but without prejudice to the generality of the foregoing) may as between the holders of shares so consolidated determine which shares are consolidated into each consolidated share and in the case of any shares registered in the name of one holder (or joint holders) being consolidated with shares registered in the name of another holder (or other joint holders) may make such arrangements for the allocation, acceptance or sale of the consolidated share or any fractions thereof and for the distribution to the member entitled thereto of any moneys received in respect thereof as may be thought fit and for the purpose of giving effect thereto may appoint some person to transfer the consolidated share or any fractions thereof and to receive the purchase price therefor and any transfer executed in pursuance thereof shall be effective and after such transfer has been registered no person shall be entitled to question its validity.

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III. GENERAL MEETINGS

A. MEETINGS AND NOTICES

Annual general meeting

52. The company shall in each year hold a general meeting as its annual general meeting in addition to any other meetings in that year and shall specify the meeting as such in the notice calling it. Not more than 15 months shall elapse between the date of one annual general meeting of the company and the next. The annual general meeting shall be held at such time and place as the board shall determine.

Extraordinary general meetings

53. All general meetings other than annual general meetings shall be called extraordinary general meetings. The board may convene an extraordinary general meeting whenever it thinks fit and at such time and place as it shall determine, and extraordinary general meetings shall be convened by the board on requisition in accordance with the statutes.

Length of notice

54. In the case of an annual general meeting or of a meeting for the passing of a special resolution 21 clear days’ notice at the least, and in any other case 14 clear days’ notice at the least, specifying the place, the day and the hour of meeting, and the general nature of the business to be transacted, shall be given in writing to all members (other than those who under the provisions of these articles or the conditions attaching to the shares held by them are not entitled to receive the notice) and to the auditors for the time being of the company and to every other person who by virtue of the statutes or these articles is entitled to receive notices of meetings of the company. In the case of a general meeting convened for the purpose of considering the passing of a special or extraordinary resolution, the notice shall specify the intention to propose the resolution as a special or extraordinary resolution, as the case may be.

Short notice

55. A general meeting may be called on shorter notice than that specified in article 54 provided that:

(a)	in the case of an annual general meeting, all the members who are entitled to attend and vote at that meeting so agree; and
(b)	in the case of an extraordinary general meeting, a majority in number of the members having a right to attend and vote at that meeting (being a majority together holding not less than 95 per cent in nominal value of the shares giving that right) so agree.

Notice to state right of member to appoint a proxy

56. In every notice calling a general meeting of the company there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint one or more proxies to attend and, on a poll, vote instead of such member and that a proxy need not be a member.

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Notice to be given of members’ resolutions upon requisition

57. The board shall on the requisition of members in accordance with the provisions of the statutes, but subject as therein provided:

(a)	give to the members entitled to receive notice of the next annual general meeting notice of any resolution which may properly be moved and is intended to be moved at that meeting; and
(b)	circulate to the members entitled to receive notice of any general meeting, any statement of not more than 1,000 words with respect to the matter referred to in any proposed resolution or the business to be dealt with at that meeting.

Accidental omission or non-receipt of notice

58. The accidental omission to give notice of a general meeting to, or the non-receipt of such notice by, any person entitled to receive such notice shall not invalidate the proceedings at any general meeting.

B. PROCEEDINGS AT GENERAL MEETINGS

Quorum

59. No business shall be transacted at any general meeting unless a quorum is present at the time when the meeting proceeds to business. Save as in these articles otherwise provided, two members present in person and entitled to vote shall be a quorum for all purposes.

Validity of written resolution of members

59A. A resolution in writing executed by or on behalf of each member who would have been entitled to vote upon it if it had been proposed at a general meeting at which he was present shall be as effective as if it had been passed at a general meeting duly convened and held and may consist of several instruments in the like form each executed by or on behalf of one or more members.

Adjournment or dissolution for lack of quorum

60. If within 15 minutes from the time appointed for a general meeting a quorum is not present the meeting, if convened on the requisition of members, shall be dissolved. In any other case it shall stand adjourned to the same day in the next week, at the same time and place, or to such later day and at such time and place as the board or the chairman of the meeting may determine and, if at such adjourned meeting a quorum is not present within 15 minutes from the time appointed for holding the meeting, at least two members present in person or by proxy shall be a quorum.

Chairman of the meeting

61. The chairman shall be entitled to preside at every general meeting, but if there be no chairman, or if at any meeting the chairman shall not be present within 15 minutes after the time appointed for holding such meeting and willing to preside, the deputy chairman, or if there shall be more than one deputy chairman and more than one be present, then one of such deputy chairmen, selected by agreement between them or in default of agreement by lot, shall be entitled to preside, and if neither the chairman nor any deputy chairman shall be present within 15 minutes as aforesaid and willing to preside, the vice-chairman shall be entitled to preside, or if there shall be more than one vice-chairman and more than one be present, then one of such vice-chairmen, selected by agreement between them or in default of agreement by lot, shall be entitled to preside, and if there be no such chairman, deputy chairman or vice-chairman or if none of them shall be present within 15 minutes as aforesaid and willing to preside, the members present shall choose another director as chairman of the meeting, or if one director only be present he or she shall preside if willing to do so. If no director is present or if all the directors present decline to take the chair,

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then the members present shall choose one of their number to act as chairman of the meeting.

Adjournment for other reasons

62. The chairman of the meeting may at any time with the consent of any general meeting at which a quorum is present adjourn the meeting either sine die or to another time and at the same or a different place. When a meeting is adjourned sine die the time and place for any adjourned meeting shall be fixed by the board. No business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting from which the adjournment took place.

Notice of adjourned meeting

63. When a meeting is adjourned for 30 days or more, not less than seven clear days’ notice of the adjourned meeting shall be given. Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.

Chairman’s decision final on procedural matters

64. The decision of the chairman of the meeting, made in good faith, on matters of procedure or arising incidentally from the business of the meeting shall be final as shall be his or her decision, acting in good faith, whether any matter is of such a nature.

Amendments to resolutions

65. If an amendment shall be proposed to any resolution under consideration but shall be ruled out of order by the chairman of the meeting, the proceedings on the substantive resolution shall not be invalidated by any error in the ruling. In the case of a resolution duly proposed as a special or extraordinary resolution, no amendment thereto (other than a mere clerical amendment to correct a manifest error) may in any event be considered or voted upon. In the case of a resolution duly proposed as an ordinary resolution, no amendment thereto (other than a mere clerical amendment to correct a manifest error) may be considered or voted upon unless notice of such proposed amendment is given to the office at least 48 hours prior to the time appointed for holding the relevant meeting or adjourned meeting or (in the absence of any such notice) the chairman of the meeting in his or her absolute discretion rules that the amendment is fit for consideration at the meeting.

Resolution decided by show of hands or poll

66. At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless before or upon the declaration of the result of the show of hands a poll is demanded by:

(a)	the chairman of the meeting; or
(b)	any member entitled to vote at the meeting.

Unless a poll is duly demanded (and the demand is not withdrawn), a declaration by the chairman of the meeting that a resolution has been carried, or carried unanimously or by a particular majority, or lost or not carried by a particular majority, and an entry to that effect in the minutes of the meeting, shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded for or against such resolution.

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Objections to votes and errors in counting votes etc.

67. If any objection is raised to the counting of, or failure to count, any votes or if any votes shall be counted which ought not to have been counted or might have been rejected or if any votes shall not be counted which ought to have been counted, the objection or error shall not vitiate the resolution unless it be raised or pointed out at the same meeting and it shall in the opinion of the chairman of the meeting be of sufficient magnitude to vitiate the result of the voting. The decision of the chairman of the meeting on such matters shall be final and conclusive.

Manner of and place for taking a poll

68. Subject to article 71, if a poll is duly demanded it shall be taken in such manner (including the use of ballot or voting papers or tickets) and at such place and at such time as the chairman of the meeting may direct and the chairman of the meeting may appoint scrutineers (who need not be members). The result of a poll shall be deemed to be the resolution of the meeting at which the poll was demanded.

Chairman’s casting vote

69. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded shall be entitled to a second or casting vote in addition to the vote or votes to which the chairman of the meeting may be entitled as a member or on behalf of any other member.

When a poll has to be taken

70. A poll on the election of a chairman of the meeting or on a question of adjournment shall if duly demanded be taken forthwith. A poll duly demanded on any other question shall be taken either forthwith or at such later time and place as the chairman of the meeting may direct not being more than 30 days from the date of the meeting at which the poll was demanded.

Notice of a poll

71. No notice need be given of a poll not taken forthwith if the time and place at which it is to be taken are announced at the meeting at which it is demanded. In any other case, at least seven clear days’ notice shall be given specifying the time and place at which the poll is to be taken.

Continuance of other business

72. The demand for a poll shall not prevent the continuance of the meeting for the transaction of any business other than the question on which the poll has been demanded.

Demand for a poll may be withdrawn

73. A demand for a poll may, before the poll is taken, be withdrawn but only with the consent of the chairman of the meeting. If a demand for a poll is so withdrawn:

(a)	before the result of a show of hands is declared, the meeting shall continue as if the demand had not been made; or
(b)	after the result of a show of hands is declared, the demand shall not be taken to have invalidated the result of that show of hands.

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Directors entitled to attend and speak at general meetings

74. Each director (or, in the absence of a director, his or her alternate director, if any) shall be entitled to attend and speak at any meeting of the company.

C. VOTES OF MEMBERS

Voting rights

75. Subject to any special rights or restrictions as to voting attached to any shares by or in accordance with these articles or their terms of issue (including, without limitation, the dollar preference shares), on a show of hands every member who (being an individual) is present in person or by proxy or (being a corporation) is present by a duly authorised representative at any meeting of the company and entitled to vote shall have one vote and on a poll every member present in person or by proxy or (being a corporation) by duly authorised representative and entitled to vote shall have one vote for every £1 of nominal capital held by such member.

Voting by joint holders

76. In the case of joint holders of a share, any one of such holders may vote at any meeting of the company either in person or by proxy in respect thereof as if he or she were the sole holder thereof, but the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register in respect of the share.

Voting on behalf of member incapable of managing own affairs

77. A member in respect of whom an order has been made by any competent court or official on the ground that such member is or may be suffering from mental disorder or is otherwise incapable of managing his or her own affairs may vote, whether on a show of hands or on a poll, by any person authorised in such circumstances to do so on his or her behalf and such person may on a poll vote by proxy, provided that evidence to the satisfaction of the board of the authority of the person claiming to exercise the right to vote shall have been deposited at the transfer office or at such other place within the United Kingdom as is specified in the notice convening the meeting not later than the last time by which an instrument of proxy had to be delivered in order to be valid for use at that meeting or on the holding of that poll, and in default the right to vote shall not be exercisable.

Member need not cast his or her votes all in same way

78. On a poll, a member entitled to more than one vote need not, if such member votes, use all his or her votes or cast all the votes he or she uses in the same way.

Execution of an instrument of proxy

79. The instrument appointing a proxy shall be in writing signed by the appointor or the appointer’s duly authorised agent or, if the appointor is a corporation, executed in accordance with Section 36A or signed on its behalf by a duly authorised officer or agent. The board may, but shall not be bound to, require evidence of the authority of any such officer or agent. The signature on such instrument need not be witnessed. A proxy need not be a member. If more than one proxy is so appointed, the instrument appointing each such proxy shall specify the shares held by the member in respect of which each such proxy

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is to vote. If two or more valid but differing instruments of proxy are delivered in respect of the same share for use at the same meeting or poll, the one which is last received by the company (regardless of its date or of the date of its execution) shall be treated as replacing and revoking the others as regards such share and if the board is unable to determine which was last received, none of them shall be treated as valid in respect of that share.

Deposit of instrument of proxy – duration of validity of instrument of proxy

80.	(a)	The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is executed, or a copy of such power or authority certified notarially or in some other way approved by the board, shall be deposited at the transfer office, or at such other place within the United Kingdom as is specified in the notice convening the meeting or in the instrument of proxy issued by the company in relation to that meeting, not less than 48 hours before the time appointed for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote or, in the case of a poll taken subsequently to the date of a meeting or adjourned meeting, not less than 24 hours before the time appointed for the taking of the poll, and in default the instrument of proxy shall not be treated as valid. An instrument of proxy relating to more than one meeting (including any adjournment thereof) having once been so delivered for the purposes of any meeting shall not, however, require again to be delivered in relation to any subsequent meeting to which it relates.
	(b)	No instrument appointing a proxy shall be valid after the expiration of six months from the date named in it as the date of its execution, except at an adjourned meeting or on a poll demanded at a meeting or an adjourned meeting in cases where the meeting was originally held within six months from such date.
	(c)	Delivery of an instrument appointing a proxy shall not preclude a member from attending and voting in person at the meeting or poll concerned, in which event the attendance of the member at the meeting or the poll shall forthwith revoke the authority of the proxy in relation to that meeting or poll.

Instrument of proxy

81.	(a)	An instrument of proxy may be in any usual or common form or in such other form as the board shall approve.
	(b)	The instrument of proxy shall confer authority on the proxy, unless otherwise instructed in the instrument, to vote in such way, or to abstain from voting, as the proxy thinks fit on any resolution (including amendments to resolutions) put to a meeting for which the instrument of proxy is valid. The instrument of proxy shall also be deemed to confer authority on the proxy to demand or join in demanding a poll (and for the purposes of article 66 a demand for a poll by a proxy shall be the same as a demand by the member who appointed the proxy). The instrument of proxy shall, unless the contrary is stated thereon, be valid as well for any adjournment of the meeting as for the meeting to which it relates.

Board to send out instruments of proxy to all members

82. The board may determine to send, by post or otherwise, to the members entitled to be sent notice of a meeting and to vote thereat instruments of proxy (with or without stamped envelopes or other pre-paid or similar postal facilities for their return) for use at any meeting

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of the company, either in blank or nominating in the alternative to act as proxy any one or more of the directors or any other person. The accidental omission to send such an instrument to, or the non-receipt thereof by, any member entitled to attend and vote at a meeting shall not invalidate the proceedings of that meeting.

Validity of acts of proxy and duly authorised representative

83. A vote given or a poll demanded by a person duly appointed as a proxy or by a duly authorised representative of a corporation in accordance (in either case) with the terms of his or her appointment shall be valid notwithstanding the principal having previously ceased to have the right or ability to exercise the right to vote or the previous determination of the authority of the person voting or demanding a poll, provided that no intimation in writing of such cessation or determination shall have been received by the company at the transfer office at least one hour prior to the commencement of the meeting or adjourned meeting at which the instrument of proxy is used (or, in the case of a poll to be taken at an appointed time after the meeting, before such time).

D. CORPORATIONS ACTING BY REPRESENTATIVES

A corporate member may appoint a representative

84. Any corporation which is a member of the company may, by authority given in accordance with Section 36A or signed by a duly authorised officer, authorise such person as it thinks fit to act as its representative at any meeting of the company. The person so authorised shall be entitled to exercise the same powers on behalf of the corporation which such person represents as that corporation could exercise if it were an individual member of the company personally present at such meeting and a corporation so represented shall for the purposes of these articles be deemed to be present in person at such meeting. The secretary, any director or the board may (but is not bound to do so) require such evidence as he or she or it thinks fit of the authority of the representative to act.

IV. DIRECTORS

A. NUMBER AND REMUNERATION OF DIRECTORS

Number of directors

85. The number of directors (disregarding alternate directors) shall not be less than five.

No directors’ share qualification

86. A director shall not be required to hold any shares in the company by way of qualification.

Directors’ fees

87. Each of the directors (including the chairman, each deputy chairman and each vice chairman) may be paid a fee at such rate as may from time to time be determined by the board provided that the ordinary remuneration of the directors (other than the chairman, each deputy chairman and each vice chairman) shall not exceed £15,000 per annum in any one case or such higher amount as may from time to time be decided by the board. Such fees shall accrue from day to day and in the case of any director shall, unless and to the extent

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that the board otherwise determines, be independent of any remuneration to which such director may be entitled under any other provison of these articles or in respect of any other office or appointment under the company or any other company in which the company may be interested.

Remuneration for extra services

88. If any director shall devote to the business of the company or any other company in which the company may be interested either his or her whole time and attention, or more of his or her time and attention than in the opinion of the board would usually be so devoted by a person holding such office, or shall undertake or perform any duties or services other than those which, in the opinion of the board, would usually be undertaken or performed by a person holding such office, or shall be called upon to perform and shall perform extra services or make any special exertions for any of the purposes of the company or any other company in which the company may be interested, or shall serve on any committee, then and in any of such cases the board may remunerate the director concerned either by a fixed sum, annual or otherwise, or in such other manner (including, but without limitation, the payment of or arrangements for the purpose of providing any pension or other retirement allowance or gratuity) as shall be determined by the board, and such remuneration may at the discretion of the board be either in addition to or in substitution for all or any part of any other remuneration to which such director may be entitled under these articles.

Reimbursement of expenses

89. The board may repay to any director all such travelling, hotel and other expenses as he or she may properly incur in attending and returning from meetings of the board or of any committee of the board or meetings of the company or otherwise in or about the business of the company.

B. INTERESTS OF DIRECTORS

Director may hold other positions under and
may act in professional capacity for the company

90.	(a)	A director may hold any office or place of profit under the company (other than the office of auditor to the company or to any other member of the group) in conjunction with his or her office of director upon such terms as the board may determine and may receive such remuneration in addition to any other remuneration receivable by the director as the board may think fit.
	(b)	A director or any firm in which he or she is interested may act in a professional capacity for the company (otherwise than as auditor to the company or to any other member of the group) and the director or such firm shall be entitled to remuneration upon such terms as the board may think fit for such services as if he or she were not a director. In this article, “firm” includes any company.

Director may hold positions with other companies

91. A director may continue to be or become a director or other officer of, or employee or member of, or otherwise interested in, any other company in which the company may be interested, and (save as the board may otherwise determine) no such director shall be accountable for any remuneration or other benefits received by him or her as a director, officer, employee or member of or from his or her other interest in such other company.

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The board may exercise the voting powers conferred on the company in relation to any other company in such manner in all respects as it thinks fit, including the exercise thereof in favour of any resolution appointing all or any members of the board as directors or other officers or employees of, or holders of any places of profit under, such other company, and voting or providing for the payment of remuneration to the directors or other officers or employees of such other company.

Director may be interested in any contract

92. Subject as provided in the statutes, no director or intending director shall be disqualified by his or her office from contracting with the company, or any other company in which the company may be interested, either with regard to such director’s tenure of any such other office or place of profit or services as are referred to in article 91 or 92 or as customer, vendor, purchaser or in any other manner whatsoever, nor shall any such contract, or any contract, transaction or arrangement entered into by or on behalf of the company, or any other company in which the company is interested, in which the director is in any way, whether directly or indirectly, interested be liable to be avoided, nor shall any director so contracting or being so interested be liable to account to the company for any profit realised by any such contract, transaction or arrangement by reason of such director holding that office or of the fiduciary relationship thereby established.

Director to declare interest in contract with company

93. A director who is in any way, whether directly or indirectly, interested in a contract, transaction or arrangement or proposed contract, transaction or arrangement with the company shall declare the nature of his or her interest in accordance with the provisions of the statutes.

Restriction on voting – matters upon which a director may vote

94.  (a)  Save as otherwise provided by this article, a director shall not vote at any meeting of the board (and if such director shall do so his or her vote shall not be counted) in respect of any contract, transaction, arrangement or proposal in which he or she has an interest which (together with any interest of any person connected with him or her) is a material interest (otherwise than by virtue of an interest in shares, debentures or other securities of, or otherwise in or through, the company) or in relation to which he or she has a duty which conflicts or may conflict with the interests of the company, nor shall he or she be counted for the purposes of any resolution regarding the same in the quorum present at the meeting. Provided that (in the absence of any material interest other than is indicated below) a director may vote and be counted in the quorum in respect of any resolution concerning any of the following matters, namely:

(i)	any contract, transaction, arrangement or proposal for giving to such director any security, guarantee or indemnity in respect of money lent by him or her to, or obligations incurred by him or her or by any other person at the request or for the benefit of, the company or any other member of the group;
(ii)	any contract, transaction, arrangement or proposal for the giving by the company of any security, guarantee or indemnity to a third party in respect of a debt or obligation of the company or any other member of the group for which such director has personally assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of or agreement to give security;

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(iii)	any contract, transaction, arrangement or proposal giving to such director any security, guarantee or indemnity in respect of any liability to any person which may be incurred by such director in the performance of his or her duties as a director or other officer or employee of the company or any other member of the group, or for the purchase or renewal for such director of insurance against any liability;
(iv)	the subscription or purchase by him or her of shares, debentures or other securities of the company pursuant to an offer or invitation to members or debenture holders of the company, or any class of them, or to the public or any section of the public;
(v)	any contract, transaction, arrangement or proposal by such director to underwrite or sub-underwrite (alone or with others) any shares, debentures or other securities of the company or any other member of the group;
(vi)	any contract or arrangement with or concerning any other company (not being a company in which such director owns one per cent. or more within the meaning of paragraph (b)) in which such director is interested as an officer or creditor of that company or as a holder of shares or other securities;
(vii)	any proposal concerning the adoption, modification, operation, suspension or cancellation of any superannuation fund or retirement, death or disability benefits scheme under which such director may benefit or of any employees’ share scheme being a scheme for encouraging or facilitating employees (including directors) of the company or any other member of the group to acquire shares, debentures or other securities of the company or any other member of the group, provided that any such fund or scheme does not accord to any director as such any privilege or advantage not generally accorded to the employees to whom the fund or scheme relates;
(viii)	any other arrangement for the benefit of employees of the company or any other member of the group under which such director benefits or stands to benefit in a similar manner to the employees concerned and which does not accord to any director as such any privilege or advantage not generally accorded to the employees to whom the arrangement relates.

(b)	For the purposes of this article, a company shall be deemed to be a company in which a director owns one per cent. or more if and so long as (but only if and so long as) such director (together with persons connected with him or her) is, directly or indirectly, the holder of or beneficially interested in one per cent. or more of any class of the equity share capital of such company or of the voting rights available to members of such company. Provided that for the purposes of this paragraph there shall be disregarded any shares held by a director as bare or custodian trustee or by virtue of his or her being a personal representative of any estate, any shares comprised in a trust in which the director’s interest is in reversion or remainder if and so long as some other person is entitled to receive the income thereof and any interest which the director has by virtue of holding units in an authorised unit trust scheme, a recognised scheme or a UCITS (in each case, as defined in Section 220(1)).
(c)	Where a company in which a director owns one per cent. or more is materially interested in a contract, transaction, arrangement or proposal then such director shall also be deemed to be materially interested therein.
(d)	Subject to the provisions of paragraph (e), a director shall not vote or be counted in the quorum on any resolution concerning his or her own appointment as the holder of any office or employment with or place of profit under the company or any other company in which the company is interested, including fixing or varying the terms of his or her appointment or the termination thereof.
(e)	Where proposals are under consideration concerning the appointment (including fixing or varying the terms of appointment) of two or more directors to offices or employments with or places of profit under the company or any other company in which the company is interested, such proposals may be divided and considered in

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	relation to each director separately, and in such cases each of the directors concerned (if not debarred from voting under paragraph (a)) shall be entitled to vote and be counted in the quorum in respect of each resolution except that concerning his or her own appointment.
(f)	If any question shall arise at any meeting of the board as to the materiality of a director’s interest or as to the entitlement of any director to vote or be counted in the quorum, such question shall be referred to the chairman of the meeting (or, if the director concerned is the chairman of the meeting, to the other directors at the meeting) and the chairman of the meeting’s ruling in relation to any director other than himself or herself (or, as the case may be, the ruling of the majority of the other directors in relation to the chairman of the meeting) shall be final and conclusive, except in a case where the nature or extent of the interest of the director concerned as known to such director has not been fairly disclosed.
(g)	Subject to the statutes, the company may by ordinary resolution suspend or relax the provisions of this article to any extent (in respect of any particular contract, transaction, arrangement or proposal) or ratify any particular contract, arrangement or transaction carried out in contravention of this article.

C. VACATION OF OFFICE OF DIRECTOR

When office of director to be vacated

95. The office of a director shall be vacated in any of the following events, namely:

(a)	if such director shall become prohibited by law from acting as a director; or
(b)	if such director shall resign his or her office by notice in writing sent to or deposited at the office or shall tender his or her resignation and the board shall resolve to accept the same; or
(c)	if such director becomes bankrupt, has a receiving order made against him or her or makes any arrangement or composition with his or her creditors generally; or
(d)	if such director is, or may be, suffering from mental disorder and either:

(i)	is admitted to hospital in pursuance of an application for admission for treatment under the Mental Health Act 1983 or, in Scotland, an application for admission under the Mental Health (Scotland) Act 1960 or, in any other jurisdiction, in pursuance of an application or otherwise under similar legislation; or
(ii)	an order is made in respect of him or her by any competent court or official on the ground that such director is or may be suffering from mental disorder or is otherwise incapable of managing his or her own affairs; or

(e)	if such director shall be absent from meetings of the board for a continuous period of six months without special leave from the board and his or her alternate director (if any) shall not during such period have attended in his or her stead; or
(f)	if such director ceases to be a director on account of age by virtue of Section 293; or
(g)	if such director is removed from office by a resolution of the board in favour of which at least five-sixths of the total number of directors for the time being shall have voted.

D. APPOINTMENT AND RETIREMENT OF DIRECTORS

No retirement by rotation

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96. No director shall be required to retire from office at any annual general meeting by rotational retirement.

Appointment by majority shareholder(s)

97. The holder or holders of a majority in nominal value of such part of the issued share capital of the company as confers the right to attend and vote at any general meeting of the company may, at any time or from time to time by notice in writing (signed by, in the case of a corporate body, any of its directors or its duly authorised attorney) left at or sent to the transfer office, remove any director from office (notwithstanding any claim such director may have for damages for breach of any agreement between himself or herself and the company) or appoint any person to be a director. The foregoing provisions of this article are without prejudice to any special right conferred on the holders of any series of the dollar preference shares or any other class of shares by the terms of issue thereof to appoint one or more directors.

Restriction on election of two or more directors by single resolution

98. A resolution for the election of two or more persons as directors by a single resolution shall not be moved at any general meeting unless a resolution that it shall be so moved has first been agreed to by the meeting without any vote being given against it; and any resolution moved in contravention of this provision shall be void.

Persons eligible for election as directors

99. No person shall, unless recommended by the board for election, be eligible for election as a director at any general meeting unless not less than seven nor more than 42 days before the day appointed for the meeting there shall have been received by the secretary at the office notice in writing signed by some member (other than the person to be proposed) duly qualified to attend and vote at the meeting for which such notice is given of such member’s intention to propose such person for election and also notice in writing signed by the person to be proposed of his or her willingness to be elected, such notice of willingness to be elected not having subsequently been withdrawn.

Removal of directors by ordinary resolution

100. The company may, in accordance with and subject to the provisions of the statutes, by ordinary resolution of which special notice has been given remove any director from office notwithstanding any provisions of these articles or of any agreement between the company and such director, but without prejudice to any claim such director may have for damages for breach of any such agreement, and elect another person in place of a director so removed from office. In default of such appointment the vacancy arising upon the removal of a director from office may be filled by the board as a casual vacancy.

Board’s power to appoint directors

101. The board shall have the power at any time and from time to time to appoint any person to be a director either to fill a casual vacancy or as an additional director.

E. ALTERNATE DIRECTORS

A director may appoint an alternate – powers of alternate – revocation of appointment of alternate – remuneration of alternate

102.  (a)  Any director (other than an alternate director) may at any time appoint any other director or appoint any other person willing to act (whether a member of the company or not) to be such director’s alternate; and every such alternate shall (subject to giving to the company an address either within or outside the United Kingdom at which notices may be served, including by facsimile or telex, upon him or her) be entitled (during any period of absence which his or her appointor has notified in writing to the company at the office) to notice of meetings of the

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	board, and of all committees of which the appointing director is a member, as if such alternate were a director and to attend and vote as a director at any such meeting at which the appointing director is not personally present and generally at such meeting to have and to perform all the functions of his or her appointor as a director in the appointor’s absence (other than the power to appoint an alternate of the director appointing him or her) and so that for the purposes of the proceedings at such meeting the provisions of these articles shall apply as if he or she were a director Provided that such appointment of any person not being a director shall be effective only upon its being approved by the board.
(b)	The board may at any time revoke the appointment of an alternate director. A director may at any time revoke the appointment of an alternate appointed by him or her, and appoint another person in his or her place (subject always to the proviso to paragraph (a)), and if a director shall die or otherwise cease to hold the office of director the appointment of his or her alternate shall thereupon cease and determine.
(c)	Any appointment or revocation by a director under this article shall be effected by notice in writing to the company at the office executed by the appointor or in any other manner approved by the board.
(d)	Every such alternate shall be an officer of the company, shall alone be responsible to the company for his or her own acts and defaults and shall not be deemed to be the agent of the director appointing him or her.
(e)	The remuneration of any such alternate shall be payable out of the remuneration payable to the director appointing him or her, and shall consist of such portion (if any) of the last-mentioned remuneration as shall be agreed between them. The alternate shall, however, be entitled to be paid his or her expenses and to be indemnified by the company to the same extent as the director appointing him or her.
(f)	Every person acting as an alternate director shall have one vote for each director for whom he or she acts as alternate, in addition to his or her own vote if he or she is also a director. Execution by an alternate director of any resolution in writing of the board or a committee of the board shall, unless the notice of appointment provides to the contrary, be as effective as execution by the appointor.

F. PROCEEDINGS OF THE BOARD

Conduct and convening of board meetings

103. The board may meet together for the despatch of business, adjourn and otherwise regulate its meetings as it thinks fit. Questions arising at any meeting shall be determined by a majority of votes, and in the case of an equality of votes the chairman of the meeting shall have a second or casting vote. The chairman or any two directors may, and the secretary on the requisition of the chairman or any two directors shall, at any time summon a meeting of the board. Notice of a board meeting shall be deemed to be properly given to a director if it is given to him or her personally or by word of mouth or sent in writing to him or her at his or her last known address or any other address given by him or her to the company for this purpose. A director absent or intending to be absent from the United Kingdom may request that notices of board meetings shall during his or her absence be sent in writing to him or her at an address given by him or her to the company for this purpose, but such notices need not be given any earlier than notices given to directors not so absent and if no such request is made it shall not be necessary to give notice of a board meeting to any director who is for the time being absent from the United Kingdom. Any director may prospectively or retrospectively waive the right to receive notice of any meeting of the board. Failure to give notice of a board meeting to a director shall not invalidate the proceedings at that meeting, provided that reasonable efforts are made to give notice to all directors entitled to receive notice.

Quorum

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104. The quorum necessary for the transaction of the business of the board may be fixed by the board and unless so fixed at any other number shall be five. Subject to the provisions of these articles, any director who ceases to be a director at a board meeting may continue to be present and to act as a director and be counted in the quorum until the termination of the board meeting if no other director objects and if otherwise a quorum of directors would not be present.

Telephone meetings

105.  (a)  A meeting of the board may consist of a conference between directors some or all of whom are in different places provided that each director who participates is able:

(i)

to hear each of the other participating directors addressing the meeting; and

(ii)

if he or she so wishes, to address all of the other participating directors simultaneously,whether directly, by conference telephone or by any other form of communications equipment (whether in use when these articles are adopted or developed subsequently) or by a combination of such methods. Each director so participating in a meeting shall be deemed to be “present” at such meeting for the purpose of these articles.

(b)	A quorum is deemed to be present if those conditions are satisfied in respect of at least the number of directors required to form a quorum.
(c)	A meeting held in this way is deemed to take place at the place where the largest group of participating directors is assembled or, if no such group is readily identifiable, at the place from where the chairman of the meeting participates.

Validity of written resolution of directors

106. A written resolution signed by all the directors entitled to receive notice of a meeting of the board (provided that number would be sufficient to constitute a quorum) shall be as effective as a resolution passed at a meeting of the board duly convened and held, and may consist of one document or several documents in the like form each signed by one or more of the directors concerned. For the purposes of this article, any signature may be affixed to a facsimile copy of the resolution and any written resolution shall be valid upon the company receiving the original or a facsimile copy of the document or documents containing each of the said signatures.

Continuing directors may act

107. The continuing directors may act notwithstanding any vacancies in their body, but if and so long as the number of directors is reduced below the minimum number fixed by these articles the continuing directors or director may act for the purpose of filling up such vacancies or of summoning general meetings of the company, but not for any other purpose, and may act for either of such purposes whether or not the number of directors is reduced below the number fixed by or in accordance with these articles as the quorum for board meetings. If there be no directors or director able or willing to act, then any two members may summon a general meeting for the purpose of appointing directors.

Appointment of chairman, deputy chairman and vice-chairman

108. The board may from time to time elect from its own number a chairman, one or more deputy chairmen and one or more vice-chairmen, but so that the total number of deputy chairmen and vice-chairmen shall not at any time exceed six. The board may determine the period for which such officers are respectively to hold office and, notwithstanding such determination, may from time to time remove any such officer from office.

Chairman of board meetings

109. The chairman shall preside at all meetings of the board, but if at any time there is no chairman or if at any meeting the chairman be not present, the deputy chairman, or if there are two or more deputy chairmen present, then one of such deputy chairmen (selected by agreement between them or in default of agreement by lot) shall preside, or if at any

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meeting neither the chairman nor any deputy chairman be present, the vice-chairman, or if there are two or more vice-chairmen present, then one of such vice-chairmen (selected by agreement between them or in default of agreement by lot) shall preside. In the event that there be no chairman, deputy chairman or vice-chairman or if none of them is present within five minutes from the time appointed for holding the meeting, then the directors present shall choose one of their number to be chairman of the meeting.

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Executive directors

110. The board may from time to time appoint any one or more of the directors to any executive office or employment with the company with such title and on such terms as to remuneration, pension and otherwise and with such of the powers exercisable by the board as it may think fit and (subject to the provisions of the statutes) for such period as the board may determine and, subject to the terms of any agreement entered into in any particular case, may at any time revoke any such appointment or vary the terms thereof. A director so appointed shall, subject to the terms of any agreement between such director and the company, be subject to the same provisions as to retirement or removal as the other directors and, without prejudice to any claim for damages or compensation to which such director may be entitled, his or her appointment shall be automatically determined if he or she ceases from any cause to be a director.

Board may confer upon a director any of its powers

111. The board may entrust to and confer upon any director any of the powers exercisable by it as such upon such terms and conditions and with such restrictions as it thinks fit, and either collaterally with or to the exclusion of its own powers, and may from time to time (subject to the terms of any agreement entered into in any particular case) revoke, withdraw, alter or vary all or any of such powers.

Delegation to board committees and certain subsidiaries

112.	(a)	The board may delegate all or any of its powers, authorities, discretions and functions to any committee or committees on such terms and conditions as it may think fit. Any such committee may consist of one or more members of the board, and the board shall also be entitled to appoint such other person or persons as it considers expedient to a committee but so that the majority at least of the members of any such committee shall consist of directors and no resolution of the committee shall be effective unless a majority of the members of the committee present at the relevant meeting consists of directors.
	(b)	The board may also delegate all or any of its powers, authorities, discretions and functions to a wholly-owned subsidiary (whether direct or indirect) of the company for such period and on such terms and conditions as the board may determine.
	(c)	Any such committee or subsidiary shall in the exercise of the powers, authorities, discretions and functions so delegated conform to any regulations which may from time to time be imposed by the board.
	(d)	The board may authorise any such committee or subsidiary to sub-delegate all or any of the powers, authorities, discretions and functions delegated to it and the board may at any time dissolve any such committee or revoke, vary or suspend any delegation made to any such committee or subsidiary.
	(e)	In so far as any power, authority, discretion or function is delegated to a committee or subsidiary, any reference in these articles to the exercise or performance by the board of the power, authority, discretion or function so delegated shall be read and construed as if it were a reference to the exercise or performance thereof by such committee or subsidiary.
	(f)	Any such delegation may be collateral with or to the exclusion of the powers, authorities, discretions or functions which are the subject of the delegation.

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Proceedings of committees

113. The meetings and proceedings (including without limitation the conduct of business by a telephone meeting or by written resolution) of any such committee consisting of two or more members shall be governed by the provisions of these articles regulating the meetings and proceedings of the board, so far as the same are applicable and are not superseded by any regulations made by the board under article 112.

Acts of board or committee valid notwithstanding disqualification

114. All acts done by any meeting of the board, or of a committee of the board, or by any person acting as a director or a member of such committee, shall as regards all persons dealing in good faith with the company, notwithstanding that there was some defect in the appointment or continuance in office of any member of the board or such committee or person acting as aforesaid, or that any such member or person was disqualified or had vacated office, or was not entitled to vote, be as valid as if every such person had been duly appointed and was qualified and had continued to be a director or a member of such committee and had been entitled to vote.

G. GENERAL POWERS OF THE BOARD

Management of company’s business vested in board

115. The business of the company shall be managed by the board, which may exercise all such powers of the company as are not by the statutes or by these articles required to be exercised in general meeting, subject nevertheless to the provisions of the statutes and of these articles and to such regulations as may be prescribed by the company by special resolution; but no alteration of these articles or regulations so prescribed by the company shall invalidate any prior act of the board which would have been valid if such alteration or regulation had not been made. The general powers given by this article shall not be limited or restricted by any special authority or power given to the board by any other article.

Local management

116.	(a)	The board may establish such subsidiaries, branch banks, divisional, departmental or local boards, managing committees or agencies for conducting or managing any of the affairs of the company in any part of the world as the board may from time to time consider fit, and for that purpose the board may cause to be promoted any subsidiary and may make all necessary or desirable arrangements for the control and financing of such subsidiary and for the guaranteeing of its contracts and obligations.
	(b)	The board may also appoint any persons (whether directors or not) to be members of such boards or committees and may appoint any such persons to be regional directors, local directors, managers, agents or representatives and may fix the remuneration of any persons so appointed.
	(c)	The board may delegate to any such subsidiary, branch, bank, board, managing committee, regional director, local director, manager, agent or representative any of the powers authorities and discretions vested in the board on such terms and conditions as the board may think fit.
	(d)	The board may authorise the members of any such boards or managing committees to fill any vacancies therein, and to act notwithstanding vacancies.
	(e)	The board may authorise any such boards or managing committees to sub-delegate all or any of the powers, authorities, discretions and functions delegated to it and the board may at any time dissolve any such board or managing committee or revoke, vary or suspend any delegation made to any such board or managing committee.

Associate directors

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117. The board may from time to time appoint any person to any office or employment with the company having a designation or title including the word “director” or to attach to any existing office or employment such a designation or title and may at any time terminate any such appointment or the use of any such designation or title. The inclusion of the word “director” in the designation or title of any such office or employment shall not (save in the case of any person appointed a director by the board under article 101 or by the company under article 100 or appointed as such under article 97) imply that the holder thereof is a director of the company nor shall such holder, by virtue of such appointment, be empowered in any respect to act as a director or be entitled to attend or vote at any meeting of the board or be deemed to be a director for any of the purposes of these articles.

Board’s borrowing powers

118. The board may exercise all the powers of the company to borrow money, and to mortgage or charge its undertaking, and all or any part of its property and uncalled capital, and to issue debentures and other securities, whether outright or as collateral security for any debt, liability or obligation of the company or of any third party.

Appointment of attorneys

119. The board may from time to time and at any time by power of attorney or otherwise appoint any person (whether an individual or otherwise) and whether nominated directly or indirectly by the board to be the attorney or agent of the company for such purposes and with such powers, authorities, discretions and functions (not exceeding those vested in or exercisable by the board under these articles) and for such period and subject to such conditions as it may think fit, and any such appointment may contain such provisions for the protection and convenience of persons dealing with any such attorney or agent as the board may think fit and may also authorise any such attorney or agent to sub-delegate all or any of the powers, authorities, discretions and functions vested in that attorney or agent.

Overseas branch registers

120. Subject to and to the extent permitted by the statutes, the board may cause to be kept in any territory outside the United Kingdom an overseas branch register of members resident in such territory, and the board may make and vary such regulations as it may think fit with regard to the keeping of any such register.

Execution of certain instruments

121. All cheques, promissory notes, drafts, bills of exchange and other negotiable or transferable instruments, and all receipts for monies paid to the company, shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, by such person or persons as may be appointed for the purpose by or on behalf of the board.

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Company not to make loans, quasi-loans or enter into credit transactions with directors or shadow directors or connected persons

122. Save as permitted by the statutes, the board shall not:

(a)	make a loan or a quasi-loan to or enter into a credit transaction as a creditor for a director (including a shadow director) of the company or any person connected with such a director; or
(b)	enter into any guarantee or provide security in connection with a loan or quasi-loan or credit transaction made by any person to or for such a director or person so connected; or
(c)	take part in any arrangement whereby another person enters into such a transaction in return for a benefit from the company or any subsidiary; or
(d)	arrange for the assignment to it of any rights, obligations or liabilities of any such loan or quasi-loan to such a director or person so connected.

For the purposes of this article the expressions “quasi-loan”, “credit transaction” and “shadow director” shall have the meanings ascribed to them in Sections 331(3), 331(7) and 741(2) respectively.

Pension and superannuation funds – employees’ share schemes – charitable subscriptions

123. The board may establish and maintain or procure the establishment and maintenance of any non-contributory or contributory pension or superannuation funds or any share option, share incentive or share acquisition schemes or any profit sharing schemes or funds or trusts financed or contributed to by the company for the benefit of, and may give or procure the giving of donations, gratuities, pensions, allowances, disability benefits or emoluments to (or to any person in respect of), any persons who are or were at any time in the employment or service of the company, or of any other member of the group, or who are or were at any time directors or officers of the company or of any other member of the group and hold or have at any time held any salaried employment or office in the company or such other company, and the wives, husbands, widows, widowers, families and dependants of any such persons, and also may establish and subsidise or subscribe to any institution, association, club or fund calculated to be for the benefit of or to advance the interests and well-being of the company or of any other member of the group, or of any such person as aforesaid, and may make payments for or towards the insurance of any such persons as aforesaid, and subscribe or guarantee money for any charitable or benevolent objects or for any exhibition, or for any public, general or useful object and do any of the matters aforesaid either alone or in conjunction with any such other company as aforesaid.

Power to make provision for employees

124. The board is hereby authorised to sanction (by resolution of the board) the exercise of any power conferred upon the company by Section 719.

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H. MINUTES AND RECORDS

Minutes and records

125.  (a)  The board shall cause minutes to be made of:

(i)	all appointments of officers made by the board; and
(ii)	the names of the directors and any alternate directors and any person other than directors present at each meeting of the board or any committee of the board; and
(iii)	all resolutions and proceedings at all meetings of the company, of the board and of committees of the board.

Any such minutes, if purporting to be signed by the chairman of the meeting at which the proceedings took place or by the chairman of the next succeeding meeting, shall be evidence of the proceedings.

(b)

Any register, index, minute book, book of account or other book required by these articles or the statutes to be kept by or on behalf of the company may be kept either by making entries in bound books or by recording them in some other form including the use of computer storage facilities so long as the recording is capable of being reproduced in a legible form. In any case in which bound books are not used, the board shall take adequate precautions for guarding against falsification and for facilitating its discovery.

I. SECRETARY

Appointment of and acts of the secretary

126.	(a)	The secretary shall be appointed by the board for such term, at such remuneration and upon such conditions as it may think fit; and any such secretary so appointed may be removed by the board, but without prejudice to any claim which such secretary may have against the company. If thought fit the board may appoint two or more persons to the office of secretary.
	(b)	No person shall be appointed to the office of secretary unless he or she is duly qualified or eligible under one or more of the categories specified in Section 286.
	(c)	The board may, at any time and from time to time, appoint one or more persons qualified or eligible under one or more of the categories specified in Section 286 to be deputy and/or assistant secretary at such remuneration and on such terms as it may think fit and anything required or authorised to be done by or to the secretary may be done by or to any deputy and/or assistant secretary so appointed; and any deputy or assistant secretary may be removed by the board, but without prejudice to any claim which such deputy or assistant secretary may have against the company.

J. THE SEALS

Custody and use of the seals

127. The board shall provide for the safe custody of the seal and any securities seal, each of which shall be used and affixed in accordance with regulations made by the board.

Use of the official seal

128. The company may exercise all the powers conferred by the statutes with regard to having an official seal for use abroad and such powers shall be vested in the board.

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K. AUTHENTICATION OF DOCUMENTS

Authentication of documents by a director, secretary or any other person appointed by the board

129. Any director or the secretary or any other person appointed by the board for the purpose shall have power to authenticate any documents affecting the constitution of the company and any resolutions passed or adopted by the company or the board or any committee of the board, and any books, records, documents and accounts relating to the business of the company, and to certify copies thereof or extracts therefrom as true copies or extracts; and where any books, records, documents or accounts are elsewhere than at the office the local manager or other officer of the company having custody thereof shall be deemed to be a person appointed by the board as aforesaid. A document purporting to be a copy of a resolution, or an extract from the minutes of a meeting, of the company or of the board or any committee of the board which is certified as aforesaid shall be conclusive evidence in favour of all persons dealing with the company upon the faith thereof that such resolution has been duly passed or, as the case may be, that such extract is a true and accurate record of proceedings at a duly constituted meeting.

V DIVIDENDS AND DISTRIBUTIONS

Declaration of dividends

130. The company in general meeting may by ordinary resolution declare dividends to be paid to the members according to their rights and interests in the profits but no dividend shall be payable in excess of the amount recommended by the board.

Calculation and currency of dividends

131. Unless and to the extent that the rights attached to any shares or the terms of issue thereof otherwise provide:

(a)

all dividends shall (as regards any shares not fully paid throughout the period in respect of which the dividend is paid) be apportioned and paid pro rata according to the amounts paid on the shares during any portion or portions of the period in respect of which the dividend is paid, but, for the purposes of this article, no amount paid on a share in advance of calls shall be treated as paid on the share; and

(b)

dividends may be declared or paid in any currency. The board may agree with any member that dividends which may at any time or from time to time be declared or become due on his or her shares in one currency shall be paid or satisfied in another, and may agree the basis of conversion to be applied and how and when the amount to be paid in the other currency shall be calculated and paid and for the company, the member or any other person to bear any costs involved.

Interim and other dividends

132. If and so far as in the opinion of the board the distributable reserves of the company justify such payments, the board may pay dividends (whether fixed or calculated by reference to a specified formula or procedure) on any class of shares carrying such a dividend on such dates as may be prescribed for the payment thereof (whether such dates are fixed or determined or to be determined in accordance with a specified procedure). Subject as aforesaid, the board may also from time to time pay one or more dividends (as interim or final dividends) on shares of any class of such amounts and on such dates and in respect of such periods as it thinks fit.

Dividend may be declared by reference to record date

133. Where any dividend is declared by the company in general meeting by ordinary resolution pursuant to article 130, or is determined to be paid by resolution of the board passed in accordance with article 132, the ordinary resolution or (as the case may be) the resolution of the board may provide that such dividend shall be payable to the members (or to any

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class of members) registered as such on or as at any such date as the resolution may specify, and (without prejudice to the generality of the foregoing) any date so specified may be either before or after that upon which the resolution is passed, and may be before the date upon which such dividend is to be actually paid.

No dividend to bear interest

134. No dividend or other monies payable on or in respect of a share shall bear interest as against the company.

Power to deduct from dividends any unpaid debts

135. The board may deduct from any dividend or other monies payable to any member on or in respect of a share all sums of money (if any) presently payable by such member to the company on account of calls or otherwise in respect of shares in the company.

Power to satisfy lien out of dividends

136. The board may retain any dividend or other monies payable on or in respect of a share on which the company has a lien, and may apply the same in or towards satisfaction of the debts, liabilities or engagements in respect of which the lien exists.

Treatment of unclaimed dividends etc.

137. The payment by the board of any unclaimed dividend or other monies payable on or in respect of a share into a separate account shall not constitute the company a trustee in respect thereof. All unclaimed dividends or other moneys payable on or in respect of a share may be invested or otherwise made use of by the board for the benefit of the company until claimed; but so that any such dividend unclaimed after a period of 12 years from the date such dividend first became due for payment shall be forfeited and shall revert to the company and any monies payable on or in respect of a fractional interest in a share remaining unclaimed after a period of 12 years from the date upon which the same first became due for payment, shall be forfeited and shall revert to the company. In the case of a dividend resolved to be paid under article 132, the above period of 12 years shall be calculated from the date specified in the relevant resolution of the board as the date for payment of the dividend.

Dividend warrants

138. Any dividend or other monies payable on or in respect of a share may be paid by cheque or warrant sent through the post to the registered address of the member or person entitled thereto (and if two or more persons are registered as joint holders of the share or are entitled thereto in consequence of the death or bankruptcy of the holder or otherwise by operation of law, to any one of such persons), or to such other person and such address as such member or person or persons may direct by notice in writing to the company signed by such member or other person or persons. Every such cheque shall be crossed and bear across its face the words “account payee” or “a/c payee” either with or without the words “only” and every such cheque or warrant shall be made payable to the person to whom it is sent or to such other person as the holder or joint holders or person or persons entitled to the share in consequence of the death or bankruptcy of the holder or otherwise by operation of law may direct by notice in writing to the company signed by such holder or holders or other person or persons, and payment of the cheque or warrant, if appearing to have been duly paid by the banker on whom it is drawn, shall be a good discharge to the company. Every such cheque or warrant shall be sent at the risk of the person or persons entitled to the money represented thereby. Any such dividend or other money may also be paid by any other usual or common banking method (including, without limitation, direct debit, bank transfer and electronic funds transfer) and the company shall have no responsibility for any sums lost or delayed in the course of any such transfer or where it has acted on any such directions.

Any joint holder may give receipt for a dividend

139. If several persons are registered as joint holders of a share or are entitled thereto in consequence of the death or bankruptcy of the holder or otherwise by operation of law, any

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one of them may give effectual receipts for any dividend or other monies payable or property distributable on or in respect of the share.

Payment of dividend in specie

140. A general meeting may, upon the recommendation of the board, direct payment of a dividend wholly or in part by the distribution of specific assets, and in particular of paid up shares, debentures or other securities of any other company or in any one or more of such ways, and the board shall give effect to such resolution; and where any difficulty arises in regard to the distribution the board may settle the same as it thinks expedient and in particular may issue fractional certificates, and may fix the value for distribution of such specific assets or any part thereof, and may determine that cash payments shall be made to any members upon the footing of the values so fixed, in order to adjust the rights of members, and may vest any specific assets in trustees upon trust for the persons entitled to the dividend as may seem expedient to the board, and generally may make such arrangements for the allotment, acceptance and sale of such specific assets or fractional certificates, or any part thereof, and distribution of the cash proceeds of any sale or of the cash equivalent to any member or members and otherwise as it thinks fit.

VI RESERVES

Board powers to carry profits to reserve and to carry forward profits

141. The board may, before recommending or resolving to pay any dividend, whether preferential or otherwise, carry to reserve out of the profits of the company (including any premiums received upon the issue of debentures or other securities of the company) such sums as they think proper as a reserve or reserves which shall, at the discretion of the board, be applicable for any purpose to which the profits of the company may be properly applied, and pending such application may, at the like discretion, either be employed in the business of the company or be invested in such investments other than shares in the company or of its holding company (if any) as the board may from time to time think fit. The board may also without placing the same to reserve carry forward any profits. The board may divide the reserve into such special funds as it thinks fit and may consolidate into one fund any special funds or any parts of any special funds into which the reserve may have been divided.

VII CAPITALISATION OF PROFITS

Capitalisation issue

142.

The company in general meeting may, subject to the rights attaching to any class of shares, upon the recommendation of the board at any time and from time to time, subject as hereinafter provided, by ordinary resolution resolve to capitalise all or any part of any amount standing to the credit of any reserve or fund (including the profit and loss account) whether or not the same is available for distribution and accordingly that the amount to be capitalised be set free for distribution among the holders of the ordinary shares in proportion to the amounts paid up on the ordinary shares and to apply such amount on their behalf, either in or towards paying up the amounts, if any, for the time being unpaid on any ordinary shares, or in paying up in full unissued shares, debentures or other securities of the company of a nominal amount equal to such amount, and to allot and distribute such shares, debentures or other securities credited as fully paid up, to and amongst such holders, or as they may direct, or partly in one way and partly in the other,

provided that:

(a)	the share premium account and the capital redemption reserve and any such profits not available for distribution may, for the purposes of this article, only be applied in the paying up of unissued shares to be issued to members credited as fully or, where permitted by the statutes, partly paid; and
(b)	no unrealised profits shall be applied in paying up any debentures of the company or any amount unpaid on any share in the capital of the company.

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Board to effect capitalisations

143. Whenever a resolution is passed in pursuance of article 142, the board shall:

(a)  allot unissued shares, debentures or other securities of the company, as the case may be, to the amount authorised by the resolution credited as fully paid up amongst the holders of the shares entitled to participate therein with full power to the board to make such provisions by way of the issue of fractional certificates or otherwise as it

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thinks fit for the case of fractions, and prior to such allotment the board may, if it thinks fit, authorise any person, on behalf of all the members so entitled to the said shares, debentures or other securities of the company, to enter into an agreement with the company providing for the allotment to them in the proportion specified in article 142 credited as fully paid up of the shares, debentures or other securities authorised by the resolution to be distributed amongst them, and any agreement made under such authority shall be effective and binding on all the holders of the ordinary shares for the time being; and the board shall have power generally to do all acts and things required to give effect to such resolution as aforesaid. Whenever on any issue of shares, debentures or other securities of the company in pursuance of article 142 the value of a fractional entitlement thereof shall be less than a minimum amount determined by the board in respect of any holder, the proceeds of sale (after the deduction of the proper expenses of such sale) of each and every such fractional entitlement amounting to less than such minimum amount shall belong to and be vested in the company (or one or more charities selected by it). For the purpose of giving effect to any such sale, the board may authorise some person to transfer the securities sold to the purchaser thereof and the purchaser shall be registered as the holder of the securities comprised in any such transfer and shall not be bound to see to the application of the purchase money nor shall the purchaser’s title to the said securities be affected by any irregularity or invalidity in the proceedings relating to the sale; and/or

(b)

(if the resolution so specifies) apply such profits or sum on behalf of the holders entitled thereto in paying up the amount, if any, unpaid on any shares held by such holders.

VIII ACCOUNTS AND AUDIT

Keeping of accounts and retention and location of accounting records

144.	(a)	The board shall cause to be kept proper accounts and accounting records in accordance with the requirements of the statutes.
	(b)	The accounting records shall be kept at the office or (subject to the provisions of the statutes) at such other place as the board thinks fit, and shall always be open to inspection by the directors. No member (other than a director) shall have any right of inspecting any account or book or document of the company except as conferred by law (including the statutes) or authorised by order of the court or by the board.

Accounts to be laid before general meetings

145. The board shall from time to time, in accordance with the provisions of the statutes, cause to be prepared and to be laid before the company in general meeting such profit and loss accounts, balance sheets, group accounts and reports as are specified in the statutes.

Reports and accounts to be delivered to members, debentureholders and auditors

146. Subject to the provisions of article 147, a copy of the directors’ and auditors’ reports accompanied by copies of the balance sheet, profit and loss account and other documents required by the statutes to be annexed to the balance sheet (together the “statutory accounts”) shall, not less than 21 clear days prior to the annual or other general meeting at which it is proposed to lay such documents before members, be delivered or sent by post to the

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registered address of every member and holder of debentures of the company and to the auditors and to every other person, if any, who is entitled by these articles or the statutes to receive copies of such documents and/or notices of meetings from the company.

Cases in which reports and accounts need not be delivered

147. Article 146 shall not require a copy of the statutory accounts to be sent to more than one of joint holders or to any person who is not entitled to receive notices of meetings or of whose address the company is not aware, but any member or holder of debentures or person entitled by the statutes or these articles to receive a copy of the statutory accounts to whom a copy has not been sent shall be entitled to receive a copy free of charge on application at the office.

Appointment of auditors

148. Auditors shall be appointed, and their duties, powers, rights and remuneration regulated, in accordance with the provisions of the statutes.

IX NOTICES

Notices to be in writing – manner of giving notices to company

149.	(a)	Any notice to be given to or by any person pursuant to these articles shall, unless otherwise provided in these articles, be in writing.
	(b)	Any notice to be given to the company pursuant to these articles shall, unless otherwise provided in these articles, be sent to the transfer office and may in all cases be given by any method of delivery by which notices may be served on a member under article 150 other than facsimile transmission or telex, provided that the company may in its absolute discretion elect to accept a notice purported to be given to the company by facsimile transmission, telex or some other means of electronic communication.

Service of notices and documents by company

150. Any notice in writing or document may be served on or delivered to any member by the company either personally, or by leaving it at, or by delivering it to, or by sending it through the post in a prepaid cover, or by facsimile transmission or telex, addressed to such member at, his or her registered address, or (if he or she has no registered address within the United Kingdom) the address, if any, within the United Kingdom supplied by such member in writing to the company as his or her address for the service of notices. Any such notice or document may be served or delivered by the company by reference to the register as it stands at any time not more than 15 days before the date of service or delivery. No change in the register after that time shall invalidate that service or delivery. Where any notice or other document is served on or delivered to any person in respect of a share in accordance with these articles, no person deriving any title or interest in that share shall be entitled to any further service or delivery of that notice or document.

When service effected on member

151. Where a notice or other document is, under article 150, served or sent by post, service or delivery shall be deemed to be effected at the expiration of 24 hours after the time when the cover containing the same is posted (irrespective of the class or type of post used) and in proving such service or delivery it shall be sufficient to prove that such cover was properly

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addressed and posted. If such notice or other document is sent by facsimile transmission or telex, service shall be deemed to be effected at the time of transmission, subject, in the case of facsimile transmission, to the facsimile machine on which transmission has been made indicating to the sender that transmission has been completed and, in the case of telex, to receipt of the appropriate answerback.

Notice by advertisement

152. Any notice required to be given by the company to members (including for this purpose holders of share warrants issued under article 15) and not expressly provided for by or in accordance with these articles shall be sufficiently given by advertisement. Any such notice shall be advertised in a leading daily newspaper in London and in such other place, if any, as the board shall determine and shall be deemed to have been duly given on the date of publication or, if published more than once, on the first date of publication. The holder of a share warrant shall be entitled to notice in respect thereof only by advertisement as herein provided.

Notice to joint holders

153. In respect of joint holdings all notices shall be given to that one of the joint holders whose name stands first in the register and notice so given shall be sufficient notice to all the joint holders.

Service of documents on persons entitled to shares by transmission

154. A person entitled to a share in consequence of the death or bankruptcy of a member or otherwise by operation of law upon supplying to the company such evidence as the board may reasonably require to show his or her title to the share, and upon supplying also an address within the United Kingdom for the service of notices, shall be entitled to have served upon or delivered to him or her at such address any notice or document to which the member but for his or her death or bankruptcy or the other event in question would be entitled, and such service or delivery shall for all purposes be deemed a sufficient service or delivery of such notice or document on all persons interested (whether jointly with or as claiming through or under him or her) in the share. Save as aforesaid, any notice or document delivered or sent by post, facsimile transmission or telex to or left at the registered address of any member in pursuance of these articles shall, notwithstanding that such member be then dead or bankrupt, and whether or not the company has received notice of his or her death or bankruptcy or the other event in question, be deemed to have been duly served or delivered in respect of any share registered in the name of such member as sole or joint holder.

Members not entitled to notices

155. A member who (having no registered address within the United Kingdom) has not supplied to the company an address within the United Kingdom for the service of notices shall not be entitled to receive notices from the company.

X WINDING UP

Distribution of assets in specie

156. In the winding up (whether the liquidation is voluntary or by the court) of the company the liquidator may, with the authority of an extraordinary resolution of the company and any other sanction required by the statutes, divide among the members in specie the whole or

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any part of the assets of the company, whether or not the assets shall consist of property of one kind, and may for such purposes set such value as the liquidator deems fair upon any one or more class or classes of property, and may determine how such division shall be carried out as between the members or different classes of members. The liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of members as the liquidator, with the like authority, shall think fit, and the liquidation of the company may be closed and the company dissolved, but so that no member shall be compelled to accept any assets in respect of which there is a liability.

XI INDEMNITY AND INSURANCE

Indemnity and insurance for directors and other officers

157.	(a)	Subject to the provisions of the statutes, but without prejudice to any indemnity to which he or she may otherwise be entitled, every director, other officer and auditor of the company and every former director, other former officer and former auditor of the company shall be indemnified out of the assets of the company against any liability, loss or expenditure incurred by him or her in the actual or purported execution and/or discharge of his or her duties and/or the exercise or purported exercise of his or her powers and/or otherwise in relation to or in connection with his or her duties, powers or office including (without prejudice to the foregoing) any liability incurred by him or her in defending any proceedings, whether civil or criminal, which relate to anything done or omitted to be done or alleged to have been done or omitted to be done by him or her as a director, officer or auditor of the company and in which judgment is given in his or her favour or in which he or she is acquitted or which are otherwise disposed of without any finding or admission of guilt or breach of duty on his or her part or incurred in connection with any application in which relief is granted to him or her by the court from liability in respect of any such act or omission or from liability to pay any amount in respect of shares acquired by a nominee of the company.
	(b)	To the extent permitted by the statutes, the board may arrange and maintain insurance cover at the cost of the company in respect of any liability, loss or expenditure incurred by any director, other officer or auditor of the company in relation to anything done or alleged to have been done or omitted to be done by him or her as a director, officer or auditor.

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EX-2.1

Exhibit 2.1

Exhibit 2.1

Neither Barclays nor Barclays Bank PLC is party to any single instrument relating to long-term debt pursuant to which a total amount of securities exceeding 10% of its total assets (on a consolidated basis) is authorised to be issued. Each of Barclays PLC and Barclays Bank PLC hereby agrees to furnish to the Commission, upon its request, a copy of any instrument defining the rights of holders of its long-term debt or the rights of holders of the long-term debt of any of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed with the Commission.

EX-4.5

Exhibit 4.5

Exhibit 4.5

Barclays PLC

Rules
of the
Barclays PLC
Approved Incentive Share Option Plan

Approved by the Board of Inland Revenue
on 16 May 2000
Ref no: X20704/GRP

Lovells

CONTENTS

Clause			Page No
	1.	Definitions and Interpretation		1
	2.	Grant of Options		4
	3.	Limitations on Grant of Options		5
	4.	Exercise of Options		6
	5.	Limitations on Exercise of Options		7
	6.	Time for Exercise of Options		8
	7.	Takeovers and Liquidations		8
	8.	Replacement of Options on Change of Control of the Company		9
	9.	Variations in the Share Capital of the Company		11
	10.	Administration of the Plan		11
	11.	Amendment of the Plan		11
	12.	Additional Provisions		12

Barclays PLC

Approved Incentive Share Option Plan

Definitions and Interpretation

1.1	In the Plan the following words and expressions have the meanings set opposite them:
	“Acquiring Company” means a company which for the purposes of clause 8 comes within the definition of “the acquiring company” in paragraph 26(1) of Schedule 4;
	“Adoption Date” means 26 April 2000 being the date on which the Plan is adopted by the Company;
	“Announcement Date” means the date on which the Company announces its annual, half-yearly or if relevant quarterly results to the London Stock Exchange in any year within the Operative Period;
	“Any Other Approved Plan” means any employees’ share scheme other than the Plan established by the Company or by any Associated Company and approved in accordance with Schedule 4;
	“Any Other Executive Plan” means any employees’ share scheme other than the Plan adopted by the Company in general meeting which provides for the acquisition of or subscription for shares of the Company by or on behalf of selected employees and/or directors, and which is not linked to an SAYE contract;
	“Any Other Plan” means any employees’ share scheme other than the Plan adopted by the Company in general meeting which provides for the acquisition of or subscription for shares in the Company by or on behalf of employees or directors;
	“Associated Company” means any company which is an associated company of the Company as defined in paragraph 35 of Schedule 4;
	“Auditors” means the auditors for the time being of the Company or in the event of there being joint auditors such one of them as the Board shall select;
	“BGI” means Barclays Global Investors UK Holdings Limited;
	“BGI Plan” means the Barclays Global Investors Equity Ownership Plan adopted by the Company on 26 April 2000;
	“BGI Shares” means “A” Ordinary Shares in the capital of BGI;
	“Barclays Bank” means Barclays Bank PLC;
	“Board” means the board of directors for the time being of the Company or a committee of the board of directors of the Company appointed to administer the Plan PROVIDED THAT if any person obtains Control of the Company the Board or the relevant committee as appropriate shall consist of the members of the Board or such committee as the case may be immediately before such Control is obtained;
	“Company” means Barclays PLC;
	“Control” means the control of a company within the meaning given to that expression by section 840 of the Taxes Act save that for the purposes of clause 7 a person shall be deemed to have control of a company if he and others acting in concert with him have together obtained control of the company within such meaning;
	“Controlling Company” means a company other than the Company and an Acquiring Company which falls within paragraph 27(2)(b) of Schedule 4;

“Date of Grant” means the date on which an Option is granted in accordance with clause 2;

“Dealing Day” means a day on which transactions take place on the London Stock Exchange;

“Eligible Employee” means any person whose terms of employment require him to devote substantially the whole of his working time to any member or members of the Group, but excluding:

(a)	any director of a member or members of the Group who is contracted to work for less than 25 hours a week (excluding meal breaks) in that capacity;
(b)	any person who is prohibited from participating in the Plan by the provisions of paragraph 9 of Schedule 4; and
(c)	any person who has less than two years service to run before his Normal Retirement Age unless the Company in general meeting shall have resolved to waive such requirement in any particular case;

“Exercise Price” means subject to clause 9, the price per Share payable on the exercise of an Option as determined by the Board and as stated when granting an Option in accordance with clause 2 being:

(a) in the case of an Option to subscribe Shares not less than the greater of:

(i)	the nominal value of a Share; and
(ii)	if and for so long as the Shares are admitted to the Official List of the UK Listing Authority, the average middle market quotations of a Share as derived from the Daily Official List of the UK Listing Authority (rounded up to the nearest whole penny) over any period of not more than five successive Dealing Days in the period of 30 days before the Date of Grant PROVIDED THAT any such period of successive Dealing Days falls within the Grant Period; and
(iii)	if the Shares are not so admitted the market value of a Share determined in accordance with Part VIII of the Taxation of Chargeable Gains Act 1992 and if and for so long as the Plan has Revenue Approval agreed in writing in advance with Shares Valuation the specialist valuation division of the Inland Revenue;

(b) in any other case, the average purchase price paid by the Trustees to purchase Shares on any regulated market for the grant of Options over any period not exceeding ten successive Dealing Days PROVIDED THAT:

(i)	not more than 30 days shall elapse after the first Dealing Day taken for these purposes and the Date of Grant;
(ii)	any such period of ten successive Dealing Days falls within the relevant Grant Period;
(iii)	for the purposes of calculating the average purchase price, if the Trustees do not purchase Shares on any regulated market the average purchase price the Trustees would have paid had they bought the Shares on such regulated market during the relevant period as determined by the Trustees; and
(iv)	the Trustees notify the Board in writing of the average purchase price paid for the Shares by the Trustees (or which the Trustees would have paid pursuant to paragraph (b)(iii) above);

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“Financial Year” means a financial year of the Company within the meaning given to that expression by section 742 of the Companies Act 1985;

“Grant Period” means any period of three months from:

(a)	the day on which the Plan receives Revenue Approval;
(b)	an Announcement Date PROVIDED THAT if the Company is restricted by statute, order, regulation or otherwise (including a restriction resulting from the application of the Model Code for transactions in securities by directors or any comparable code adopted by the Company) from granting Options within such three month period, the Company may grant Options within the period of three months after the lifting of such restrictions;
(c)	any date on which changes to the legislation affecting share option schemes is announced or made; or
(d)	any time when the Board resolves that exceptional circumstances exist which justify the grant of Options;

“Group” means the Company and all of its Subsidiaries and, in relation to a New Option granted pursuant to clause 8, the Acquiring Company and the Controlling Company and their subsidiaries as defined in section 736 of the Companies Act 1985, and “member of the Group” shall be construed accordingly;

“ITEPA” means the Income Tax (Earnings and Pensions) Act 2003;

“London Stock Exchange” means the London Stock Exchange plc;

“Normal Retirement Age” means the earliest age at which an employee can be required to retire by any member of the Group or, if sooner, the age at which he has agreed to take early retirement;

“Retirement Age” means age 55 or such other minimum age as may be specified from time to time in Schedule 4;

“Operative Period” means the period of ten years commencing on the Adoption Date;

“Option” means subject to clause 8, a right to buy Shares granted pursuant to the Plan;

“Option Period” means subject to clauses 5, 6.2, 6.3, 6.4 and 7, the period during which an Option shall be exercisable in accordance with the provisions of the Plan as determined by the Board at its Date of Grant PROVIDED THAT the Board may not specify a period beginning earlier than three years from its Date of Grant nor ending later than ten years from its Date of Grant;

“Participant” means an Eligible Employee who has been granted an Option or, where applicable, the personal representative(s) of any such person;

“Plan” means the employees’ share scheme herein contained as from time to time amended in accordance with the provisions hereof which shall be known as the “Barclays PLC Approved Incentive Share Option Plan”;

“Revenue Approval” means approval of the Plan by the Board of Inland Revenue under Schedule 4;

“Schedule 4” means Schedule 4 to ITEPA;

“Shares” means subject to clause 8.3(a), ordinary shares in the capital of the Company which satisfy the requirements of paragraphs 16 to 20 inclusive of Schedule 4;

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	“Subsidiaries” means those companies over which for the time being the Company has Control and which are subsidiaries of the Company within the meaning of section 736 of the Companies Act 1985;
	“Target Award” means the value determined by the Board for the purposes of granting an Option to an Eligible Employee who it has selected in its absolute discretion to participate in the Plan such value being based on market competitive practice for comparable positions differentiated to reflect individual performance and potential and used by the Board to determine the objective performance measures applicable to the exercise of the Option and the maximum number of Shares over which the Option may be granted;
	“Taxes Act” means the Income and Corporation Taxes Act 1988;
	“Trustees” means the trustees from time to time of any employee benefit trust established by a member of the Group;
	“UK Listing Authority” the UK Listing Authority within the meaning given to that expression in the Listing Rules made by the Financial Services Authority pursuant to its appointment as the relevant competent authority under the Official Listing of Securities (Change of Competent Authority) Regulations 2000.
1.2	Any reference herein to a statutory provision shall include a reference to that provision as amended or re-enacted from time to time. Where the context permits the singular shall include the plural and vice versa and the masculine gender shall include the feminine.
2.	Grant of Options
2.1	Subject to the limitations set out below, the Board may in its absolute discretion during any Grant Period grant any Eligible Employee an Option in accordance with the terms of the Plan. The Board shall as soon as reasonably practicable on or after its Date of Grant notify any such Eligible Employee in writing of the grant of the Option. The notice shall specify:

(a)	the number of Shares in respect of which the Option is granted;
(b)	the date on which it is granted;
(c)	the Exercise Price;
(d)	the objective performance target(s) imposed by the Board for the purposes of clause 5 the text of which must at any time when the Plan has Revenue Approval be approved in advance by the Board of Inland Revenue; and
(e)	the Option Period.

2.2

An Eligible Employee to whom an Option is granted may by notice in writing within 30 days after the date of grant (or such shorter period of which he is notified) renounce his rights thereunder in whole, and in such case the Option shall be deemed never to have been granted hereunder, or in part, and in such case the Option shall be deemed to have been granted only as to the balance.

2.3

The grant of an Option shall be made on the basis that participation in the Plan shall constitute an agreement to be bound by the rules of the Plan and shall be evidenced by an instrument executed as a deed (howsoever, including by facsimile signature) in such form as the Board may from time to time prescribe and shall be personal to the Participant and may not be transferred, assigned or charged to or, subject to the provisions of clause 6.2, exercised by any other person. The instrument shall be issued as soon as practicable after the last date on which an Eligible Employee may renounce his rights under an Option in accordance with clause 2.2.

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2.4	No Option shall be granted under the Plan after the expiry of the Operative Period.
3.	Limitations on Grant of Options
3.1	No Options shall be granted under the Plan:

(a)

if as a result the number of Shares issuable on the exercise of such Options, when aggregated with any other ordinary shares issued by way of subscription out of profits and with any other ordinary shares issued or capable of being issued by way of subscription on the exercise of options granted by the Company during the previous ten years under the Plan and under Any Other Plan, would exceed ten per cent. of the amount of the Company’s ordinary share capital then in issue; or

(b)

if as a result the number of Shares issuable on the exercise of such Options, when aggregated with any other ordinary shares issued or capable of being issued by way of subscription on the exercise of options granted by the Company during the previous ten years under the Plan and Any Other Executive Plan would exceed five per cent. of the amount of the Company’s ordinary share capital then in issue;

	PROVIDED THAT for the purpose of applying the limits set out in clauses 3.1(a) and (b) the number of Shares over which Options may be granted under the Plan shall be reduced by the number of notional Shares determined by the Board in the manner set out in clause 3.2.
3.2	For the purposes of the proviso to clause 3.1:

(a)	the Board shall compute the number of BGI Shares which have been acquired on exercise of options granted under the BGI Plan in the relevant period or in respect of which options under the BGI Plan are currently outstanding (less any BGI Shares issued on the exercise of options granted under the BGI Plan but subsequently purchased by Barclays Bank or any other member of the Group); and
(b)	the Board shall subject to such adjustment or variation as the Board shall in its absolute discretion consider appropriate convert such BGI Shares into a number of notional Shares by the application in relation to each such acquisition of or grant of options over, BGI Shares of the formula:

A x B	= D where:
C

A	is the number of BGI Shares acquired by or under option to each relevant employee;
B	is the price per BGI Share at which such employee acquired or may acquire such number of BGI Shares;
C	is if and for so long as the Shares are admitted to the Official List of the UK Listing Authority the greater of the market value of a Share:

(a)	on the date of grant of such options; and
(b)	on the date of any determination by the Board for the purposes of this clause 3.2,

calculated by the Board by reference to the middle-market quotations of a Share as derived from the Daily Official List of the UK Listing Authority or if the Shares are not so admitted on such other basis as the Board shall determine in its absolute discretion;

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D  is the number of notional Shares represented by the BGI Shares acquired in the relevant period or in respect of which options are currently outstanding under the BGI Plan for the purposes of the proviso to clause 3.1.

3.3 No Option shall be granted to an Eligible Employee under the Plan if as a result:

(a)

the total Exercise Price of the Shares issuable (or transferable) on the exercise of such Option when aggregated with the total market price at the relevant date of grant of shares still capable of being issued (or transferred) on the exercise of options previously granted to him under the Plan and Any Other Approved Scheme would exceed £30,000 (or its equivalent in any other currency, taking as the rate of exchange the spot rate for the currency in question on the relevant Date of Grant as quoted by any of the Company’s bankers from time to time) or such other amount as may be prescribed by statute from time to time; and

(b)

the Target Award for that Option when aggregated with the Target Award for any other Option granted to such Eligible Employee in the same Financial Year would exceed 200% of such Eligible Employee’s remuneration determined for these purposes by the Board in its absolute discretion.

4.

Exercise of Options

4.1

An Option shall only be exercised by a Participant within its Option Period by his giving notice in writing to the Company at its registered office in such form as may be prescribed by the Board from time to time. Such notice shall be signed by the Participant and shall specify the number of Shares (which shall be either a multiple of 100 or equal to the balance of the Shares remaining subject to the Option) in respect of which the Option is being exercised. The Shares needed to satisfy the exercise of the Option may be provided by the Company or the Trustees. The Participant shall:

(a) supply with such notice:

(i)	the instrument evidencing the grant of the relevant Option for cancellation or amendment; and
(ii)	such other documentation as the Board may require; and

(b) pay the full amount of the aggregate Exercise Price for the said Shares in such manner as the Board may from time to time prescribe (which in the case of Options to the satisfied by the Trustees shall be payable to the Company as agent for the relevant Trustees)

An Option (or part thereof) shall be deemed to have been exercised on the date when such notice together with a remittance for the Exercise Price, the instrument evidencing the grant of an Option and any other documents specified by the Board are received by the Company. Where such exercise is conditional on the fulfilment of the condition specified in clause 5.2 the date of exercise of the Option or the relevant portion of the Option shall for these purposes be deemed to be the date on which the Board determines in accordance with clause 5.3 that the condition has been fulfilled.

4.2

If an Employee Tax Liability for any member of the Group arises on the exercise of the Option then unless:

(a)	the Participant has indicated in the form of exercise notice that he or she will make a payment to the Company of an amount equal to the Employee Tax Liability; and
(b)	the Participant does, within 7 days of being notified by the Company of the amount of the Employee Tax Liability, make such payment to the Company.

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	the Company shall sell sufficient Shares on behalf of the Participant and arrange payment to the member of the Group of an amount equal to the Employee Tax Liability out of the proceeds of sale to reimburse the member of the Group.
4.3	An Employee Tax Liability for a member of the Group shall only arise for the purposes of clause 4.2 following the exercise of an Option, if the member of the Group is obliged to (or would suffer a disadvantage if it were not to) account for any tax and/or for any primary social security contributions recoverable from the Participant for which the Participant is liable by virtue of the exercise of the Option.
4.4	The Company or the Trustees as appropriate shall within 30 days after the date of exercise of the Option either:

(a)	allot and thereafter issue; or
(b)	transfer

	the appropriate number of Shares to the Participant (or to his nominee at the Participant’s written direction) at their Exercise Price and shall deliver to the Participant (or his nominee, as appropriate) a definitive share certificate in respect thereof (or such other evidence of allotment and issue as may be prescribed by the Board where such allotment and issue is by means of a relevant system, as defined in Regulation 2(1) of the Uncertificated Securities Regulations 1995).
4.5	Any Shares issued pursuant to clause 4.4 shall rank pari passu in all respects with the Shares in issue on the date of such allotment save that they shall not rank for or be entitled to any dividend or other distribution or any issue of Shares by way of capitalisation of profits or reserves or any issue of securities by way of rights which under the terms of a resolution passed by the Company is to be or is proposed to be paid or made to the holders of Shares on the register on a date prior to the date of such allotment.
4.6	If and for so long as the Shares are admitted to the Official List of the UK Listing Authority the Company shall for all Shares allotted pursuant to the exercise of Options apply to:

(a)	the UK Listing Authority for a listing; and
(b)	the London Stock Exchange for admission to trading.

5.	Limitations on Exercise of Options
5.1	Without prejudice to the following provisions of this clause 5, and subject as provided in clauses 6 and 7, an Option may be exercised by a Participant who has ceased to be an Eligible Employee, PROVIDED THAT he is not prohibited from doing so by the provisions of paragraph 9 of Schedule 4.
5.2	The exercise of an Option by a Participant and if relevant the extent to which it may be so exercised shall be conditional on the Board being satisfied that such objective performance target(s) as has been imposed by it on the grant of the Option in accordance with clause 2.1 shall have been fulfilled.
5.3	Within 30 days of the date of any conditional exercise of the Option the Board shall determine whether the objective performance target referred to in clause 5.2 has been fulfilled and if relevant the extent to which it has been fulfilled and shall inform the Participant in writing accordingly. The determination of the Board shall be final and binding.

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6.	Time for Exercise of Options
6.1	Subject to clauses 6.2, 6.3, 6.4 and 7, an Option may only be exercised during its Option Period. An Option which is not so exercised shall lapse.
6.2	If a Participant dies his personal representative(s) may exercise his Option at any time before the expiry of its Option Period and within but not later than 12 months of his death. Any such Option which is not so exercised shall lapse.
6.3	Subject to clause 5.2, if a Participant ceases to be employed by the Group by reason of:

(a)	retirement on or after Normal Retirement Age;
(b)	injury;
(c)	disability;
(d)	ill-health;
(e)	dismissal for redundancy within the meaning of the Employment Rights Act 1996;
(f)	the company by which he is employed ceasing to be a member of the Group; or
(g)	the undertaking in which he is employed being transferred to a transferee which is not a member of the Group,

	he may thereafter exercise his Option at any time before the earlier of the expiry of its Option Period and within the later to expire of the following periods: 12 months from the date of such cessation; or 12 months commencing on the third anniversary of the Date of Grant PROVIDED THAT if a Participant so ceases to be employed by the Group before the third anniversary of the Date of Grant the Board may in its discretion acting fairly and reasonably determine that the Option may become exercisable for 12 months from any date before the third anniversary of the Date of Grant. Any Option which is not so exercised shall lapse.
6.4	Subject to clause 5.2, if a Participant ceases to be employed by the Group otherwise than by reason of the events specified in clauses 6.2 and 6.3 which shall include for these purposes where a Participant is adjudicated bankrupt, his Option shall lapse unless the Board in its discretion acting fairly and reasonably determines otherwise in which case he may exercise his Option at any time before the expiry of its Option Period and within the later to expire of the following periods: 12 months from the date of such cessation; or 12 months commencing on the third anniversary of the Date of Grant PROVIDED THAT if a Participant so ceases to be employed by the Group before the third anniversary of the Date of Grant the Board may in its discretion acting fairly and reasonably determine that the Option may become exercisable for 12 months from any date before the third anniversary of the Date of Grant. Any Option which is not so exercised shall lapse. An Option shall lapse on the date on which a Participant transfers assigns or charges or attempts to transfer, assign or charge his interest in the Option.
6.5	For the purposes of this clause 6, where a Participant’s employment is terminated without notice or on terms in lieu of notice it shall be deemed to cease on the date on which the termination takes effect and where the said employment is terminated with notice it shall be deemed to cease upon the date on which that notice expires.
7.	Takeovers and Liquidations
7.1	Clause 7.2 shall apply:

(a) if any person obtains Control of the Company as a result of making:

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(i)	a general offer to acquire the whole of the issued share capital of the Company (other than that which is already owned by such person) made on a condition such that if it is satisfied the person making the offer will have Control of the Company; or
(ii)	a general offer to acquire all the Shares (or such Shares as are not already owned by such person); or

(b) if any person obtains Control of the Company pursuant to a compromise or arrangement sanctioned by the Court under section 425 of the Companies Act 1985 (a “scheme of arrangement” for the purposes of this clause 7).

7.2

Subject to clause 5.2, a Participant may exercise his Option at any time before the earlier of the expiry of its Option Period and the expiry of the appropriate period, as defined in clause 7.3. Any such Option which is not so exercised shall lapse PROVIDED THAT this clause 7.2 shall not apply where a Participant by agreement with an Acquiring Company releases his Option in consideration of the grant to him of a New Option pursuant to clause 8 before the expiry of the appropriate period referred to in clause 8.4.

7.3

The appropriate period referred to in clause 7.2 is:

(a) in a case falling within clause 7.1(a), a period commencing on the date when the person making the offer has obtained Control of the Company and any condition subject to which the offer is made is satisfied and ending on the earlier of:

(i)	six months after such date; and
(ii)	30 days before the last date on which the person making the offer is permitted to issue a notice pursuant to section 429 of the Companies Act 1985; and

(b) in a case falling within clause 7.1(b), whichever of the following periods is the first to expire:

(i)	a period of six months commencing with the time when the Court sanctions the compromise or arrangement; or
(ii)	the period commencing with the time when the Court sanctions the compromise or arrangement and ending on the date when the scheme of arrangement becomes effective.

7.4	Subject to clause 5.2, if the Company gives notice of a General Meeting to consider a resolution for the voluntary winding-up of the Company, a Participant may exercise his Option at any time before the expiry of its Option Period and during the period until such resolution is duly passed or defeated or withdrawn PROVIDED THAT any exercise pursuant to this clause 7.4 shall be conditional upon the said resolution being duly passed. If a Participant exercises his Option pursuant to this clause 7.4 he shall be entitled to share in the assets of the Company with existing holders of the Shares in the same manner as he would have been entitled had the Shares been registered in his name before the resolution was passed.
7.5	On the commencement of any liquidation of the Company (subject to clause 7.4 and otherwise than in connection with a compromise or arrangement as referred to in clause 7.1(b) or clause 8.1(b)) all Options shall lapse.
8.	Replacement of Options on Change of Control of the Company
8.1	Clause 8.2 shall apply where an Acquiring Company:

(a) obtains Control of the Company as a result of making:

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(i)	a general offer to acquire the whole of the issued share capital of the Company (other than that which is already owned by it and/or by any of its subsidiaries) made on a condition such that if it is satisfied the Acquiring Company will have Control of the Company; or
(ii)	a general offer to acquire all the Shares (or such Shares as are not already owned by the Acquiring Company and/or by any of its subsidiaries); or

(b)	obtains Control of the Company in pursuance of a compromise or arrangement sanctioned by the court under section 425 of the Companies Act 1985; or
(c)	becomes bound or entitled to acquire Shares under sections 428 to 430F of the Companies Act 1985.

8.2

A Participant may, at any time within the appropriate period as defined in clause 8.4 by agreement with the Acquiring Company, release any Option of his to the extent to which it is exercisable pursuant to clause 7 and clause 5.2 (the “Old Option” for the purposes of this clause) in consideration of the grant to him of a new option (the “New Option” for the purposes of this paragraph) PROVIDED THAT any New Option satisfies the conditions specified in clause 8.3.

8.3

The New Option must:

(a)	be over shares in the Acquiring Company or a Controlling Company which satisfy the conditions specified in paragraphs 16 to 20 inclusive of Schedule 4 (and the term “Shares” in this Scheme shall thereafter be construed accordingly);
(b)	be a right to acquire such number of shares which on acquisition of the New Option have an aggregate market value (determined in accordance with Part VIII of the Taxation of Chargeable Gains Act 1992) equal to the aggregate market value (determined on a like basis) of the Shares the subject of the Old Option immediately before its release; and
(c)	have an exercise price per share such that the aggregate price payable on complete exercise of the New Option equals the aggregate price which would have been payable on complete exercise of the Old Option at the time of its release.

8.4 The appropriate period referred to in clause 8.2 is:

(a)	in a case falling within clause 8.1(a), six months commencing on the date when the Acquiring Company making the offer has obtained Control of the Company and any condition subject to which the offer is made is satisfied;
(b)	in a case falling within clause 8.1(b), six months beginning with the time when the court sanctions the compromise or arrangement; and
(c)	in a case falling within clause 8.1(c), the period during which the Acquiring Company remains so bound or entitled.

8.5

The New Option shall be exercisable in the same manner as the Old Option and subject to the provisions of the Scheme as it had effect in relation to the Old Option immediately before its release (and the term “Option” in the Plan shall thereafter be construed accordingly), and the New Option shall, for all purposes of the Scheme other than clause 8.6, be treated as having been granted on the date when the corresponding Old Option was granted.

8.6

With effect from the grant of a New Option hereunder, clauses 4, 7, 8, 9, 10.2, 10.4 and 12.1 shall, in relation to the New Option, be construed as if references to the Company were references to the Acquiring Company, or as the case may be, the Controlling Company.

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9.

Variations in the Share Capital of the Company

9.1

If at any time after its Date of Grant and before an Option ceases to be exercisable, there is a variation of the share capital of the Company which involves the Shares by reason of an issue of securities by way of rights or capitalisation of reserves or a reduction, subdivision or consolidation of capital or otherwise, the Exercise Price and/or the number of Shares in respect of which the Option may be exercised and/or the denomination of the Shares comprised in an Option may be adjusted to such extent and in such manner as the Board shall determine and the Auditors shall in their opinion consider and confirm in writing to the Board to be fair and reasonable PROVIDED THAT:

(a)	the aggregate Exercise Price payable on the exercise of an Option shall not be increased thereby;
(b)	the Exercise Price shall not be reduced below the nominal value of a Share (if Shares are to be subscribed on exercise of an Option); and
(c)	any such adjustments shall be subject to prior Revenue Approval at any time when the Plan has Revenue Approval.

9.2	All Participants shall be notified in writing of any such adjustments as soon as practicable thereafter and the Company shall be entitled to call in the instruments evidencing the grant of the Options affected by such adjustments for endorsement or replacement, as may appear appropriate.
10.	Administration of the Plan
10.1	The Plan shall in all respects be administered by the Board. The Board may make such rules for the conduct of the Plan, not being inconsistent with the provisions hereof, as it shall think fit. The Board shall have authority, not inconsistent with the provisions hereof, to prescribe the form or forms of instrument evidencing Options and any other instruments required under the Plan and to change such forms from time to time. Any dispute regarding the interpretation of the Plan or the terms of any Option shall be determined by the Board (after seeking such advice as it shall consider necessary) and its decision shall be final and binding.
10.2	The Company shall at all times maintain an amount of authorised and unissued Shares sufficient to satisfy outstanding Options under the Plan or to procure that sufficient Shares are available for transfer to satisfy all Options under which Shares may be acquired.
10.3	The Company may distribute to Participants copies of any notice or document normally sent by the Company to the holders of Shares.
10.4	The provisions of the Company’s Articles of Association for the time being with regard to the service of notices upon members of the Company shall apply mutatis mutandis to any notice to be given by the Company under the Plan to Participants and all notices to be given to the Company under the Plan shall be delivered or sent by post to the Company at its registered office.
11.	Amendment of the Plan
11.1	Subject to clauses 11.2 and 11.4, the Board shall at any time be entitled to amend by resolution all or any of the provisions of the Plan, PROVIDED THAT, if an amendment is made at a time when the Plan has Revenue Approval:

(a) no amendment to the Plan shall have effect until it has been approved by the Board of Inland Revenue; and

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(b) nothing shall be done to the Plan which would prejudice the obtaining of Revenue Approval or cause it to be withdrawn.

11.2 Subject to:

(a)	any adjustment made pursuant to clause 9; and
(b)	clause 11.3;

	the definitions of “Eligible Employee” and “Exercise Price” clauses 3, 9.1 and this clause 11 and the rights attaching to shares allotted or transferred under the Plan referred to in clause 4.5 shall not be amended to the advantage of existing or future Participants without the prior approval by ordinary resolution of the members of the Company in general meeting.
11.3	Clause 11.2 shall not apply to any amendment which:

(a)	is necessary to secure and maintain Revenue Approval and to ensure that Revenue Approval is not withdrawn pursuant to any statutory modification of the provisions of ITEPA or the Taxes Act or to take account of a change in legislation or to obtain or maintain favourable taxation, exchange control or regulatory treatment of the Company, any Subsidiary or any Participant; or
(b)	is a minor amendment which is necessary or desirable to benefit or facilitate the administration of the Plan.

11.4 No amendment shall be made pursuant to clause 11.1 which would prejudice the subsisting rights of existing Participants in any manner unless it is made:

(a)

with the prior written consent of existing Participants entitled to exercise options in respect of at least three-quarters of the total number of Shares over which Options shall at that time be subsisting; or

(b)

by a resolution at a meeting of such Participants passed by not less than three quarters of the Participants who attend and vote either in person or by proxy and for the purposes of this clause 11.4 the Participants shall be treated as the holders of a separate class of share capital and the provisions of the Articles of Association of the Company relating to class meetings shall apply mutatis mutandis.

11.5	Notwithstanding any other provision of the Plan other than clause 11.1 the Board may, in respect of Options granted to Eligible Employees who are or may become subject to taxation outside the United Kingdom on their remuneration, amend the provisions of the Plan and the terms of Options as it considers necessary or desirable to take account of or to mitigate or to comply with relevant overseas taxation, securities or exchange control laws provided that the terms of Options granted to such Eligible Employees are not overall more favourable than the terms of Options granted to other Eligible Employees.
11.6	If any amendment is made pursuant to this clause 11, the Board shall notify all Participants in writing as soon as practicable thereafter.
11.7	The Board or the Company in general meeting may by resolution to terminate the Plan at any time but Options previously granted shall continue to be valid and exercisable in accordance with the provisions of the Plan.
12.	Additional Provisions
12.1	Every Option shall be subject to the condition that no Shares shall be issued or transferred to a Participant following the exercise of an Option if such issue or transfer would be contrary to any enactment or regulation for the time being in force of the United Kingdom or of any other country having jurisdiction in relation thereto. The Company

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	shall not be bound to take any action to obtain the consent of any governmental authority to such issue or transfer or to take any action to ensure that any such issue or transfer shall be in accordance with any such enactment or regulation if such action could in the opinion of the Board be unduly onerous.
12.2	The rights and obligations of a Participant under his terms of employment with any member of the Group shall not be affected by his participation in the Plan and the Plan shall not afford to a Participant any right to continued employment or any right to compensation in consequence of the termination of his employment (whether lawful or unlawful) for any reason whatsoever.
12.3	The Company may distribute to Participants copies of any notice or document normally sent by the Company to the holders of Shares.
12.4	In any matter in which they are required to act hereunder the Auditors shall be deemed to be acting as experts and not as arbitrators.
12.5	This Plan shall be governed by and construed in accordance with English law.

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Barclays PLC

Rules

of the

Barclays PLC

Unapproved Incentive Share Option Plan

Lovells

Ref: A4/LLW/540042.05
001BB/46856

Contents

Clause		Page No
1.	Definitions and Interpretation		1
2.	Grant of Options		3
3.	Limitations on Grant of Options		4
4.	Exercise of Options		5
5.	Limitations on Exercise of Options		7
6.	Time for Exercise of Options		7
7.	Takeovers and Liquidations		8
8.	Variations in the Share Capital of the Company		9
9.	Administration of the Plan		9
10.	Amendment of the Plan		10
11.	Additional Provisions		10

Barclays PLC

Unapproved Incentive Share Option Plan

1.	Definitions and Interpretation
1.1	In the Plan the following words and expressions have the meanings set opposite them:
	“Adoption Date” means 26 April 2000 being the date on which the Plan is adopted by the Company;
	“Announcement Date” means the date on which the Company announces its annual, half-yearly or if relevant quarterly results to the London Stock Exchange in any year within the Operative Period;
	“Any Other Executive Plan” means any employees’ share scheme other than the Plan adopted by the Company in general meeting which provides for the acquisition of or subscription for shares of the Company by or on behalf of selected employees and/or directors, and which is not linked to an SAYE contract;
	“Any Other Plan” means any employees’ share scheme other than the Plan adopted by the Company in general meeting which provides for the acquisition of or subscription for shares in the Company by or on behalf of employees or directors;
	“Auditors” means the auditors for the time being of the Company or in the event of there being joint auditors such one of them as the Board shall select;
	“BGI” means Barclays Global Investors UK Holdings Limited;
	“BGI Plan” means the Barclays Global Investors Equity Ownership Plan adopted by the Company on 26 April 2000;
	“BGI Shares” means “A” Ordinary Shares in the capital of BGI;
	“Barclays Bank” means Barclays Bank PLC;
	“Board” means the board of directors for the time being of the Company or a committee of the board of directors of the Company appointed to administer the Plan PROVIDED THAT if any person obtains Control of the Company the Board or the relevant committee as appropriate shall consist of the members of the Board or such committee as the case may be immediately before such Control is obtained;
	“Company” means Barclays PLC;
	“Control” means the control of a company within the meaning given to that expression by section 840 of the Taxes Act and a person shall be deemed to have control of a company if he and others acting in concert with him have together obtained control of the company within such meaning;
	“Date of Grant” means the date on which an Option is granted in accordance with clause 2;
	“Dealing Day” means a day on which transactions take place on the London Stock Exchange;
	“Eligible Employee” means any person whose terms of employment require him to devote substantially the whole of his working time to any member or members of the Group, but excluding any person who has less than two years service to run before his

Normal Retirement Age unless the Company in general meeting shall have resolved to waive such requirement in any particular case;

“Exercise Price” means subject to clause 8, the price per Share payable on the exercise of an Option as determined by the Board and as stated when granting an Option in accordance with clause 2 being:

(a) in the case of an Option to subscribe Shares not less than the greater of:

(i)	the nominal value of a Share; and
(ii)	if and for so long as the Shares are admitted to the Official List of the UK Listing Authority, the average middle market quotations of a Share as derived from the Daily Official List of the UK Listing Authority (rounded up to the nearest whole penny) over any period of not more than five successive Dealing Days in the period of 30 days before the Date of Grant PROVIDED THAT any such period of successive Dealing Days falls within the Grant Period; and
(iii)	if the Shares are not so admitted, the market value of a Share determined in accordance with Part VIII of the Taxation of Chargeable Gains Act 1992;

(b) in any other case, the average purchase price paid by the Trustees to purchase Shares on any regulated market for the grant of Options over any period not exceeding ten successive Dealing Days PROVIDED THAT:

(i)	not more than 30 days shall elapse after the first Dealing Day taken for these purposes and the Date of Grant;
(ii)	any such period of ten successive Dealing Days falls within the relevant Grant Period;
(iii)	for the purposes of calculating the average purchase price, if the Trustees do not purchase Shares on any regulated market the average purchase price the Trustees would have paid had they bought the Shares on such regulated market during the relevant period as determined by the Trustees; and
(iv)	the Trustees notify the Board in writing of the average purchase price paid for the Shares by the Trustees (or which the Trustees would have paid pursuant to paragraph (b)(iii) above);

“Financial Year” means a financial year of the Company within the meaning given to that expression by section 742 of the Companies Act 1985;

“Grant Period” means any period of three months from:

(a)	the Adoption Date;
(b)	an Announcement Date PROVIDED THAT if the Company is restricted by statute, order, regulation or otherwise (including a restriction resulting from the application of the Model Code for transactions in securities by directors or any comparable code adopted by the Company) from granting Options within such three month period, the Company may grant Options within the period of three months after the lifting of such restrictions; or
(c)	any date on which changes to the legislation affecting share option schemes is announced or made;

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(d) any time when the Board resolves that exceptional circumstances exist which justify the grant of Options;

	“Group” means the Company and all of its Subsidiaries and “member of the Group” shall be construed accordingly;
	London Stock Exchange means the London Stock Exchange plc;
	“Normal Retirement Age” means the earliest age at which an employee can be required to retire by any member of the Group or, if sooner, the age at which he has agreed to take early retirement;
	“Operative Period” means the period of ten years commencing on the Adoption Date;
	“Option” means a right to buy Shares granted pursuant to the Plan;
	“Option Period” means subject to clauses 5, 6.2, 6.3, 6.4 and 7, the period during which an Option shall be exercisable in accordance with the provisions of the Plan as determined by the Board at its Date of Grant PROVIDED THAT the Board may not specify a period beginning earlier than three years from its Date of Grant nor ending later than ten years from its Date of Grant;
	“Participant” means an Eligible Employee who has been granted an Option or, where applicable, the personal representative(s) of any such person;
	“Plan” means the employees’ share scheme herein contained as from time to time amended in accordance with the provisions hereof which shall be known as the “Barclays PLC Unapproved Incentive Share Option Plan”;
	“Shares” means ordinary shares in the capital of the Company;
	“Subsidiaries” means those companies over which for the time being the Company has Control and which are subsidiaries of the Company within the meaning of section 736 of the Companies Act 1985;
	“Target Award” means the value determined by the Board for the purposes of granting an Option to an Eligible Employee who it has selected in its absolute discretion to participate in the Plan, such value being based on market competitive practice for comparable positions differentiated to reflect individual performance and potential and used by the Board to determine the performance measures applicable to the exercise of the Option and the maximum number of Shares over which the Option may be granted;
	“Taxes Act” means the Income and Corporation Taxes Act 1988;
	“Trustees” means the trustees from time to time of any employee benefit trust established by a member of the Group;
	“UK Listing Authority” means the UK Listing Authority within the meaning given to that expression in the Listing Rules made by the Financial Services Authority
	pursuant to its appointment as the relevant competent authority under the Official Listing of Securities (Change of Competent Authority) Regulations 2000.
1.2	Any reference herein to a statutory provision shall include a reference to that provision as amended or re-enacted from time to time. Where the context permits the singular shall include the plural and vice versa and the masculine gender shall include the feminine.
2.	Grant of Options

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2.1 Subject to the limitations set out below, the Board may in its absolute discretion during any Grant Period grant any Eligible Employee an Option in accordance with the terms of the Plan. The Board shall as soon as reasonably practicable on or after its Date of Grant notify any such Eligible Employee in writing of the grant of the Option. The notice shall specify:

(a)	the number of Shares in respect of which the Option is granted;
(b)	the date on which it is granted; (c) the Exercise Price;
(d)	the performance target(s) imposed by the Board for the purposes of clause 5; and
(e)	the Option Period.

2.2	An Eligible Employee to whom an Option is granted may by notice in writing within 30 days after the date of grant (or such shorter period of which he is notified) renounce his rights thereunder in whole, and in such case the Option shall be deemed never to have been granted hereunder, or in part, and in such case the Option shall be deemed to have been granted only as to the balance.
2.3	The grant of an Option shall be made on the basis that participation in the Plan shall constitute an agreement to be bound by the rules of the Plan and shall be evidenced by an instrument executed as a deed (howsoever, including by facsimile signature) in such form as the Board may from time to time prescribe and shall be personal to the Participant and may not be transferred, assigned or charged to or, subject to the provisions of clause 6.2, exercised by any other person. The instrument shall be issued as soon as practicable after the last date on which an Eligible Employee may renounce his rights under an Option in accordance with clause 2.2.
2.4	No Option shall be granted under the Plan after the expiry of the Operative Period.
3.	Limitations on Grant of Options
3.1	Subject to adjustment pursuant to clause 8, no Options shall be granted under the Plan:

(a)

if as a result the number of Shares issuable on the exercise of such Options, when aggregated with any other ordinary shares issued by way of subscription out of profits and with any other ordinary shares issued or capable of being issued by way of subscription on the exercise of options granted by the Company during the previous ten years under the Plan and under Any Other Plan, would exceed ten per cent. of the amount of the Company’s ordinary share capital then in issue; or

(b)

if as a result the number of Shares issuable on the exercise of such Options, when aggregated with any other ordinary shares issued or capable of being issued by way of subscription on the exercise of options granted by the Company during the previous ten years under the Plan and Any Other Executive Plan would exceed five per cent. of the amount of the Company’s ordinary share capital then in issue;

PROVIDED THAT for the purpose of applying the limits set out in clauses 3.1(a) and (b) the number of Shares over which Options may be granted under the Plan shall be reduced by the number of notional Shares determined by the Board in the manner set out in clause 3.2.

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3.2 For the purposes of the proviso to clause 3.1:

(a)	the Board shall compute the number of BGI Shares which have been acquired on exercise of options granted under the BGI Plan in the relevant period or in respect of which options under the BGI Plan are currently outstanding (less any BGI Shares issued on the exercise of options granted under the BGI Plan but subsequently purchased by Barclays Bank or any other member of the Group); and
(b)	the Board shall, subject to such adjustment or variation as the Board shall in its absolute discretion consider appropriate, convert such BGI Shares into a number of notional Shares by the application in relation to each such acquisition of or grant of options over, BGI Shares of the formula:

A x B = D where:

   C

A	is the number of BGI Shares acquired by or under option to each relevant employee;
B	is the price per BGI Share at which such employee acquired or may acquire such number of BGI Shares;
C	is if and for so long as the Shares are admitted to the Official List of the UK Listing Authority the greater of the market value of a Share:

(a)	on the date of grant of such options; and
(b)	on the date of any determination by the Board for the purposes of this clause 3.2,

calculated by the Board by reference to the middle market quotations of a Share as derived from the Daily Official List of the UK Listing Authority or if the Shares are not so admitted on such other basis as the Board shall in its absolute discretion determine;

D is the number of notional Shares represented by the BGI Shares acquired in the relevant period or in respect of which options are currently outstanding under the BGI Plan for the purposes of the proviso to clause 3.1.

3.3	No Option shall be granted to an Eligible Employee under the Plan if as a result the Target Award for that Option when aggregated with the Target Award for any other Option granted to such Eligible Employee in the same Financial Year would exceed 200% of such Eligible Employee’s remuneration determined for these purposes by the Board in its absolute discretion.
4.	Exercise of Options
4.1	An Option shall only be exercised by a Participant within its Option Period, by his giving notice in writing to the Company at its registered office in such form as may be prescribed by the Board from time to time. Such notice shall be signed by the Participant and shall specify the number of Shares (which shall be either a multiple of 100 or equal to the balance of the Shares remaining subject to the Option) in respect of which the Option is being exercised. The Shares needed to satisfy the exercise of the Option may be provided by the Company or the Trustees. The Participant shall:

(a) supply with such notice:

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(i)	the instrument evidencing the grant of the relevant Option for cancellation or amendment; and
(ii)	such other documentation as the Board may require;

(b)	pay the full amount of the aggregate Exercise Price for the said Shares in such manner as the Board may from time to time prescribe (which in the case of Options to be satisfied by the Trustees shall be payable to the Company as agent for the relevant Trustees); and
(c)	pay any such additional amount of which the Board my notify the Participant in respect of any deduction on account of tax or similar liabilities as may be required by law which may arise on exercise of the Option in such manner as the Board may from time to time prescribe.
	An Option (or part thereof) shall be deemed to have been exercised on the date when such notice together with payment of the aggregate Exercise Price due and any such additional amount (or documentation evidencing arrangements to pay such additional amounts), the instrument evidencing the grant of an Option and any other documents specified by the Board are received by the Company. Where such exercise is conditional on the fulfilment of the condition specified in clause 5.2 the date of exercise of the Option or the relevant portion of the Option shall for these purposes be deemed to be the date on which the Board determines in accordance with clause 5.3 that the condition has been fulfilled.
4.2	The Company or the Trustees as appropriate shall within 30 days after the date of exercise of the Option either:
(a)	allot and thereafter issue; or
(b)	transfer
	the appropriate number of Shares to the Participant (or to his nominee at the Participant’s written direction) at their Exercise Price and shall deliver to the Participant (or his nominee, as appropriate) a definitive share certificate in respect thereof (or such other evidence of allotment and issue as may be prescribed by the Board where such allotment and issue is by means of a relevant system, as defined in Regulation 2(1) of the Uncertificated Securities Regulations 1995).
4.3	Any Shares issued pursuant to clause 4.2 shall rank pari passu in all respects with the Shares in issue on the date of such allotment save that they shall not rank for or be entitled to any dividend or other distribution or any issue of Shares by way of capitalisation of profits or reserves or any issue of securities by way of rights which under the terms of a resolution passed by the Company is to be or is proposed to be paid or made to the holders of Shares on the register on a date prior to the date of such allotment.
4.4	If and for so long as the Shares are admitted to the Official List of the UK Listing Authority the Company shall for all Shares allotted pursuant to the exercise of Options apply to:
(a)	the UK Listing Authority for a listing; and
(b)	the London Stock Exchange for admission to trading.

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5.	Limitations on Exercise of Options
5.1	Without prejudice to the following provisions of this clause 5, and subject as provided in clauses 6 and 7, an Option may be exercised by a Participant who has ceased to be an Eligible Employee.
5.2	The exercise of an Option by a Participant and if relevant the extent to which it may be so exercised shall be conditional on the Board being satisfied that such performance target(s) as has been imposed by it on the grant of the Option in question shall have been fulfilled.
5.3	Within 30 days of the date of any conditional exercise of the Option the Board shall determine whether the performance target referred to in clause 5.2 has been fulfilled and if relevant the extent to which it has been fulfilled and shall inform the Participant in writing accordingly. The determination of the Board shall be final and binding.
6.	Time for Exercise of Options
6.1	Subject to clauses 6.2, 6.3, 6.4 and 7, an Option may only be exercised during its Option Period. An Option which is not so exercised shall lapse.
6.2	If a Participant dies his personal representative(s) may exercise his Option at any time before the expiry of its Option Period and within but not later than 12 months from the date of his death. Any such Option which is not so exercised shall lapse.
6.3	Subject to clause 5.2, if a Participant ceases to be employed by the Group by reason of:

(a)	retirement on or after Normal Retirement Age;
(b)	injury;
(c)	disability;
(d)	ill-health;
(e)	dismissal for redundancy within the meaning of the Employment Rights Act 1996; (f) the company by which he is employed ceasing to be a member of the Group; or
(g)	the undertaking in which he is employed being transferred to a transferee which is not a member of the Group,

he may thereafter exercise his Option at any time before the earlier of the expiry of its Option Period and within the later to expire of the following periods: 12 months from the date of such cessation or 12 months commencing on the third anniversary of the Date of Grant PROVIDED THAT if a Participant so ceases to be employed by the Group before the third anniversary of the Date of Grant the Board may in its absolute discretion determine that the Option may become exercisable for 12 months from any date before such date. Any Option which is not so exercised shall lapse.

6.4

Subject to clause 5.2, if a Participant ceases to be employed by the Group otherwise than by reason of the events specified in clauses 6.2 and 6.3 which shall include for these purposes where a Participant is adjudicated bankrupt, his Option shall lapse unless the Board in its absolute discretion determines otherwise in which case he may exercise his Option at any time before the expiry of its Option Period and within the later to expire of the following periods: 12 months from the date of such cessation or 12 months beginning on the third anniversary of the Date of Grant PROVIDED THAT if a Participant so ceases to be employed by the Group before the third anniversary of the Date of Grant the Board

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	may in its absolute discretion determine that the Option may become exercisable for 12 months from any date before such date. Any Option which is not so exercised shall lapse. An Option shall lapse on the date on which a Participant transfers assigns or charges or attempts to transfer, assign or charge his interest in the Option.
6.5	For the purposes of this clause 6, where a Participant’s employment is terminated without notice or on terms in lieu of notice it shall be deemed to cease on the date on which the termination takes effect and where the said employment is terminated with notice it shall be deemed to cease upon the date on which that notice expires.
7.	Takeovers and Liquidations
7.1	Clause 7.2 shall apply:

(a) if any person obtains Control of the Company as a result of making:

(i)	a general offer to acquire the whole of the issued share capital of the Company (other than that which is already owned by such person) made on a condition such that if it is satisfied the person making the offer will have Control of the Company; or
(ii)	a general offer to acquire all the Shares (or such Shares as are not already owned by such person); or

(b) if any person obtains Control of the Company pursuant to a compromise or arrangement sanctioned by the Court under section 425 of the Companies Act 1985 (a “scheme of arrangement” for the purposes of this clause 7).

7.2	Subject to clause 5.2, a Participant may exercise his Option at any time before the earlier of the expiry of its Option Period and the expiry of the appropriate period, as defined in clause 7.3. Any such Option which is not so exercised shall lapse.
7.3	The appropriate period referred to in clause 7.2 is:

(a) in a case falling within clause 7.1(a), a period commencing on the date when the person making the offer has obtained Control of the Company and any condition subject to which the offer is made is satisfied and ending on the earlier of:

(i)	six months after such date; and
(ii)	30 days before the last date on which the person making the offer is permitted to issue a notice pursuant to section 429 of the Companies Act 1985; and

(b) in a case falling within clause 7.1(b), whichever of the following periods is the first to expire:

(i)	a period of six months commencing with the time when the Court sanctions the compromise or arrangement; or
(ii)	the period commencing with the time when the Court sanctions the compromise or arrangement and ending on the date when the scheme of arrangement becomes effective.

7.4 If the Company gives notice of a General Meeting to consider a resolution for the voluntary winding-up of the Company, a Participant may exercise his Option at any time before the expiry of its Option Period and during the period until such resolution is duly passed or defeated or withdrawn PROVIDED THAT any exercise pursuant to this clause

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7.4 shall be conditional upon the said resolution being duly passed. If a Participant exercises his Option pursuant to this clause 7.4 he shall be entitled to share in the assets of the Company with existing holders of the Shares in the same manner as he would have been entitled had the Shares been registered in his name before the resolution was passed.

7.5	On the commencement of any liquidation of the Company (subject to clause 7.4 and otherwise than in connection with a compromise or arrangement as referred to in clause 7.1(b)) the Option shall lapse.
8.	Variations in the Share Capital of the Company
8.1	If at any time after its Date of Grant and before an Option ceases to be exercisable, there is a variation or reorganisation of the share capital of the Company which involves the Shares by reason of an issue of securities by way of rights or capitalisation of reserves or a reduction, sub-division or consolidation of capital or otherwise, the Exercise Price and/or the number of Shares in respect of which the Option may be exercised and/or the denomination of the Shares comprised in an Option may be adjusted to such extent and in such manner as the Board shall determine and the Auditors shall in their opinion consider and confirm in writing to the Board to be fair and reasonable PROVIDED THAT:

(a)	the aggregate Exercise Price payable on the exercise of an Option shall not be increased thereby;
(b)	the Exercise Price shall not be reduced below the nominal value of a Share if Shares are to be subscribed on exercise of an Option.

8.2	The Participant shall be notified in writing of any such adjustments as soon as practicable thereafter and the Company shall be entitled to call in the instrument evidencing the grant of the Option affected by such adjustments for endorsement or replacement, as may appear appropriate.
9.	Administration of the Plan
9.1	The Plan shall in all respects be administered by the Board. The Board may make such rules for the conduct of the Plan, not being inconsistent with the provisions hereof, as it shall think fit. The Board shall have authority, not inconsistent with the provisions hereof, to prescribe the form or forms of instrument evidencing Options and any other instruments required under the Plan and to change such forms from time to time. Any dispute regarding the interpretation of the Plan or the terms of any Option shall be determined by the Board (after seeking such advice as it shall consider necessary) and its decision shall be final and binding.
9.2	The Company shall at all times maintain an amount of authorised and unissued Shares sufficient to satisfy outstanding Options under the Plan or to procure that sufficient Shares are available for transfer to satisfy all Options under which Shares may be acquired.
9.3	The Company may distribute to Participants copies of any notice or document normally sent by the Company to the holders of Shares.
9.4	The provisions of the Company’s Articles of Association for the time being with regard to the service of notices upon members of the Company shall apply mutatis mutandis to any notice to be given by the Company under the Plan to Participants and all notices to be given to the Company under the Plan shall be delivered or sent by post to the Company at its registered office.

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10.	Amendment of the Plan
10.1	Subject to:

(a)	any adjustment made pursuant to clause 8; and
(b)	clause 10.2; and (c) clause 10.3
(c)	clause 10.3

the Board shall at any time be entitled to amend by resolution all or any of the provision of the Plan PROVIDED THAT the definitions of the “Eligible Employee” and “Exercise Price”, clauses 3, 8.1 and this clause 10 and the rights attaching to Shares allotted or transferred under the Plan referred to in clause 4.3 shall not be amended to the advantage of existing or future Participants without the prior approval by ordinary resolution of the members of the Company in general meeting.

10.2

Clause 10.1 shall not apply to any amendment which:

(a)	is necessary to take account of a change in legislation or to obtain or maintain favourable taxation, exchange control or regulatory treatment of the Company, any Subsidiary or any Participant; or
(b)	is a minor amendment which is necessary or desirable to benefit or facilitate the administration of the Plan.

10.3 No amendment shall be made pursuant to clause 10.1 which would prejudice the subsisting rights of existing Participants in any manner unless it is made:

(a)

with the prior written consent of existing Participants entitled to exercise options in respect of at least three-quarters of the total number of Shares over which Options shall at that time be subsisting; or

(b)

by a resolution at a meeting of such Participants passed by not less than three-quarters of the Participants who attend and vote either in person or by proxy and for the purposes of this clause 10.3 the Participants shall be treated as the holders of a separate class of share capital and the provisions of the Articles of Association of the Company relating to class meetings shall apply mutatis mutandis.

10.4	Notwithstanding any other provisions of the Plan the Board may, in respect of Options granted to Eligible Employees who are or may become subject to taxation outside the United Kingdom on their remuneration, amend the provisions of the Plan and the terms of Options as it considers necessary or desirable to take account of or to mitigate or to comply with relevant overseas taxation, securities or exchange control laws provided that the terms of Options granted to such Eligible Employees are not overall more favourable than the terms of Options granted to other Eligible Employees.
10.5	If any amendment is made pursuant to this clause 10, the Board shall notify all Participants in writing as soon as practicable thereafter.
10.6	The Board or the Company in general meeting may by resolution to terminate the Plan at any time but Options previously granted shall continue to be valid and exercisable in accordance with the provisions of the Plan.
11.	Additional Provisions

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11.1	Every Option shall be subject to the condition that no Shares shall be issued or transferred to a Participant following the exercise of an Option if such issue or transfer would be contrary to any enactment or regulation for the time being in force of the United Kingdom or of any other country having jurisdiction in relation thereto. The Company shall not be bound to take any action to obtain the consent of any governmental authority to such issue or transfer or to take any action to ensure that any such issue or transfer shall be in accordance with any enactment or regulation if such action could in the opinion of the Board be unduly onerous.
11.2	The rights and obligations of a Participant under his terms of employment with any member of the Group shall not be affected by his participation in the Plan and the Plan shall not afford to a Participant any right to continued employment or any right to compensation in consequence of the termination of his employment (whether lawful or unlawful) for any reason whatsoever.
11.3	The Company may distribute to Participants copies of any notice or document sent by the Company to the holders of Shares.
11.4	In any matter in which they are required to act hereunder the Auditors shall be deemed to be acting as experts and not as arbitrators.
11.5	This Plan shall be governed by and construed in accordance with English law.

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Appendix to the Barclays PLC Incentive Share Option Plan

Effect and Purpose

     This Appendix shall take effect as if the Rules of the Plan were set out herein subject to the following modifications. The Rules of the Plan as modified herein shall apply to any Option so granted to an Eligible Employee who is resident in France on the Date of Grant of such Option unless expressly specified to the contrary so that such Participants in the Plan will be eligible to take advantage of the preferential tax regime for Options granted to French employees.

1.	Definitions
	The definition of “Eligible Employee” in Rules 1.1 of the Plan is modified by adding to the end of the definition the following words:
	“and who is both an employee and: a director of the Company; or a director of any member of the Group; or a senior manager of the Company; or a senior manager of a member of the Group;”
1.1	The definition of “Exercise Price” is modified by:

(a)	deleting in sub paragraph (a) the words “in the case of an Option to subscribe Shares”;
(b)	deleting the reference to (a);
(c)	by adding a new sub-paragraph (iii) as follows:
	"(iii) if and for so long as the Shares are admitted to the Official List of the London Stock Exchange 80% of the average middle market quotations of a Share as derived from the Daily Official List of the London Stock Exchange (rounded up to the nearest whole penny) over the period of 20 consecutive Dealing Days preceding the Date of Grant;”;
(d)	renumbering sub-paragraph (iii) as sub-paragraph (iv); and
(e)	deleting sub-paragraph (b) in its entirety.

1.2	The definition of “Grant Period” is modified by the addition, at the end of the definition, of the following:
	“PROVIDED THAT no Option may be granted in the period of 20 consecutive Dealing Days following the payment by the Company of a dividend.”
1.3	The definition of “Option Period” is modified by:

(a)	inserting “, 6.5” after the number “6.4”; and
(b)	deleting the word “three” and replacing it with the word “four”.

1.4	The definition of “Trustees” is deleted in its entirety.
2.	Limitations on Grant of Options
2.1	Rule 3.1 shall be modified by the addition of a new clause 3.1(c) as follows:

	“(c) if as a result the number of Shares issuable on the exercise of such Options when aggregated with any other ordinary shares issued or capable of being issued by way of subscription on the exercise of options granted by the Company under the Plan as at the Date of Grant of an Option would exceed one-third of the amount of the Company’s ordinary share capital then in issue.”
2.2	The final paragraph of clause 3.1 is amended by deleting the words “clauses 3.1(a) and (b)” and replacing them with the words “clause 3.1(a), (b) and (c)”.
2.3	A new clause 3.4 is added as follows:
	No Option shall be granted to an Eligible Employee under the Plan if on the proposed Date of Grant, the Eligible Employee owns 10% or more of the issued share capital of the Company at that time.
3.	Exercise of Options
3.1	Rule 4.1 is modified by:

(a)	deleting the words “The Shares needed to satisfy the exercise of the Option may be provided by the Company or the Trustees.”; and
(b)	in sub-paragraph (b) deleting the words “(which in the case of Options to be satisfied by the Trustees shall be payable to the Company as agent for the relevant Trustees)”.

3.2 Rule 4.2 is modified by:

(a)	deleting the words “or the Trustees as appropriate”;
(b)	deleting the word “either” and the colon that follows it;
(c)	deleting the reference to (a);
(d)	deleting “; or” following the word “issue”; and
(e)	deleting sub-paragraph (b) in its entirety.

4.	Time for Exercise of Options
4.1	Rule 6.1 is modified by inserting “, 6.5” after the number “6.4”.
4.2	In rule 6.2, the number “12” is deleted and is replaced with the number “6”.
4.3	Rule 6.3 is modified by:

(a)	deleting in sub-paragraphs (a) the words “on or after Normal Retirement Age” and replacing them with “other than as contemplated in Rule 6.4”;
(b)	deleting sub-paragraph (e) in its entirety;
(c)	renumbering sub-paragraph (f) as sub-paragraph (e);
(d)	renumbering sub-paragraph (g) as sub-paragraph (f);

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(e) deleting all references to the “third anniversary” and replacing them with the words “fourth anniversary”.

4.4	A new Rule 6.4 is added as follows:
	“A Participant may exercise his Option at any time before a three month period ending on the date on which he ceases to be employed by the Group by reason of:

(a)	retirement at the Normal Retirement Age; or
(b)	dismissal for redundancy;

	and, in the event the option is not so exercised, at any time before the earlier of the expiry of its Option Period and within the later to expire of the following periods: 12 months from the date of such cessation or 12 months commencing on the fourth anniversary of the Date of Grant PROVIDED THAT if a Participant so ceases to be employed by the Group before the fourth anniversary of the Date of Grant the Board may in its absolute discretion determine that the Option may become exercisable for 12 months from any date before such date. Any Option which is not so exercised shall lapse.”
4.5	Rule 6.4 is renumbered as Rule 6.5 and Rule 6.5 is renumbered as Rule 6.6.
4.6	Rule 6.5 (as renumbered) is modified by:

(a)	deleting the words “clauses 6.3 and 6.3” and replacing them with the words “clauses 6.2, 6.3 and 6.4”; and
(b)	deleting all references to the “third anniversary” replacing them with the words “fourth anniversary”.

5.	Administration of the Plan
5.1	Rule 9.2 is modified by deleting the words “or to procure that sufficient Shares are available for transfer to satisfy all Options under which Shares may be acquired”.
6.	Amendment of Scheme
6.1	Rule 10.3 is modified by:

(a)	deleting the colon after the word “made”;
(b)	adding, after the word “made”, the following:
	“with the prior written consent of each existing Participant. For the avoidance, of doubt, the provisions of this clause 10.3 will only apply to Participants who are employed in France by a member of the Group, at the time the amendments to the Plan are proposed.”
(c)	deleting sub-paragraphs (a) and (b) in their entirety.

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EX-4.6

Exhibit 4.6

Exhibit 4.6

Dated 10 January 2002

Barclays Plc

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Barclays Bank Trust Company Limited

CONFORMED COPY

Trust Deed

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Barclays Group Share Incentive Plan

Approved by the Board of Inland Revenue (ref A1001/PC)
on 14 January 2002

Lovells
Ref: A4/DHL/LLW/551310/001BB/46856

CONTENTS

Clause	Page No
1.   Definitions		1
2.   Trusts of the Plan		7
3.   Company’s and Participating Companies’ Obligations		7
4.   Investment		8
5.   Trustees’ Obligations		9
6.   Application of the Plan to Subsidiaries		11
7.   Voting Rights and Directions		12
8.   Trustees’ Administration and Powers		12
9.   Trustees’ Protection and Charges		13
10. Appointment, Removal, Retirement and Residence of Trustees		14
11. Amendment of the Plan		15
12. Termination of the Plan		16
13. Governing Law		17
Schedule		18
1.   Invitations to Participate in the Plan		18
2.   Participation – Holding Period, Forfeiture, Retirement Age and Group Plans Treated as a Single Plan		18
3.   Free Shares		19
4.   Partnership Shares		20
5.   Matching Shares		22
6.   Dividend Shares		23
7.   Limits on Participation		24
8.   Shares		25
9.   Rights Issues and Capitalisation Issues		25
10. Reconstruction and Takeover		26
11. Scrip Dividends		26
12. Fractional Entitlements		27
13. Circulars and Notices		27
14. Disposals And Payments		27
15. Notices		28
16. Information		28
17. Disputes		29
18. Terms of Employment		29

This Deed is made the 10th day of January 2002

Between:

(1)	Barclays PLC (Registered Number 48839) whose registered office is at 54 Lombard Street, London, EC3P 3AH (the “Company”); and
(2)	Barclays Bank Trust Company Limited (Registered Number 920880) whose registered office is at 54 Lombard Street, London, EC3P 3AH (the “Trustees”).

Whereas:

(A)	The members of the Company in general meeting resolved on 26 April 2000 to authorise the directors of the Company to establish an approved share incentive plan to be called the Barclays Group Share Incentive Plan (the “Plan”) and on 9 January 2002 the Share Schemes Committee, a duly authorised committee of the board of the Company approved the adoption and implementation of the Plan.
(B)	The Plan is established as an employees’ share scheme as defined in section 743 of the Companies Act 1985 to enable employees of the Company and its subsidiaries to acquire ordinary shares in the capital of the Company on the terms and in the manner hereinafter appearing and within the provisions of Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003 (“Approved Share Incentive Plans”) (“Schedule 2”).
(C)	It is intended that the Plan shall be submitted for approval by the Board of Inland Revenue as a share incentive plan pursuant to Schedule 2.
(D)	The Trustees have agreed to be the original trustees of the Plan on the terms of this Deed and the rules contained in the Schedule hereto as from time to time amended.

This Deed Witnesses:

1.	Definitions
1.1	In this Plan the following words and expressions have the meanings set opposite them:
	“Accumulation Period” means in relation to Partnership Shares, such period as determined by the Board not exceeding 12 months (or such other period as may be specified from time to time in Schedule 2) during which the Trustees accumulate an Eligible Employee’s Partnership Share Money before acquiring Partnership Shares on behalf of such employee or repaying it to such employee;
	“Acquisition Date” means:

(a)	in relation to Partnership Shares with no Accumulation Period, the date selected by the Trustees in their absolute discretion being a date within 30 days (or such other period as may be specified from time to time in Schedule 2) after the last date on which the Partnership Share Money in relation to the Partnership Shares was deducted;
(b)	in relation to Partnership Shares with an Accumulation Period, the date selected by the Trustees in their absolute discretion being a date within 30 days (or such other period as may be specified from time to time in Schedule 2) after the end of the Accumulation Period; and

(c) in relation to Dividend Shares, the date selected by the Trustees in their absolute discretion being a date within 30 days (or such other period as may be specified from time to time in Schedule 2) after the date on which the cash dividend is received by the Trustees in respect of Plan Shares;

“Any Other Plan” means any employees’ share scheme other than the Plan adopted by the Company in general meeting which provides for the acquisition of Shares by or on behalf of employees or directors;

“Appropriation” means a gift by way of the transfer of the beneficial ownership of specific Shares to an Eligible Employee by the Trustees pursuant to the Plan and the expression “appropriated” shall be construed accordingly;

“Appropriation Date” means any day on which Free Shares or Matching Shares are appropriated to an Eligible Employee by the Trustees pursuant to the Plan;

“Approval Date” means the date on which the Company receives written notification from the Board of Inland Revenue that the Plan has been approved by the Inland Revenue;

“Associated Company” means an associated company as defined in paragraph 94 of Schedule 2 (Meaning of “associated company”);

“Award” means:

(a)	in relation to Free Shares and/or Matching Shares the Appropriation of such Shares in accordance with the Plan; and
(b)	in relation to Partnership Shares, the acquisition of such Shares in accordance with the Plan

and the expression “awarded” shall be construed accordingly; “BGI” means Barclays Global Investors UK Holdings Limited; “BGI Plan” means the Barclays Global Investors Equity Ownership Plan; “BGI Shares” means “A” Ordinary Shares in the capital of BGI;

“Board” means the board of directors of the Company or a duly authorised committee of the Board;

“Capital Receipt” means a capital receipt within the meaning given to that expression in section 502 of Chapter 6 (meaning of “capital receipt” in respect of section 501 of Chapter 6);

"Chapter 6” means Chapter 6 of Part 7 of ITEPA (Approved Share Incentive Plan);

“Contract of Participation” means a contract in respect of Free Shares entered into by the Participant, the Company and the Trustees as contemplated by Part 5 (Free Shares) of Schedule 2 in such form as determined by the Board from time to time and which complies with the provisions of Schedule 2;

“Control” means the control of a company within the meaning given to that expression in section 840 of the Taxes Act;

“Dealing Day” means a day on which transactions take place on the London Stock Exchange;

“Deed” means this Deed as amended from time to time;

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“Dividend Shares” means Shares which are acquired on behalf of a Participant by the Trustees using cash dividends received in respect of the Participant’s Plan Shares and reinvested in accordance with Rule 6 for the time being held by the Trustees on his behalf pursuant to the Plan and which are:

(a)	of the same class and carry the same rights as the Plan Shares in respect of which the cash dividend is paid; and
(b)	not subject to forfeiture

and where the context so admits includes any New Shares held by the Trustees on his behalf pursuant to the Plan;

“Eligible Employee” means any person who:

(a)	is an employee of a Participating Company on the Qualifying Date, or if the Qualifying Date is not the Appropriation Date or the Acquisition Date is an employee of a Participating Company on the Appropriation Date or Acquisition Date;
(b)	is a UK resident tax payer within the meaning of paragraph 8(2) of Schedule 2 (all-employee nature of plan) PROVIDED THAT this requirement may be waived by the Board in any particular case;
(c)	is not prohibited from participating in the Plan pursuant to paragraph 19 of Schedule 2 (The “no material interest” requirement);
(d)	is not eligible at the same time to participate in an award of shares in another approved share incentive plan established by the Company or by a connected company as provided in and within the meaning of paragraph 18 of Schedule 2 (Requirement not to participate in other SIPs); and
(e)	has on the Qualifying Date such Qualifying Period (if any) of continuous employment with the Company or any Qualifying Company as the Board may determine.

“Free Shares” means Shares appropriated to a Participant under Rule 3 for the time being held by the Trustees on his behalf pursuant to the Plan and, where the context so admits includes any New Shares held by the Trustees on his behalf pursuant to the Plan;

“Group” means the Company and its Subsidiaries and “member of the Group” shall be construed accordingly;

“Holding Period” means the period which begins on the Appropriation Date or the Acquisition Date as the case may be and which shall end:

(a)	in the case of Free Shares and Matching Shares, at least three years and no later than five years from their Appropriation Date (or such other period as may be permitted from time to time by Schedule 2) as specified by the Board from time to time in accordance with Rule 2; and
(b)	in the case of Dividend Shares, three years from their Acquisition Date, (or such other period as may be specified from time to time by Schedule 2)

PROVIDED THAT:

(i) in each case, the period shall end on the date on which the Participant ceases to be an employee of the Company or an Associated Company if earlier; and

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(ii) for the purposes of this definition a Participant shall not be treated as ceasing to be an employee of the Company or an Associated Company until such time as he is no longer an employee of any such company;

“Initial Market Value” means:

(a) if and for so long as the Shares are admitted to the Official List of the UK Listing Authority:

(i) in relation to Free Shares, Matching Shares, Partnership Shares with no Accumulation Period and Dividend Shares which are:

(aa)	acquired wholly or partly by the Trustees by subscription, the average of the middle market quotations of a Share as derived from the Daily Official List of the UK Listing Authority over the period of five consecutive Dealing Days ending immediately before the Appropriation Date or the Acquisition Date as determined by the Trustees; or
(bb)	acquired by the Trustees by purchase, the average purchase price per Share paid by the Trustees (excluding the costs of purchase and stamp duties) to purchase Shares on the Appropriation Date or the Acquisition Date PROVIDED THAT if the Shares:

(1)	are not all acquired on the relevant Appropriation Date or Acquisition Date; or
(2)	are acquired otherwise than by means of a purchase of Shares on a regulated market

	the average purchase price per share shall be the average of the middle market quotations of a share as derived from the Daily Official List of the UK Listing Authority on the Dealing Day immediately before the relevant Appropriation Date or Acquisition Date as determined by the Trustees; or
(cc)	acquired by the Trustees by subscription and/or by purchase, such value per Share calculated on such other basis as may be agreed from time to time by the Trustees and the Inland Revenue in accordance with paragraph 92 of Schedule 2 (Determination of market value):

(ii) in relation to Partnership Shares with an Accumulation Period, the lower of the market value of a Share:

(aa)	at the beginning of the Accumulation Period; and
(bb)	on the Acquisition Date,

PROVIDED THAT market value for these purposes means:

(aa)	on any day the average as determined by the Trustees of the middle market quotations of a Share as derived from the Daily Official List of the UK Listing Authority over the period of five consecutive Dealing Days ending immediately before such day; or
(bb)	such value per share calculated on such other basis as may be agreed between the Trustees and the Inland Revenue in

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accordance with paragraph 92 of Schedule 2 before the beginning of the Accumulation Period, and

(b) if the Shares are not admitted to the Official List of the UK Listing Authority:

(i)	in relation to Free Shares, Matching Shares, Partnership Shares with no Accumulation Period and Dividend Shares, on any day the market value of a Share determined in accordance with the provisions of Part VIII of the Taxation of Chargeable Gains Act 1992 and agreed for the purposes of the Plan with the Inland Revenue Shares Valuation on or before that day; and
(ii)	in relation to Partnership Shares with an Accumulation Period, the lower of the market value of a Share determined as described in paragraph (b)(i) above:

(aa)	at the beginning of the Accumulation Period; and
(bb)	on the Acquisition Date;

“ITEPA” means the Income Tax (Earnings and Pensions) Act 2003; “London Stock Exchange” means the London Stock Exchange plc;

“Matching Shares” means Shares appropriated to a Participant under Rule 5 for the time being held by the Trustees on his behalf pursuant to the Plan and which are of the same class and carry the same rights as the Partnership Shares to which they relate and where the context so admits includes any New Shares held by the Trustees on his behalf pursuant to the Plan;

“New Shares” means new shares within the meaning of paragraph 87 of Schedule 2 (Consequences of company reconstructions);

“Participant” means any Eligible Employee to whom the Trustees have awarded Shares;

“Participating Company” means the Company and any Subsidiary which participates in the Plan in accordance with clause 6.1 and which is bound by the provisions of the Plan;

“Partnership Shares” means Shares which are acquired on behalf of a Participant by the Trustees under Rule 4 and are registered in the name of the Trustees (or any other person nominated by the Board) to be held by the Trustees on behalf of the Participant pursuant to the Plan and where the context so admits includes any New Shares held by the Trustees on his behalf pursuant to the Plan;

“Partnership Share Agreement” means an agreement in such form as determined by the Board from time to time which complies with the provisions of Schedule 2 made between the Company, the Trustees and an Eligible Employee under which:

(a)

the Eligible Employee authorises the Company to deduct (or procure that his employing Participating Company deducts) part of his Salary for the purchase of Partnership Shares; and

(b)

the Company agrees to give effect to the agreement by making (or procuring that the relevant Participating Company makes) deductions from such employee’s Salary of such amount and at such intervals as may be agreed from time to time (so that the limits in paragraph 46 of Schedule 2 (Maximum amount of deductions) are not infringed) and undertakes to arrange for the acquisition of Partnership Shares by the Trustees on behalf of the Eligible Employee in accordance with the Plan using the amounts so deducted;

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“Partnership Share Money” means amounts deducted from an Eligible Employee’s Salary under the terms of a Partnership Share Agreement;

“Plan” means the Barclays Group Share Incentive Plan established by this Deed including the Schedule and any Partnership Share Agreement or Contract of Participation issued to Eligible Employees or Participants in accordance with the Schedule each as amended from time to time in accordance with the provisions of this Deed;

“Plan Shares” means Free Shares, Matching Shares, Partnership Shares and Dividend Shares;

“Qualifying Company” means a company that:

(a)	is a Participating Company at the end of the Qualifying Period; or
(b)	when the individual was employed by it it was:

(i)	a Participating Company; or;);
(ii)	an Associated Company of the Participating Company or any other Company qualifying under paragraph 17 of Schedule 2 (Meaning of “qualifying company”);

“Qualifying Date” means the date on which eligibility to participate in the Plan is determined being:

(a)	in the case of Free Shares the Appropriation Date;
(b)	in the case of Partnership Shares or Matching Shares;

(i)	if there is no Accumulation Period, the date that Partnership Share Money is deducted in respect of the Partnership Shares; and
(ii)	if there is an Accumulation Period, the date of the first deduction of Partnership Share Money in respect of the Partnership Shares in the Accumulation Period,

or subject to the definition of “Qualifying Period” such other date determined by the Trustees;

“Qualifying Period” means:

(a)	in the case of Free Shares, a period of not more than 18 months ending on the Appropriation Date; and
(b)	in the case of Partnership Shares with or without Matching Shares, where there is an Accumulation Period a period of not more than six months ending with the start of the Accumulation Period; and
(c)	in the case of Partnership Shares with or without Matching Shares where there is no Accumulation Period a period of not more than 18 months ending with the deduction of the Partnership Share Money relating to the Partnership Shares

but in each case so that in respect of an Award the same Qualifying Period applies to all Eligible Employees;

“Reconstruction or Takeover” means any transaction affecting Plan Shares as mentioned in paragraph 37 of Schedule 2 (Holding period: power of participants to direct trustees to accept general offers etc.);

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	“Relevant Amount” means £3,000 or such other sum as may be prescribed from time to time in paragraph 35 of Schedule 2 (Maximum annual award);
	“Rules” means the rules of the Plan set out in the Schedule as amended from time to time in accordance with the provisions of this Deed;
	“Salary” means salary within the meaning of paragraph 43(4) of Schedule 2 (Partnership shares: introduction);
	“Schedule” means the schedule to this Deed;
	“Share” means an ordinary share in the capital of the Company which satisfies the conditions set out in Part 4 of Schedule 2 (Types of shares that may be awarded) or, where the context permits, in the event of a Reconstruction or Takeover of the Company, such shares, securities or rights of any description which form part of any new holding as defined in paragraph 87 of Schedule 2 (Consequences of company reconstructions);
	“Subsidiary” means any company which is for the time being under the Control of the Company and which is a subsidiary within the meaning given by section 736 of the Companies Act 1985;
	“Taxes Act” means the Income and Corporation Taxes Act 1988;
	“Termination Date” means the date three months following the date on which a Termination Notice has been distributed in accordance with clause 12.1;
	“Termination Notice” means notice given pursuant to and in accordance with clause 12.1 to terminate the Plan;
	“Trustees” means the Trustees referred to in this Deed or such other person or persons who is or are the trustee or trustees from time to time of the Plan;
	“UK Listing Authority” means the UK Listing Authority within the meaning given to that expression in the Listing Rules made by the Financial Services Authority pursuant to its appointment as the relevant competent authority under the Official Listing of Securities (Change of Competent Authority) Regulations 2000; and
	“Year of Assessment” means a year beginning on any 6 April and ending on the following 5 April.
1.2	In this Deed references to any statutory provisions are to those provisions as amended, extended or re-enacted from time to time and shall include any regulations made thereunder and, unless the context otherwise requires, words in the singular include the plural (and vice versa) and words importing any gender include all genders.
1.3	In this Deed and the Rules, references to clauses are to the provisions of this Deed and references to Rules are to the provisions of the Rules.
2.	Trusts of the Plan
	Subject as hereinafter provided, the Trustees hereby declare that they shall hold any Partnership Share Money, Shares once awarded and all other trust property deriving therefrom UPON TRUST for the Participants and shall apply and deal with the same in accordance with the provisions of the Plan.
3.	Company’s and Participating Companies’ Obligations

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3.1 The Company hereby covenants with the Trustees to fulfil all obligations expressed to be binding on the Company under this Deed and in particular to pay to the Trustees:

(a)	such sums as may be required to enable the Trustees to acquire Free Shares and/or Matching Shares; and
(b)	any additional expenses incurred in acquiring Partnership Shares where the Initial Market Value of the Partnership Shares exceeds the Partnership Share Money paid by Eligible Employees to acquire such Partnership Shares.

3.2 Each Participating Company hereby binds and obliges itself to pay to the Trustees, such sums as are described in clause 3.1(a) and (b) in respect of the acquisition of Free Shares, Matching Shares or Partnership Shares by the Trustees on behalf of Eligible Employees employed by such Participating Company together with any other amounts required to cover any costs, charges and expenses incurred in such acquisition and any other expenses and charges incurred by the Trustees in the establishment, operation and termination of the Plan PROVIDED THAT

(a)	a Participating Company shall only contribute to the Trustees such sums as are required in connection with the acquisition of Free Shares, Matching Shares or Partnership Shares by the Trustees to be awarded to Eligible Employees who are for the time being employees of that Participating Company or, where applicable, former employees of such Participating Company; and
(b)	contribution of such sums to be made by each Participating Company to the Trustees to fund any acquisition, of Free Shares, Matching Shares or Partnership Shares by the Trustees shall be paid not later than the fifth Dealing Day immediately before the relevant Appropriation Date or Acquisition Date or on such other date as the Trustees determine.

4.	Investment
4.1	The Trustees may in their absolute discretion invest any monies other than Partnership Share Money from time to time held by them and not required immediately for the acquisition of Shares in accordance with clauses 4.3(a)-(c) inclusive unless the Trustees in their absolute discretion resolve otherwise in which case they shall have the power conferred by section 3 of the Trustee Act 2000. Any income arising on any such investments shall be used for the purposes of acquiring further Shares or to meet taxation or other liabilities or expenses incurred from time to time in the operation and administration of the Plan.
4.2	The Trustees shall hold Partnership Share Money on behalf of an Eligible Employee until such time as the Trustees use such money in the acquisition of Partnership Shares for such Eligible Employee save that following the withdrawal by a Participant from his Partnership Share Agreement or on termination of the Plan in accordance with clause 12, or otherwise in accordance with Rule 4 the Trustees shall pay any uninvested Partnership Share Money to the Participant as soon as practicable.
4.3	The Trustees shall keep any monies required to be held by them pursuant to clause 4.2 in an account (interest bearing or otherwise) with:

(a)	a person falling within section 840A(1)(b) of the Taxes Act;
(b)	a building society; or
(c)	a firm falling under section 840A(1)(c) of the Taxes Act,

and an “account” shall include a “deposit” for these purposes.

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4.4	The Trustees shall be under no duty to invest trust property.
4.5	The Trustees shall have power to borrow monies to acquire Shares for the purposes of the Plan and to satisfy their obligations hereunder upon such terms as they shall think fit.
5.	Trustees’ Obligations
5.1	The Trustees shall apply all monies received for the acquisition of Free Shares, Partnership Shares or Matching Shares in acquiring such Shares and awarding them to Eligible Employees pursuant to and in accordance with the Plan.
5.2	Shares transferred to the Trustees in accordance with paragraph 78 of Schedule 2 (Acquisition by trustees of shares from employee share ownership trust), shall be awarded by the Trustees only as Free or Matching Shares and in priority to other available Shares.
5.3	The Trustees shall, if the Board directs from time to time pursuant to Rule 6 that:

(a)	all cash dividends received in respect of Plan Shares must be reinvested in acquiring more Shares; or
(b)	cash dividends received in respect of Plan Shares of those Participants who so elect must be so reinvested;

	apply cash dividends received in respect of a Participant’s Plan Shares in acquiring Dividend Shares on behalf of such Participant in accordance with the Plan. If any amount of a cash dividend is not reinvested in accordance with Rule 6.5, for the time it is retained by the Trustees it shall be held by them so as to be separately identifiable for the purpose of complying with Rule 6.5.
5.4	The Trustees shall:

(a)	as soon as practicable after any Free or Matching Shares have been appropriated by the Trustees to a Participant in accordance with the Rules, notify the Participant of the Appropriation specifying the number and description of those Shares, the Appropriation Date, their Initial Market Value and the Holding Period applicable to them;
(b)	as soon as practicable after any Partnership Shares have been acquired by the Trustees on behalf of a Participant in accordance with the Rules, notify the Participant of the acquisition specifying the number and description of those Shares, the amount of Partnership Share Money applied by the Trustees in the acquisition and their Initial Market Value;
(c)	as soon as practicable after any Dividend Shares have been acquired by the Trustees on behalf of a Participant in accordance with the Rules, notify the Participant of the acquisition specifying the number and description of those Shares, their Initial Market Value, the Holding Period applicable to them and any amount of uninvested cash dividends held by the Trustees on behalf of the Participant pursuant to Rule 6;
(d)	as soon as practicable after any foreign cash dividend is received in respect of Plan Shares, notify the Participant of the amount of any foreign tax deducted from such dividend before it was paid.

5.5 Subject to clause 5.6, clause 5.7, clause 8.1(e), clause 12 and Rules 9 and 10 the Trustees shall only dispose of a Participant’s Plan Shares and deal with any right conferred in respect of any of his Plan Shares to be allotted other Shares securities or

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	rights of any description pursuant to a direction given by notice by or on behalf of the Participant (in such form as may be prescribed from time to time by the Trustees).
5.6	The Trustees shall not dispose of a Participant’s Free Shares, Matching Shares or Dividend Shares during the Holding Period (whether by transfer to the Participant or otherwise) unless the Participant has at that time ceased to be in employment with the Company or an Associated Company PROVIDED THAT:

(a) the Trustees may dispose of a Participant’s Free Shares, Matching Shares or Dividend Shares during the Holding Period:

(i)	pursuant to a direction under clause 5.5 or clause 12 given by or on behalf of a Participant;
(ii)	in accordance with clause 8.1(e); or
(iii)	in accordance with Rule 9 or Rule 10; and

(b) if a Participant ceases at any time to be in employment with the Company or an Associated Company or dies while in such employment the Trustees may at their discretion either:

(i)	transfer his Plan Shares to him (or his personal representatives) or to another person at his direction; or
(ii)	dispose of his Plan Shares and account (or hold themselves ready to account) to him (or his personal representatives) or another person at his direction for the net sale proceeds thereof within a reasonable time thereafter.

5.7	In the event of a Reconstruction or Takeover and in accordance with Rule 10, the Trustees shall dispose of any Plan Shares acquired on behalf of the Participant upon receipt by the Trustees of a notice to this effect signed by the Participant (or his personal representatives) and subject to the payment of any income tax under Chapter 6 shall account to the Participant for the net sale proceeds thereof within a reasonable time thereafter.
5.8	Subject to their obligations under section 510 of Chapter 6 (Payments by trustees to employer company on shares ceasing to be subject to plan), section 511 of Chapter 6 (PAYE deductions to be made by trustees on shares ceasing to be subject to plan), section 512 of Chapter 6 (Disposal of beneficial interest by participant), section 513 of Chapter 6 (Capital receipts: payments by trustees to employer company), and section 514 of Chapter 6 (Capital receipts: PAYE deductions to be made by trustees) any such direction as is referred to in clause 5.5 and the provisions of Rule 6, Rule 9, Rule 11 and Rule 12, the Trustees shall pay over to the Participant any money or money’s worth received by them in respect of, or by reference to, any of his Plan Shares other than money’s worth consisting of New Shares.
5.9	In the case of any acquisition of Free Shares for the purpose of an Appropriation, if it is not possible to appropriate all the Free Shares without fractional entitlements arising in respect of individual Participants, or, if for any other reason the Trustees hold Shares which are not to be awarded, the Trustees may retain so many of the Shares as the Company shall direct or shall otherwise sell any of the Shares. If the Trustees sell any of the Shares they shall apply the proceeds to meet any expenses. If the proceeds are not required to meet such expenses, the Trustees shall pay to the Participating Companies such proceeds in the same proportion as they were provided or as the Trustees may otherwise determine.

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5.10	If the Trustees become entitled in respect of any unawarded Shares to any rights to be allotted, or to subscribe, further securities in the Company (other than an issue of capitalisation shares of the same class as Shares then held by the Trustees pending any Appropriation, which capitalisation shares shall be retained by the Trustees and shall form part of the Shares to be appropriated among the Participants on the relevant Appropriation Date), the Trustees may at their discretion take up those rights or sell them for the best consideration in money reasonably obtainable at the time or sell sufficient of them nil paid to enable the Trustees to subscribe in full for the balance of any unsold rights or allow them to lapse.
5.11	The Trustees shall hold any unawarded Shares or unutilised cash balances arising under clauses 5.9 or 5.10 and any income arising therefrom on trust to apply the same in or towards the future subscription or purchase of Shares for the purposes of the Plan and/or their expenses of administering the same, and shall notify the Company from time to time of the amounts and number of Shares so held by them and their application.
5.12	The Trustees shall maintain such records as may be necessary to enable the Trustees to carry out their obligations under paragraph 79 of Schedule 2 (Meeting by trustees of PAYE obligations) and paragraph 80 of Schedule 2 (Other duties of trustees in relation to tax liabilities). Where a Participant becomes liable to income tax under Chapter 2 of Part 2 of ITEPA (Tax on employment income), Case V of Schedule D, or Schedule F by reason of the occurrence of any event, the Trustees shall inform him of any facts relevant to determining that liability.
5.13	The Trustees shall, in accordance with paragraph 71A of Schedule 2 (Duty to monitor participants in connected scheme) maintain records of Participants who have participated in one or more approved share incentive plans established by the Company or a connected company within the meaning of paragraph 18 of Schedule 2 (Requirement not to participate in other SIPs).
5.14	The Trustees shall make available to any of the Participating Companies and Participants on reasonable notice and to the Board of Inland Revenue such information relevant to such persons in connection with the Plan as such persons may reasonably require and shall at all times comply with their obligations to make payments to any of the Participating Companies and to make the deductions required under Chapter 6.
5.15	The Trustees shall take all reasonable steps to notify Participants of the principal terms of any offer, compromise, arrangement or scheme affecting any of a Participant’s Plan Shares. In the absence of any direction from a Participant concerning how the Trustees should act in respect of his Plan Shares following any offer, compromise, arrangement or scheme the Trustees shall not take any action in respect thereof.
5.16	Upon the termination of the Plan for whatever reason the Trustees shall deal with the Plan Shares in accordance with clause 12.
6.	Application of the Plan to Subsidiaries
6.1	Any Subsidiary may with the consent of the Company and the Trustees become a party to this Deed and participate in the Plan by entering into a deed supplemental to this Deed agreeing to be bound in all respects by this Deed for as long as such company is a Subsidiary.
6.2	A company shall cease to be a Participating Company if it ceases to be a Subsidiary or if the Board serves a notice on the Trustees that such company shall cease to be a Participating Company PROVIDED THAT:

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(a)	paragraph 10 of Schedule 2 (No preferential treatment for directors and senior employees) is not thereby breached; and
(b)	the rights of Participants employed by such company to Plan Shares appropriated to them or acquired on their behalf while such Company was a Participating Company shall not be affected.

6.3	A company which is or has been a Participating Company shall provide the Trustees with all information required from it for the purposes of the administration and termination of the Plan and shall do so in such form as the Trustees shall reasonably require and the Trustees may in good faith rely on such information without further enquiry.
7.	Voting Rights and Directions
7.1	A Participant may direct the Trustees to exercise any voting rights attaching to such Participant’s Plan Shares in accordance with such Participant’s wishes. The Trustees shall not be entitled to vote on a show of hands in respect of Plan Shares unless all directions received from Participants in respect of the particular resolution are identical. The Trustees shall not in any circumstances be under an obligation to call for a poll. If there is a poll the Trustees shall vote only in accordance with the directions of Participants. The Trustees shall not exercise voting rights in respect of Plan Shares in the absence of any such directions. The Trustees may not vote in respect of Shares which have not been awarded pursuant to the Plan.
7.2	The Trustees shall deal with any right conferred in respect of any of those Shares to be allotted other shares, securities or rights of any description whether pursuant to paragraph 37 of Schedule 2 (Holding period: power of participant to direct trustees to accept general offers etc.) or otherwise only pursuant to a direction given by notice by or on behalf of the Participant (or any person in whom the beneficial interest in that Participant’s Shares is for the time being vested).
8.	Trustees’ Administration and Powers
8.1	The Trustees may:

(a)	at any time, and shall if so directed by the Company, revoke any delegation or arrangement made under this clause or any other power and/or require any trust property held by another person to be returned to the Trustees;
(b)	execute or authorise any of their directors, officers or employees on their behalf to execute any deeds, documents, cheques or other instruments by the impression of any signature on behalf of, or as witness of any sealing by, the Trustees of any writing, printing, lithography, photocopying and other modes of representing or reproducing words in a visible form;
(c)	make such arrangements as they consider appropriate to facilitate the acquisition of Partnership Shares and/or Dividend Shares or the sale of Plan Shares for Participants who wish to dispose of their holdings;
(d)	subject to and in accordance with the provisions of this Deed convene meetings and make such regulations as they consider appropriate relating to the administration of the Plan;
(e)	where a PAYE obligation is imposed on the Trustees pursuant to Chapter 6 as a result of a Participant’s Plan Shares ceasing to be subject to the Plan, (including pursuant to this clause) and/or where an obligation is imposed on the Trustees to account for employee’s National Insurance Contributions as a result of a

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Participant’s Plan Shares ceasing to be subject to the Plan, meet that obligation by:

(i)	disposing of any of the Participant’s Plan Shares; or
(ii)	the Participant paying to the Trustees a sum equal to the amount needed to discharge the obligation, and

	the Trustees may dispose of a Participant’s Plan Shares under this paragraph (e)(i) by acquiring some or all of such Shares for the purposes of the Plan;
(f)	arrange for the relevant Participating Company to account to the Inland Revenue or other authority concerned for any amounts deducted from payments made pursuant to the Plan in respect of income tax or any other deductions required in accordance with Chapter 6;
(g)	where there is no relevant Participating Company in respect of a Participant, account to the Inland Revenue or other authority concerned for any amounts of income tax or other deductions required to be made in accordance with Chapter 6.

8.2	Any two Trustees or a body corporate acting as a Trustee may give a valid and effectual receipt or discharge for the payment or transfer of any money or other property receivable by the Trustees.
8.3	In the case of a Participant who is a minor, the receipt of a parent, grandparent or guardian shall provide a good discharge to the Trustees.
9.	Trustees’ Protection and Charges
9.1	No Trustee shall be liable for any loss arising out of or in connection with the Plan by reason of:

(a)	the negligence, or fraud of any agent employed by such Trustee, or by any of the Trustees, even if the employment of such agent was not strictly necessary or expedient;
(b)	any mistake or omission made in good faith by such Trustee, or by any of the Trustees; or
(c)	any other matter or thing, except fraud or dishonesty of such Trustee.

	And in particular (without prejudice to the generality of this clause), no Trustee shall be bound to take any proceedings against a co-trustee or former trustee or his personal representatives for any breach or alleged breach of trust committed or suffered by such co-trustee or former trustee.
9.2	Neither the Trustees nor any of their officers or employees shall be liable to account to Participants for any remuneration or other benefit received in connection with the Plan and no Trustee or officer or employee of the Trustees shall be liable to account to other Participants for any profit derived from the Award to him of Shares held under the Plan.
9.3	Any person acting as a Trustee in the course of any profession or business carried on by him may charge and be paid such reasonable remuneration, charges or disbursements, whether in connection with the Plan or otherwise, as shall from time to time be agreed between him and the Board.
9.4	Any Trustee hereof being a corporate body shall be entitled to charge and be paid such proper and reasonable charges and expenses as may from time to time be agreed

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	between such Trustee and the Company. If the Trustee is a trust corporation, it may, unless otherwise agreed with the Company, act in accordance with its general terms and conditions from time to time in force.
9.5	Any Trustee (and any director or officer of a body corporate or a trust corporation acting as a Trustee) shall not on his own account be precluded from acquiring, holding or dealing with any debentures, debenture stock, shares or securities whatsoever of the Company or any Subsidiary or any other company in the shares of which the Company or any Subsidiary may be interested, or from entering into any contract or other transaction with the Company or any Subsidiary or any other company, or from being interested in such contract or transaction, and nor shall he be in any way liable to account to the Company or any Subsidiary or any Participant for any profits made, fees, commissions, shares of brokerage, discounts allowed or advantages obtained by him from or in connection with such acquisition, holding, dealing, contract or transaction whether or not in connection with his duties hereunder.
9.6	The Trustees shall be entitled in the absence of manifest error to rely without further enquiry on information supplied to them by any Participating Company, former Participating Company, or any Associated Company for the purposes of the Plan and shall also be entitled to rely in the absence of manifest error on any direction, notice or document purporting to be given or executed by or with the authority of any such company or by any Participant as having been so given or executed.
10.	Appointment, Removal, Retirement and Residence of Trustees

10.1	(a)	No person may be a Trustee of the Plan unless such person is resident in the United Kingdom for tax purposes; and
	(b)	the Board shall immediately remove in accordance with clause 10.3 any Trustee who ceases to be so resident.

10.2	The number of Trustees hereof shall be not less than two persons unless a body corporate is appointed as sole Trustee and if at any time the number of the Trustees shall fall below such limit the surviving or continuing Trustee shall have power to act only for the purpose of doing all things necessary to concur in or secure the appointment of a new Trustee or Trustees.
10.3	Subject to clause 10.1(a) the Board may at any time by notice given to the Trustees:

(a)	appoint a new or additional Trustee, including a corporate Trustee (to the exclusion of the Trustees statutory power of appointment); and
(b)	remove a Trustee from office (but not so as to leave in office less than two Trustees, unless the Trustee is a corporate Trustee), without assigning any reason therefor and such removal shall (in the absence of any other date specified in the notice) take place forthwith,

	PROVIDED THAT the existing Trustees shall thereupon execute such documents and do such things as may be necessary to give proper effect to such appointment or removal.
10.4	The powers of appointment and removal shall be vested in the Trustees if the Company ceases to exist otherwise than in consequence of a Reconstruction or Takeover when the successor company (or, if more than one, such successor companies as the Company shall nominate) shall have such powers.
10.5	A Trustee may retire at any time by giving to the Company notice of his desire to retire and such notice shall take effect at the expiry of three months (or such other period as may be agreed with the Company) from the date of such notice. The retiring Trustee shall

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	not be obliged to give any reason for and shall not be responsible for any costs occasioned by such retirement but shall execute all such documents and do all such things as may be necessary to give proper effect to such retirement.
10.6	Forthwith upon his removal or retirement a Trustee shall transfer all trust property held by him and deliver all documents in his possession relating to the Plan as the Company may direct and hereby authorises the continuing Trustees, in the absence of such transfer, to effect such transfer on his behalf.
10.7	A person shall not be disqualified from acting as a Trustee of the Plan by reason of the fact that he is or has been an employee of a Participating Company or is or has been a Participant.
11.	Amendment of the Plan
11.1	Subject to clause 11.2, the Board shall with the prior written consent of the Trustees at any time be entitled by resolution to amend all or any of the provisions of the Plan, PROVIDED THAT at any time when the Plan is approved by the Inland Revenue under Schedule 2:

(a)	if an amendment is made to a provision which is necessary to meet the requirements of Schedule 2 no such amendment shall have effect until it has been approved by the Inland Revenue;
(b)	nothing shall be done to the Plan which would prejudice the obtaining of such approval or cause such approval to be withdrawn;
(c)	any amendment to this Deed excluding the Schedule for the purposes of this clause 11.1(c) shall only become effective if embodied in a deed supplemental to this Deed executed by the Company and the Trustees; and
(d)	any amendment to any of the provisions of the Plan made pursuant to this clause 11 shall bind the Participating Companies (including where appropriate any former Participating Company), the Trustees and Participants.

11.2	Subject to clause 11.3, the definitions of “Eligible Employee”, “Relevant Amount”, this clause 11, Rule 3.1, the limits in Rule 3.2, Rule 3.3, Rule 4.4, Rule 5.3, Rule 6.2, Rule 7.1, Rule 7.2 and Rule 8.1 shall not be amended to the advantage of existing or future Participants without the prior approval by ordinary resolution of the members of the Company in general meeting.
11.3	Clause 11.2 shall not apply to any amendment which:

(a)

is necessary to secure and maintain Inland Revenue approval of the Plan under Schedule 2 or any other enactment, to ensure that such approval is not withdrawn pursuant to any statutory modification of ITEPA or the Taxes Act, or to comply with or take account of the provisions of any proposed or existing legislation, or to obtain or maintain favourable taxation, exchange control or regulatory treatment of the Company, any Subsidiary or any Participant; and

(b)

is a minor amendment which is necessary or desirable to benefit or facilitate the administration of the Plan.

11.4 No amendment shall be made to the Plan which:

(a) would cause the provisions of this Deed to conflict or be inconsistent with the Rules;

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(b)	would materially and adversely affect the beneficial interests of Participants in Shares already awarded to them under the Plan;
(c)	would cause the Plan to cease to be an employees’ share scheme within the meaning of section 743 of the Companies Act 1985;
(d)	unless made with the written consent of the Trustees, would impose on the Trustees any obligations more onerous than their obligations under this Deed prior to such amendment;
(e)	would unless made with the written consent of the Subsidiary involved impose on a Subsidiary any obligations more onerous than its obligations under this Deed.

12.

Termination of the Plan

12.1

The Board may issue a notice (the Termination Notice) in such form as the Board may in its absolute discretion determine on any day in its absolute discretion to terminate the Plan PROVIDED THAT if no Termination Notice has been issued by the seventy-fourth anniversary of the date of this Deed and the period of 74 years shall be the perpetuity period, the Board shall issue a Termination Notice on the seventy-fourth anniversary of the date of this Deed. A copy of the Termination Notice shall be provided without delay to:

(a)	the Inland Revenue;
(b)	the Trustees;
(c)	each Participant;
(d)	each Eligible Employee who is party to a Partnership Share Agreement at the date of the Termination Notice.

12.2	The Trustees shall not award any Shares under the Plan following the date of the Termination Notice.
12.3	The Trustees must remove all Plan Shares from the Plan, as soon as practicable after:

(a)	the Termination Date; or
(b)	if later, the date on which the Plan Shares may be removed from the Plan without giving rise to a charge to income tax under Chapter 6 for a Participant or such earlier date which the Participant may agree in writing after receipt of the Termination Notice,

in which case the Trustees may remove Plan Shares from the Plan following the issue of the Termination Notice by:

(c)	transferring Plan Shares to the relevant Participant or to another person at his direction (or where the Participant has died to his personal representatives);
(d)	disposing of the Plan Shares and accounting (or holding themselves ready to account) for the proceeds to the Participant or to another person at his direction.

12.4	The Trustees shall as soon as practicable after the Termination Notice is issued pay to a Participant any money held on his behalf by the Trustees.
12.5	The Trustees shall convert any assets which have not been appropriated to Participants into cash on the Termination Date and shall distribute the same to the Participating Companies in proportion to the aggregate amounts provided by each of them (if any) to the Trustees.

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13.	Governing Law
	This Deed shall be governed by and construed in accordance with the law of England.

IN WITNESS whereof the parties have entered into this Deed on the day and year first above written.

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Schedule
 
The Rules

1.	Invitations to Participate in the Plan
1.1	The Board may at any time following the Approval Date and from time to time in its absolute discretion resolve that the Plan shall be operated or shall cease to be operated in respect of any or all of Free Shares, Partnership Shares with or without Matching Shares or Dividend Shares in accordance with the provisions of the Plan.
1.2	If the Board exercises its discretion in Rule 1.1 and resolves to operate the Plan:

(a)	the Board shall invite every Eligible Employee to participate in the Plan on the same terms in respect of any Award and every Eligible Employee who participates in the Plan shall do so on the same terms; and
(b)	the Board shall issue an invitation in accordance with the Rules (in such form as the Board shall determine from time to time) to:

(i)	each Eligible Employee who is not a Participant; and
(ii)	if applicable, to each Eligible Employee who has since the Plan was operated, revoked a notice previously served by him under Rule 1.3; and
(iii)	all employees who at the next Qualifying Date are expected to be Eligible Employees,

	and an Eligible Employee may consent to the Appropriation of Free Shares or accept the opportunity to acquire Partnership Shares and/or Matching Shares by returning duly executed, a Contract of Participation or a Partnership Share Agreement by the date specified in the letter of invitation. If the Trustees do not receive a Contract of Participation or Partnership Share Agreement by the date specified in the invitation the Eligible Employee shall be deemed to have declined to participate in the Plan at that time.
1.3	An individual may by notice given to the Company before an Appropriation Date or an Acquisition Date direct that Free Shares or Partnership Shares with or without Matching Shares shall not be appropriated to him or acquired on his behalf on that Appropriation Date or Acquisition Date or on any subsequent Appropriation Date or Acquisition Date. A notice given by an individual under this Rule may be revoked by that individual giving the Company a notice of revocation.
2.	Participation – Holding Period, Forfeiture, Retirement Age and Group Plans Treated as a Single Plan
2.1	The Board shall specify a Holding Period in respect of each Appropriation of Free Shares or Matching Shares. Such Holding Period shall be specified in the Contract of Participation or the Partnership Share Agreement PROVIDED THAT:

(a)	once a Holding Period has been specified in relation to an Appropriation of Free Shares or Matching Shares, it may not be increased in respect of that Appropriation;
(b)	the Board may specify different Holding Periods from time to time; and
(c)	the Holding Period must be the same for all Shares in the same Appropriation.

2.2 Subject to clause 5.6, clause 8.1(e), clause 12 and Rule 10 a Participant shall during the Holding Period:

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(a)	permit his Free Shares, Matching Shares and/or Dividend Shares to be held by the Trustees; and
(b)	not assign, charge or otherwise dispose of his beneficial interest in the Free, Matching Shares and/or Dividend Shares.

2.3	The Board may in its absolute discretion resolve that an Appropriation of Free Shares or Matching Shares may be subject to provision for forfeiture. The Contract of Participation or Partnership Share Agreement shall state the extent to which the Free Shares or Matching Shares shall be forfeitable. Any such provision for forfeiture of Free Shares or Matching Shares must comply with paragraph 32 of Schedule 2 (Permitted restrictions: provision for forfeiture).
2.4	If an Eligible Employee participates in an Award under the Plan in a Year of Assessment in which he has already participated in an award of shares under one or more other approved share incentive plans established by the Company or a connected company within the meaning of paragraph 18 of Schedule 2 (Requirement not to participate in other SIPs), then the limits specified in Rules 3.3(g), 4.4 and 6.2 apply as if the Plan and the other plan or plans were a single plan as required by paragraph 18A of Schedule 2 (Participation in more than one connected SIP in a tax year).
2.5	The retirement age for the purposes of the Plan is 50.
3.	Free Shares
3.1	If the Board in its absolute discretion resolves that the Plan shall be operated in respect of Free Shares the Board shall determine the maximum amount which may be paid to the Trustees for the acquisition of Shares on every occasion on which the Board decides to operate the Plan in respect of Free Shares and shall notify the Participating Companies and the Trustees accordingly PROVIDED THAT if the Plan is to be operated otherwise than on a monthly basis not more than one Appropriation of Free Shares may be made under the Plan in any Year of Assessment.
3.2	If the Board resolves to make an Appropriation of Free Shares to Eligible Employees such Appropriation may be made by reference to an Eligible Employee’s remuneration, length of service or hours worked or by reference to performance allowances within the meaning of and in accordance with paragraphs 38-42 of Schedule 2 (Performance allowances: general application) PROVIDED THAT if performance allowances are used the Company must as soon as practicable notify each Eligible Employee of the performance targets and measures to be used to determine the number of Free Shares to be appropriated to him and the same performance allowance shall apply to all Eligible Employees in relation to that Appropriation.
3.3	Subject to Rule 3.5 and any reduction or limit imposed by Rule 7, the number of Free Shares to be appropriated by the Trustees to each Eligible Employee on any Appropriation Date for which funds have been allocated in accordance with Rule 3.1 shall be determined by the Board in accordance with any one or more of the following formulae:

(a)	each Eligible Employee shall receive a fixed number of Free Shares or a number of Shares with an Initial Market Value equal to a fixed sum;
(b)	each Eligible Employee shall receive Free Shares having an Initial Market Value equal to such percentage of his remuneration as the Board shall determine;
(c)	each Eligible Employee shall receive a number of Free Shares depending on his length of service with a Qualifying Company;

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(d)	each Eligible Employee shall receive a number of Free Shares depending on the number of hours worked;
(e)	if the Board decides that performance allowances are to be used each Eligible Employee shall receive a number of Free Shares which is conditional on performance targets and measures notified as soon as practicable to each Eligible Employee having been met; or
(f)	such other formula to be determined by the Board and approved by the Inland Revenue;

PROVIDED THAT:

(g)	the aggregate Initial Market Value of all Free Shares which may be appropriated to any Participant in any Year of Assessment shall not exceed the Relevant Amount; and
(h)	where the number of Free Shares depends on more than one of the formulae in sub-paragraphs (b), (c) and (d) above each factor must give rise to a separate entitlement and the total entitlement is the sum of those separate entitlements.

3.4	The Participating Companies shall pay to the Trustees such sums as may be required by the Trustees to purchase Shares to be appropriated to Eligible Employees as Free Shares pursuant to this Rule.
3.5	Where the Trustees appropriate Free Shares a proportion of which rank for any dividend or other distribution or other rights attaching to Shares by reference to a record date preceding the relevant Appropriation Date and a proportion of which do not, then the Shares to be appropriated to each Eligible Employee shall as far as practicable be in the same proportions thereto.
3.6	The Free Shares to which each Eligible Employee is entitled as a result of the calculations described in Rule 3.3 shall be appropriated to him on the Appropriation Date by the Trustees but shall be registered in the name of the Trustees on his behalf.
3.7	As soon as practicable after any Free Shares have been appropriated by the Trustees to a Participant in accordance with these Rules, the Trustees shall notify the Participant (in such form as determined by the Trustees from time to time) of the Appropriation specifying the Appropriation Date, the number and description of those Shares, their Initial Market Value and the Holding Period applicable to those Shares.
4.	Partnership Shares
4.1	The Board may from time to time in its absolute discretion invite Eligible Employees to acquire Partnership Shares with or without an Accumulation Period. To participate in an Award of Partnership Shares each Eligible Employee must first enter into a Partnership Share Agreement with the Company and the Trustees to be given effect by deductions from the Eligible Employee’s Salary.
4.2	If the Board resolves to invite Eligible Employees to participate in an Award of Partnership Shares with an Accumulation Period:

(a)	the Accumulation Period must be the same for all Eligible Employees participating in that Award; and
(b)	the Partnership Share Agreement must specify:

(i) the length of the Accumulation Period;

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(ii)

when the Accumulation Period begins which shall not be later than the date on which the first deduction of salary is made under the Partnership Share Agreement; and

(iii)

when the Accumulation Period ends and whether or not the Accumulation Period will end before such date on the occurrence of a specified event in which case the Partnership Share Agreement may also provide that where an Accumulation Period comes to an end on the occurrence of a specified event, the Partnership Share Money deducted in that period must be paid over to the individual as soon as practicable instead of being applied in acquiring Shares PROVIDED THAT such specified events must be the same for all Eligible Employees participating in that Award.

4.3	The Company may not enter into a Partnership Share Agreement with an Eligible Employee unless such agreement contains a notice in the form prescribed in paragraph 48 of Schedule 2 (Notice of possible effect of deductions on benefit entitlement).
4.4	The amount of Partnership Share Money which may be deducted from an Eligible Employee’s Salary must not exceed the limit contained in paragraph 46 of Schedule 2 (Maximum amount of deductions) from time to time and shall not be greater than £10 (or such other minimum amount specified in paragraph 47 of Schedule 2 (Minimum amount of deductions) from time to time).
4.5	Partnership Share Money must be paid to the Trustees, once deducted by the Company or any Participating Company, as soon as practicable.
4.6	Subject to Rule 4.11, Partnership Share Money shall be held by the Trustees until it is applied in acquiring Partnership Shares on behalf of the relevant Eligible Employee pursuant to clause 4.3 of the Trust Deed and any interest arising on Partnership Share Money held by the Trustees in an interest-bearing account shall be accounted for to the relevant Eligible Employee by the Trustees.
4.7	Partnership Share Money shall be applied by the Trustees in the acquisition of Partnership Shares on behalf of the relevant Eligible Employee on the Acquisition Date.
4.8	The Company may specify a maximum number of Shares over which an Award of Partnership Shares may be made on any one occasion. The Partnership Share Agreement shall require the Company to notify relevant Eligible Employees of any such maximum before the deduction of Partnership Share Money in respect of that Award if there is no Accumulation Period and before the beginning of the Accumulation Period if there is an Accumulation Period.
4.9	If the Company receives applications for Partnership Shares in excess of the maximum determined by the Board in accordance with Rule 4.8 the Board shall adjust individual applications downwards either:

(a)	on a pro-rata basis; or
(b)	on such other basis as the Board may determine and agree in advance with the Inland Revenue.
(c)	PROVIDED THAT

(i)	if possible, each applicant who so wishes should be able to participate at least to the extent represented by the minimum monthly amount pursuant to Rule 4.4;
(ii)	if there are insufficient Shares available to allow full participation based on the minimum monthly amount, then participation based on such minimum

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monthly amount shall be afforded to those applicants who are selected at random in a ballot conducted by the Board.

4.10	The number of Partnership Shares awarded to each Eligible Employee shall be determined in accordance with their Initial Market Value. As soon as practicable after any Partnership Shares have been acquired by the Trustees on behalf of a Participant, the Trustees shall notify the Participant (in such form as determined by the Trustees from time to time) of the acquisition specifying the number and description of those Shares, the amount of Partnership Share Money applied by the Trustees in the acquisition and their Initial Market Value.
4.11	Any surplus Partnership Share Money following the acquisition of Partnership Shares by the Trustees shall be paid over to the Participant as soon as practicable or may with the agreement of the Participant in the Partnership Share Agreement be carried forward and added to the amount of the next deduction where there is no Accumulation Period or to the next Accumulation Period.
4.12	Subject to clause 8.1(e) Partnership Shares may be withdrawn from the Plan at any time.

4.13	(a)	A Participant may at any time give notice to the Company to stop deductions pursuant to a Partnership Share Agreement. A Participant may subsequently give notice to the Company to restart deductions by giving notice to the Company (but not so as to make up missed payments). Where a notice is received stopping deductions, deductions will be stopped no later than 30 days (or such other period as may be specified from time to time in Schedule 2) following the date of receipt unless a later date is specified in the notice. Where a notice to re-start deductions is received, deductions will be restarted no later than the first deduction due following 30 days (or such other period as may be specified from time to time in Schedule 2) from the date of receipt of the notice unless a later date is specified in the notice.
	(b)	The Company may at any time give notice to the Participant to stop deductions pursuant to a Partnership Share Agreement to acquire Partnership Shares without an Accumulation Period. The Company may subsequently give notice to the Participant to restart deductions (but not so as to make up missed payments). Where a notice is given stopping deductions, deductions will be stopped no later than 30 days (or such other period as may be specified from time to time in Schedule 2) following the date the notice is given unless a later date is specified in the notice. Where a notice to restart deductions is given, deductions will be restarted no later than the first deduction due following 30 days (or such other period as may be specified from time to time in Schedule 2) from the date the notice is given unless a later date is specified in the notice.

4.14	A Participant may withdraw from a Partnership Share Agreement at any time by notice to the Company. Unless a later date is specified any such notice shall take effect 30 days from the date of receipt.
4.15	If a Participant withdraws from a Partnership Share Agreement or if the Trustees receive a Termination Notice from the Board or if approval of the Plan under Schedule 2 is withdrawn the Trustees shall return all Partnership Share Money held by the Trustees to the relevant Eligible Employee as soon as practicable.
5.	Matching Shares
5.1	If the Board from time to time in its absolute discretion decides to offer Matching Shares in conjunction with an invitation to acquire Partnership Shares in accordance with Rule 4, the following provisions shall apply.

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5.2	The Participating Companies shall pay to the Trustees such sums as may be required by the Trustees to acquire Shares to be appropriated to Eligible Employees as Matching Shares pursuant to this Rule.
5.3	The number of Matching Shares to be appropriated to each Eligible Employee on the occasion on which Partnership Shares are acquired on behalf of each such Eligible Employee shall be calculated by applying the ratio specified in the Partnership Share Agreement which shall be the same for all Eligible Employees for that Award to the number of Partnership Shares to be acquired on that occasion PROVIDED THAT the ratio shall not exceed two Matching Shares for each Partnership Share (or such other ratio as may be specified from time to time in Schedule 2).
5.4	Matching Shares shall be appropriated by the Trustees on the same day as the Partnership Shares to which they relate are awarded and on exactly the same basis to all Eligible Employees who participate in the Award and Rule 3.5 shall apply mutatis mutandis.
5.5	As soon as practicable after any Matching Shares have been appropriated by the Trustees to a Participant, the Trustees shall notify the Participant (in such form as determined by the Trustees from time to time) of the Appropriation specifying the Appropriation Date, the number and description of those Shares, their Initial Market Value and the Holding Period applicable to those Shares.
6.	Dividend Shares
6.1	The Board may from time to time, in its absolute discretion, direct that:

(a)	all cash dividends received in respect of Plan Shares must be reinvested in acquiring more Shares; or
(b)	cash dividends received in respect of Plan Shares of those Participants who so elect must be reinvested by the Trustees in acquiring more Shares on behalf of those Participants.

6.2	If Rule 6.1(a) applies or a Participant makes an election under Rule 6.1(b), any cash dividend received by the Trustees in respect of Plan Shares held on behalf of a Participant shall, subject to the limits in paragraph 64 of Schedule 2 (Limit on amount reinvested) be applied by the Trustees in acquiring more Shares on his behalf on the Acquisition Date and the number of Dividend Shares acquired on his behalf shall be determined by the Trustees in accordance with their Initial Market Value.
6.3	As soon as practicable after any Dividend Shares have been acquired on behalf of a Participant, the Trustees shall notify the Participant (in such form as the Trustees shall determine from time to time) of the acquisition specifying the number and description of those Shares, their Initial Market Value, the Holding Period applicable to them and any amount of uninvested cash dividends held by the Trustees on behalf of the Participant.
6.4	The Trustees shall reinvest dividends in a way that is fair and equal between Participants.
6.5	Any amount of a cash dividend which is not reinvested under Rule 6.2 because it is insufficient to acquire a Share shall unless the Trustees determine otherwise be retained by the Trustees and carried forward to be added to the amount of the next cash dividend to be reinvested PROVIDED THAT any amount so retained shall be paid to a Participant as soon as practicable:

(a) if or to the extent that it is not reinvested within the period of three years beginning with the date on which the cash dividend was paid; or

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(b)	if within the said period of three years the Participant ceases employment with the Company or any Associated Company; or
(c)	if a Termination Notice is issued; or
(d)	if the Trustees determine that such amount shall not be retained.

6.6	If the Board does not make a direction under Rule 6.1(a) or a Participant does not make an election under Rule 6.1(b) or if the amounts received by the Trustees exceed the limit in paragraph 64 of Schedule 2 (Limit on an amount reinvested), the Trustees shall pay the cash dividend or any balance thereof shall be paid to the Participant as soon as practicable.
6.7	The Board may from time to time in its absolute discretion by notice given to all Eligible Employees revoke a direction given under Rule 6.1 in which case any election made by a Participant under Rule 6.1(b) would immediately cease to have effect.
7.	Limits on Participation
7.1	The number of Free Shares and Matching Shares to be appropriated to an Eligible Employee shall be:

(a)

reduced in accordance with the provisions of Rule 7.3 if the total number of Free and Matching Shares acquired by way of subscription by the Trustees and appropriated under the Plan in that calendar year would otherwise exceed one per cent. of the Company’s ordinary share capital then in issue; and/or

(b)

reduced in accordance with the provisions of Rule 7.3 if the total number of Free and Matching Shares acquired by way of subscription by the Trustees and appropriated under the Plan during the previous ten years when aggregated with any other Shares issued or capable of being issued under Any Other Plan during such period would otherwise exceed ten per cent of the Company’s issued ordinary share capital then in issue.

	PROVIDED THAT for the purpose of applying the limit set out in Rule 7.1(b) the number of Shares which may be appropriated under the Plan shall be reduced by the number of notional Shares determined by the Board in the manner set out in Rule 7.2.
7.2	For the purposes of the proviso to Rule 7.1:

(a)	the Board shall compute the number of BGI Shares which have been acquired on exercise of options granted under the BGI Plan in the relevant period or in respect of which options under the BGI Plan are currently outstanding (less any BGI Shares issued on the exercise of options granted under the BGI Plan but subsequently purchased by Barclays Bank PLC or any other member of the Group); and
(b)	the Board shall subject to such adjustment or variation as the Board shall in its absolute discretion consider appropriate convert such BGI Shares into a notional number of Shares by the application in relation to each such acquisition of or grant of options over, BGI Shares of the formula:

A x B	=  D where:
C

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A	is the number of BGI Shares acquired by or under option to each relevant employee;
B	is the price per BGI Share at which such employee acquired or may acquire such number of BGI Shares;
C	is if and for so long as the Shares are admitted to the Official List of the UK Listing Authority the greater of the market value of a Share:

(a)	on the date of grant such options; and
(b)	on the date of any determination by the Board for the purposes of this Rule 7.2;

	calculated by the Board by reference to the middle-market quotations of a Share as derived from the Daily Official List of the UK Listing Authority or if the Shares are not so admitted on such other basis as the Board shall in its absolute discretion determine;
D	is the number of notional Shares represented by the BGI Shares acquired in the relevant period or in respect of which options are currently outstanding under the BGI Plan for the purposes of the proviso to Rule 7.1.

7.3	If it is not possible to appropriate to all Eligible Employees Free and Matching Shares to meet the allocation basis described in Rule 3.3 because of any provision of this Rule 7, the number of Free Shares and/or Matching Shares to be appropriated to each Eligible Employee shall be scaled down on a pro rata basis or in such other manner determined by the Board which complies with the requirements of paragraph 9 of Schedule 2 (Participation on same terms);
8.	Shares
8.1	Shares subscribed for by the Trustees (whether or not appropriated pursuant to the Plan) shall rank pari passu in all respects with Shares then in issue except they will not rank for any rights attaching to the Shares by reference to a record date preceding the date of issue.
8.2	If and for so long as Shares are admitted to the Official List of the UK Listing Authority the Company (or any successor company) shall apply to the UK Listing Authority for a listing and to the London Stock Exchange for permission to trade for any Shares issued pursuant to the Plan as soon as practicable after the allotment thereof.
9.	Rights Issues and Capitalisation Issues
9.1	Whenever any rights to acquire New Shares are granted by a company to the holders of any class of shares of which some are Plan Shares the Trustees shall notify each Participant of the rights relating to his Plan Shares and he may give notice to the Trustees instructing them to do one or more of the following:

(a)	subject to the provision by him of any necessary funds, to take up or sell all or any of the rights or allow them to lapse; and/ or
(b)	to sell rights nil paid to the extent necessary to enable the Trustees to subscribe in full for the balance of any unsold rights

which instructions may be particular or of general application and relate to Plan Shares appropriated before and after the date of the relevant rights issue.

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9.2	The Trustees shall act upon any such notice received by them not less than five Dealing Days before the expiry of the period allowed for the exercise of any such rights. If any Participant has not prior to five Dealing Days before the expiry of the period allowed for the exercise of any such rights, given notice to the Trustees instructing them to take action with regard thereto and provided any funds necessary for the purpose, the Trustees shall allow such rights to lapse. The Trustees shall deal with any Capital Receipt received in consequence of the non-exercise or sale of any rights in accordance with Rule 14.1.
9.3	Any New Shares taken up by the Trustees on behalf of any Participant under Rule 9.1(b) shall, subject to Rule 12, form part of the Participant’s Plan Shares and shall be deemed to have been appropriated to, or acquired on behalf of the Participant, in the same way and at the same time as the Participant’s Plan Shares to which they relate PROVIDED THAT this Rule 9.3 shall not apply in relation to rights arising under a rights issue to subscribe shares in a company unless similar rights are conferred in respect of all ordinary shares in the company.
9.4	Nothing in this Rule shall require the Trustees to act in any manner whereby they would be involved in any liability unless indemnified to their satisfaction by the Participant against such liability.
9.5	Where any New Shares are allotted by way of capitalisation to the Trustees in respect of any Participant’s Plan Shares, such New Shares shall form part of that Participant’s Plan Shares and shall be deemed to have been appropriated at the same time as the Participant’s Plan Shares in respect of which they are allocated.
10.	Reconstruction and Takeover
10.1	If there is a Reconstruction or Takeover affecting Plan Shares, the Participants shall be notified of such event by the Trustees and any Participant may give notice to the Trustees instructing them on the action to be taken (and, where appropriate, exercise any right to elect to receive any particular form of consideration available thereunder) in respect of any of his Plan Shares.
10.2	If there is a Reconstruction or Takeover affecting Plan Shares, the consideration received thereunder shall (so far as it consists of cash or securities which cannot be held under the Plan) be treated as the proceeds of a disposal under Rule 14.1 and so far as it consists of New Shares be held by the Trustees as Plan Shares subject to the Rules mutatis mutandis as if the same were the Shares in respect of which they are issued, or which they otherwise represent.
10.3	If notices to acquire compulsorily any Plan Shares are issued under sections 428 to 430F inclusive of the Companies Act 1985 by another company for a consideration consisting of cash and/or shares, the Participants concerned shall be entitled to receive notification thereof from the Trustees as soon as practicable after receipt of such notice(s) by the Trustees and to give notice of their instructions to the Trustees in relation to such consideration. The provisions of Rules 10.1, 10.2 and 12 shall apply mutatis mutandis so far as relevant.
10.4	Where a transaction occurs during an Accumulation Period by virtue of which the Shares to be acquired under the Partnership Share Agreement would result in a new holding of shares equating to the original holding of shares for capital gains tax purposes, the Board shall with the consent of the relevant Eligible Employee allow the Partnership Share Agreement to continue in effect as if it were an agreement to purchase the shares comprising the new holding.
11.	Scrip Dividends

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11.1 Subject to Rule 6, this Rule 11 applies where the holders of any class of shares of which some are Plan Shares are offered the right to elect to receive shares, credited as fully paid in whole or in part, in lieu of a cash dividend. Within five Dealing Days or such other period as the Trustees may decide before the closing of the offer, the Participant may:

(a)	instruct the Trustees to elect to receive shares; or
(b)	instruct the Trustees to elect to receive cash,

	which instructions may be of particular or of general application and relate to Plan Shares appropriated before and after the relevant date of the scrip dividend. If neither Rule 6.1(a) nor Rule 6.1(b) applies the Trustees shall notify Participants of their right to elect for shares or cash.
11.2	Any shares taken up by the Trustees on behalf of any participant under this Rule shall not form part of the Participant’s Plan Shares to which they relate and they shall belong to the Participant, and the Trustees shall take all reasonable steps to procure that the Shares so acquired are vested in the Participant without delay.
12.	Fractional Entitlements
12.1	Where a company makes an offer or invitation conferring any rights upon its members including the Trustees to acquire, against payment, additional securities in that company or where that company allots any new securities by way of capitalisation, the Trustees shall allocate such rights or securities amongst the Participants concerned on a proportionate basis and, if such allocation shall give rise to a fraction of a security or a transferable unit thereof (in this Rule a “unit”), shall round such allocation down to the next whole unit and the Trustees shall aggregate the fractions not allocated and use their best endeavours to sell any rights or units which are not allocated and distribute the net proceeds of sale (after deducting therefrom any expenses of sale and any taxation which may be payable in respect thereof) proportionately among the Participants whose allocation was rounded down, provided that any sum of less than £3 otherwise distributable to a particular Participant may be retained by the Trustees.
12.2	In any circumstances in which the Trustees receive New Shares which form part of a Participant’s Plan Shares the Trustees shall allocate the New Shares to the Participant by reference to the relative times of Appropriation or acquisition of his Plan Shares to which they relate and, if any such allocation should give rise to a fraction of a New Share, the Trustees shall subject to Schedule 2 and to the Taxes Act, round such allocation up or down to the next whole unit as they in their discretion think fit.
13.	Circulars and Notices
	The Company may provide or make available (or procure that the Company’s registrars may provide or make available) to a Participant upon request copies of any notices, circulars and other documents sent to shareholders of the Company.
14.	Disposals and Payments
14.1	Upon receipt of a sum of money being (or being part of) the proceeds of any disposal or Capital Receipt in respect of any Plan Shares, the Trustees shall subject to compliance with the provisions of Schedule 2, Chapter 6 and the Taxes Act account as soon as reasonably practicable to the Participant for any balance remaining in their hands and relating to such Plan Shares by paying the same to the Participating Company or Subsidiary (if any) by which he is employed, PROVIDED THAT:

   (a) any sum of less than £3 distributable to a particular Participant may be retained by the Trustees; and

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   (b) if section 514 of Chapter 6 (Capital receipts: PAYE deductions to be made by trustees) applies the Trustees shall in paying over to the Participant the Capital Receipt make a PAYE deduction in respect of an amount equal to that on which income tax is payable as if the Participant were a former employee of the Trustees.

14.2	Any Participating Company or Subsidiary to which the Trustees pay or account for any part of any such sum as is referred to in Rule 14.1 shall subject to compliance with the Taxes Act forthwith account to the Participant for the balance remaining in its hands.
15.	Notices
15.1	The Trustees shall not be bound to act upon any notice given by or on behalf of a Participant or any person in whom the beneficial interest in his Plan Shares is for the time being vested pursuant to the Plan unless such notice is received by the Trustees in writing signed by the relevant person PROVIDED THAT:

(a)	“in writing” shall not include writing on or transmitted via the screen of a visual display unit or other similar device except for facsimile; and
(b)	the Trustees or the Board as appropriate may specify from time to time that a notification may be given by such alternative means as may be permitted from time to time pursuant to Schedule 2.

15.2 Any notice which the Trustees are required or may desire to give to any Eligible Employee or Participant pursuant to the Plan (or a Termination Notice given by the Board to any Eligible Employee or Participant) shall be in writing PROVIDED THAT:

(a)	“in writing” shall not include writing on or transmitted via the screen of a visual display unit or other similar device except for facsimile; and
(b)	the Trustees or the Board as appropriate may specify from time to time that a notification may be given by such alternative means as may be permitted from time to time pursuant to Schedule 2.

	and notice is sufficiently given if delivered to the Eligible Employee or personally or sent first class through the post pre-paid addressed to the Eligible Employee or Participant at his address last known to the Trustees (including any address supplied by the relevant Participating Company or any Subsidiary as being his address) or if sent through the Group’s internal postal service. If so personally delivered notice shall be deemed to have been given on delivery at the relevant address or if sent by post shall be deemed to have been duly given on the day following the date the notice is posted or if sent through the Group’s internal postal service shall be deemed to have been duly given three working days after the date of posting. Any document so sent to an Eligible Employee or a Participant shall be deemed to have been duly delivered notwithstanding that he is dead (and whether or not the Trustees have notice of his death) except where his personal representatives have established their title to the satisfaction of the Trustees and supplied to the Trustees an address to which documents are to be sent.
16.	Information
	The Trustees shall maintain such records as may be necessary to comply with the requirements of paragraph 80 of Schedule 2 (Other duties of trustees in relation to tax liabilities), and shall at all times and from time to time give to each Participant such information as shall be in their possession to enable him to determine and quantify any liability he may have to income tax under Chapter 2 of Part 2 of ITEPA (Tax on Employment Income).

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17.	Disputes
	The decision of the Board in any dispute or question affecting any Eligible Employee or Participant under the Plan shall be final and conclusive.
18.	Terms of Employment
18.1	Nothing in the Deed or the Plan shall in any way be construed as imposing upon a Participating Company a contractual obligation as between that Participating Company and an employee to contribute or to continue to contribute to the Plan.
18.2	In no circumstances shall any person who has ceased to be an employee of any member of the Group by reason of dismissal or otherwise howsoever or who is under notice of termination of his employment be entitled to claim as against any member of the Group or the Trustees any compensation for or in respect of any consequential loss he may suffer by reason of the operation of the terms of the Plan, the provisions of Schedule 2, ITEPA or the Taxes Act.

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EXECUTED as a deed by	)
Barclays PLC	)
acting by:	)
Director
Director/Secretary
EXECUTED as Deed by	)
Barclays Bank Trust Company Limited	)
acting by:	)
Director
Director/Secretary

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DATED 2004

Barclays PLC

- and -

Barclays Bank Trust Company Limited

Supplemental Trust Deed

relating to the

Barclays Group Share Incentive Plan
(Inland Revenue reference A1001/PC)

Lovells

C2LLW

This Supplemental Trust Deed is made on                                                            2004

Between:

(1)	Barclays PLC whose registered office is at 54 Lombard Street London EC3P 3AH (hereinafter called the “Company”); and
(2)	Barclays Bank Trust Company Limited whose registered office is at 54 Lombard Street London EC3P 3AH (hereinafter called the “Trustees”)

Whereas:

(A)	This Supplemental Trust Deed is supplemental to a trust deed (the “Trust Deed”) dated 10 January 2002 made between the Company and the Trustees whereby the Barclays Group Share Incentive Plan was established for the benefit of certain persons who are or have been employed by the Company and certain of its subsidiaries upon the terms and conditions appearing therein.
(B)	The Trustees are the present trustees of the Plan.
(C)	The Company may by resolution of its board of directors amend the provisions of the Plan provided that no amendment to the Trust Deed may be effective unless implemented by a deed executed by the Company and the Trustees.
(D)	The Company wishes to amend the Trust Deed and the rules of the Plan contained in the Schedule to the Trust Deed (the “Rules”) by amending the Trust Deed and Rules to reflect in particular changes to the provisions relating to Inland Revenue approved Share Incentive Plans introduced by the Income Tax (Earnings and Pensions) Act 2003 and the Finance Act 2003.
(E)	The Board of Inland Revenue has approved this Supplemental Trust Deed in principle pursuant to Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003.

This Deed Witnesses:

1.	Definitions
	In this Supplemental Trust Deed unless the context otherwise requires words and expressions defined in the Trust Deed shall have the same meaning herein.
2.	Amendment of the Plan
	With effect on and from the date on which the Board of the Inland Revenue approves this Supplemental Trust Deed, the Company and the Trustees hereby agree to amend the provisions of the Trust Deed as set out in clause 3 so that the Trust Deed following such amendment shall be in the form set out in the Schedule hereto.
3.	Amendment of the Trust Deed and Rules
3.1	Group plans treated as a single plan

(a) The definition of “Eligible Employee” shall be amended by deleting clause (d) and replacing it with a new clause (d) as follows:

“(d)  is not eligible at the same time to participate in an award of shares in another approved share incentive plan established by the Company or by a connected company as provided in and within the meaning of paragraph 18 of Schedule 2 (Requirement not to participate in other SIPs).”

(b)	Clause 5: Trustees’ Obligations
	Clause 5 of the Trust Deed shall be amended by the insertion of a new clause 5.13 as follows:

“5.13  The Trustees shall, in accordance with paragraph 71A of Schedule 2 (Duty to monitor participants in connected scheme) maintain records of Participants who have participated in one or more approved share incentive plans established by the Company or a connected company within the meaning of paragraph 18 of Schedule 2 (Requirement not to participate in other SIPs).”;

	and by renumbering clauses 5.13 and 5.14 as 5.14 and 5.15 respectively.
(c)	Rule 2: Participation – Holding Period, Forfeiture, Retirement Age and Group Plans treated as a Single Plan
	Rule 2 of the Trust Deed shall be amended by the insertion of a new Rule 2.4 as follows:

“2.4  If an Eligible Employee participates in an Award under the Plan in a Year of Assessment in which he has already participated in an award of shares under one or more other approved share incentive plans established by the Company or a connected company within the meaning of paragraph 18 of Schedule 2 (Requirement not to participate in other SIPs), then the limits specified in Rules 3.3(g), 4.4 and 6.2 apply as if the Plan and the other plan or plans were a single plan as required by paragraph 18A of Schedule 2 (Participation in more than one connected SIP in a tax year).”

and by renumbering Rule 2.4 as Rule 2.5.

3.2	New Annual Individual Limit
	Rule 4.4 shall be amended by deleting the words “maximum monthly limits” and replacing them with the word “limit”.
3.3	Eligibility and Qualifying Date

(a) The definition of “Eligible Employee” shall be amended by deleting clause (a) and replacing it with a new clause (a) as follows:

“(a)  is an employee of a Participating Company on the Qualifying Date, or if the Qualifying Date is not the Appropriation Date or the Acquisition Date is an employee of a Participating Company on the Appropriation Date or Acquisition Date.”

(b) The definition of “Qualifying Date” shall be amended by inserting the words “or subject to the definition of “Qualifying Period” such other date determined by the Trustees” after clause (b)(ii) in the definition of “Qualifying Date”.

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3.4	Statutory References
	The Trust Deed and Rules shall be amended by updating all statutory references to Schedule 8 to the Income and Corporation Taxes Act and other related statutory references and terminology in the Trust Deed and Rules to take account of changes introduced by ITEPA and the Finance Act 2003 and which shall include the insertion of a new definition of “Chapter 6” and “ITEPA” as follows:
	“Chapter 6” “means Chapter 6 of Part 7 of ITEPA (Approved Share Incentive Plan)”; and
	“ITEPA” means the Income Tax (Earnings and Pensions) Act 2003”;
	and by deleting the definition of “Schedule 9”;
3.5	Miscellaneous

(a)	Clause 3.2(b) of the Trust Deed shall be amended by inserting the word “of” before the words “Free Shares” and deleting the word “or” after the words “Free Shares”.
(b)	Clause 10.3(b) shall be amended by the insertion of the words “the Trustee is”
	after the word “unless”.
(c)	Clause 11.1 of the Trust Deed shall be amended by inserting the word “to” after the word “resolution”.
(d)	Rule 1.2(b) of the Trust Deed shall be amended by deleting the word “determined”.
(e)	Rule 3.3(b) of the Trust Deed shall be amended by the deletion of the word “Salary” and its replacement with the word “remuneration”.
(f)	Rule 7.1 of the Trust Deed shall be amended by the insertion of the word “and” after the words “Free Shares”.

In Witness whereof the parties have caused this Supplemental Trust Deed to be executed the day and year first before written.

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EX-4.8

Exhibit 4.8

Exhibit 4.8

DATED                                        2004

BARCLAYS BANK PLC (1)

- And -

MATTHEW W BARRETT (2)

CONTRACT OF EMPLOYMENT

(21/06/04)

This Agreement is made the          day of                    2004

BETWEEN:

(1)	BARCLAYS BANK PLC (a company registered in England and Wales under no. 1026167) whose registered office is at 54 Lombard Street, London EC3P 3AH (“Barclays”) and;
(2)	Matthew W Barrett – Detail Omitted

WHEREAS:

Mr Barrett has been employed by Barclays as Group Chief Executive and the parties wish his employment to continue on the terms and conditions set out in this Agreement in substitution for any previous agreement or arrangement.

IT IS HEREBY AGREED:

1.	DEFINITIONS
1.1	In this Agreement:
	“Associated Company” means any company which for the time being is:

(i)	a holding company (as defined by Section 736 of the Companies Act 1985) of Barclays;
(ii)	a subsidiary (as defined by Section 736 of the Companies Act 1985) of Barclays or of its holding company;
(iii)	a company over which Barclays has control within the meaning of Section 840 of the Income and Corporation Taxes Act 1988; or
(iv)	a subsidiary undertaking of Barclays as defined by Section 258 of the Companies Act 1985.
	“Barclays Group” means Barclays and any Associated Company and “member of the Barclays Group” shall be construed accordingly;

“Board” means the Board of Directors of Barclays and any duly appointed committee of the Board.

1.2	References to any statute includes any modification or re-enactment of it.
2.	APPOINTMENT AND TERM
2.1	This Agreement shall take effect on 1 September 2004 (“the Effective Date”) and continue until terminated as provided in this Agreement.
2.2	From the Effective Date Barclays shall continue to employ Mr Barrett and Mr Barrett shall serve Barclays as Group Chairman. The principal accountabilities are set out in the attachment to this contract. Mr Barrett shall remain a director of Barclays PLC and Barclays Bank PLC, but cease to be Group Chief Executive and cease to be a member of the Group Executive Committee. Mr Barrett’s duties as a director of Barclays or any member of the Barclays Group are subject to the Articles of Association of the relevant company for the time being.
2.3	Subject to clause 13, Mr Barrett’s employment may be terminated on:

2.3.1 12 months’ written notice given at any time by Barclays to Mr Barrett; or

2.3.2 6 months’ written notice given at any time by Mr Barrett to Barclays.

3.	DUTIES
3.1	During his employment, Mr Barrett shall:

3.1.1 diligently perform such duties and exercise such powers and functions not inconsistent with the role referred to in Clause 2.2 above as may reasonably be assigned to or vested in him from time to time by the Board in relation to the Barclays Group;

3.1.2	faithfully and loyally serve Barclays to the best of his ability and use his utmost endeavours to promote the interests of the Barclays Group to the best of his ability;
3.1.3	comply with all reasonable requests, instructions and regulations given by the Board, and promptly provide such explanations, information and assistance as to his activities in the business of the Barclays Group as they may reasonably require;
3.1.4	neither engage in any activities which would detract from the proper performance of his duties under this Agreement, nor without the prior written consent of the Board (such consent not to be unreasonably withheld) in any capacity including as director, shareholder, principal, consultant, agent, partner or employee engage or be concerned or interested directly or indirectly in any other trade, business or occupation whatsoever. This clause shall not prevent Mr Barrett holding shares for investment purposes only of securities, which do not exceed five per cent (5%) in nominal value of the share capital or stock of any class of any company quoted on a recognised stock exchange;
3.1.5	without prejudice to Mr Barrett’s obligations under this clause 3, it is acknowledged by the parties that they currently expect that from 1 January 2005, Mr Barrett’s duties will require him to devote on average over the year approximately 60% of the time required in a full-time role. Mr Barrett will continue to work on a full-time basis from the Effective date until 31 December 2004.

3.2 Notwithstanding the provisions of clause 3.1, Barclays shall:

3.2.1 be entitled during any period when Mr Barrett is prevented by illness, accident or other incapacity from properly performing his duties or when Mr Barrett is suspended pursuant to 3.2.3 or 3.3 below to appoint another person or persons to act jointly with him so long as such circumstances prevail;

3.2.2 have the right to suspend at any time Mr Barrett from the performance of any duties or exclude him from any premises of Barclays to allow it to undertake any investigation including, but not limited to, any investigation under the disciplinary procedure or failure to obtain or hold any regulatory authorisations necessary to fulfil the position held by Mr Barrett, provided that such period of suspension lasts 28 days unless it is reasonably necessary to carry out a longer investigation.

3.3	If either party has given notice to terminate employment, Barclays may, in its absolute discretion, at any time require Mr Barrett to cease performing his job and/or not to attend at his place of work for the whole or part of his notice period (not exceeding six months in aggregate). Mr Barrett’s salary and contractual benefits will not be affected by reason of Barclays exercise of its powers under this clause. For the avoidance of doubt, during any period of garden leave under this clause, Mr Barrett shall remain bound by the terms and conditions of his employment (except as expressly included in this clause) and, in particular, by his obligations of confidentiality and good faith to Barclays.
3.4	During any period of suspension under clause 3.2.2 or any period of garden leave under clause 3.3, Barclays shall have the right to require Mr Barrett not to speak to or otherwise communicate with any director or employee of any member of the Barclays Group or any person, firm or company who at the date of such suspension or exclusion is a client or customer of any member of the Barclays Group, without the prior consent of the Board (not to be unreasonably withheld). It is agreed that this sub-clause shall not apply to non-business communications.
4.	DEALING RULES
4.1	Mr Barrett hereby agrees to be bound by and comply with the Barclays Group Share Dealing Code or with any more stringent dealing rules that Barclays notifies to Mr Barrett are applicable to him.

5.	REMUNERATION AND REIMBURSEMENT OF EXPENSES
5.1	Mr Barrett will continue to receive his existing basic salary at a rate of £1,100,000 per annum from the Effective Date until 31 December 2004. He will also continue to be eligible for the existing notional pension investment of £990,000 per annum until 31 December 2004, and will also be eligible for discretionary performance-related bonus in respect of the full 2004 performance year.
5.2	Barclays shall pay Mr Barrett a basic salary at the rate of £650,000 per annum from 1 January 2005, payable in arrears by equal monthly instalments on or by the last day of each month. Mr Barrett’s basic salary is inclusive of any fees to which Mr Barrett may be entitled as a director of any member of the Barclays Group. Mr Barrett’s basic salary shall be reviewed from time to time and may in the sole discretion of the Board on the recommendation of the Remuneration Committee be increased following any such review.
5.2	Barclays shall reimburse to Mr Barrett all travelling, hotel, entertainment and other expenses properly and reasonably incurred by him in the performance of his duties under this Agreement and properly claimed and vouched for in accordance with Barclays current expense reporting procedure.
6.	PREVIOUSLY ACCUMULATED PENSION, AND LIFE ASSURANCE
6.1	During his term as Group Chief Executive, pension benefits were provided for Mr Barrett via an unfunded unapproved pension arrangement (the “Unapproved Scheme”) to which Barclays made a notional investment each month. Notional investments will cease to be made from 1 January 2005. However, the notional fund will continue to accrue notional investment return fixed at 0.6% per month compound. The Unapproved Scheme will be valued by reference to the accrued notional value (ie the previously accumulated notional investment and notional return in that notional investment) (the “Notional Fund”). Appropriate records will be kept of the value of the Notional Fund held for the Unapproved Scheme and a statement

	will be sent to Mr Barrett at regular intervals (no less frequently than quarterly).
6.2	At any time after the termination of Mr Barrett’s employment and before attaining age 75 and upon Mr Barrett giving at least one month’s written notice, Barclays will, in accordance with the terms of that written notice:

6.2.1

exchange all or part of the accumulated value of the Notional Fund for a pension (the design of which must come within the Inland Revenue rules for tax-approved Occupational Pension Schemes). Barclays will offer such a pension on the same terms as are made available by an authorised UK insurance company for purchased life annuities. Any tax or employee’s National Insurance resulting from the exchange of the lump sum for a pension would be borne by Mr Barrett;

6.2.2

pay to Mr Barrett (less any deductions it is obliged by law to withhold), within one calendar month of receipt of Mr Barrett’s written notice, the accumulated value of the Notional Fund as at the date of payment in the Unapproved Scheme as a lump sum.

	For the avoidance of doubt, Mr Barrett is entitled to choose 6.2.1 or 6.2.2, or a combination of the two options.
6.3	In the event of Mr Barrett’s death, whether or not Mr Barrett is employed by Barclays, the Notional Fund accumulated to that date will be paid to such person or persons as Mr Barrett nominates. Barclays will deduct any taxes it is obliged by law to withhold.
6.4	Barclays will provide, for the duration of Mr Barrett’s employment, death in service cover of four times the basic salary referred in clause 5.1 of this Agreement as follows:

6.4.1 To the extent permitted by the Inland Revenue, cover will be provided through the Barclays Bank UK Retirement Fund. The Inland Revenue limits the coverage Mr Barrett may receive through the

	Barclays Bank UK Retirement Fund by a cap on pensionable earnings, currently £102,000 per annum.
6.4.2	Death lump sum coverage on Mr Barrett’s salary above the Inland Revenue cap will be provided, if Mr Barrett so chooses, by an unapproved life cover arrangement. Barclays will pay the costs of this cover, but Mr Barrett will be responsible for paying any income tax due on the benefit.
6.4.3	Apart from the death in service lump sum cover set out above, Mr Barrett will not become a member of the Barclays Bank UK Retirement Fund.

7.

OTHER BENEFITS

7.1

Subject to the rules of the relevant schemes from time to time in force, Barclays will continue to provide the following benefits, referred to in 7.1.1, to Mr Barrett. For the avoidance of doubt, these benefits are provided at the discretion of Barclays and do not create enforceable contract terms under the Contracts (Rights of Third Parties) Act 1999. Barclays shall have the right to change these arrangements or withdraw the provision of these benefits as it sees fit, and/or give notice to lawfully terminate this Agreement as specified in clause 2.3, provided that, in changing or withdrawing such benefits, Mr Barrett is treated no less favourably compared with the general treatment of the executive directors of Barclays.

7.1.1 Medical cover will be available through the Barclays Healthcare Trust or any substitute scheme operated by Barclays for its employees. Medical cover may be provided for Mr Barrett’s spouse and dependants at his cost through a separate scheme. All cover will cease on leaving employment whether on retirement, resignation or for any other reason.

7.2 Barclays will pay the costs of tax and/or financial advice, provided by advisers chosen by Mr Barrett, subject to a maximum cost of £20,000 per

	annum. Barclays will pay the costs of this advice, but Mr Barrett will be responsible for paying any income tax due on the benefit.
7.3	Mr Barrett will cease to be eligible for further awards under the Incentive Share Option Plan (ISOP). However, because his employment with Barclays continues under this Agreement, he will retain his outstanding awards under the ISOP subject to the Rules of the plan. Mr Barrett will also retain his outstanding awards under the Executive Share Award Scheme (ESAS), subject to the Rules of the plan.
8.	HOLIDAYS
8.1	Mr Barrett shall be entitled to 23 working days’ paid holiday, including Bank and Public Holidays, during each holiday year, which runs from 1 March to the end of February the following year. Regulation 15(1-4) of the Working Time Regulations 1998 (dates on which leave is taken) do not apply. Any unused part of his holiday entitlement cannot be carried over to a subsequent holiday year.
8.2	If Mr Barrett leaves during a holiday year, his holiday entitlement will be recalculated as 2 day’s holiday, including Bank and Public Holidays, for each completed month worked in the year. If when Mr Barrett is leaving his employment he has taken less holiday than his accrued entitlement, he will be paid salary in lieu of any outstanding holiday entitlement. If when Mr Barrett is leaving he has taken more holiday than his accrued entitlement, he will have to repay to Barclays any salary received in excess of his proportionate holiday entitlement. One day’s holiday pay will be deemed to be 1/156th of his annual basic salary.
9.	INCAPACITY
9.1	If Mr Barrett shall at any time be prevented by illness or accident or other incapacity from properly performing the duties of his employment, he shall report this fact forthwith to the Company Secretary . Mr Barrett may be asked to submit to a medical examination as directed by Barclays.

9.2	Subject to Mr Barrett complying with clause 9.1, if as a result of illness or accident or other incapacity Mr Barrett is unable to perform his duties, he will be eligible to receive his basic salary for a period of 26 weeks (whether consecutive or not) in any period of 12 consecutive months. Thereafter Barclays may by notice to Mr Barrett discontinue payment in whole or in part of his salary until such incapacity shall cease or terminate this Agreement. Any payment will be subject to the deduction of any Statutory Sick Pay or social security or other benefits payable to Mr Barrett including any sums recoverable from a third party. The qualifying days for Statutory Sick Pay purposes are Monday to Friday. For the avoidance of doubt, Barclays has the right at any time to serve notice to terminate this Agreement under clause 2.3.
10.	INTELLECTUAL PROPERTY
10.1	Mr Barrett will promptly disclose to Barclays and keep confidential all inventions, copyright works, designs or technical know-how conceived or made by him alone or with others in the course of his employment. Mr Barrett will hold all such intellectual property in trust for Barclays and will do everything necessary or desirable at Barclays expense to vest the intellectual property fully in Barclays and/or to secure patent or other appropriate forms of protection for the intellectual property. Decisions as to the protection or exploitation of any intellectual property shall be in the absolute discretion of Barclays.
11.	CONFIDENTIAL INFORMATION
11.1	Mr Barrett shall not during his employment (except as necessary for the proper performance of his duties) or at any time after its termination (save for the right to comment appropriately to the extent that the same affects his reputation, upon any information in the public domain otherwise than as a result of breach of duty by him) for any reason whatsoever disclose to any person whatsoever or otherwise make use of any confidential or secret information which he has or may have acquired in the course of his

employment concerning the business or affairs of any member of the Barclays Group or any of their suppliers or customers.

11.2 Confidential information includes but is not limited to:

11.2.1	corporate and marketing strategy, business development plans, sales reports and research results;
11.2.2	business methods and processes, technical information and know-how relating to the Barclays Group’s business and which is not available to the public generally, including inventions, designs, programmes, techniques, database systems, formulae and ideas;
11.2.3	business contacts, lists or details of customers and suppliers and details of contacts with them, their business or affairs;
11.2.4	information on employees and the terms and conditions of their employment, details of employee benefits, incentive schemes/plans, salary scales, trade union/employee disputes current or anticipated;
11.2.5	information or details of any actual, potential or threatened litigation, legal action, claim, dispute or arbitration against or with any member of the Barclays Group or any director, officer or employee of the Barclays Group in such capacity and any information in respect of provisions for any such action;
11.2.6	budgets, management accounts, trading statements and other financial reports; and
11.2.7	unpublished price sensitive information relating to shares or securities listed or dealt in on any recognised stock exchange.

11.3 Mr Barrett shall at all times comply with any relevant Barclays policies on the security of information and shall use his best endeavours to prevent any unauthorised publication or disclosure of any confidential or secret information.

11.4	The restrictions in this clause 11 shall not apply in respect of information in the public domain (save as a result of default by Mr Barrett) or if such information is required to be produced by a court of law, or by a governmental or regulatory body.
12.	RESTRICTIVE COVENANTS
12.1	Mr Barrett shall not without the prior written consent of the Board (such consent to be withheld only so far as may be reasonably necessary to protect the legitimate interests of the Barclays Group) either on his own behalf or on behalf of any other person, firm or company:

12.1.1

for a period of 6 months from the termination of Mr Barrett’s employment be engaged or interested (whether as a director, shareholder, principal, consultant, agent, partner or employee) in any business within the European Union which is competitive or likely to be competitive with any business of the Barclays Group in the provision of banking or financial services and which is carried on by the Group as at the date Mr Barrett’s employment terminates;

12.2.2

for a period of 12 months from the termination of Mr Barrett’s employment (directly or indirectly) induce or attempt to induce or entice away any director, officer or employee of executive status to leave the employment of the Barclays Group and with whom Mr Barrett had material dealings in the 12 months prior to the termination of his employment.

12.2 Each of the restrictions contained in clauses 12.1.1, and 12.1.2 of this clause are considered by the parties to be reasonable in all the circumstances as at the date of this Agreement. However, the parties agree that if any one or more of such restrictions shall be judged to be void as going beyond what is reasonable in all the circumstances for the protection of the interests of the Barclays Group but if words were deleted or the period was reduced or the range of activities or area covered was reduced

	in scope would be valid the restrictions shall be deemed to apply with such modifications as may be necessary to make them valid and effective. Any such modification shall not affect the validity of any other restriction contained in this Agreement.
12.3	The period of restriction stated in clause 12.1 shall be reduced by the length of time, if any, that Mr Barrett is suspended from his duties pursuant to clause 3.3.
13.	TERMINATION ON THE HAPPENING OF CERTAIN EVENTS
13.1	Without prejudice to any remedy Barclays may have against Mr Barrett for breach or non-performance of any of the provisions of this Agreement, and irrespective of whether the grounds for termination arose before or after Mr Barrett’s employment began, Barclays may, without thereby incurring any obligation to pay compensation (including, but without limitation, any payment in lieu of notice, save in relation to payments accrued and owing at the date of termination) immediately determine Mr Barrett’s employment by notice in writing to him if he shall:

13.1.1	become bankrupt (or equivalent in any other jurisdiction) or become the subject of an interim order under the Insolvency Act 1986 or make any arrangements or composition with his creditors; or
13.1.2	be convicted of any criminal offence (other than a road traffic offence not involving a custodial sentence or an offence which, in the reasonable opinion of Barclays, does not affect Mr Barrett’s position as an employee of Barclays, bearing in mind the nature of his duties and the capacity in which he is employed); or
13.1.3	commit any act of dishonesty whether relating to any member of the Barclays Group, other employees or otherwise; or
13.1.4	be guilty of any serious misconduct or any conduct calculated or tending to bring any member of the Barclays Group or himself into

	disrepute or be guilty of any material breach or material non-observance of any of the provisions of this Agreement or be guilty of any serious negligence in carrying out his duties properly assigned to him under this Agreement; or
13.1.5	cease to hold or fail to obtain any regulatory approvals or consents which are required for the effective discharge by Mr Barrett of any duties assigned to him save where such cessation or failure is as a result of a default by any member of the Barclays Group.

13.2	Barclays reserves the option, in its absolute discretion, to give notice that Mr Barrett’s employment will terminate with immediate effect and to pay him his basic salary subject to deductions for income tax and national insurance contributions (as appropriate) in equal instalments at such time(s) as he would have received such payment(s) of basic salary had he been required to remain in employment for the whole or remainder of his notice period. The amount of such payment(s) shall be pro rated for the applicable period of the notice period. Benefits referred to in clauses 6.4 and 7 will be provided to Mr Barrett as if he had remained in service for the applicable period of the notice period. Mr Barrett acknowledges and accepts his obligation to mitigate his loss by seeking comparable new employment. If Mr Barrett mitigates his loss by commencing alternative employment or by obtaining employment for his services during the period in which payments of basic salary are due, Barclays reserves the right to cease or reduce further payment and to cease providing or reduce the benefits referred to in clauses 6.4 and 7.
14.	RETURN OF BARCLAYS DOCUMENTS
14.1	Upon the termination of his employment for whatever reason, Mr Barrett shall deliver up to Barclays all vehicles, keys, credit cards, correspondence, documents, specifications, reports, papers and records (including any computer material such as discs or tapes) and any other property of any kind relating to the business of or belonging to any member of the Barclays Group which may be in his possession or under his control. Mr Barrett shall also deliver up all copies of such documents, which he has in his possession

	or under his control. Mr Barrett shall be entitled to have reasonable access to Board minutes and documentation referred to them in respect of a period during which he is a director of Barclays.
14.2	Following the termination of his employment for whatever reason, Mr Barrett shall not at any time represent himself as still being connected with any member of the Barclays Group.
15.	STAFF HANDBOOK
15.1	The employment of Mr Barrett shall also be governed by the terms and conditions applicable to Barclays staff contained in the Barclays Staff Handbook ‘You & Barclays’ (as may be amended from time to time) except where these are inconsistent with, or specifically dealt with by, the provisions of this Agreement, in which case the provisions of this Agreement shall apply.
16.	STATUTORY REQUIREMENTS
16.1	The following particulars are given in compliance with the requirements of Section 1 of the Employment Rights Act 1996.

16.1.1	the employment of Mr Barrett by Barclays began on 15 September 1999. No employment with a previous employer will count as part of his continuous employment with Barclays.
16.1.2	Mr Barrett agrees that the maximum weekly working time as set out in Regulation 4 of the Working Time Regulations 1998 shall not apply in relation to his employment because his working time is not measured or predetermined or can be determined by Mr Barrett.
16.1.3	Barclays has a disciplinary and grievance procedure, details of which are in the staff manual. Barclays’ disciplinary procedure is not incorporated by reference in this Agreement and therefore does not form part of Mr Barrett’s contract of employment. If Mr Barrett has a grievance in relation to his employment or is dissatisfied with a

	disciplinary decision against him he may apply in writing to the Company Secretary.
16.1.4	While Mr Barrett’s initial place of work will be London, he will work at and/or travel to such places (inside and outside the United Kingdom) as Barclays may require from time to time provided that he shall not be required to be based at a location outside a reasonable commuting distance of his current home address. If Mr Barrett is required to work outside the UK for a period in excess of one month, the additional terms that will apply will be notified to him.
16.1.5	There are no collective agreements with any trade unions which directly affect the terms and conditions of Mr Barrett’s employment.

17.	NOTICES
17.1	Any notice to be given under this Agreement shall be in writing. Notice to Mr Barrett shall be sufficiently given by being delivered personally to him or by being sent by first class post addressed to him at the address stated in this Agreement or the last place of residence in the UK notified to Barclays by Mr Barrett. Notice to Barclays shall be sufficiently given by being delivered to the Group Secretary or by being sent by first class post to the registered office of Barclays addressed for the attention of the Group Secretary. Any notice if posted shall be deemed served upon the third day following that on which it was posted.
18.	APPLICABLE LAW
18.1	English law shall apply to this Agreement and the parties submit to the jurisdiction of the English courts.
19.	MISCELLANEOUS
19.1	This Agreement, together with any documents referred to in it, sets out the whole agreement between the parties relating to and cancels all previous

	agreements, representations and arrangements in connection with Mr Barrett’s employment by Barclays.
19.2	No omission to exercise or delay in exercising any right, power or remedy provided to Barclays by law or under this Agreement will be a waiver of it.
19.3	Termination of this Agreement shall not affect any provisions, which are intended to operate after termination.
19.4	For the purposes of the Employment Rights Act 1996 or otherwise, Mr Barrett hereby consents to the deduction of any sums owing by him to any Barclays at any time from his salary or any other payment due from Barclays to Mr Barrett and he hereby also agrees to make a payment to Barclays of any sums owed by him to Barclays upon demand by Barclays at any time.
19.5	During Mr Barrett’s employment, he must comply with Barclay’s policies and procedures relating to the Data Protection Act 1998. This means that Mr Barrett consents to Barclays processing any data relating to him, where it is necessary or reasonably required for the conduct of Barclays business. This may include personal data as well as documentation relating to Mr Barrett’s absence from work through sickness or injury. Further details of the type of data that is covered by this provision can be found in the Barclays Staff Handbook.
	IN WITNESS the hands of the parties hereto

	(SIGNED BY a duly
	(Authorised signatory for
	(and on behalf of Barclays
SIGNED BY Mr Barrett

Attachment

Group Chairman, Principal accountabilities

• Manage the business of the Board and set its agenda, taking full account of the issues and the concerns of Board members. Ensure that agendas are forward looking and concentrate on strategic matters.

• Ensure that members of the Board receive accurate, timely and clear information in particular about the company’s performance, to enable the Board to take sound decisions, monitor effectively and provide advice to promote the success of the company.

• Keep under review, with the Board, the general progress and long-term development of the Group.

• Ensure effective communication with shareholders and ensure that members of the Board develop and maintain an understanding of the views of major investors and other key stakeholders.

• Manage the Board to ensure that sufficient time is allowed for discussion of complex or contentious issues, where appropriate arranging for informal meetings beforehand to enable thorough preparation for the Board discussion.

• Promote the highest standards of corporate governance, seeking compliance with the provisions of the Combined Code wherever possible.

• Ensure that the Board is able to discharge its duties and comply with the requirements of statutory/regulatory bodies that affect the functioning and responsibilities of the Board.

• Ensure that a properly constructed induction programme is provided for new directors.

• Consider and address the development needs of individual directors, and the Board as a whole, to maintain the necessary depth and breadth of knowledge and skills, and enhance the effectiveness of the Board as a team.

• Ensure that the performance of individual Board members, and of the Board as a whole, is evaluated at least once a year.

• Ensure, subject to the views of the Remuneration Committee, that members of the Board are appropriately rewarded.

• Encourage active engagement by members of the Board.

The Chairman will also:

• Establish a close relationship of trust with the Chief Executive, providing support and advice while respecting executive responsibility.

• Uphold the highest standards of integrity and probity.

• Set the style and tone of Board discussions to promote effective decision-making and constructive debate.

• Promote effective relationships and open communication, both inside and outside the Boardroom, between non-executive directors and the executive team.

• Build an effective and complementary Board, initiating change and planning succession and Board appointments, working with the Nominations Committee.

• Ensure clear structure for and the effective running of Board committees.

• Provide coherent leadership for the company, including representing the company and understanding the views of shareholders.

EX-4.14

Exhibit 4.14

Exhibit 4.14

DATED 15 June 1992

BARCLAYS BANK PLC (1)

- and -

CHRISTOPHER JOHN LENDRUM (2)

CONTRACT OF EMPLOYMENT

CONTRACT OF EMPLOYMENT

DATE 15 June 1992

PARTIES:

(1)	BARCLAYS BANK PLC of
	54 Lombard Street, London EC3 (“The Bank”)
(2)	CHRISTOPHER JOHN LENDRUM
	Detail Omitted

WHEREAS The Bank and the Executive wish the employment of the Executive to continue on the terms and conditions set out in this Agreement to the exclusion of any others:-

IT IS AGREED as follows:-

1. APPOINTMENT AND TERM

(1) The Bank shall employ the Executive and the Executive shall serve the Bank as Deputy Managing Director, Banking Division or in such other capacity as the Bank may reasonably require. This Agreement shall take effect from 15th June 1992.

Subject to all the terms and conditions of this Agreement the Executive’s employment may be terminated at any time on 364 days’ written notice by the Bank to the Executive or on 6 months’ written notice by the Executive to the Bank. The Executive’s appointment shall in any event terminate on his normal retirement date, currently the day before his 60th birthday.

(2) The Bank shall be entitled at any time to appoint another person or persons to act jointly with the Executive in his position.

2. DUTIES

(1)	During his employment hereunder, the Executive shall:-
(a)	perform such duties and exercise such powers and functions as may be assigned to or vested in him by the Board of Directors (“the Board”) of the Bank in relation to any member of the Barclays Group (as defined in this Agreement);
(b)	faithfully and loyally serve and promote the interests of the Bank to the best of his ability and to this end during working hours devote his time and attention exclusively to his duties under this Agreement;

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(c) comply with all reasonable requests, instructions and regulations made by the Board or by anyone authorised by it, and promptly provide such explanations, information and assistance as to his activities in the business of the Barclays Group as the Board may reasonably require;

(d)

not engage in any activities which would detract from the proper performance of his duties under this Agreement, nor (without the prior written consent of a Director of the Bank) engage or be concerned or interested directly or indirectly in any other trade business or occupation whatsoever or become director, manager, agent, partner or employee of any other company, firm or person. This Clause shall not prevent the Executive holding shares for investment purposes only of securities not exceeding 5% in nominal value of the share capital of any Company quoted on a recognised Stock Exchange.

(2)

The Bank shall:-

(a) have the right to require the Executive at any time to carry out such special projects or functions as the Bank shall in its absolute discretion determine;

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(b) be under no obligation to assign to or vest in the Executive any powers, duties or functions or to provide any work for the Executive and may at any time suspend the Executive from the performance of any duties or exclude him from any premises of the Bank or any member of the Barclays Group.

(c) without derogating from the Bank’s rights in (b) above, if the Executive shall give notice pursuant to Clause 1(1) above, the Bank may, in its absolute discretion, require the Executive not to attend his place of work for the whole or part of the Executive’s notice period, without affecting the Executive’s obligations to attend and serve the Bank during any part of the notice period at such location/s as it may reasonably require.

3.	DEALING RULES
	The Executive hereby agrees to be bound by and comply with the Bank’s Employee Dealing Rules or with any more stringent Dealing Rules which the Bank notifies the Executive applicable to him. The Executive hereby acknowledges receipt of a copy of the Employee Dealing Rules.
4.	REMUNERATION AND REIMBURSEMENT OF EXPENSES

(1) The Bank shall pay the Executive a salary at the rate of £105,000 [one hundred and five thousand] pounds per annum
payable in arrears by equal monthly instalments on the last day of each month.

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	This salary shall be reviewed from time to time and may in the sole discretion of the Board be increased following any such review.
(2)	The Executive may be entitled to participate in the Barclays PLC Renewed 1986 Executive Share Option Scheme or such other share or bonus schemes or arrangements as the Board in its sole discretion may from time to time determine.
(3)	The Bank shall reimburse to the Executive all travelling, hotel, entertainment and other expenses properly and reasonably incurred by him in the performance of his duties under this Agreement and properly claimed and vouched for in accordance with the Bank’s current expense reporting procedure.

5.

HOLIDAY

In addition to the normal Bank and Public Holidays the Executive shall be entitled to thirty working days’ paid holiday during each holiday year, which runs from 1st March to the end of February the following year. The Executive’s holiday dates must be agreed with the Director or Executive to whom he reports. The Executive may not carry forward any unused part of his holiday entitlement to a subsequent holiday year without the consent of that Director or Executive.

- 5 -

6.

CONFIDENTIALITY

The Executive shall not during his employment (except as necessary for the proper performance of his duties) or at any time after its termination for any reason whatsoever disclose to any person whatsoever or otherwise make use of any confidential or secret information which he has or may have acquired in the course of his employment concerning the business or affairs of any member of the Barclays Group or any of their customers. The Executive shall use his best endeavours to prevent the unauthorised publication or disclosure of any such confidential or secret information.

7. RESTRICTIVE COVENANTS

(1) The Executive shall not without the prior written consent of the Board (such consent to be withheld only so far as may be reasonably necessary to protect the legitimate interests of any member of the Barclays Group) for a period of six months after the termination for whatever reason of. his employment either on his own behalf or on behalf of any other person, firm or company:-

(a) in connection with the provision of services or the sale of products with which the Executive was concerned to a material extent within the year before termination of his employment, directly or indirectly deal with any customer or client of the Bank or of any member of the Barclays Group with whom the Executive had business dealings within the year before the termination of his employment;

- 6 -

(b)	directly or indirectly canvass, solicit, entice away or cause to be canvassed or solicited or enticed away from the Bank or from any member of the Barclays Group any person, firm or company who at the date of the termination of his employment or within one year prior to such date is or was a customer or client of the Bank or of any member of the Barclays Group or was in the habit of dealing under contract with the Bank or with any member of the Barclays Group and with whom or which the Executive had business contact during the said period;
(c)	solicit or entice away or endeavour to solicit or entice away from the Bank or from any member of the Barclays Group any director, officer or employee of the Bank or any member of the Barclays Group;
(d)	the restricted area to which the restrictions set out in (a), (b) and (c) above apply is as follows:

(i) if at the time of termination of his employment or six months prior thereto the Executive’s duties and responsibilities are countrywide in nature, the restricted area shall be the United Kingdom or England or Wales or Scotland (as may be appropriate to the geographical scope of the Executive’s responsibilities);

- 7 -

(ii) if at the time of termination of his employment or within six months prior thereto the Executive’s duties are regional or local in nature, the restricted area shall be the region or locality to which the Executive’s responsibilities extend.

(2) Each of the restrictions in sub-clauses 1(a), (b), (c) and (d) of this Clause are considered by the parties to be reasonable in all the circumstances as at the date of this Agreement. However, the parties agree that if any one or more of such restrictions shall be judged to be void as going beyond what is reasonable in all the circumstances for the protection of the interests of the Bank and the Barclays Group but would be valid if words were deleted therefrom or the period thereof reduced or the range of activities or area covered thereby reduced in scope the said restrictions shall be deemed to apply with such modifications as may be necessary to make them valid and effective. Any such modification shall not thereby affect the validity of any other restriction contained in this Agreement.

8.	TERMINATION ON THE HAPPENING OF CERTAIN EVENTS
	The Bank may immediately determine this Agreement by notice in writing to the Executive if he shall:-

a) become bankrupt or make any composition or enter into any deed of arrangement with his creditors; or

- 8 -

(b)	become a patient as defined in the Mental Health Act 1983; or
(c)	be convicted of any criminal offence (other than a minor road traffic offence); or
(d)	commit any act of dishonesty whether relating to any member of the Barclays Group, other employees or otherwise; or
(e)	be prevented by illness or otherwise from performing his duties hereunder for a consecutive period of six months or for an aggregate period of six months in any period of 12 months; or
(f)	be guilty of any serious misconduct or any conduct tending to bring any member of the Barclays Group or himself into disrepute or be guilty of any material breach or non-observance of any of the provisions of this Agreement or shall neglect fail or refuse to carry out duties properly assigned to him under this Agreement.

9. CHANGE OF CONTROL

(1) If at any time during the Executive’s employment under this Agreement there is a change of control (as defined below) of the Bank the Executive shall be entitled to treat such a change

- 9 -

	in control as a repudiation by the Bank of this Agreement and shall be entitled by written notice given to the Bank within six months of the change of control taking effect to resign with immediate effect and to claim damages for such repudiation by reference to whichever is the lesser of 364 days or the period until the Executive’s normal retirement date.
(2)	For the purposes of this Clause a change in control of the Bank shall mean any circumstance by which the Bank becomes a subsidiary within the meaning of Section 736 of the Companies Act 1985 of any company other than a member of the Barclays Group or any other circumstances by which the effective voting control of the Bank or the right to appoint or remove a majority of the Directors of the Bank becomes vested in any individual or body, or group of individuals or bodies, or group of individuals or bodies acting in concert, or all or substantially all of the business, assets and undertaking of the Bank become owned by any person, firm or company other than a member of the Barclays Group.
(3)	If before the Executive purports to exercise his right pursuant to Clause 9(1) above, he has already given notice to the Bank of his intended termination of this Agreement, the Executive shall not be entitled to resign his employment hereunder in accordance with the said Clause 9(1).

- 10 -

10.

RETURN OF BANK’S DOCUMENTS

Upon the termination of his employment for whatever reason the Executive shall deliver up to the Bank all vehicles, credit cards, correspondence, documents, specifications, reports, papers, records (including any computer material such as discs or tapes) and any other property (of any kind) relating to the business of or belonging to the Bank or any member of the Barclays Group. The Executive shall also deliver up all copies of such documents which he has in his possession or under his control.

11.	STATUTORY REQUIREMENTS
	The following particulars are given in compliance with the Requirements of Section 1 of the Employment Protection (Consolidation) Act 1978:–

(a)	The employment of the Executive by the Bank began on 6th January 1969. No employment with a previous employer counts as part of his continuous employment with the Bank.
(b)	The Executive is required to work such hours as may be necessary for the proper discharge of his duties hereunder.

- 11 -

(c)	There is a pension scheme in operation in relation to the employment of the Executive particulars of which are available in the Staff Manual. Any entitlement to credited service is the subject of separate correspondence between the Executive and the Bank. A Contracting-Out Certificate is in force in respect of the Executive’s employment.
(d)	The grievance and disciplinary procedures applicable to the Executive are set out in the Staff Handbook.

12.	STAFF HANDBOOK
	The employment of the Executive shall also be governed by the terms and conditions applicable to the Bank’s staff contained in the booklet “Barclays Staff ‘Handbook Rules and General Information” (as may be amended from time to time) except where these are inconsistent with the provisions of this Agreement.

13.	DEFINITION
	this Agreement “the Barclays Group” means the Bank, its holding company (Barclays PLC) and those companies which are for the time being subsidiaries or associated companies of the Bank or such holding company and “member of the Barclays Group” shall be construed accordingly.

- 12 -

14.	APPLICABLE LAW
	This Agreement and any disputes or differences arising out of it (whether relating to interpretation, compensation or termination) shall in all respects be interpreted in accordance with and governed by English law and the parties submitted to the jurisdiction of the courts.

IN WITNESS whereof the parties have caused this Agreement to be executed the day and year first before written

( THE COMMON SEAL of

( BARCLAYS BANK PLC was

( hereunto affixed in

( the presence of:–

(

	[•]	Secretary

SEC/92/2300 Authorized Sealing Officer

SIGNED by The Executive	)
in the presence of:–	)

- 13 -

Barclays Bank PLC
Group Human Resources
54 Lombard Street
London
EC3P 3AH

Telephone: (0171) 699 5000

Strictly private and confidential

C. Lendrum Esq.
Chief Executive
Corporate Banking
54 Lombard Street
LONDON EC3P 3AH

3rd June 1998


Dear Chris
Contract of Employment

This letter is to confirm the amendment to your contract of employment (dated 15 June 1992) as discussed and agreed with you.

With immediate effect, clause 9 of the contract is deleted and therefore no longer a term of your contract. The removal of this clause means that, in the event of a change of control of Barclays, you will not be able to, within 6 months of the change of control, leave without giving notice and claim damages. You will however, still be entitled to resign on notice or be given 12 months notice (save for gross misconduct). All other terms and conditions of your employment will remain as before.

Please confirm by signing and returning the enclosed copy of this letter your agreement to the above change.

Yours sincerely

Sally Bott
Director, Group Human Resources

Signature:	/s/  Sally Bott
	(SALLY BOTT)
Date:	04.06.98

Regulated by IMRO and the Personal Investment Authority.
Barclays Bank PLC represents only the Barclays Marketing Group for life assurance, pensions and unit trust business.
Registered in London, England. Reg. No: 1026167. Reg. Office: 54 Lombard Street, London EC3P 3AH EX-4.15 8 u48461exv4w15.htm EXHIBIT 4.15

Exhibit 4.15

Exhibit 4.15

Patrick Gonsalves
Group Corporate Secretariat

29 August 2003

Sir Richard Broadbent
Detail Omitted  
54 Lombard Street
London
EC3P 3AH

Tel 020 7699 3512
Fax 0870 242 2733

patrick.gonsalves@barclays.co.uk

Dear Sir Richard

I am writing to you about your appointment as a Director of Barclays PLC and Barclays Bank PLC with effect from 1 September 2003.

1. Fees

As a Non-Executive Director you will receive a fee of £50,000 per annum, payable monthly in arrears by direct credit into your nominated bank account. In the event that you hold office for part of the year the fees shall be pro-rated accordingly on the basis of one twelfth for each complete or part month served. £20,000 of this fee will be paid in the form of Barclays PLC shares. Any reasonable out of pocket expenses that you incur in performing your duties as a Director (travelling expenses in attending Board meetings etc) will be reimbursed in accordance with our standard expenses policy. The Board (with the Non-Executive Directors abstaining) reviews the level of fees paid to Non-Executive Directors annually.

2. Terms of Your Appointment

The Directors, rather than the shareholders in general meeting, have appointed you to the Boards of Barclays PLC and Barclays Bank PLC. As a consequence, you are required by legislation to seek re-election at the Barclays Annual General Meeting on 29 April 2004. As with all the directors, you will then normally be required to seek re-election at least every three years.

Your initial term of office will be for up to six years. On or before the sixth anniversary of your appointment we will agree with you whether it is appropriate for you to continue for up to another three years. All Non-Executive Directors have an annual review with the Chairman.

Your appointment as a Non-Executive Director may be terminated by us on six months notice (or immediately on payment of six months fees in lieu of notice) but would automatically terminate without any entitlement to notice or payment should you not be re-elected by Barclays PLC shareholders and/or should you be removed as a Director by shareholders. Should you wish to resign your appointment you are required to give us not less than six months notice.

Bairlays PLC. Registered in England. Registered No: 48839. Registered Office: 54 Lombard Street, London EC3P 3AH

3. Time Commitment

The Board normally meets formally 10 times a year, including a full day strategy session in November and a two day overseas visit at some point during the year, and will otherwise meet on an ad-hoc basis as required.

Directors are expected to attend each meeting of the Board, including those called on an ad-hoc basis to discuss urgent matters, and to set aside sufficient time to consider the papers in respect of those meetings which are normally sent to Directors in the week prior to the meting. Directors are also expected to attend the Barclays AGM, which is held in April each year.

4. Committees

The Chairman may invite you in due course to serve as a member of one or more of the Board Committees. Additional fees will be paid for membership and attendance at these meetings, which will be discussed with you at the time, together with the time commitment involved.

5. Directors Share Qualification

Under our Articles of Association, you will be required to hold £500 in nominal value (2,000 ordinary shares of 25p each) of Barclays shares within two months of your appointment. If you would like any assistance in buying these shares please speak to me. If you already hold Barclays shares, please let me know so that we can update the statutory register of Directors’ interests and make the necessary announcement under the UKLA’s Listing Rules.

6. Induction

As part of the induction of new Directors we encourage you to meet some of the key members of our senior management, and we will agree a suitable induction programme with you shortly. Ongoing training and briefings on particular topics are also made available at the request of Directors.

I would be grateful if you would confirm receipt of this letter, and your acceptance of the conditional appointments as set out, by signing and returning the enclosed copy. I am available at any time to provide any information you may need.

Yours sincerely

Patrick Gonsalves
Head of Group Corporate Secretariat

Signed:
	(SIR RICHARD BROADBENT)
Date:	01.09.03

- 2 -

Exhibit 4.15

Lawrence Dickinson
Group Secretary

28 June 2004

Sir Richard Broadbent
Detail Omitted  
54 Lombard Street
London
EC3P 3AH

Tel 020 7699 2454
Fax 020 7699 3690

lawrence.dickinson@barclays.co.uk

Dear Sir Richard

I write to confirm your appointment as Senior Independent Director of Barclays PLC and Barclays Bank PLC (“the Boards”) with effect from 1 September 2004.

1. Fees

As Senior Independent Director you will receive a fee of £25,000 per annum, payable monthly in arrears by direct credit into your nominated bank account. In the event that you hold office for part of the year the fees shall be pro-rated accordingly on the basis of one twelfth for each complete or part month served. This will be in addition to the fees that you receive from being a member of the Boards and Board Committees. The Board (with the Non-Executive Directors abstaining) reviews the level of fees paid to Non-Executive Directors (including your fee as Senior Independent Director) annually.

2. Terms of Your Appointment

Your appointment will not be for a fixed term but will be reviewed annually with the Chairman. Your appointment as Senior Independent Director and as a Non-Executive Director may be terminated by us on six months notice (or immediately on payment of six months fees in lieu of notice) but would automatically terminate without any entitlement to notice or payment if the Barclays PLC shareholders do not re-elect you whenever you stand for re-election and/or if you are removed from office by the shareholders.

The Board shall also reserve the right to reconsider your appointment as a Director and therefore to terminate your appointment forthwith should there be any material change to your personal circumstances that the Board believes may affect your appointment as a Director of Barclays PLC and Barclays Bank PLC. A material change shall include, but not be limited to, the following:

• Where you resign, retire or are removed from office from any of your other external appointments (including, but not limited to, any other directorships).

• Where you are appointed to any other company, corporate body or other entity (internal or external), which has not been agreed in advance with the Chairman.

• Where an incident occurs, which the Board considers could adversely affect the reputation of the Croup.

Bairlays PLC. Registered in England. Registered No: 48839. Registered Office: 54 Lombard Street, London EC3P 3AH

Where such a material change occurs, you must inform the Chairman as soon as possible. Should you wish to resign your appointment, you are required to give us not less than six months notice.

3. Role

Attached to this letter is a role profile for your position as Senior Independent Director, which has been agreed by the Board. The Board may change this role profile from time to time and the role profile as amended shall, once notified to you, be deemed to form part of this letter in place of the document attached.

4. Indemnity

I confirm that you can rely on the indemnity contained in Article 160 of Barclays Articles of Association. In outline, the effect of that Article (as restricted by relevant statutory provisions) is to provide an indemnity in respect of certain liabilities incurred by you in the execution of your duties, provided that the liability does not arise by virtue of your negligence, default, breach of duty or breach of trust in relation to the Bank. The indemnity is of course in addition to any other protection available to you by virtue of provisions of statute, common law or indeed any specific contract.

I should be grateful if you would confirm receipt of this letter, and your acceptance of the appointment as set out, by signing and returning the enclosed copy. I am available at any time to provide any information you may need.

Yours sincerely

Lawrence Dickinson
Group Secretary

- 2 -

I agree to the terms and conditions of my appointment as set out in this letter.

Signed:
	SIR RICHARD BROADBENT
Date:	02.08.04

- 3 -

Role Profile of the Senior Independent Director

The role of the Senior Independent Director will be to:

• Meet with the Non-Executive Directors without the chairman present at least annually to appraise the Chairman’s performance and on other such occasions as are deemed appropriate.

• Maintain contact as required with major shareholders to understand their issues and concerns, including attending meetings where necessary with shareholders to listen to their views in order to help develop a balanced understanding of the issues and concerns of major shareholders.

• Be available to shareholders if they have concerns relating to matters which contact through the normal channels of Chairman, Chief Executive or Finance Director has failed to resolve, or for which such contact is inappropriate.

Group Corporate Secretariat
June 2004

EX-4.15

exv4w15

EX-4.16

Exhibit 4.16

Exhibit 4.16

Lawrence Dickinson
Group Secretary


11 February 2003

Prof. Sandra Dawson
Detail Omitted  
54 Lombard Street
London
EC3P 3AH

Tel 020 7699 2454
Fax 020 7699 3690

lawrence.dickinson@barclays.co.uk

Dear Sandra

I am writing to you with respect to your appointment as a Director of Barclays PLC and Barclays Bank PLC with effect from 1 March 2003 and also to provide you with some further information which you will need now that your appointment has been conditionally approved by the Board.

1. Fees

As a Non-Executive Director you will receive a fee of £50,000 per annum, payable monthly in arrears by direct credit into your nominated bank account. In the event that you hold office for part of the year the fees shall be pro-rated accordingly on the basis of one twelfth for each complete or part month served. £20,000 of this fee will be paid in the form of Barclays PLC shares. You will see that in the folder entitled ‘Forms for Directors’ there is an agreement setting out details in respect of this remuneration in Barclays PLC shares which you are asked to sign and return. Any reasonable out of pocket expenses that you incur in performing your duties as a Director will be reimbursed in accordance with our expenses policy.

2. Terms of Your Appointment

Your appointment as a Non-Executive Director will be made by the Board rather than the shareholders in general meeting. In consequence, you are required, under the Companies Act 1985 to seek re-election at the Barclays Annual General Meeting on 24 April 2003. If at all possible, you should attend the meeting for your re-election. As with all the directors you will then normally be required to seek re-election by rotation every three years.

Your initial term of office will be for up to five years. On or before the fifth anniversary of your appointment we will agree with you whether it is appropriate for you to continue for up to another five years.

Your appointment as a Non-Executive Director may be terminated by us on six months notice (or immediately on payment of six months fees in lieu of notice) but would automatically terminate without any entitlement to notice or payment should you not be re-elected by Barclays PLC

Barclays PLC. Registered in England. Registered No: 48839. Registered Office: 54 Lombard Street, London EC3P 3AH

shareholders and/or should you be removed as a Director. Should you wish to resign your appointment you are required to give us not less than six months notice.

3. Committees

The Chairman may invite you in due course to serve as a member of one or more of the Board Committees. Additional fees will be paid for membership and attendance at these meetings and I enclose a schedule of the fee structure currently in operation.

4. Directors Share Qualification

Under our Articles of Association, you will be required to hold £500 in nominal value (2,000 ordinary shares of 25p each) of Barclays shares within two months of your appointment. If you would like any assistance in buying these shares please speak to me. [As a Director you will not be able to do this until after we have announced our interim results on 13 February 2003]. If you already hold Barclays shares, please let me know so that we can update the statutory register of Directors’ interests and notify the Stock Exchange.

5. Administration

The ‘Forms for Directors’ folder contains various forms and questionnaires. I would be grateful if you would complete and sign them where indicated and return them to me. If you need any assistance in completing these forms please give me a call and I will be happy to help.

6. Induction

As part of the induction of new Non-Executive Directors we would encourage you to meet some of the key members of our senior management team. Other Directors have found this a good way of gaining an early understanding of the structure and business of the Barclays Group. If you would find this helpful please contact me and I will make the necessary arrangements. Also enclosed is a copy of our Group Governance Manual on CD ROM which describes the flow of authority from the Boards of Barclays PLC and Barclays Bank PLC to the Businesses and explains how the Group is controlled.

I would be grateful if you would confirm receipt of this letter, and your acceptance of the conditional appointment as set out, by signing and returning the enclosed copy. I am available at any time to provide any support and information you may need.

Yours sincerely

Lawrence Dickinson
Group Secretary

- 2 -

Signed:	(PROF. SANDRA DAWSON)
Date:

- 3 -

EX-4.17

Exhibit 4.17

Exhibit 4.17

	BARCLAYS BANK PLC 54 LOMBARD STREET LONDON EC3P 3AH
A.N.R. Rudd, Esq., FCA., Detail Omitted	1st August, 1995

I am very pleased that you have agreed to be elected as a non-Executive Director of Barclays in early 1996. I have discussed the details of the election with Howard Trust, the Secretary of the Bank, and we have decided that at the December Board we will discuss the intention to appoint you and then make the actual appointment at the Board on the 1st February, when I hope you would also be able to attend for the first time. The announcement would, therefore, be made on the 1st February 1996.

A list of the Board dates in 1996 is enclosed, together with the dates of the Audit Committees. I have included the latter because you agreed that you would be willing to become a member of the Audit Committee.

The fees for a non-Executive Director of Barclays is currently £23,040. In addition, a member of the Audit Committee is paid a further fee of £3,000 and an attendance fee of £500 for each Committee meeting attended.

I look forward to the 1st February 1996 when you will join us.

A.R.F. Buxton

Enc:

Regulated by IMRO and the Personal Investment Authority.
Barclays Bank PLC represents only the Barclays Marketing Group for life assurance, pensions and unit trust business.
Registered in London, England. Reg. No: 1026167. Reg. Office: 54 Lombard Street, London EC3P 3AH

Lawrence Dickinson
Group Secretary

28 June 2004

Sir Nigel Rudd
Detail Omitted  
 
54 Lombard Street
London
EC3P 3AH

Tel 020 7699 2454
Fax 020 7699 3690

lawrence.dickinson@barclays.co.uk

Dear Sir Nigel

I write to confirm your appointment as Deputy Chairman of Barclays PLC and Barclays Bank PLC with effect from 1 September 2004.

1. Fees

As Deputy Chairman you will receive a fee of £150,000 per annum, payable monthly in arrears by direct credit into your nominated bank account. In the event that you hold office for part of the year the fees shall be pro-rated accordingly on the basis of one twelfth for each complete or part month served. £20,000 of this fee, after tax and national insurance, will be used to purchase Barclays PLC shares twice per year, in February and August. These shares will be held on your behalf until you leave the Board. Any reasonable out of pocket expenses that you incur in performing your duties as a Director (travelling expenses in attending Board meetings etc) will be reimbursed in accordance with our standard expenses policy. The Board (with the Non-Executive Directors abstaining) reviews the level of fees paid to Non-Executive Directors annually.

2. Terms of Your Appointment

Your appointment will not be for a fixed term but will be reviewed annually with the Chairman. Your appointment as Deputy Chairman and as a Non-Executive Director may be terminated by us on six months notice (or immediately on payment of six months fees in lieu of notice) but would automatically terminate without any entitlement to notice or payment if the Barclays PLC shareholders do not re-elect you whenever you stand for re-election and/or if you are removed from office by the shareholders.

The Board shall also reserve the right to reconsider your appointment as a Director and therefore to terminate your appointment forthwith should there be any material change to your personal circumstances that the Board believes may affect your appointment as a Director of Barclays PLC and Barclays Bank PLC. A material change shall include, but not be limited to, the following:

• Where you resign, retire or are removed from office from any of your other external appointments (including, but not limited to, any other directorships).

Barclays PLC. Registered in England. Registered No: 48839. Registered Office: 54 Lombard Street, London EC3P 3AH

• Where you are appointed to any other company, corporate body or other entity (internal or external), which has not been agreed in advance with the Chairman.

• Where an incident occurs, which the Board considers could adversely affect the reputation of the Croup.

Where such a material change occurs, you must inform the Chairman as soon as possible. Should you wish to resign your appointment, you are required to give us not less than six months notice.

3. Role

Attached to this letter is a role profile as Deputy Chairman, which has been agreed by the Board. The Board may change this role profile from time to time and the role profile as amended shall, once notified to you, be deemed to form part of this letter in place of the document attached.

4. Committees

You will be expected to serve as a member of one or more of the Board Committees. No additional fees will be paid for membership of those Committees.

5. Indemnity

I confirm that you can rely on the indemnity contained in Article 160 of Barclays’ Articles of Association. In outline, the effect of that Article (as restricted by relevant statutory provisions) is to provide an indemnity in respect of certain liabilities incurred by you in the execution of your duties, provided that the liability does not arise by virtue of your negligence, default, breach of duty or breach of trust in relation to the Bank. The indemnity is of course in addition to any other protection available to you by virtue of provisions of statute, common law or indeed any specific contract.

I should be grateful if you would confirm receipt of this letter, and your acceptance of the appointment, by signing and returning the enclosed copy. I am available at any time to provide any information you may need.

Yours sincerely

Lawrence Dickinson
Group Secretary

- 2 -

I agree to the terms and conditions of my appointment as set out in this letter.

Signed:
	SIR NIGEL RUDD
Date:

- 3 -

EX-4.18

Exhibit 4.18

Exhibit 4.18

Howard Trust
Group General Counsel
and Group Secretary

24 October 2000

Stephen Russell Esq
Detail Omitted  
54 Lombard Street
London
EC3P 3AH

Tel 020 7699 2953
Fax 020 7699 3414

howard.trust@barclays.co.uk

Dear Mr Russell,

I am writing to you formally to confirm your appointment as a Non-Executive Director of Barclays PLC and Barclays Bank PLC. This appointment is conditional and will only become effective upon completion of the acquisition of Woolwich PLC which is expected to be on or about 25 or 26 October 2000.

1.	Fees
	As a Non-Executive Director you will receive a fee of £36,040 per annum, payable monthly in arrears by direct credit into your nominated bank account. In the event that you hold office for part of the year the fees shall be pro-rated accordingly on the basis of one twelfth for each complete or part month served. £7,500 (net of tax) of this fee will be received in the form of Barclays PLC shares. You will see that in the folder entitled ‘Forms for Directors’ there is an agreement setting out details in respect of this remuneration in Barclays PLC shares which you are asked to sign and return. Any reasonable out of pocket expenses that you incur in performing your duties as a Director will be reimbursed in accordance with our expenses policy.
2.	Terms of Your Appointment
	Your appointment as a Non-Executive Director has been made by the Board to be effective when the acquisition of Woolwich is completed. Your initial term would be for up to five years. On the fifth anniversary of your appointment we would agree with you whether it was appropriate for you to continue for up to another five years. All Non-Executive Directors have an annual review with the Chairman.
	As your appointment has been made by the Board rather than the shareholders in general meeting you are required, under the Companies Act, to seek re-election at our 2001 Annual General Meeting. As with all Directors you will then be required to seek re-election by rotation approximately every three years.

Barclays PLC. Registered in England. Registered No: 48839. Registered Office: 54 Lombard Street, London EC3P 3AH

Stephen Russell Esq
The Boots Company Plc

24 October 2000

	Your appointment as a Non-Executive Director may be terminated by us on six months notice (or immediately on payment of six months fees in lieu of notice) but would automatically terminate without any entitlement to notice or payment should you not be re-elected by Barclays PLC shareholders and/or should you be removed or, other than at our request, resign as a Director. Should you wish to resign your appointment you are required to give us not less than six months notice.
3.	Committees
	You will be expected, in due course, at the invitation of the Chairman, to serve as a member of one or more of the Board Committees. Additional fees will be paid for membership and attendance at these meetings.
4.	Directors Share Qualification
	You should also be aware that under our Articles of Association you would be required to hold 500 Barclays shares within two months of your appointment. Obviously your Woolwich shares will be exchanged for Barclays shares but if you would like any assistance in acquiring the remainder needed please speak to my deputy, Alison Dillon on 020 7699 2454.
5.	Administration
	The ‘Forms for Directors’ folder contains various forms and questionnaires which we have completed with the help of Chris Fletcher-Smith of Woolwich. I would be grateful if you would review them, sign them where indicated and return them to Alison Dillon.
	If you need any assistance in completing these forms please give Alison a call and she will be happy to help.
	Please could you also provide three copies of a recent photograph, size 6” x 4”.
6.	Induction
	Enclosed with this letter is a ‘Directors Information’ pack. If you would like any further information or would find it helpful, to gain an early understanding of the structure and business of the Barclays Group, to meet some of the key members of our senior management team then please contact Alison Dillon and she will make the necessary arrangements.
	Also enclosed is a copy of our Group Governance Manual which describes the flow of authority from the Boards of Barclays PLC and Barclays Bank PLC to the Business Groupings and explains how the Group is controlled. The next update of the Manual, taking into account Valued Based Management and the integration of the Woolwich business is planned for the end of this year.

- 2 -

Stephen Russell Esq
The Boots Company Plc

24 October 2000

I would be grateful if you would confirm receipt of this letter, and your acceptance of the conditional appointment as set out, by signing and returning the enclosed copy.

I am available at any time to provide any support and information you may need.

Yours sincerely

Encs

Signed:
	STEPHEN RUSSELL
Date:

- 3 -

EX-4.19

Exhibit 4.19

Exhibit 4.19

	Group Corporate Secretariat 54 Lombard Street London EC3P 3AH
26 July 2002 Dr Jurgen Zech Detail Omitted	Tel +44 (0) 20 7699 5000 Fax +44 (0) 870 242 2733 patrick.gonsalves@barclays.co.uk

Dear Dr Zech

I am writing to you with respect to your appointment as a Director of Barclays PLC and Barclays Bank PLC and also to provide you with some further information which you will need once your appointment has been confirmed on 30 July 2002.

1.	Announcement
	I enclose a copy of the draft London Stock Exchange announcement which we will issue following your agreement and the confirmation of your appointment on 30 July 2002. I also enclose some questions that may be asked by the press and suggested answers that have been prepared by our Public Relations Department and I would be grateful for your comments. If you have any questions about the announcement, please contact me or Chris Tucker in our Public Relations Department (020 7699 3161).
2.	Fees
	As a Non-Executive Director you will receive a fee of £50,000 per annum, payable monthly in arrears by direct credit into your nominated bank account. In the event that you hold office for part of the year the fees shall be pro-rated accordingly on the basis of one twelfth for each complete or part month served. £20,000 of this fee will be paid in the form of Barclays PLC shares. You will see that in the folder entitled ‘Forms for Directors’ there is an agreement setting out details in respect of this remuneration in Barclays PLC shares which you are asked to sign and return. Any reasonable out of pocket expenses that you incur in performing your duties as a Director will be reimbursed in accordance with our expenses policy.
3.	Terms of Your Appointment
	Your appointment as a Non-Executive Director has been made by the Board rather than the shareholders in general meeting. In consequence, you are required, under the Companies Act 1985 to seek re-election at the Barclays Annual General Meeting in April 2003. As with all the directors you will then be required to seek re-election by rotation every three years.

Barclays PLC. Registered in England. Registered No: 48839. Registered Office: 54 Lombard Street. London EC3P 3AH

	Your initial term will be for up to five years. On or before the fifth anniversary of your appointment we will agree with you whether it is appropriate for you to continue for up to another five years. All Non-Executive Directors have an annual review with the Chairman.
	Your appointment as a Non-Executive Director may be terminated by us on six months notice (or immediately on payment of six months fees in lieu of notice) but would automatically terminate without any entitlement to notice or payment should you not be re-elected by Barclays PLC shareholders and/or should you be removed or, other than at our request, resign as a Director. Should you wish to resign your appointment you are required to give us not less than six months notice.
4.	Committees
	The Chairman may invite you in due course to serve as a member of one or more of the Board Committees. Additional fees will be paid for membership and attendance at these meetings and I enclose a schedule of the fee structure currently in operation.
5.	Directors Share Qualification
	Under our Articles of Association, you will be required to hold £500 in nominal value of Barclays shares within two months of your appointment. If you would like any assistance in buying these shares please speak to me. As a Director you will not be able to do this until after we have announced our interim results on 1 August 2002.
6.	Administration
	The ‘Forms for Directors’ folder contains various forms and questionnaires. I would be grateful if you would complete and sign them where indicated and return them to me.
	If you need any assistance in completing these forms please give me a call and I will be happy to help.
	Please could you also provide three copies of a recent photograph, size 6” x 4”.
7.	Induction
	As part of the induction of new Non-Executive Directors we would encourage you to meet some of the key members of our senior management team. Other Directors have found this a good way of gaining an early understanding of the structure and business of the Barclays Group. If you would find this helpful please contact me and I will make the necessary arrangements.
	Also enclosed is a copy of our Group Governance Manual on CD ROM which describes the flow of authority from the Boards of Barclays PLC and Barclays Bank PLC to the Businesses and explains how the Group is controlled.

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Copies of the 2001 Annual Report and the 2001 Annual Review and Summary Financial Statement are also enclosed for your information.

I would be grateful if you would confirm receipt of this letter, and your acceptance of the conditional appointment as set out, by signing and returning the enclosed copy.

I am available at any time to provide any support and information you may need.

Kind regards

Yours sincerely

Patrick Gonsalves
Deputy Group Secretary

Direct Line: +44 (0) 20 7699 3512

Enc.

Signed:
	DR JURGEN ZECH
Date:

- 3 -

EX-4.20

Exhibit 4.20

Exhibit 4.20

Lawrence Dickinson
Group Secretary

30 September 2004

Mr Leigh Clifford
Detail Omitted  
54 Lombard Street
London
EC3P 3AH

Tel 020 7699 2454
Fax 020 7699 3690

lawrence.dickinson@barclays.co.uk

Dear Leigh

I am writing to you about your appointment as a Director of Barclays PLC and Barclays Bank PLC with effect from 1 October 2004.

1. Fees

As a Non-Executive Director you will receive a fee of £50,000 per annum, payable monthly in arrears by direct credit into your nominated bank account. In the event that you hold office for part of the year the fees shall be pro-rated accordingly on the basis of one twelfth for each complete or part month served. £20,000 of this fee, after tax and national insurance, will be used to purchase Barclays PLC shares twice per year, in February and August. These shares will be held on your behalf until you leave the Board. Any reasonable out of pocket expenses that you incur in performing your duties as a Director (travelling expenses in attending Board meetings etc) will be reimbursed in accordance with our standard expenses policy. The Board (with the Non-Executive Directors abstaining) reviews the level of fees paid to Non-Executive Directors annually.

2. Terms of Your Appointment

The Directors, rather than the shareholders in general meeting, have appointed you to the Boards of Barclays PLC and Barclays Bank PLC. As a consequence, you are required to seek re-election at the Barclays PLC Annual General Meeting on 28 April 2005. As with all of the directors, you will then normally be required to seek re-election at least every three years.

Your initial term of office will be for up to six years. On or before the sixth anniversary of your appointment we will agree with you whether it is appropriate for you to continue for up to another three years. In addition, you will also have an annual review with the Chairman of your performance as a non-executive director. The Board has also adopted a formal system of self-evaluation, which is carried out on an annual basis.

Your appointment as a Non-Executive Director may be terminated by us on six months notice (or immediately on payment of six months fees in lieu of notice) but would automatically terminate without any entitlement to notice or payment if the Barclays PLC shareholders do not re-elect you whenever you

Barclays PLC Registered in England. Registered No: 48839. Registered Office: 54 Lombard Street. London EC3P 3AH

stand for re-election and/or if you are removed from office by the shareholders. The Board shall also reserve the right to reconsider your appointment as a Director and therefore to terminate your appointment forthwith should there be any material change to your personal circumstances that the Board believes may affect your appointment as a Director of Barclays PLC and Barclays Bank PLC. A material change shall include, but not be limited to, the following:

• Where you resign, retire or are removed from office from any of your other external appointments (including, but not limited to, any other directorships).

• Where you are appointed to any other company, corporate body or other entity (internal or external), which has not been agreed in advance with the Chairman.

• Where an incident occurs, which the Board considers could adversely affect the reputation of the Group.

Where such a material change occurs, you must inform the Chairman as soon as possible.

Should you wish to resign your appointment, you are required to give us not less than six months notice.

3. Role

Attached to this letter is a role profile for non-executive directors, which has been agreed by the Board. The Board may change this role profile from time to time and the role profile as amended shall, once notified to you, be deemed to form part of this letter in place of the document attached.

4. Time Commitment

The Board normally meets formally 10 times a year, including a full day strategy session in November, and will otherwise meet on an ad-hoc basis as required. Directors are also expected to attend the Barclays AGM, which is held at the end of April each year, and be available afterwards to meet with and answer the questions of shareholders.

Directors are expected to attend each meeting of the Board, including those called on an ad-hoc basis to discuss urgent matters, and to set aside sufficient time to consider the papers in respect of those meetings which are normally sent to Directors in the week prior to the meeting. On average, we would expect Board matters to take approximately 20-25 working days of your time per annum, not including any membership of Board Committees.

5. Directors Share Qualification

Under our Articles of Association, you will be required to hold £500 in nominal value (2,000 ordinary shares of 25p each) of Barclays shares within two months of your appointment (on or before 30 November 2004). If you would like any assistance in buying these shares please speak to me. If you already hold Barclays shares, please let me know as soon as possible so that we can update the statutory register of Directors’ interests and make the necessary announcement under the UKLA’s Listing Rules.

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6. Induction and support

Your induction programme has recently started and will be continuing. Ongoing training and briefings on particular topics will be made available at your request. The services of the Group Secretary and the Group Corporate Secretariat are available to assist you with both day-to-day and specific matters in your role as a director of Barclays. Also, should you feel that there maybe implications for you personally in carrying out the duties of your directorship, you may seek independent advice on any matter, at the Group’s expense.

7. Indemnity

I confirm that you can rely on the indemnity contained in Article 160 of Barclays’ Articles of Association. In outline, the effect of that Article (as restricted by relevant statutory provisions) is to provide an indemnity in respect of certain liabilities incurred by you in the execution of your duties, provided that the liability does not arise by virtue of your negligence, default, breach of duty or breach of trust in relation to the Bank. A copy of the indemnity wording is attached to this letter. The indemnity is of course in addition to any other protection available to you by virtue of provisions of statute, common law or indeed any specific contract.

8. Top 15 shareholders

We are offering our top 15 shareholders the opportunity to meet with you, in line with corporate governance best practice as set out in the Combined Code. I will of course advise you if any shareholders ask to take up this offer although I would not expect this based on previous experience.

I should be grateful if you would confirm receipt of this letter, and your acceptance of the conditional appointments as set out, by signing and returning the enclosed copy. I am available at any time to provide any information you may need.

Yours sincerely

Lawrence Dickinson
Group Secretary

- 3 -

I agree to the terms and conditions of my appointment as set out in this letter.

Signed:	(Leigh Clifford)
Date:

- 4 -

ROLE OF NON-EXECUTIVE DIRECTORS

The Board is responsible to shareholders for creating and delivering sustainable shareholder value through the management of the Group’s business. It should therefore determine the objectives and policies of the Group to deliver such long-term value, providing overall strategic direction within a framework of rewards, incentives and controls. It is important that the Board strikes the appropriate balance between promoting long-term growth and shorter-term interests.

A key area is the Board’s responsibility to maintain a system of internal control which provides reasonable assurance of effective and efficient operations, internal financial control and compliance with law and regulation. Regard must be had to what is appropriate for the Group’s businesses, the materiality of the financial risks inherent in the businesses and the relative costs and benefits of implementing specific controls.

The Board is also the decision making body for all other matters of such importance as to be of significance to the Group as a whole because of their financial or reputational implications or consequences. To enable it to make decisions effectively, Board members must be advisers, questioners and problem-solvers and must actively participate in a decision-making role to ensure the overall success of the Group.

Non-executive Directors complement the skills and experience of the executive Board team and the Executive Directors’ detailed knowledge of the business, generally being more involved in formulating policies and taking high level decisions on the recommendation of the Executive Directors. In particular, they add value by bringing to bear on an impartial basis a different range of knowledge, experience and insight from other industries, including those which may conduct related activities, provided that these do not lead to a conflict for the Directors concerned. Non-executive Directors also have a role in monitoring that decisions conform to agreed policy.

Under English Law, Non-executive Directors share the same responsibilities and are subject to the same legal constraints as Executive Directors. The key duties of Directors include:

a)	at all times acting not only in good faith and honesty but also in the company’s best interests and not for any ulterior purpose or to benefit themselves or others at the company’s expense;
b)	avoiding a conflict of interest between their personal interests and their duties to the company;
c)	exercising reasonable skill and care in carrying out their duties commensurate with their knowledge and experience;
d)	having regard to the interests of employees; and
e)	ensuring that the company does everything that is required of it by law and regulation e.g. ensuring the preparation of accounts which give a true and fair view of the state of affairs of the Group at the end of each financial year.

Directors of Barclays PLC and Barclays Bank PLC owe both fiduciary duties and also general duties of skill and care to each of those companies as a whole. In fulfilling their responsibilities, Directors may take independent professional advice at the expense of the Group. This may be arranged directly by the Directors but it is normally appropriate for independent advice to be arranged in the first instance through the Group Secretary.

Non-executive Directors are also responsible for carrying out the controlled function of a Non-executive Director as defined by the Financial Services and Markets Act 2000.

Group Corporate Secretariat

FORM OF INDEMNITY WORDING

(Extracted from Article 160 of the Barclays PLC Articles of Association)

Indemnity and insurance for directors and other officers

160 (a)

Subject to the provisions of the statutes, but without prejudice to any indemnity to which he or she may otherwise be entitled, every director, other officer and auditor of the company and every former director, other former officer and former auditor of the company shall be indemnified out of the assets of the company against any liability, loss or expenditure incurred by him or her in the actual or purported execution and/or discharge of his or her duties and/or the exercise or purported exercise of his or her powers and/or otherwise in relation to or in connection with his or her duties, powers or office including (without prejudice to the foregoing) any liability incurred by him or her in defending any proceedings, whether civil or criminal, which relate to anything done or omitted to be done or alleged to have been done or omitted to be done by him or her as a director, officer or auditor of the company and in which judgment is given in his or her favour or in which he or she is acquitted or which are otherwise disposed of without any finding or admission of guilt or breach of duty on his or her part or incurred in connection with any application in which relief is granted to him or her by the court from liability in respect of any such act or omission or from liability to pay any amount in respect of shares acquired by a nominee of the company.

(b)

To the extent permitted by the statutes, the board may arrange and maintain insurance cover at the cost of the company in respect of any liability, loss or expenditure incurred by any director, other officer or auditor of the company in relation to anything done or alleged to have been done or omitted to be done by him or her as a director, officer or auditor.

EX-4.21

Exhibit 4.21

Exhibit 4.21

Lawrence Dickinson
Group Secretary

25 August 2004

Sir A Likierman
Detail Omitted
 
54 Lombard Street
London
EC3P 3AH

Tel 020 7699 2454
Fax 020 7699 3690
lawrence.dickinson@barclays.co.uk

Dear Sir Andrew

I am writing to you about your appointment as a Director of Barclays PLC and Barclays Bank PLC with effect from 1 September 2004.

1. Fees

As a Non-Executive Director you will receive a fee of £50,000 per annum, payable monthly in arrears by direct credit into your nominated bank account. In the event that you hold office for part of the year the fee shall be pro-rated accordingly on the basis of one twelfth for each complete or part month served. £20,000 of this fee, after tax and national insurance, will be used to purchase Barclays PLC shares twice per year, in February and August. These shares will be held on your behalf until you leave the Board. Any reasonable out of pocket expenses that you incur in performing your duties as a Director (travelling expenses in attending Board meetings etc) will be reimbursed in accordance with our standard expenses policy. The Board (with the Non-Executive Directors abstaining) reviews the level of fees paid to Non-Executive Directors annually.

2. Terms of Your Appointment

The Directors, rather than the shareholders in general meeting, have appointed you to the Boards of Barclays PLC and Barclays Bank PLC. As a consequence, you are required to seek re-election at the Barclays PLC Annual General Meeting on 28 April 2005. As with all of the directors, you will then normally be required to seek re-election at least every three years.

Your initial term of office will be for up to six years. On or before the sixth anniversary of your appointment we will agree with you whether it is appropriate for you to continue for up to another three years. In addition, you will also have an annual review with the Chairman of your performance as a non-executive director. The Board has also adopted a formal system of self-evaluation, which is carried out on an annual basis.

Your appointment as a Non-Executive Director may be terminated by us on six months notice (or immediately on payment of six months fees in lieu of notice) but would automatically terminate without any entitlement to notice or payment if the Barclays PLC shareholders do not re-elect you whenever you

Barclays PLS. Registered in England. Registered No: 48839. Registered Office: 54 Lombard Street London EC3P 3AH

stand for re-election and/or if you are removed from office by the shareholders. The Board shall also reserve the right to reconsider your appointment as a Director and therefore to terminate your appointment forthwith should there be any material change to your personal circumstances that the Board believes may affect your appointment as a Director of Barclays PLC and Barclays Bank PLC. A material change shall include, but not be limited to, the following:

• Where you resign, retire or are removed from office from any of your other external appointments (including, but not limited to, any other directorships).

• Where you are appointed to any other company, corporate body or other entity (internal or external), which has not been agreed in advance with the Chairman.

• Where an incident occurs, which the Board considers could adversely affect the reputation of the Group.

Where such a material change occurs, you must inform the Chairman as soon as possible.

Should you wish to resign your appointment, you are required to give us not less than six months notice.

3. Role

Attached to this letter is a role profile for non-executive directors, which has been agreed by the Board. The Board may change this role profile from time to time and the role profile as amended shall, once notified to you, be deemed to form part of this letter in place of the document attached.

4. Time Commitment

The Board normally meets formally 10 times a year, including a full day strategy session in November, and will otherwise meet on an ad-hoc basis as required. Directors are also expected to attend the Barclays AGM, which is held at the end of April each year, and be available afterwards to meet with and answer the questions of shareholders.

Directors are expected to attend each meeting of the Board, including those called on an ad-hoc basis to discuss urgent matters, and to set aside sufficient time to consider the papers in respect of those meetings which are normally sent to Directors in the week prior to the meeting. On average, we would expect Board matters to take approximately 20-25 working days of your time per annum, not including any membership of Board Committees.

5. Committees

As you know, you will serve as a member of the Board Audit Committee from 1 September 2004 onwards. The fee payable will be £15,000 per annum, wholly paid in cash. It is expected that the Board Audit Committee will meet at least four times a year. The planned meetings for the remainder of 2004 and for 2005 are set out at Tab 2 of Part B of the enclosed Appointment Pack.

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6. Directors Share Qualification

Under our Articles of Association, you will be required to hold £500 in nominal value (2,000 ordinary shares of 25p each) of Barclays shares within two months of your appointment (on or before 31 October 2004). If you would like any assistance in buying these shares please speak to me. If you already hold Barclays shares, please let me know as soon as possible so that we can update the statutory register of Directors’ interests and make the necessary announcement under the UKLA’s Listing Rules.

7. Induction and support

An induction programme has already been arranged for you. Ongoing training and briefings on particular topics are made available at your request. The services of the Group Secretary and the Group Corporate Secretariat are available to assist you with both day-to-day and specific matters in your role as a director of Barclays. Also, should you feel that there may be implications for you personally in carrying out the duties of your directorship, you may seek independent advice on any matter, at the Group’s expense.

8. Indemnity

I confirm that you can rely on the indemnity contained in Article 160 of Barclays’ Articles of Association. In outline, the effect of that Article (as restricted by relevant statutory provisions) is to provide an indemnity in respect of certain liabilities incurred by you in the execution of your duties, provided that the liability does not arise by virtue of your negligence, default, breach of duty or breach of trust in relation to the Bank. A copy of the indemnity wording is attached to this letter. The indemnity is of course in addition to any other protection available to you by virtue of provisions of statute, common law or indeed any specific contract.

9. Top 20 shareholders

We are offering our top 20 shareholders the opportunity to meet with you, in line with corporate governance best practice as set out in the Combined Code. I will of course advise you if any shareholders ask to take up this offer although I would not expect this based on previous experience.

I should be grateful if you would confirm receipt of this letter, and your acceptance of the conditional appointments as set out, by signing and returning the enclosed copy. I am available at any time to provide any information you may need.

Yours sincerely

Lawrence Dickinson
Group Secretary

- 3 -

I agree to the terms and conditions of my appointment as set out in this letter.

Signed:		(Sir Andrew Likierman)
Date:	30.8.04

- 4 -

ROLE OF NON-EXECUTIVE DIRECTORS

The Board is responsible to shareholders for creating and delivering sustainable shareholder value through the management of the Group’s business. It should therefore determine the objectives and policies of the Group to deliver such long-term value, providing overall strategic direction within a framework of rewards, incentives and controls. It is important that the Board strikes the appropriate balance between promoting long-term growth and shorter-term interests.

A key area is the Board’s responsibility to maintain a system of internal control which provides reasonable assurance of effective and efficient operations, internal financial control and compliance with law and regulation. Regard must be had to what is appropriate for the Croup’s businesses, the materiality of the financial risks inherent in the businesses and the relative costs and benefits of implementing specific controls.

The Board is also the decision making body for all other matters of such importance as to be of significance to the Group as a whole because of their financial or reputational implications or consequences. To enable it to make decisions effectively, Board members must be advisers, questioners and problem-solvers and must actively participate in a decision-making role to ensure the overall success of the Group.

Non-executive Directors complement the skills and experience of the executive Board team and the Executive Directors’ detailed knowledge of the business, generally being more involved in formulating policies and taking high level decisions on the recommendation of the Executive Directors. In particular, they add value by bringing to bear on an impartial basis a different range of knowledge, experience and insight from other industries, including those which may conduct related activities, provided that these do not lead to a conflict for the Directors concerned. Non-executive Directors also have a role in monitoring that decisions conform to agreed policy.

Under English Law, Non-executive Directors share the same responsibilities and are subject to the same legal constraints as Executive Directors. The key duties of Directors include:

a)	at all times acting not only in good faith and honesty but also in the company’s best interests and not for any ulterior purpose or to benefit themselves or others at the company’s expense;
b)	avoiding a conflict of interest between their personal interests and their duties to the company;
c)	exercising reasonable skill and care in carrying out their duties commensurate with their knowledge and experience;
d)	having regard to the interests of employees; and
e)	ensuring that the company does everything that is required of it by law and regulation e.g. ensuring the preparation of accounts which give a true and fair view of the state of affairs of the Group at the end of each financial year.

Directors of Barclays PLC and Barclays Bank PLC owe both fiduciary duties and also general duties of skill and care to each of those companies as a whole. In fulfilling their responsibilities, Directors may take independent professional advice at the expense of the Group. This may be arranged directly by the Directors but it is normally appropriate for independent advice to be arranged in the first instance through the Group Secretary.

Non-executive Directors are also responsible for carrying out the controlled function of a Non-executive Director as defined by the Financial Services and Markets Act 2000.

Group Corporate Secretariat

FORM OF INDEMNITY WORDING

(Extracted from Article 160 of the Barclays PLC Articles of Association)

Indemnity and insurance for directors and other officers

160 (a)

Subject to the provisions of the statutes, but without prejudice to any indemnity to which he or she may otherwise be entitled, every director, other officer and auditor of the company and every former director, other former officer and former auditor of the company shall be indemnified out of the assets of the company against any liability, loss or expenditure incurred by him or her in the actual or purported execution and/or discharge of his or her duties and/or the exercise or purported exercise of his or her powers and/or otherwise in relation to or in connection with his or her duties, powers or office including (without prejudice to the foregoing) any liability incurred by him or her in defending any proceedings, whether civil or criminal, which relate to anything done or omitted to be done or alleged to have been done or omitted to be done by him or her as a director, officer or auditor of the company and in which judgment is given in his or her favour or in which he or she is acquitted or which are otherwise disposed of without any finding or admission of guilt or breach of duty on his or her part or incurred in connection with any application in which relief is granted to him or her by the court from liability in respect of any such act or omission or from liability to pay any amount in respect of shares acquired by a nominee of the company.

(b)

To the extent permitted by the statutes, the board may arrange and maintain insurance cover at the cost of the company in respect of any liability, loss or expenditure incurred by any director, other officer or auditor of the company in relation to anything done or alleged to have been done or omitted to be done by him or her as a director, officer or auditor.

EX-4.22

Exhibit 4.22

Exhibit 4.22

Howard Trust Group General Counsel and Group Secretary   24 October 2000 Sir Brian Jenkins Detail Omitted	54 Lombard Street London EC3P 3AH Tel 020 7699 2953 Fax 020 7699 3414 howard.trust@barclays.co.uk

Dear Sir Brian,

I am writing to you formally to confirm your appointment as a Non-Executive Director and Deputy Chairman of Barclays PLC and Barclays Bank PLC. These appointments are conditional and will only become effective upon completion of the acquisition of Woolwich PLC which is expected to be on or about 25 or 26 October 2000.

1.	Fees
	As Deputy Chairman you will receive a fee of £100,000 per annum, payable monthly in arrears by direct credit into your nominated bank account. You will be expected to devote not less than 2 days each week to the business of the Barclays Group (including attendance at Board, Board committee or subsidiary board meetings, including Woolwich of which you will continue as a Director, as required). I attach a brief role description for this position. In the event that you hold office for part of the year the fees shall be pro-rated accordingly on the basis of one twelfth for each complete or part month served. £7,500 (net of tax) of this fee will be received in the form of Barclays PLC shares. You will see that in the folder entitled ‘Forms for Directors there is an agreement setting out details in respect of this remuneration in Barclays PLC shares which you are asked to sign and return. Any reasonable out of pocket expenses that you incur in performing your duties as a director will be reimbursed in accordance with our expenses policy.
2.	Benefits
	You will be provided with an office and secretarial support to assist you in carrying out this role. For the time being, the arrangements currently in place at The Strand will be retained. We will also make a chauffeur driven car available to you for the conduct of Group business.
3.	Terms of Your Appointment
	Your appointments as a Non-Executive Director and Deputy Chairman have been made by the Board to be effective when the acquisition of Woolwich is completed. Your initial term would be for up to five years. On the fifth anniversary of your appointment we would agree with you whether it was

Barclays PLC. Registered in England. Registered No: 48839. Registered Office: 54 Lombard Street. London EC3P 3AH

Sir Brian Jenkins
Woolwich PLC

24 October 2000

	appropriate for you to continue for up to another five years. All Non-Executive Directors have an annual review with the Chairman.
	As your appointments have been made by the Board rather than the shareholders in general meeting you are required, under the Companies Act, to seek re-election at our 2001 Annual General Meeting. As with all Directors you will then be required to seek re-election by rotation approximately every three years.
	Your appointments as a Non-Executive Director and a Deputy Chairman may be terminated by us on six months notice (or immediately on payment of six months fees in lieu of notice) but would automatically terminate without any entitlement to notice or payment should you not be re-elected by Barclays PLC shareholders and/or should you be removed or, other than at our request, resign as a Director. Should you wish to resign your appointment you are required to give us not less than six months notice.
4.	Committees
	I understand from Sir Peter Middleton that he has invited you to serve as a member of the Remuneration and Nominations Committees. No additional fees will be paid for these appointments.
5.	Directors Share Qualification
	You should also be aware that under our Articles of Association you would be required to hold 500 Barclays shares within two months of your appointment. Obviously your Woolwich shares will be exchanged for Barclays shares but if you would like any assistance in acquiring the remainder needed please speak to my deputy, Alison Dillon on 020 7699 2454.
6.	Administration
	Folder ‘Forms for Directors’ contains various forms and questionnaires which we have completed with the help of Chris Fletcher-Smith of Woolwich. I would be grateful if you would review them, sign them where indicated and return them to Alison Dillon.
	If you need any assistance in completing these forms please give Alison a call and she will be happy to help.
	Please could you also provide three copies of a recent photograph, size 6” x 4”.
7.	Induction
	Enclosed with this letter is a ‘Directors Information’ pack. If you would like any further information or would find it helpful, to gain an early understanding of the structure and business of the Barclays Group, to meet some of the key members of our senior management team then please contact Alison Dillon and she will make the necessary arrangements.

- 2 -

Sir Brian Jenkins
Woolwich PLC

24 October 2000

Also enclosed is a copy of our Group Governance Manual which describes the flow of authority from the Boards of Barclays PLC and Barclays Bank PLC to the Business Groupings and explains how the Group is controlled. The next update of the Manual, taking into account Valued Based Management and the integration of the Woolwich business is planned for the end of this year.

I would be grateful if you would confirm receipt of this letter, and your acceptance of the conditional appointment as set out, by signing and returning the enclosed copy.

I am available at any time to provide any support and information you may need.

Yours sincerely

Encs

Signed:
	SIR BRIAN JENKINS
Date:

- 3 -

The Role of a Deputy Chairman

At the request of the Chairman, or in his absence the Group Chief Executive, the Deputy Chairman deputises for the Chairman in respect of the authorities and responsibilities confirmed or delegated by the Board. He will also serve on such committees and such subsidiary boards as requested by the Chairman. He reports in the execution of his responsibilities to the Chairman.

Group Corporate Secretariat
October 2000

EX-4.23

Exhibit 4.23

Exhibit 4.23

BARCLAYS BANK PLC

54 LOMBARD STREET

LONDON EC3P 3AH

Mrs H.M. Cropper
Detail Omitted
	17th March, 1998

Further to my telephone call of yesterday, I am writing to confirm that I would very much like you to join the Barclays PLC Board as a non-executive Director.

The Barclays Board normally meets ten times a year for formal Board meetings – in each month apart from May and September. In addition, there is a formal meeting for the Annual General Meeting at the end of April. It has been our recent practice to have one Board meeting a year outside London; last year that meeting was held in Coventry and this year will be held in Leeds. One meeting a year – normally the June meeting – is a whole day meeting concentrating on strategy but other Board meetings commence at 10:00 a.m. and are finished by 1:00 p.m.

This year the Board will be visiting New York for its October meeting and there is currently a plan to visit Harare in 1999, either in April or June.

The two main Committees of the Board are the Remuneration Committee and the Audit Committee and I expect all of our non-executive Directors to service on one of those Committees. Each of those Committees meets up to four times a year with Committee meetings being dovetailed with Board meetings, as far as possible.

Continued...

Regulated by IMRO and the Personal Investment Authority.
Barclays Bank PLC represents only the Barclays Marketing Group for life assurance, pensions and unit trust business.
Registered in London, England. Reg. No: 1026167. Reg. Office: 54 Lombard Street, London EC3P 3AH

The current Board fee for a non-executive Director is £26,000 per annum, plus a Committee membership fee of £3,000 per annum. In addition, a non-executive Director is paid £1,000 for each Committee attendance. A proposal will go to the Board at the beginning of April for the base fee to be raised to £31,000 per annum with the whole of the extra £5,000 per annum being paid in shares, which may not be sold until the Director leaves the Board.

Non-executive Directors are appointed initially for a period of five years, purely for the purpose of reviewing the position at that stage. It would be the intention of Barclays that you should serve longer. Non-executive Directors do not normally serve behind the age of 65.

I hope that you will be willing to join us. My colleagues and I will be extremely pleased if you take that step.

A.R.F. Buxton

-Page 2-

EX-7.1

Exhibit 7.1

EXHIBITS RATIO OF EARNINGS UNDER UK GAAP TO FIXED CHARGES Exhibit 7.1

	Year ended 31st December
	2004			2003			2002		2001		2000
	(in £ millions except for ratios)
Fixed Charges
Total Interest excluding interest on trading liabilities and interest on deposits		2,080			1,877			2,045		2,669		1,896
Interest on trading liabilities		7,414			4,933			4,297		5,824		5,024
One third of rental expense		91			85			87		95		74
Total fixed charges excluding interest on deposits		9,585			6,895			6,429		8,588		6,994
Interest on deposits and current accounts		4,741			3,944			3,811		4,818		4,778
Total fixed charges including interests on deposits		14,326			10,839			10,240		13,406		11,772
EARNINGS
Income before taxes and minority interests (a)		4,603			3,845			3,205		3,425		3,392
Fixed charges excluding interest on deposits		9,585			6,895			6,429		8,588		6,994
		14,188			10,740			9,634		12,013		10,386
Less
Unremitted pre-tax loss/(income) of associated companies and joint ventures		(44	)		(21	)		11		13		14
Total earnings excluding interest on deposits		14,144			10,719			9,645		12,026		10,400
Interest on deposits and current accounts		4,741			3,944			3,811		4,818		4,778
Total earnings including interest on deposits		18,885			14,663			13,456		16,844		15,178
RATIO OF EARNINGS TO FIXED CHARGES
Excluding interest on deposits		1.48			1.55			1.50		1.40		1.49
Including interest on deposits		1.32			1.35			1.31		1.26		1.29

Note

a) There was a difference in the income before tax and minority interests in 2004 between Barclays PLC and Barclays Bank PLC of £9m (2003: nil, 2002-2001 £2m, 2000: nil). There is no impact on the above ratios as a result of this difference.

EX-7.2

Exhibit 7.2

EXHIBITS RATIOS OF EARNINGS UNDER US GAAP TO FIXED CHARGES Exhibit 7.2

	Year ended 31st December
	2004			2003			2002		2001		2000
	(in £ millions except for ratios)
Fixed Charges
Total Interest excluding interest on trading liabilities and interest on deposits		1,946			1,732			1,896		2,532		1,849
Interest on trading liabilities		7,414			4,933			4,297		5,824		5,024
One third of rental expense		91			85			87		95		74
Total fixed charges excluding interest on deposits		9,451			6,750			6,280		8,451		6,947
Interest on deposits and current accounts		4,741			3,944			3,811		4,818		4,778
Total fixed charges including interests on deposits		14,192			10,694			10,091		13,269		11,725
EARNINGS
Income before taxes and minority interests (a)		4,603			3,845			3,205		3,425		3,392
UK/US GAAP adjustments (b)		(234	)		(1,544	)		261		396		(83	)
Payments to Reserve Capital Instrument holders		137			145			149		138		47
		4,506			2,446			3,615		3,959		3,356
Fixed charges excluding interests on deposits		9,451			6,750			6,280		8,451		6,947
		13,957			9,196			9,895		12,410		10,303
Less
Unremitted pre-tax loss/(income) of associated companies and joint ventures		(44	)		(21	)		11		13		14
Total earnings excluding interest on deposits		13,913			9,175			9,906		12,423		10,317
Interest on deposits and current accounts		4,741			3,944			3,811		4,818		4,778
Total earnings including interest on deposits		18,654			13,119			13,717		17,241		15,095
RATIO OF EARNINGS TO FIXED CHARGES
Excluding interest on deposits		1.47			1.36			1.58		1.47		1.49
Including interest on deposits		1.31			1.23			1.36		1.30		1.29

Notes

a)	There was a difference in the income before tax and minority interests in 2004 between Barclays PLC and Barclays Bank PLC of £9m (2003: nil, 2002-2001 £2m, 2000: nil). There is no impact on the above ratios as a result of this difference.
b)	For a discussion of significant differences between UK GAAP and US GAAP and a reconciliation of net income between amounts calculated under UK GAAP and those estimated under US GAAP, see note 52 of the accounts included herein.

EX-7.3

Exhibit 7.3

EXHIBITS	Exhibit 7.3
RATIOS OF EARNINGS UNDER UK GAAP TO COMBINED FIXED CHARGES AND PREFERENCE SHARE DIVIDENDS

	Year ended 31st December
	2004			2003			2002		2001		2000
	(in £ millions except for ratios)
COMBINED FIXED CHARGES AND PREFERENCE SHARE DIVIDENDS
Total Interest excluding interest on trading liabilities and interest on deposits		2,080			1,877			2,045		2,669		1,896
Interest on trading liabilities		7,414			4,933			4,297		5,824		5,024
One third of rental expense		91			85			87		95		74
Preference share dividends		3			—			—		7		33
Total fixed charges excluding interest on deposits		9,588			6,895			6,429		8,595		7,027
Interest on deposits and current accounts		4,741			3,944			3,811		4,818		4,778
Total fixed charges including interests on deposits		14,329			10,839			10,240		13,413		11,805
EARNINGS
Income before taxes and minority interests (a)		4,603			3,845			3,205		3,425		3,392
Fixed charges excluding interests on deposits		9,588			6,895			6,429		8,588		6,994
		14,191			10,740			9,634		12,013		10,386
Less
Unremitted pre-tax loss/(income) of associated companies and joint ventures		(44	)		(21	)		11		13		14
Total earnings excluding interest on deposits		14,147			10,719			9,645		12,026		10,400
Interest on deposits and current accounts		4,741			3,944			3,811		4,818		4,778
Total earnings including interest on deposits		18,888			14,663			13,456		16,844		15,178
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERENCE SHARE DIVIDEND
Excluding interest on deposits		1.48			1.55			1.50		1.40		1.48
Including interest on deposits		1.32			1.35			1.31		1.26		1.29

Notes

a) There was a difference in the income before tax and minority interests in 2004 between Barclays PLC and Barclays Bank PLC of £9m (2003: nil, 2002-2001 £2m, 2000: nil). There is no impact on the above ratios as a result of this difference.

EX-7.4

Exhibit 7.4

EXHIBITS	Exhibit 7.4
RATIOS OF EARNINGS UNDER US GAAP TO COMBINED FIXED CHARGES, PREFERENCE SHARE DIVIDENDS AND PAYMENTS TO RESERVE CAPITAL INSTRUMENT HOLDERS

	Year ended 31st December
	2004			2003			2002		2001		2000
	(in £ millions except for ratios)
COMBINED FIXED CHARGES, PREFERENCE SHARE DIVIDENDS AND PAYMENTS TO RESERVE CAPITAL INSTRUMENT HOLDERS
Total Interest excluding interest on trading liabilities and interest on deposits		1,946			1,732			1,896		2,532		1,849
Interest on trading liabilities		7,414			4,933			4,297		5,824		5,024
One third of rental expense		91			85			87		95		74
Preference share dividends and payments to Reserve Capital Instrument holders		96			102			104		104		66
Total fixed charges excluding interest on deposits		9,547			6,852			6,384		8,555		7,013
Interest on deposits and current accounts		4,741			3,944			3,811		4,818		4,778
Total fixed charges including interests on deposits		14,288			10,796			10,195		13,373		11,791
EARNINGS
Income before taxes and minority interests (a)		4,603			3,845			3,205		3,425		3,392
UK/US GAAP adjustments (b)		(234	)		(1,544	)		261		396		(83	)
Payments to Reserve Capital Instrument Holders		137			145			149		138		47
		4,506			2,446			3,615		3,959		3,356
Fixed charges excluding interests on deposits		9,451			6,750			6,280		8,451		6,947
		13,957			9,196			9,895		12,410		10,303
Less
Unremitted pre-tax loss/(income) of associated companies and joint ventures		(44	)		(21	)		11		13		14
Total earnings excluding interest on deposits		13,913			9,175			9,906		12,423		10,317
Interest on deposits and current accounts		4,741			3,944			3,811		4,818		4,778
Total earnings including interest on deposits		18,654			13,119			13,717		17,241		15,095
RATIO OF EARNINGS TO COMBINED FIXED CHARGES, PREFERENCE SHARE DIVIDENDS AND PAYMENTS TO RESERVE CAPITAL INSTRUMENTS HOLDERS
Excluding interest on deposits		1.46			1.34			1.55		1.45		1.47
Including interest on deposits		1.31			1.22			1.35		1.29		1.28

Notes

a)	There was a difference in the income before tax and minority interests in 2004 between Barclays PLC and Barclays Bank PLC of £9m (2003: nil, 2002-2001 £2m, 2000: nil). There is no impact on the above ratios as a result of this difference.
b)	For a discussion of significant differences between UK GAAP and US GAAP and a reconciliation of net income between amounts calculated under UK GAAP and those estimated under US GAAP, see note 52 of the accounts included herein.

EX-8.1

Exhibit 8.1

Exhibit 8.1

This exhibit contains a list of subsidiaries of Barclays PLC and Barclays Bank PLC and their jurisdiction of incorporation. This list is not complete. Any subsidiaries not included in the list would not, in the aggregate, constitute a “significant subsidiary” as defined in Rule 1-02(w) of Regulation S-X as of December 31, 2004

Jurisdiction	Company
United Kingdom	54 Lombard Street Investments Limited
United Kingdom	Abecor (Europe) Limited
United Kingdom	Adam One Limited
United Kingdom	Adam Three Limited
United Kingdom	Adam Two Limited
United Kingdom	Airlease International Management Limited (in liquidation)
United Kingdom	Albert E Sharp Limited
United Kingdom	Allied Provincial P.E.P. (Nominees) Limited
United Kingdom	Allied Trust Limited
United Kingdom	Andromeda Finance (in Liquidation)
United Kingdom	Antlia Shipping LTD Partnership
United Kingdom	Appleyard Finance Holdings Limited
United Kingdom	APS Standby Nominees Limited
United Kingdom	Aquarius Shipping LTD Partnership
United Kingdom	Aquila Shipping LTD Partnership
United Kingdom	Aribage Limited
United Kingdom	Aries Shipping LTD Partnership
United Kingdom	Ashford Great Park (Phase I) Limited
United Kingdom	AUK
United Kingdom	Avontrail Limited (In Liquidation)
United Kingdom	B D & B Investments Limited
United Kingdom	B. Invest Limited
United Kingdom	B.P.B. (Holdings) Limited
United Kingdom	Banestar Limited
United Kingdom	Barafor Limited
United Kingdom	Barclay Assets Limited
United Kingdom	Barclay Leasing Limited
United Kingdom	Barclay Projects Limited
United Kingdom	Barclaycard Funding PLC
United Kingdom	Barclaycard Services Limited (In Liquidation)
United Kingdom	Barclays (CB) Limited
United Kingdom	Barclays (Security Realisation) Limited
United Kingdom	Barclays Administration Services Limited
United Kingdom	Barclays Aerospace Investment Limited
United Kingdom	Barclays Aerospace Investment Management Limited
United Kingdom	Barclays Aldersgate Investments Limited
United Kingdom	Barclays Alma Mater General Partner Limited
United Kingdom	Barclays Amarillo Investments Limited
United Kingdom	Barclays Angel Investments Limited (in liquidation)
United Kingdom	Barclays Asset Finance Limited
United Kingdom	Barclays Asset Management Limited (in Liquidation)
United Kingdom	Barclays Asset Management Services Limited
United Kingdom	Barclays B2B.com Limited
United Kingdom	Barclays Bank (London and International) Limited (in liquidation)
United Kingdom	Barclays Bank International Investments Holdings Limited
United Kingdom	Barclays Bank PLC
United Kingdom	Barclays Bank Trust Company Limited
United Kingdom	Barclays Barbican Investments (in liquidation)
United Kingdom	Barclays Beaumont Investments Limited
United Kingdom	Barclays Business Credit Limited

Jurisdiction	Company
United Kingdom	Barclays Call Centre Services Limited (In Liquidation)
United Kingdom	Barclays Capital AMS (No.1) Limited
United Kingdom	Barclays Capital AMS (No.2) Limited
United Kingdom	Barclays Capital Finance Limited
United Kingdom	Barclays Capital Futures Limited
United Kingdom	Barclays Capital Futures Trading Limited
United Kingdom	Barclays Capital Leasing (No.165) Limited
United Kingdom	Barclays Capital Leasing (No.166) Limited
United Kingdom	Barclays Capital Margin Financing Limited
United Kingdom	Barclays Capital Nominees (No.2) Limited
United Kingdom	Barclays Capital Nominees (No.3) Limited
United Kingdom	Barclays Capital Nominees Limited
United Kingdom	Barclays Capital Overseas Limited
United Kingdom	Barclays Capital Pensions Limited
United Kingdom	Barclays Capital Principal Investments Limited
United Kingdom	Barclays Capital Projects Limited
United Kingdom	Barclays Capital Securities Limited
United Kingdom	Barclays Capital Services Limited
United Kingdom	Barclays Capital Worldwide Holdings Limited
United Kingdom	Barclays Carina Investments Limited
United Kingdom	Barclays Client Credit Limited
United Kingdom	Barclays Commercial Services (Holdings) Limited
United Kingdom	Barclays Commercial Services Limited
United Kingdom	Barclays Converted Investments Limited
United Kingdom	Barclays Darnay Euro Investments Limited
United Kingdom	Barclays Directors Limited
United Kingdom	Barclays Dorado Investments Limited
United Kingdom	Barclays E.B.S. Limited
United Kingdom	Barclays E.B.S. Managers Limited
United Kingdom	Barclays Equity Investments (BB&T) Company (in liquidation)
United Kingdom	Barclays European Infrastructure Limited
United Kingdom	Barclays Executive Schemes Trustees Limited
United Kingdom	Barclays Export and Finance Company Limited
United Kingdom	Barclays Export Services Limited
United Kingdom	Barclays Factoring Limited
United Kingdom	Barclays Finance Europe Limited
United Kingdom	Barclays Financial Management Limited
United Kingdom	Barclays Financial Planning Limited
United Kingdom	Barclays Financial Planning Nominee Company Limited
United Kingdom	Barclays Financial Services Limited
United Kingdom	Barclays Funds Limited
United Kingdom	Barclays Gift Plans Limited (In Liquidation)
United Kingdom	Barclays Global Investors Asset Risk Management Limited
United Kingdom	Barclays Global Investors Limited
United Kingdom	Barclays Global Investors Pensions Management Limited
United Kingdom	Barclays Global Investors Services Limited
United Kingdom	Barclays Global Investors UK Holdings Limited
United Kingdom	Barclays Group Holdings Limited
United Kingdom	Barclays Homemove Limited
United Kingdom	Barclays Industrial Development Limited
United Kingdom	Barclays Industrial Finance Limited
United Kingdom	Barclays Industrial Investments Limited
United Kingdom	Barclays Industrial Leasing Limited
United Kingdom	Barclays Infrastructure Limited
United Kingdom	Barclays Insurance Services Company Limited
United Kingdom	Barclays Investment (1992) Limited

Jurisdiction	Company
United Kingdom	Barclays Investment Management Limited
United Kingdom	Barclays Invoice Discounting Limited
United Kingdom	Barclays Leasing (No. 3) Limited
United Kingdom	Barclays Leasing (No. 6) Limited
United Kingdom	Barclays Leasing (No. 9) Limited
United Kingdom	Barclays Leasing (No.12) Limited
United Kingdom	Barclays Leasing (No.15) Limited
United Kingdom	Barclays Leasing (No.18) Limited
United Kingdom	Barclays Leasing (No.21) Limited
United Kingdom	Barclays Leasing (No.24) Limited
United Kingdom	Barclays Life Assurance Company Limited
United Kingdom	Barclays Mercantile Business Finance Limited
United Kingdom	Barclays Mercantile Highland Finance Limited
United Kingdom	Barclays Mercantile Limited
United Kingdom	Barclays Merchant Services Limited (In Liquidation)
United Kingdom	Barclays Metals (Investments) Limited
United Kingdom	Barclays Metals Limited
United Kingdom	Barclays Nominees (Aldermanbury) Limited
United Kingdom	Barclays Nominees (BGSS) Limited
United Kingdom	Barclays Nominees (Branches) Limited
United Kingdom	Barclays Nominees (Depository Services) Limited
United Kingdom	Barclays Nominees (George Yard) Limited
United Kingdom	Barclays Nominees (K.W.S.) Limited
United Kingdom	Barclays Nominees (Monument) Limited
United Kingdom	Barclays Nominees (Provincial) Limited
United Kingdom	Barclays Nominees (United Nations For UNJSPF) Limited
United Kingdom	Barclays Nominees Limited
United Kingdom	Barclays Overseas Pension Funds Trustees Limited
United Kingdom	Barclays Pension Funds Trustees Limited
United Kingdom	Barclays Physical Trading Limited
United Kingdom	Barclays PLC
United Kingdom	Barclays Private Bank Limited
United Kingdom	Barclays Private Banking Services Limited
United Kingdom	Barclays Private Equity Limited
United Kingdom	Barclays Private Trust Limited
United Kingdom	Barclays Programme Management Limited
United Kingdom	Barclays Programme Rentals Limited
United Kingdom	Barclays Property Holdings Limited
United Kingdom	Barclays PVLP Partner Limited
United Kingdom	Barclays Quest Trustees Limited
United Kingdom	Barclays RVCF Investments Limited
United Kingdom	Barclays Safe Deposit Centres Limited
United Kingdom	Barclays SAMS Limited
United Kingdom	Barclays Scotland Limited
United Kingdom	Barclays Services (Japan) Limited
United Kingdom	Barclays Sharedealing
United Kingdom	Barclays Special Partner Limited
United Kingdom	Barclays Sponsorship Company Limited
United Kingdom	Barclays Stockbrokers (Holdings) Limited
United Kingdom	Barclays Stockbrokers (Nominees) Limited
United Kingdom	Barclays Stockbrokers Limited
United Kingdom	Barclays Structured Finance Limited
United Kingdom	Barclays Systems Finance Limited
United Kingdom	Barclays Technology Finance Limited
United Kingdom	Barclays Trade-Finance Limited (In liquidation)
United Kingdom	Barclays Unicorn (Gift Plans) Limited

Jurisdiction	Company
United Kingdom	Barclays Unicorn (Trustees) Limited (In Liquidation)
United Kingdom	Barclays Unicorn Limited
United Kingdom	Barclays Unit Trust Services Limited
United Kingdom	Barclays Unquoted Investments Limited
United Kingdom	Barclays Unquoted Property Investments Limited
United Kingdom	Barclays Vehicle Management Services Limited
United Kingdom	Barclays Venture Nominees Limited
United Kingdom	Barclayshare Nominees Limited
United Kingdom	Barcosec Limited
United Kingdom	Bardco Property Investments Limited
United Kingdom	Barfranc Limited
United Kingdom	Barley Investments Limited
United Kingdom	Barley Showhomes Limited
United Kingdom	Barmac (Construction) Limited
United Kingdom	Barometers Limited
United Kingdom	Barsec Nominees Limited
United Kingdom	Barshelfco (BM No.1) Limited
United Kingdom	Barshelfco (BM No.2) Limited
United Kingdom	Barshelfco (No.1) PLC (in liquidation)
United Kingdom	Barshelfco (No.2) PLC (in liquidation)
United Kingdom	Barshelfco (No.61) Limited
United Kingdom	Barshelfco (TR No.3) Limited
United Kingdom	BEIF Management Limited
United Kingdom	Bevan Nominees Limited
United Kingdom	Bexco Limited
United Kingdom	BGI Investment Management Limited (in Liquidation)
United Kingdom	BLAC Limited
United Kingdom	BLAF (No. 2) Limited
United Kingdom	BLAF (No. 3) Limited
United Kingdom	BLAF (No. 4) Limited
United Kingdom	BLAF (No. 5) Limited
United Kingdom	BLAF (No. 7) Limited
United Kingdom	BLAF (No. 8) Limited
United Kingdom	BLAF (No. 9) Limited
United Kingdom	BLAF (No.10) Limited
United Kingdom	BLAF (No.11) Limited
United Kingdom	BLAF (No.18) Limited
United Kingdom	BM Dormant (No.5) Limited
United Kingdom	BM Dormant (No.6) Limited
United Kingdom	BMBF (Bluewater Investments) Limited
United Kingdom	BMBF (No. 3) Limited
United Kingdom	BMBF (No. 6) Limited
United Kingdom	BMBF (No. 9) Limited
United Kingdom	BMBF (No.12) Limited
United Kingdom	BMBF (No.15) Limited
United Kingdom	BMBF (No.18) Limited
United Kingdom	BMBF (No.21) Limited
United Kingdom	BMBF (No.24) Limited
United Kingdom	BMBF (No.30) Limited
United Kingdom	BMBF USD NO1 Limited
United Kingdom	BMI (No. 3) Limited
United Kingdom	BMI (No. 6) Limited
United Kingdom	BMI (No. 9) Limited
United Kingdom	BMI (No.18) Limited
United Kingdom	BMI Marine Limited
United Kingdom	BPE General Partner Limited

Jurisdiction	Company
United Kingdom	BPH Developments Limited
United Kingdom	BPH Investments Limited
United Kingdom	BUKIF Management Limited
United Kingdom	Byrom House Nominees Limited
United Kingdom	Camalot Cars Limited
United Kingdom	Capel Cure Sharp Fund Managers Limited
United Kingdom	Capel Cure Sharp Limited
United Kingdom	Capel-Cure Myers Financial Services Limited
United Kingdom	Capel-Cure Myers Nominees Limited
United Kingdom	Capel-Cure Myers Unit Trust Management (PEP Nominees) Limited
United Kingdom	Carnegie Financial Services Limited
United Kingdom	Carnegie Holdings Limited
United Kingdom	Carnegie SPV Limited
United Kingdom	Cassiopeia Finance Limited (in Liquidation)
United Kingdom	Chinnock Capital PLC
United Kingdom	City Merchant Developers Limited
United Kingdom	Claas Valtra Finance Limited
United Kingdom	Clearlybusiness.com Limited
United Kingdom	Clink Street Nominees Limited
United Kingdom	Clydesdale Finance Limited
United Kingdom	Clydesdale Financial Services Limited
United Kingdom	CMD Property Developments Limited (In Liquidation)
United Kingdom	CMD Property Group Limited (In Liquidation)
United Kingdom	Commensus Limited
United Kingdom	Commercial Property Corporation Limited
United Kingdom	Computer Equipment Rentals Limited
United Kingdom	Corrida Investments Limited
United Kingdom	Cosever Shipping Limited Partnership
United Kingdom	Cosfair Shipping Limited Partnership
United Kingdom	Cosluck Shipping Limited Partnership
United Kingdom	Costar Shipping Limited Partnership
United Kingdom	D C & O Investments Limited
United Kingdom	David McLean Showhomes Limited
United Kingdom	Debt Recovery Agents Limited
United Kingdom	Durlacher Nominees Limited
United Kingdom	E-Crossnet Limited
United Kingdom	Eagle Financial and Leasing Services (UK) Limited
United Kingdom	Eagle Leasing and Chartering Limited (In Liquidation)
United Kingdom	East Port Investments Limited
United Kingdom	Ebbgate Holdings Limited
United Kingdom	Ebbgate Investments Limited
United Kingdom	Edotech Limited
United Kingdom	Electric Investments Limited
United Kingdom	European Management Consultancy Services Limited (In Liquidation)
United Kingdom	Exshelfco (BGS) Limited
United Kingdom	Exshelfco (BIBI) Limited
United Kingdom	Exshelfco (DZBC)
United Kingdom	Figurefile Limited
United Kingdom	Finpart Nominees Limited
United Kingdom	FIRSTPLUS Financial Group PLC
United Kingdom	FIRSTPLUS Management Services Limited
United Kingdom	FIRSTPLUS Services Limited
United Kingdom	Fitzroy Finance Limited
United Kingdom	Fleetway House Construction Management Limited
United Kingdom	Fleetway House Limited
United Kingdom	Foltus Investments Limited

Jurisdiction	Company
United Kingdom	Forest Road Investments Limited
United Kingdom	FP Mortgage Loans No.1 Limited
United Kingdom	Freesave Limited
United Kingdom	Frobisher Funding Limited
United Kingdom	Gerrard (OMH) Limited
United Kingdom	Gerrard Direct Limited
United Kingdom	Gerrard Financial Planning Services Limited
United Kingdom	Gerrard Financial Services Limited
United Kingdom	Gerrard Group Financial Services Limited
United Kingdom	Gerrard Limited
United Kingdom	Gerrard Management Services Limited
United Kingdom	Gerrard Nominees Limited
United Kingdom	Gerrard Vivian Gray Limited
United Kingdom	GHL Mortgage Originations Limited
United Kingdom	GHL Mortgage Services Limited
United Kingdom	GHL Payment Transmission Limited
United Kingdom	GHL Services Limited
United Kingdom	GHL Technology Limited Partnership
United Kingdom	Global Home Loans Limited
United Kingdom	Globe Nominees Limited
United Kingdom	Glowsound Limited (In Liquidation)
United Kingdom	Glustage Investments Limited (In Liquidation)
United Kingdom	GM Computers Limited
United Kingdom	Gorton Nominees Limited
United Kingdom	Gracechurch Mortgage Finance (No.4) Limited
United Kingdom	Gracechurch Mortgage Finance (No.5) Limited
United Kingdom	Gracechurch Trust Company Limited
United Kingdom	Greig Middleton & Co. Limited
United Kingdom	Greig Middleton Financial Services Limited
United Kingdom	Greig Middleton Holdings Limited
United Kingdom	Greig Middleton Nominees Limited
United Kingdom	Grenville Funding Limited
United Kingdom	Gresham Insurance Company Limited
United Kingdom	GS Collections Limited
United Kingdom	GS Commercial Limited
United Kingdom	H.P.C. Trustees Limited (In Liquidation)
United Kingdom	Halogic (GP) Limited (In Liquidation)
United Kingdom	Halogic Limited
United Kingdom	Hawkins Funding Limited
United Kingdom	Hechshire Limited
United Kingdom	Heraldglen Limited
United Kingdom	Heseltine Nominees Limited
United Kingdom	Highland (Machinery) Limited
United Kingdom	Hoardburst Limited
United Kingdom	ICCH Limited
United Kingdom	Ideal Bank Limited, The (In liquidation)
United Kingdom	Igloo Limited
United Kingdom	IMD Developments Limited
United Kingdom	IMD International Limited
United Kingdom	IMD Investments Limited
United Kingdom	IMD Securities Limited
United Kingdom	IMD Trading Limited
United Kingdom	iMoney Limited (In Liquidation)
United Kingdom	Imry (Leicester) Limited
United Kingdom	Imry Group Limited
United Kingdom	Imry Holdings Limited

Jurisdiction	Company
United Kingdom	Imry Investments Limited (In Liquidation)
United Kingdom	Imry Properties Developments Limited
United Kingdom	Imry Property Holdings Limited
United Kingdom	Indigosquare Limited
United Kingdom	Infrastructure Investors Limited
United Kingdom	Intelligent Processing Solutions Limited
United Kingdom	Investors In Infrastructure Limited
United Kingdom	iShares Limited
United Kingdom	J.V. Construction Limited
United Kingdom	J.V. Estates Limited
United Kingdom	Keepier Investments
United Kingdom	L.H. Home Services (Ebbgate) Limited
United Kingdom	Laycable Shipping Limited Partnership
United Kingdom	Laypipeline Shipping Limited Partnership
United Kingdom	Ledgerstyle Limited (In Liquidation)
United Kingdom	Lethill Limited (In Liquidation)
United Kingdom	Limbomono Limited
United Kingdom	Limebank Property Company Limited
United Kingdom	Linde Financial Services Limited
United Kingdom	Lindley Developments Limited
United Kingdom	Littlewoods Personal Finance Limited
United Kingdom	Lombard Street Nominees Limited
United Kingdom	Macdet Investments Limited (In Liquidation)
United Kingdom	Marlborough Property Investments Limited (In Liquidation)
United Kingdom	Martins Bank Limited
United Kingdom	Martins Investments Limited
United Kingdom	Mayfair & City Holdings Limited (In Liquidation)
United Kingdom	MCC Leasing (No. 3) Limited
United Kingdom	MCC Leasing (No. 6) Limited
United Kingdom	MCC Leasing (No.12) Limited
United Kingdom	MCC Leasing (No.15) Limited
United Kingdom	MCC Leasing (No.21) Limited
United Kingdom	MCC Leasing (No.24) Limited
United Kingdom	Mega Properties Limited (In Liquidation)
United Kingdom	Menlo Investments Limited
United Kingdom	Mercantile Credit Company Limited
United Kingdom	Mercantile Industrial Leasing Limited
United Kingdom	Mercantile Leasing Administration Limited
United Kingdom	Mercantile Leasing Company (No. 3) Limited (in liquidation)
United Kingdom	Mercantile Leasing Company (No. 15) Limited
United Kingdom	Mercantile Leasing Company (No. 24) Limited
United Kingdom	Mercantile Leasing Company (No. 60) Limited
United Kingdom	Mercantile Leasing Company (No. 72) Limited
United Kingdom	Mercantile Leasing Company (No. 81) Limited
United Kingdom	Mercantile Leasing Company (No. 84) Limited
United Kingdom	Mercantile Leasing Company (No. 93) Limited
United Kingdom	Mercantile Leasing Company (No. 96) Limited
United Kingdom	Mercantile Leasing Company (No. 99) Limited
United Kingdom	Mercantile Leasing Company (No.102) Limited (in liquidation)
United Kingdom	Mercantile Leasing Company (No.105) Limited
United Kingdom	Mercantile Leasing Company (No.108) Limited
United Kingdom	Mercantile Leasing Company (No.111) Limited (in liquidation)
United Kingdom	Mercantile Leasing Company (No.117) Limited
United Kingdom	Mercantile Leasing Company (No.123) Limited (in liquidation)
United Kingdom	Mercantile Leasing Company (No.126) Limited (in liquidation)
United Kingdom	Mercantile Leasing Company (No.129) Limited

Jurisdiction	Company
United Kingdom	Mercantile Leasing Company (No.132) Limited
United Kingdom	Mercantile Leasing Company (No.135) Limited
United Kingdom	Mercantile Leasing Company (No.138) Limited
United Kingdom	Mercantile Leasing Company (No.141) Limited
United Kingdom	Mercantile Leasing Company (No.144) Limited
United Kingdom	Mercantile Leasing Company (No.147) Limited
United Kingdom	Mercantile Leasing Company (No.150) Limited
United Kingdom	Mercantile Leasing Company (No.153) Limited
United Kingdom	Mercers Debt Collections Limited
United Kingdom	Mervest (Chislehurst) Limited
United Kingdom	Mervest (Maidenhead) Limited
United Kingdom	Mervest (Sloane) Limited
United Kingdom	Metropolitan House Trustees Limited
United Kingdom	Morris Showhomes Limited
United Kingdom	Motability Finance Limited
United Kingdom	Muleta Investments Limited
United Kingdom	Murray House Investment Management Limited
United Kingdom	Murray House Investments Limited
United Kingdom	Myers Grove Investments Limited
United Kingdom	New Holland Finance Limited
United Kingdom	North Audley Street Developments Limited
United Kingdom	North Colonnade Investments Limited
United Kingdom	NuDelta Company Limited
United Kingdom	Odysseus (Martins) Investments Limited
United Kingdom	P.F. Cars Limited (In Liquidation)
United Kingdom	Parc Limited
United Kingdom	PE Nominees Limited
United Kingdom	Pisces Nominees Limited
United Kingdom	Plumbline Properties Limited
United Kingdom	Precis (338) Limited (In Liquidation)
United Kingdom	R.C. Greig Nominees Limited
United Kingdom	Redkeep Limited
United Kingdom	Registration Services Limited
United Kingdom	Regmore Homes Limited
United Kingdom	Rootbourne Limited
United Kingdom	Royal Mint Court Investments Limited
United Kingdom	S.F.E. Leasing Company Limited
United Kingdom	S.T.& H.Nominees Limited
United Kingdom	Scotlife Home Loans (No.3) Limited
United Kingdom	Securitas Cash Management Limited
United Kingdom	Sedgwick Independent Financial Consultants Limited
United Kingdom	Sharelink Nominees Limited
United Kingdom	Shipdiams Investments Limited
United Kingdom	Shooters Grove Holdings Limited
United Kingdom	Shopsmart Digital Limited
United Kingdom	ShopSmart Limited
United Kingdom	Showhouses (Ebbgate) Limited
United Kingdom	Sixtus Funding Limited
United Kingdom	Stepconcept Property Management Limited (In liquidation)
United Kingdom	Surety Trust Limited
United Kingdom	Swan Lane Investments Limited
United Kingdom	Swan Nominees Limited
United Kingdom	Sycamore Shipping Limited Partnership
United Kingdom	Telecom Exchange Rentals Limited
United Kingdom	Tercio Investments Limited
United Kingdom	Thirty Three Nominees Company Limited (In liquidation)

Jurisdiction	Company
United Kingdom	Torero Investment Holdings Limited
United Kingdom	Town & Country Homebuilders Limited
United Kingdom	Town & Country Property Services Limited
United Kingdom	Townregal Limited (In Liquidation)
United Kingdom	Tradewise Services International Limited
United Kingdom	Transpay Limited
United Kingdom	Triumph Collections Limited
United Kingdom	Twenty-Nine Gracechurch Street Nominees Limited
United Kingdom	Ulysses Finance
United Kingdom	Unit Trust Nominees Limited
United Kingdom	United Coach Leasing Limited
United Kingdom	Venturi Investment Management Limited
United Kingdom	Vivian Gray Nominees Limited
United Kingdom	W.D. Pension Fund Limited
United Kingdom	Wedd Durlacher International Limited
United Kingdom	Wedd Jefferson (Nominees) Limited
United Kingdom	Wenlock Capital 1 Limited
United Kingdom	Wenlock Capital 2 Limited
United Kingdom	Wenlock Capital 3 Limited
United Kingdom	West Central Estate & Property Co. Limited
United Kingdom	West Quay Shopping Centre Limited
United Kingdom	West Wickham Properties Limited
United Kingdom	Westferry Investments Limited
United Kingdom	Whitehome Limited
United Kingdom	Woolwich (Europe) Limited
United Kingdom	Woolwich (Guernsey) Limited
United Kingdom	Woolwich Assured Homes Limited
United Kingdom	Woolwich Contracts Limited
United Kingdom	Woolwich Countryside Limited
United Kingdom	Woolwich Financial Services Limited
United Kingdom	Woolwich Group Funding plc
United Kingdom	Woolwich Homes (1987) Limited
United Kingdom	Woolwich Homes Limited
United Kingdom	Woolwich Insurance Services Limited
United Kingdom	Woolwich Mortgage Services Limited
United Kingdom	Woolwich Pension Fund Trust Company Limited
United Kingdom	Woolwich Personal Finance Limited
United Kingdom	Woolwich Plan Managers Limited
United Kingdom	Woolwich plc
United Kingdom	Woolwich Property Services (1996) Limited
United Kingdom	Woolwich Qualifying Employee Share Ownership Trustee Limited
United Kingdom	Woolwich Surveying Services Limited
United Kingdom	Woolwich Surveying Services Property Management Limited
United Kingdom	Woolwich Telecoms Limited
United Kingdom	Woolwich Unit Trust Managers Limited
United Kingdom	Wysteria Euro Investments Limited
United Kingdom	Xansa Barclaycard Partnership Limited
United Kingdom	Youatwork Limited
United Kingdom	Zanton Service Company
United Kingdom	Zeban Nominees Limited
Netherlands Antilles	Barclays International Leasing NV
Argentina	Barclays Rio de la Plata SA (Rep Office)
Australia	Barclays Australia International Finance Limited (in liquidation)
Australia	Barclays Global Investors Australia Holdings Pty Limited
Australia	Barclays Global Investors Australia Limited
Australia	Barclays Global Investors Australia Services Limited

Jurisdiction	Company
Australia	Barclays Services Pty Limited
Australia	Barrep Pty Limited
Barbados	FirstCaribbean International Bank (Barbados) Limited
Barbados	FirstCaribbean International Bank (Offshore) Limited
Barbados	FirstCaribbean International Bank Limited
Barbados	FirstCaribbean International Finance Corporation (Barbados) Limited
Barbados	FirstCaribbean International Land Holdings (Barbados) Limited
Barbados	FirstCaribbean International Trust and Merchant Bank (Barbados) Limited
Bermuda	Barclays Capital Asia Pacific Limited
Bermuda	Barclays International Leasing (Bermuda) Limited
Brazil	Banco Barclays SA
Brazil	Barclays Brasil Ltda
Brazil	BBSA Servicos e Participacoes Limitada
Brazil	Golden Companhia Securitizadora de Creditos Financeiros
The Bahamas	BBSA (Bahamas) Limited
The Bahamas	FirstCaribbean International (Bahamas) Nominees Company Limited
The Bahamas	FirstCaribbean International Bank (Bahamas) Limited
The Bahamas	FirstCaribbean International Finance Corporation (Bahamas) Limited
Botswana	Barclays Bank of Botswana Limited
Botswana	Barclays Botswana Nominees (Pty) Limited
Botswana	Barclays House (Pty) Limited
Botswana	Barclays Insurance Services (Pty) Limited
Canada	Barclays Corporation Limited
Canada	Barclays Global Investors Canada Limited
Canada	Barclays Global Investors Holdings Canada Limited
Canada	Barclays Global Investors Services Canada Limited
Switzerland	Barclays Bank (Suisse) S.A.
Switzerland	Barclays Leasing AG
Switzerland	Barclaytrust (Suisse) SA
Switzerland	BPB Holdings SA
Chile	Asesorias e Inversiones Barclays (Chile) Limiteda (Rep Office)
Germany	Barclays Industrie Bank GmbH
Germany	Barclays Industrie Leasing GmbH
Germany	Barclays Private Equity Gmbh
Germany	Barclays Private Equity Verwaltungs GmbH
Germany	Barclays Technology Finance GmbH
Germany	Barclays Verwaltungs GmbH
Germany	FRESIMO Grundstuecksverwaltungs GmbH
Germany	GVJ Grundstuecksverwaltung Jaegerstrasse 4 GmbH
Germany	Jaegerstrasse 4 Geselleschaft buergerlichen Rechts
Germany	Salvete Financial Services GmbH (In Liquidation)
Germany	Salvete Immobilien Beteiligungs GmbH
Germany	ShopSmart AG (In Liquidation)
Egypt	Cairo Barclays Bank SAE
Spain	Antilia Gestion Inmobiliaria SA
Spain	Antilia Promociones Inmobiliarias SA
Spain	Asiris SA Correduria de Seguros
Spain	Auxiliar de Banca y Finanzas AIE
Spain	Banzano Group Factoring SA Establecimiento Financiero de Credito
Spain	Banzarenting SA
Spain	Barclays Bank SA
Spain	Barclays Correduria de Seguros SA
Spain	Barclays Fondos, SGIIC, SA
Spain	Barclays Mercantile Espana S.A. (In Liquidation)
Spain	Barclays Vida y Pensiones Compania de Seguros, SA

Jurisdiction	Company
Spain	BZ Grupo Banco Zaragozano Sociedad de Agencia de Seguros SA
Spain	BZ Pensiones SA Sociedad Gestora de Fondos de Pensiones
Spain	Carthiconsa SA
Spain	Gesbanzano SA (In liquidation)
Spain	Inmuebles y Servicios Banzano SA
Spain	ISB CANARIAS SA
Spain	Naviera Arrecife Acrupacion de Interes Economico
Spain	Naviera del Hierro Agrupacion de Interes Economico
Spain	Prosegur Seguridad SA
Spain	Ruval SA
Spain	Saracosta SA
Spain	Zaragozano Vida Y Pensiones SA De Seguros Y Reaseguros
France	Barclays Asset Management France SA (BAMF)
France	Barclays Bail SA
France	Barclays Capital France SA
France	Barclays Finance S.C.S.
France	Barclays Financements Immobiliers SA (BARFIMMO)
France	Barclays France SA
France	Barclays Private Equity France SA
France	Barclays Programme Management SA
France	Barclays Vie S.A.
France	Capvent
France	GIE Indus Two
France	GIE Lara
France	GIE Merriwa
France	GIE PKAC
France	GIE Red Fern
France	Laffitte Patrimoine SA
France	NHF S.A.
France	Partvent
France	Roche Beranger SA (SERRB)
France	S.C.I. des Garages du 21 Rue Laffitte
France	ShopSmart S.A. (In Liquidation)
France	Societe Civile Immobiliere Barclays Immo Hexagone
France	Societe Civile Immobiliere Barclays Immo Hexagone II
France	Societe Francaise de Gestion et de Construction (SFGC)
Guernsey	Barclays Global Investors Guernsey Limited
Guernsey	Barclays Insurance Guernsey PCC Limited
Guernsey	Barclays Nominees (Guernsey) Limited
Guernsey	Barclaytrust International (Guernsey) Limited
Guernsey	Gerrard International Limited (In Liquidation)
Guernsey	Middle East Capital Group Limited
Guernsey	S.E. Investments Limited
Isle of Man	Barclays Holdings (Isle of Man) Limited
Isle of Man	Barclays Investment Bonds (Isle of Man) Limited
Isle of Man	Barclays Nominees (Manx) Limited
Isle of Man	Barclays Private Bank & Trust (Isle of Man) Limited
Isle of Man	Barclays Private Clients International Limited
Isle of Man	Barclaytrust (Nominees) Isle of Man Limited
Isle of Man	Barclaytrust International Nominees (Isle of Man) Limited
Jersey	Aix Investment Company Limited
Jersey	Barclays Asia Holdings Limited (In Liquidation)
Jersey	Barclays Belcroute Investments (Jersey) Limited
Jersey	Barclays Capital (Jersey) Limited
Jersey	Barclays Corbiere Investments (Jersey) Limited
Jersey	Barclays Fund Managers Limited

Jurisdiction	Company
Jersey	Barclays Funding (Jersey) Limited
Jersey	Barclays Global Investors Jersey Limited
Jersey	Barclays International Fund Managers Limited
Jersey	Barclays International Funds Group Limited
Jersey	Barclays Nominees (Jersey) Limited
Jersey	Barclays Private Bank & Trust Limited
Jersey	Barclays Services Jersey Limited
Jersey	Barclays Sirius Investments (Jersey) Limited (in liquidation)
Jersey	Barclays Titan Investments (Jersey) Limited
Jersey	Barclays Venus Investments (Jersey) Limited
Jersey	Barclaytrust Channel Islands Limited
Jersey	Barclaytrust International (Jersey) Limited
Jersey	Barclaytrust Jersey Limited
Jersey	BIS Jersey Limited
Jersey	BPB Asia Limited
Jersey	Brise de Mer Apartments Limited
Jersey	Carnegie SPV (Jersey) Limited
Jersey	Double Eagle Limited
Jersey	Verdala (Clos de la Rocque) Limited
Ghana	Barclays Bank of Ghana Limited
Ghana	Barclays Bank of Ghana Nominees Limited
Gibraltar	Barclays Bank Offshore Financial Services (Gibraltar) Limited
Gibraltar	Barclays Gibraltar Nominees Company Limited
Gibraltar	Barclaytrust International Nominees (Gibraltar) Limited
Gibraltar	Parkgate Holdings Limited
Greece	Barclays Mutual Fund Management Company (In Liquidation)
Hong Kong	Barclays Asia Limited
Hong Kong	Barclays Bank (Hong Kong Nominees) Limited
Hong Kong	Barclays Capital Asia Limited
Hong Kong	Barclays Capital Asia Nominees Limited
Hong Kong	Barclays Capital Futures Hong Kong Limited
Hong Kong	Barclays Capital Securities Asia Limited
Hong Kong	Barclays Corporation N Z Limited
Hong Kong	Barclays Finance Holdings (Asia) Limited
Hong Kong	Barclays Global Investors North Asia Limited
Hong Kong	Barclaytrust Nominees (Hong Kong) Limited
Ireland	Barclaycard (Ireland) Limited
Ireland	Barclaycard Irish Properties Limited
Ireland	Barclays Assurance (Dublin) Limited
Ireland	Barclays Global Investors Ireland Limited
Ireland	Barclays Insurance (Dublin) Limited
Ireland	Barclays International Financial Services (Ireland) Limited
Ireland	Barclays Ireland Nominees Limited
Ireland	Barclays Management Services (Ireland) Limited
Ireland	Barclays Reinsurance Dublin Limited
Ireland	Barclays Reinsurance Ireland (No.1) Limited
Ireland	Barclays Reinsurance Ireland (No.2) Limited
Ireland	Barclays Services (Dublin) Limited
Ireland	Harleigh Limited (In Liquidation)
Ireland	Highland Finance Ireland Limited
Italy	Barclays Financial Services Italia S.p.A.
Italy	Barclays Private Equity S.p.A.
Italy	Gabetti Holding SpA
Jamaica	FirstCaribbean International Bank (Jamaica) Limited
Jamaica	FirstCaribbean International Building Society
Jamaica	FirstCaribbean International Securities Limited

Jurisdiction	Company
Japan	Barclays Global Investors Japan Investment Trust Company Limited
Japan	Barclays Global Investors Japan Limited
Japan	Barclays Global Investors Japan Trust and Banking Co. Limited
Kenya	Barclays (Kenya) Nominees Limited
Kenya	Barclays Advisory and Registrar Services Limited
Kenya	Barclays Bank of Kenya Limited
Kenya	Barclays Mercantile Limited
Kenya	Barclays Mortgages Limited
Kenya	Barclays Securities Services (Kenya) Ltd
Cayman Islands	Antlia Investments Limited
Cayman Islands	Barclays Capital (Cayman) Limited
Cayman Islands	Barclays Capital Japan Holdings Limited
Cayman Islands	Barclays Capital Japan Limited
Cayman Islands	Barclays Libra Limited
Cayman Islands	Barclays Private Bank & Trust (Cayman) Limited
Cayman Islands	Barclays Thames Limited
Cayman Islands	Belgravia Securities Investments Limited
Cayman Islands	Bronco (Barclays Cayman) Limited
Cayman Islands	Demeter (Cayman) Limited
Cayman Islands	Draco Investments (London) Limited
Cayman Islands	Eagle Financial & Leasing Services Limited
Cayman Islands	Eagle Holdings Ltd
Cayman Islands	Eagle Management Services Limited
Cayman Islands	FirstCaribbean International (Cayman) Nominees Company Limited
Cayman Islands	FirstCaribbean International Bank (Cayman) Limited
Cayman Islands	FirstCaribbean International Finance Corporation (Cayman) Limited
Cayman Islands	FirstCaribbean International Finance Corporation (Netherlands Antilles) Limited
Cayman Islands	Gallen Investments Limited
Cayman Islands	Golden Eagle Holdings Limited
Cayman Islands	Grey Lynn Investments Limited
Cayman Islands	Grus Investments Limited
Cayman Islands	Heliodor Investments Limited
Cayman Islands	Indair Leasing (Cayman) Limited
Cayman Islands	Loxley Investments Limited
Cayman Islands	Meadowbank Investments Limited
Cayman Islands	Mintaka Investments No 1 Limited
Cayman Islands	Mintaka Investments No 4 Limited
Cayman Islands	Mintaka Investments No. 3 Limited
Cayman Islands	Parnell Investment Holdings Limited
Cayman Islands	Pyrus Investments Limited
Cayman Islands	Reynolds Funding Limited
Cayman Islands	St James Fleet Investments Two Limited
St Lucia	FirstCaribbean International Finance Corporation (Leeward & Windward) Limited
Liechtenstein	BPB Trust AG
Liberia	Aigle Trustees SA
Liberia	BMI (Shipping) Limited
Liberia	Perpetual Nominees S.A.
Luxembourg	Barclays European Investments Holdings S.A.
Luxembourg	Barclays International Independent Financial Advisory Services
Monaco	Barclays Investment Services S.A.M. (in liquidation)
Monaco	Barclays Private Asset Management (Monaco) SAM
Monaco	Societe Civile Immobiliere 31 Avenue de la Costa
Malta	Barclays International Investments (Malta) Limited
Mauritius	Barclays Leasing Company Limited

Jurisdiction	Company
Malaysia	BZW Capital (Malaysia) Sdn Bhd (In Liquidation)
Nigeria	Barclays Bank Group Representatives Office (Nigeria) Limited
Netherlands	Barclays Capital Investments B.V.
Netherlands	Barclays Crossharbour Investments B.V.
Netherlands	Barclays Delta Investments BV
Netherlands	Barclays Finance & Leasing BV
Netherlands	Barclays Overseas Capital Corporation B.V.
Netherlands	Barclays Overseas Investment Company B.V.
Netherlands	Darnay BV
Netherlands	New Spring Enterprises BV
Netherlands	Romintco Investments BV
New Zealand	Barclays Finance New Zealand Limited
New Zealand	Barclays New Zealand Limited
Philippines	Barclays Capital Securities Philippines, Inc (in liquidation)
Philippines	BZW Securities Philippines, Inc. (In Liquidation)
Poland	Barclays Capital Polska sp.zoo (In Liquidation)
Portugal	Barclays Fundos, SA
Portugal	Barclays Prestacao de Servicos — ACE
Romania	BCI Capital SrL
Seychelles	Barclays Bank (Seychelles) Limited
Singapore	Barclays Bank (Singapore Nominees) Pte Ltd.
Singapore	Barclays Bank (South East Asia) Nominees Private Limited
Singapore	Barclays Capital Futures (Singapore) Private Limited
Singapore	Barclays Capital Holdings (Singapore) Private Limited
Singapore	Barclays Global Investors Southeast Asia Limited
Singapore	Barclays Merchant Bank (Singapore) Ltd.
Turks and Caicos Islands	FirstCaribbean International Land Holdings (TCI) Limited
Thailand	Barclays Capital Securities (Thailand) Ltd.
Tanzania	Barclays Bank Tanzania Limited
Uganda	Barclays Bank of Uganda (Nominees) Limited
Uganda	Barclays Bank of Uganda Limited
United States	Augustus Funding, LLC
United States	Barclays Business Credit L.L.C.
United States	Barclays Capital Inc.
United States	Barclays Capital Services LLC
United States	Barclays Capital Ventures Inc.
United States	Barclays Electronic Commerce Holdings Inc.
United States	Barclays Group US Inc.
United States	Barclays Oversight Management Inc.
United States	Barclays Services Corporation
United States	Barclays Wall Street Realty Corporation
United States	BarclaysAmerican/Mortgage Corporation
United States	Baroreo Lloyd Corp.
United States	Cetus Investments LLC
United States	Gracechurch Services Corporation
United States	HYMF, Inc.
United States	Ivanhoe Funding LLC
United States	Juniper Financial Corporation
United States	Taurus Investments, Inc.
United States	WA Properties, LP
Uruguay	Barclays Uruguay Limiteda (Rep Office)
Venezuela	Barclays Investment CA (Rep Office)
Venezuela	BICA Corporation (Rep Office)
Virgin Islands (British)	Barclays (BVI) Nominees Limited
Virgin Islands (British)	Condor Nominees Limited

Jurisdiction	Company
Virgin Islands (British)	Crescendo Investment Holdings Limited
Virgin Islands (U.S)	AYH Holdings, Inc.
Virgin Islands (U.S)	Spread Eagle Paradise Holdings, Inc. (In Liquidation)
South Africa	Barclays International Funds (South Africa) Limited
South Africa	Clarinbridge Investments Limited
Zambia	Barclays Bank Zambia plc
Zambia	Barclays Lusaka Nominees Limited
Zambia	Kafue House Limited
Zimbabwe	Afcarme Zimbabwe Holdings (Pvt) Limited
Zimbabwe	Barclays Bank of Zimbabwe Limited
Zimbabwe	Barclays Merchant Bank of Zimbabwe Limited
Zimbabwe	Barclays Zimbabwe Nominees (Pvt) Limited
Zimbabwe	Barclaytrust (Pvt) Limited
Zimbabwe	BRAINS Computer Processing (Pvt) Limited
Zimbabwe	Branchcall Computers (Private) Limited
Zimbabwe	Fincor Finance Corporation Limited

EX-12.1

Exhibit 12.1

Exhibit 12.1

     I, John Varley, certify that:

1.	I have reviewed this annual report on Form 20-F of Barclays PLC;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4.	The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)	Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: 10/3/05
	/s/  John Varley
	John Varley
	Title: Group Chief Executive

Exhibit 12.1

     I, Naguib Kheraj, certify that:

1.	I have reviewed this annual report on Form 20-F of Barclays PLC;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4.	The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)	Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: 10/3/05

/s/  Naguib Kheraj

Naguib Kheraj

Title: Group Finance Director 

Exhibit 12.1

I, John Varley, certify that:

1.	I have reviewed this annual report on Form 20-F of Barclays Bank PLC;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4.	The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)	Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: 10/3/05

/s/ John Varley  

Title: Group Chief Executive 

Exhibit 12.1

I, Naguib Kheraj, certify that:

1.	I have reviewed this annual report on Form 20-F of Barclays Bank PLC;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4.	The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)	Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: 10/3/05

/s/ Naguib Kheraj  

Title: Group Finance Director 

EX-13.1

Exhibit 13.1

Exhibit 13.1

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Barclays PLC, a public limited company incorporated under the laws of England and Wales (“Barclays”), and Barclays Bank PLC, a public limited company incorporated under the laws of England and Wales (“Barclays Bank” and, together with Barclays, the “Companies”), hereby certifies, to such officer’s knowledge, that:

The Annual Report on Form 20-F for the year ended December 31, 2004 (the “Report”) of the Companies fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.

Date: 10/3/05

/s/  John Varley
John Varley
Title:	Group Chief Executive

Exhibit 13.1

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Barclays PLC, a public limited company incorporated under the laws of England and Wales (“Barclays”), and Barclays Bank PLC, a public limited company incorporated under the laws of England and Wales (“Barclays Bank” and, together with Barclays, the “Companies”), hereby certifies, to such officer’s knowledge, that:

The Annual Report on Form 20-F for the year ended December 31, 2004 (the “Report”) of the Companies fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.

Date: 10/3/05

/s/  Naguib Kheraj
Naguib Kheraj
Title:	Group Finance Director

EX-14.1

Exhibit 14.1

23 March 2005

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in these Registration Statements on Form F-3 (File No. 333-85646, 333-12384 and 333-8054), of our report dated March 10, 2005 relating to the financial statements of Barclays PLC and Barclays Bank PLC, which appears in the 2004 Annual Report to Shareholders of Barclays PLC, which is incorporated by reference in the combined Annual Report on Form 20-F for Barclays PLC and Barclays Bank PLC for the year ended December 31, 2004. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

Yours sincerely

PricewaterhouseCoopers LLP
London, England
March 23, 2005

PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The registered office of PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH. PricewaterhouseCoopers LLP is authorised and regulated by the Financial Services Authority for designated investment business.

23 March 2005

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in these Registration Statements on Form S-8 (File No. 333-112796, 333-112797 and 333-12818), of our report dated March 10, 2005 relating to the financial statements of Barclays PLC and Barclays Bank PLC, which appears in the 2004 Annual Report to Shareholders of Barclays PLC, which is incorporated by reference in the combined Annual Report on Form 20-F for Barclays PLC and Barclays Bank PLC for the year ended December 31, 2004.

Yours sincerely

PricewaterhouseCoopers LLP
London, England
March 23, 2005

PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The registered office of PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH. PricewaterhouseCoopers LLP is authorised and regulated by the Financial Services Authority for designated investment business.