UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 20-F

(Mark One) 

☐

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 

OR 

☑

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019 

OR 

☐

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to 

OR 

☐

 SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report 

Commission file number

Barclays PLC

1-09246

BARCLAYS PLC

(Exact Name of Registrant as Specified in its Charter) 

ENGLAND 

(Jurisdiction of Incorporation or Organization) 

1 CHURCHILL PLACE, LONDON E14 5HP, ENGLAND 

(Address of Principal Executive Offices) 

GARTH WRIGHT, +44 (0)20 7116 3170, GARTH.WRIGHT@BARCLAYS.COM

1 CHURCHILL PLACE, LONDON E14 5HP, ENGLAND

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) 

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

Title of each class

Trading symbol(s)

Name of each exchange

on which registered

25p ordinary shares*

Not applicable*

New York Stock Exchange*

Title of each class

Trading symbol(s)

Name of each exchange

on which registered

American Depositary Shares, each representing four 25p ordinary shares

BCS

New York Stock Exchange

4.338% Fixed -to-Floating Rate Senior Notes due 2024

BCS24A

New York Stock Exchange

Floating Rate Senior Notes due 2024

BCS24B

New York Stock Exchange

4.972% Fixed-to-Floating Rate Senior Notes due 2029

BCS29

New York Stock Exchange

4.610% Fixed-to-Floating Rate Senior Notes due 2023

BCS23B

New York Stock Exchange

Floating Rate Senior Notes due 2023

BCS23C

New York Stock Exchange

4.375% Fixed Rate Subordinated Notes due 2024

BCS24

New York Stock Exchange

3.65% Fixed Rate Senior Notes due 2025

BCS25

New York Stock Exchange

2.875% Fixed Rate Senior Notes due 2020

BCS20B

New York Stock Exchange

5.25% Fixed Rate Senior Notes due 2045

BCS45

New York Stock Exchange

3.25% Fixed Rate Senior Notes due 2021

BCS21B

New York Stock Exchange

4.375% Fixed Rate Senior Notes due 2026

BCS26

New York Stock Exchange

5.20% Fixed Rate Subordinated Notes due 2026

BCS26A

New York Stock Exchange

3.20% Fixed Rate Senior Notes due 2021

BCS21

New York Stock Exchange

Floating Rate Senior Notes due 2021

BCS21A

New York Stock Exchange

Floating Rate Senior Notes due 2023

BCS23

New York Stock Exchange

3.684% Fixed Rate Senior Notes due 2023

BCS23A

New York Stock Exchange

4.337% Fixed Rate Senior Notes due 2028

BCS28

New York Stock Exchange

4.950% Fixed Rate Senior Notes due 2047

BCS47

New York Stock Exchange

4.836% Fixed Rate Subordinated Callable Notes due 2028

BCS28A

New York Stock Exchange

3.250% Fixed Rate Senior Notes due 2033

BCS33

New York Stock Exchange

3.932% Fixed-to-Floating Rate Senior Notes due 2025

BCS25A

New York Stock Exchange

5.088% Fixed-to-Floating Rate Subordinated Notes due 2030

BCS30

New York Stock Exchange

*

Not for trading, but in connection with the registration of American Depository Shares, pursuant to the requirements to the Securities and Exchange

Commission.

Securities registered or to be 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 issuer’s classes of capital or common stock as of the close of the period covered by the annual

report . 

25p ordinary shares

17,322,057,836

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. 

Yes

☐

 No

☑

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the

Securities Exchange Act 1934. 

Yes

☐

 No

☑

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

from their obligations under those Sections. 

Indicate by check mark whether the registrant (1) has 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 registrant was required to file such reports), and (2) has been subject to such filing

requirements for the past 90 days. 

Yes

☑

 No

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of

Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and

submit such files).

 Yes

☑

 No

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See

definition of “large accelerated filer”, “accelerated filer” and “emerging growth company” in Rule 12b -2 of the Exchange Act: 

Large Accelerated Filer

☑

Accelerated Filer

☐

Non-Accelerated Filer

☐

Emerging growth company

☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected

not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the

Exchange Act.

☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting

Standards Codification after April 5, 2012.

*Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: 

U.S. GAAP

☐

International Financial Reporting Standards as issued by the International Accounting Standards Board 

☑

Other

☐

*If “Other” has been chec ked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to

follow: 

Item 17

☐

Item 18

☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b -2 of the Exchange Act). 

Yes

☐

 No

☑

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

Indicate by check mark whether the registrant has 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

☐

 No

☐

SEC Form 20-F Cross reference information

Form 20-F item number

Page and caption references

in this document*

1

Identity of Directors, Senior Management and Advisers

Not applicable

2

Offer Statistics and Expected Timetable

Not applicable

3

Key Information

A. Selected financial data

181, 183, 303

B. Capitalization and indebtedness

Not applicable

C. Reason for the offer and use of proceeds

Not applicable

D. Risk factors

90-100

4

Information on the Company

A. History and development of the company

i (Notes), 178 -199, 268 -271 (Note 26), 297 (Note

41), 299, 311

B. Business overview

ii (Market and other data), 171 -177, 185 -192, 219-

220 (Note 2)

C. Organizational structure

286 -290 (Notes 34 and 35), 321 -324

D. Property, plants and equipment

257 -261 (Notes 20 and 21)

4A

Unresolved staff comments

Not applicable

5

Operating and Financial Review and Prospects

A. Operating results

90-100, 103 -107, 139, 165, 167-177, 179- 192,

236 -243 (Note 14)

B. Liquidity and capital resources

137 -138, 145 -158, 165-166, 210, 212- 213, 236-

243 (Note 14), 272 -275 (Notes 27 and 28), 286-

287 (Note 34), 291 -292 (Note 37), 316 -326

C. Research and development, patents and licenses, etc.

41

D. Trend information

92 -100, 146 -169, 178 -199

E. Off-balance sheet arrangements

109 -111, 267 (Note 25), 287- 290 (Note 35)

F. Tabular disclosure of contractual obligations

327

G. Safe harbor

ii (Forward -looking statements)

6

Directors, Senior Management and Employees

A. Directors and senior management

3-5, 313 -316

B. Compensation

45-47, 63, 73 -76, 79, 163 -164, 279 -285 (Notes 32

and 33), 294 -296 (Note 39), 471

C. Board practices

3-5, 11 -19, 38, 59 -61, 79 -81

D. Employees

83-86, 185, 187, 191, 219- 220 (Note 2)

E. Share ownership

78, 279 -280 (Note 32), 294- 296 (Note 39), 319-

320

7

Major Shareholders and Related Party Transactions

A. Major shareholders

41 -43, 312

B. Related party transactions

C. Interests of experts and counsel

294 -296 (Note 39), 345

Not applicable

8

Financial Information

A. Consolidated statements and other financial information

201 -214, 214 -298, 300 -301

B. Significant changes

Not applicable

9

The Offer and Listing

A. Offer and listing details

303 -304, 311

B. Plan of distribution

Not applicable

C. Markets

303 -304, 311

D. Selling shareholders

Not applicable

E. Dilution

Not applicable

F. Expenses of the issue

Not applicable

10

Additional Information

A. Share capital

Not applicable

B. Memorandum and Articles of Association

41 -43, 299 -302

C. Material contracts

48, 52 -62, 79

D. Exchange controls

308

E. Taxation

305 -308

F. Dividends and paying agents

Not applicable

G. Statement by experts

Not applicable

H. Documents on display

308

I. Subsidiary information

286 -287 (Note 34), 321- 324

11

Quantitative and Qualitative Disclosure about Market Risk

87-1 77, 237 -255 (Notes 14-17)

12

Description of Securities Other than Equity Securities

A. Debt Securities

Not applicable

B. Warrants and Rights

Not applicable

C. Other Securities

Not applicable

D. American Depositary Shares

303 , 309

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

A. Disclosure controls and procedures

312

B. Management’s annual report on internal control over financial reporting

38

C. Attestation report of the registered public accounting firm

201 -204

D. Changes in internal control over financial reporting

38

16A

Audit Committee Financial Expert

12

16B

Code of Ethics

31 1

16C

Principal Accountant Fees and Services

18 -19, 296 (Note 40)

16D

Exemptions from the Listing Standards for Audit Committees

Not applicable

16E

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

42

16F

Change in Registrant’s Certifying Accountant

Not applicable

16G

Corporate Governance

311

16H

Mine Safety Disclosure

Not applicable

17

Financial Statements

Not applicable (See Item 8)

18

Financial Statements

Not applicable (See Item 8)

19

Exhibits

Exhibit Index

* Captions have been included only in respect of pages with multiple sections on the same page in order to identify the relevant caption on that page

covered by the corresponding Form 20- F item number.

Delivering for our stakeholders

Barclays PLC

2019 Annual Report on Form 20-F

Notes

The terms Barclays or Group refer to Barclays PLC together with its subsidiaries. Unless otherwise stated, the income statement analysis compares the

year ended 31 Decem ber 2019 to the corresponding twelve months of 2018 and balance sheet analysis as at 31 December 2019 with comparatives

relating to 31 December 2018. The abbreviations ‘£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 the abbreviations ‘€m’ and ‘€bn’ represent

millions and thousands of millions of Euros respectively.

Non-IFRS performance measures

Barclays management believes that the non -IFRS performance measures included in this document provide valuable information to the readers of the

financial statements as they enable the reader to identify a more consistent basis for comparing the businesses’ performance between financial periods

and provide more detail concerning the elements of performance which the manag ers of these businesses are most directly able to influence or are

relevant for an assessment of the Group. They also reflect an important aspect of the way in which operating targets are defined and performance is

monitored by Barclays management. However , any non-IFRS performance measures in this document are not a substitute for IFRS measures and

readers should consider the IFRS measures as well. Refer to the appendix on pages 193 to 199 for further information and calculations of non-IFRS

performance measures included throughout this document, and the most directly comparable IFRS measures.

Key non -IFRS measures included in this document, and the most directly comparable IFRS measures, are:

– Attributable profit excluding litigation and conduct represents attributable profit excluding litigation and conduct charges. The comparable IFRS

measure is attributable profit. A reconciliation is provided on pages 197-199;

– Average allocated equity represents the average shareholders’ equity that is allo cated to the businesses. The comparable IFRS measure is average

equity. A reconciliation is provided on pages 197-199 ;

– Average allocated tangible equity is calculated as the average of the previous month’s period end allocated tangible equity and the cu rrent month’s

period end allocated tangible equity. The average allocated tangible equity for the period is the average of the monthly averages within that period.

Period end allocated tangibl e equity is calculated as 13.0% (2018: 13.0%) of RWAs for each b usiness, adjusted for capital deductions, excluding

goodwill and intangible assets, reflecting the assumptions the Group uses for capital planning purposes. Head Office allocated tangible equity represents

the difference between the Group’s tangible shareholders’ equity and the amounts allocate d to businesses. The comparable IFRS measure is average

equity. A reconciliation is provided on pages 197-199 ;

– Average tangible shareholders’ equity is calculated as the average of the previous month’s period end tangible equity and the current month’s period

end tangible equity. The average tangible shareholders’ equity for the period is the average of the monthly averages within that period. The comparable

IFRS measure is average equity. A reconciliation is provid ed on pages 197 -199;

– Basic earnings per share excluding litigation and conduct is calculated by dividing statutory profit after tax attributable to ordinary shareholders

excluding litigation and conduct charges, by the basic weighted average number of shares. The comparable IFRS measure is basic earnings per share.

A reconciliation is provided on pages 197-199;

– Cost: income ratio excluding litigation and conduct represents operating expenses excluding litigation and conduct charges, divided by total income.

The comparabl e IFRS measure is cost: income ratio. A reconciliation is provided on pages 197-199 ;

– Operating expenses excluding litigation and conduct represents operating expenses excluding litigation and conduct charges. The comparable IFRS

mea sure is operating expenses. A reconciliation is provided on pages 197-199 ;

– Operating expenses excluding litigation and conduct, and a Guaranteed Minimum Payments (GMP) charge of £140m for 2018 represents operating

expenses excluding litigation and conduct charges, and a GMP charge of £140m for 2018. The comparable IFRS measure is operating expenses. A

reconciliation is provided on page 181;

– Profit before tax excluding litigation and conduct represents profit before tax excluding litigation and conduct charges. The comparable IFRS measure

is profit before tax. A reconciliation is provided on pages 197-199;

– Return on average allocated equity represents the return on shareholders’ equity that is allocated to the businesses. The comparable IFRS measure is

return on equity. A reconciliation is provided on page 197;

– Return on average allocated tangible equity is calculated as the annualised profit after tax attributable to ordinary equity holders of the parent, as a

proporti on of average allocated tangible equity. The comparable IFRS measure is return on equity. A reconciliation is provided on page 196 ;

– Return on average allocated tangible equity excluding litigation and conduct is calculated as the annualised profit after tax attributable to ordina ry

equity holders of the parent excluding litigation and conduct charges, as a proportion of average allocated tangible equity. The comparable IFRS

measure is return on equity. A reconciliation is provided on page 196;

– Return on average tangible shareholders’ equity is calculated as the annualised profit after tax attributable to ordinary equity holders of the parent, as a

proportion of average shareholders’ equity excluding non -controlling interests and other equity instruments adjusted for the deduction of intangible

assets and goodwill. The comparable IFRS measure is return on equity. A reconciliation is provided on page 196; and

– Tangible net asset value per share is calculated by dividing shareholders’ equity, excluding non-controlling interests and other equity instruments, less

goodwill and intangible assets, by the number of issued ordinary shares. The components of the calculation have been included on page 199 .

Forward -looking statements

This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended,

and Section 27A of the US Securities Act of 1933, as amended, with respect to the Group. Barclays cautions readers that no forward-looking statement

is a guarantee of future performance and that actual results or other financial condition or performance measures could differ materially from those

contained in the forward -looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or

current facts. Forward-looking statements sometimes use words such as ‘may’, ‘will’, ‘seek’, ‘continue’, ‘aim’, ‘anticipate’, ‘target’, ‘projected’, ‘expect’,

‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’, ‘achieve’ or other words of similar meaning. Forward-looking statements can be made in writing but also may

be made verbally by members of the management of the Group (including, without limitation, during management presentations to financial analysts) in

connection with this document. Examples of forward-looking statements include, among others, statements or guidance regarding or relating to the

Group’s future financial position, income growth, assets, impairment charges, provisions, business strategy, capital, leverage and other regulatory ratios,

payment of dividends (including dividend payout ratios and expected payment strategies), projected levels of growth in the banking and financial

markets, projected costs or savings, any commitments and targets, estimates of capital expenditures, plans and objectives for future operations,

projected employee numbers, IFRS impacts and other statements that are not historical fact. By their nature, forward -looking statements involve risk and

uncertainty because they relate to future events and circumstances. The forward -looking statements speak only as at the date on which they are made

and such statements may be affected by changes in legislation, the development of standards and interpretations under IFRS, including evolving

practices with regard to the interpretation and application of accounting and regulatory standards, the outcome of current and future legal proceedings

and regulatory investigations, future levels of conduct provisions, the policies and actions of governmental and regulatory authorities, geopolitical risks

and the impact of competition. In addition, factors including (but not limited to) the following may have an effect: capital, leverage and other regulatory

rules applicable to past, current and future periods; UK, US, Eurozone and global macroeconomic and business conditions; the effects of any volatility in

credit markets; market related risks such as changes in interest rates and foreign exchange rates; effects of changes in valuati on of credit market

exposures; changes in valuation of issued securities; volatility in capital markets; changes in credit ratings of any entity within the Group or any securities

issued by such entities; the potential for one or more countries exiting the Eurozone; instability as a result of the exit by the UK from the European Union

and the disruption that may subsequently result in the UK and globally; and the success of future acquisitions, disposals and other strategic transactions.

A number of these i nfluences and factors are beyond the Group’s control. As a result, the Group’s actual financial position, future results, dividend

payments, capital, leverage or other regulatory ratios or other financial and non-financial metrics or performance measures may differ materially from the

statements or guidance set forth in the Group’s forward-looking statements.

Subject to our obligations under the applicable laws and regulations of any relevant jurisdiction, (including, without limitation, the UK and the US), in

relation to disclosure and ongoing information, we undertake no obligation to update publicly or revise any forward-looking statements, whether as a

result of new information, future events or otherwise.

Market and other data

This document contains information, including statistical data, about certain 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.

Uses of Internet addresses

This document contains inactive textual addresses to internet websites operated by us and third parties. Reference to such websites is made for

information purposes only, and information found at such websites is not incorporated by reference into this document.

References to Strategic Report and Pillar 3 Report

This document contains references throughout to the Barclays PLC Strategic Report and Pillar 3 Report. References to the aforementioned report s are

made for information purposes only, and information found in said report s is not incorporated by reference into this document.

1 Barclays PLC 2019 Annual Report on Form 20-F.

Contents

What’s inside this report

Governance

●

 Governance contents

2

●

 Directors’ report

9

●

 Remuneration report

44

●

 Colleagues

83

Risk review

●

 Risk review contents

87

●

 Risk management

90

●

 Material existing and emerging risks

92

●

 Principal Risk management

102

●

 Risk performance

108

●

 Supervision and regulation

171

Financial review

●

 Financial review contents

178

●

 Key performance indicators

179

●

 Consolidated summary income statement

181

●

 Income statement commentary

182

●

 Consolidated summary balance sheet

183

●

 Balance sheet commentary

184

●

 Analysis of results by business

185

●

 Non-IFRS performance measures

193

Financial statements

●

 Financial statements contents

200

●

 Consolidated financial statements

205

●

 Notes to the financial statements

214

Shareholder information

●

 Key dates, Annual General Meeting, Dividends, and useful information

299

2 Barclays PLC 2019 Annual Report on Form 20-F

OUR GOVERNANCE

Contents

Welcome to our Governance report. This report

explains who we are, at Board and Executive

Committee (“ExCo”) level how our governance

framework operates, and our key areas of focus in

2019.

Our primary aim is that our governance:

Is effective in providing challenge, advice and support to management; Provides checks

and balances and encourages constructive challenge; Drives informed, collaborative

and accountable decision -making; and Creates long -term sustainable value for our

shareholders, having regard to our other stakeholders.

We are in a new regime for 2019, with the revised 2018 UK Corporate Governanc e

Code (the “Code”) and the Companies (Miscellaneous Reporting) Regulations 2018 (the

“Regulations”) now in force, and our Governance Report reflects these requirements.

To view our specific compliance as against the Code, please see pages 33 to 38.

Certain additional information, signposted throughout this report, will be available at

barclays.com/ourgovernance

. 

Page

Directors’ Report

•

Board of Directors: a year of renewal

3

•

Executive Committee: strategically enhanced and strengthened

6

•

Striving for simplicity and effectiveness

7

•

Our key areas of focus in 2019

9

•

Key priorities

10

•

Board Audit Committee report

11

•

Board Nominations Committee report

20

•

Board Risk Committee report

25

•

How we comply

33

•

Other statutory information

39

Remuneration Report

44

3 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT

Board of Directors: 

a year of renewal

Relevant skills and experience:

Nigel is the Group Chairman. He is also Chairman of

Barclays Bank PLC. Nigel has extensive experience

in, and understanding of, banking and financial

services, gained through a 36-year career at

Rothschild & Co. where he was most recently Deputy

Chairman. Prior to that he was Chairman of the Group

Executive Committee and Managing Partner of

Rothschild & Co. He is a seasoned business leader

with a strong track record in leading and chairing a

range of organisations and in acting as a strategic

adviser to multiple major international corporations

and governments. The breadth of Nigel’s knowledge

and operational experience with international banking

groups, building teams and culture, and growing

businesses are all hugely beneficial to Barclays, and

enables Nigel to contribute to the strategic direction

and long-term sustainable success of Barclays.

Key current appointments

Chairman, Sadler’s Wells; Non-Executive Director,

Tetra Laval Group

Committee membership

Board Nominations Committee (Chair)

Relevant skills and experience

Jes has nearly four decades of extensive experience

in banking and financial services. He brings a wealth

of investment banking knowledge to the Board as well

as strong executive leadership, and this contribution

is reflected in Barclays strategy and long-term

sustainable success of the business. He previously

worked for more than 30 years at JP Morgan where

he initially trained as a commercial banker, later

advancing to the leadership of major businesses

involving equities, private banking and asset

management, and ultimately heading JP Morgan’s

Global Investment Bank.

Key current appointments

Board Member, Bank Policy Institute; Board Member,

Institute of International Finance

Committee membership

None

Relevant skills and experience

Crawford has extensive business and management

experience at executive and board level spanning

over 30 years. Beneficial to the Board and to

Barclays’ strategy and long-term sustainable success

is his key understanding of stakeholder needs and his

experience in international and cross-sector

organisations, strong leadership and strategic

decision-making. Crawford brings to the Board robust

remuneration experience gained from his former

remuneration committee chairmanships at Standard

Life plc and other current positions.

Key current appointments

Non-Executive Director, SSE plc; Chairman,

Edrington Group

Committee membership

Board Audit Committee, Board Nominations

Committee, Board Remuneration Committee (Chair)

Relevant skills and experience

Mike has deep knowledge of accounting, auditing and

associated regulatory issues, having previously

worked at KPMG for over 20 years. Mike’s former

roles include acting as the lead engagement partner

on the audits of large financial services groups

including HSBC, Standard Chartered and the Bank of

England, as Head of Quality and Risk Management

for KPMG Europe LLP and as KPMG UK’s Ethics

Partner. The Board benefits from his extensive

experience in accounting, auditing and financial

reporting and therefore Mike continues to contribute

to the long-term sustainable success of the business.

Key current appointments

Member, Cabinet Office Board; Member, International

Ethics Standards Board for Accountants; Member,

ICAEW Ethics Standards Committee; Member,

Charity Commission

Committee membership

Board Audit Committee (Chair), Board Nominations

Committee, Board Risk Committee

Full Director biographies can be found on pages 313 to 315.

4 Barclays PLC 2019 Annual Report on Form 20-F

Relevant skills and experience

Tim’s continued contribution to Barclays’ strategy and

long-term sustainable success comes from his

extensive financial services experience, knowledge of

risk management and UK and EU regulation, as well

as an understanding of key investor issues. He had a

distinguished career with Legal & General, where,

among other roles, he was the Group CEO until June

2012, and this experience enables Tim to provide

challenge, advice and support to management on

business performance and decision-making.

Key current appointments

Chairman, Apax Global Alpha Limited

Committee membership

Board Audit Committee, Board Nominations

Committee, Board Remuneration Committee, Board

Risk Committee (Chair)

Relevant skills and experience

Sir Ian is a member of the Board and is also Chair of

Barclays Bank UK PLC. He contributes to the Board

substantial business experience particularly in the

international retail sector from his lengthy executive

career at the Kingfisher Group, as well as experience

in sustainability and environmental matters which are

important to the Group’s strategy and long-term

sustainable success. Sir Ian holds strong credentials

in leadership, is involved with many charitable

organisations, such as The Prince of Wales’s

Charitable Foundation, and is highly regarded by the

Government for his work with various Government

departments .

Key current appointments

Chairman, Maisons du Monde; Chairman, Menhaden

plc; Lead Non-Executive Director for the Government;

Trustee, Institute for Government

Committee membership

Board Nominations Committee

Relevant skills and experience

Mary Anne is an experienced Non-Executive Director

with considerable financial services and investment

banking experience, following an executive career

spanning over 20 years with Morgan Stanley. This

enables her to contribute to the effectiveness of

Barclays ’ operations, strategy and long-term

sustainable success of the business. Her current

other Non-Executive positions and Senior Advisory

role with Blackstone, coupled with her previous board

and senior management level positions (with Dollar

Tree Inc., Health Net, Inc., and Blackstone Advisory

Partners), contribute to the wide-ranging global,

strategic and advisory experience she can provide to

the Board.

Key current appointments

Non-Executive Director, HP Inc.; Non-Executive

Director, Ahold Delhaize N.V.; Non-Executive

Director, Alcoa Corporation; Senior Advisor, The

Blackstone Group L.P.

Committee membership

Board Risk Committee

Relevant skills and experience

Mohamed is a highly respected economist and

investor, with considerable experience in the asset

management industry and multilateral institutions. He

is chief economic advisor at Allianz SE, the corporate

parent of PIMCO (Pacific Investment Management

Company LLC) where he formerly served as Chief

Executive and Co-Chief Investment Officer. As well as

serving on several advisory committees and boards,

Mohamed is a regular columnist for Bloomberg

Opinion and a contributing editor at the Financial

Times. He has also published widely on international

economic and financial topics. He spent 15 years at

the IMF where he served as Deputy Director before

moving to the private sector and financial services.

Mohamed’s acute knowledge and understanding of

international economics and the financial services

sector strengthens the Board’s capacity for

overseeing the strategic direction and development of

the Group. Mohamed’s knowledge and experience

enables him to contribute to the long-term sustainable

success and strategy of the business.

Key current appointments

Board Member (Non-Executive), Under Armour Inc.;

Chief Economic Advisor, Allianz SE; Senior Advisor,

Gramercy Fund s Management; Senior Advisor,

Investcorp Bank BSC

Committee membership

None

Relevant skills and experience

Dawn is a highly experienced financial executive who

holds the role of Chief Investment Officer at Soros

Fund Management LLC. Her previous experience

includes 25 years with UBS and its predecessor

organisations, most recently as Head of Investments

for UBS Asset Management. Her knowledge of the

businesses and markets in which the Group operates

further strengthens the depth and range of relevant

sector skills and experience across the Board. This

enables Dawn to challenge and contribute effectively

to the Group’s operations and the long-term

sustainable success of the business.

Key current appointments

Chief Investment Officer at Soros Fund Management

LLC; Member of The New York Federal Reserve’s

Investor Advisory Committee on Financial Markets;

Member of Advisory Board and Investment

Committee of the Open Society Foundations’ and

their Economic Justice Programme

Committee membership

Board Risk Committee

Relevant skills and experience

Mary has extensive and diverse board-level

experience across a range of industries, including her

previous Non-Executive Directorships of the Bank of

England, Alliance & Leicester, Aviva, Centrica and

Swiss Re Group. Through her former senior executive

positions with HM Treasury, the Prime Minister’s

Office, and as Director General of the Association of

British Insurers, she brings to the Board a strong

understanding of the interaction between public and

priv ate sectors, skills in strategic decision-making and

reputation management and promotes strong board

governance values, which enables her to continue to

contribute effectively to the long-term sustainable

success of the Group.

Key current appointments

Non-Executive Director, Valaris PLC; Member of

Advisory Panel, The Institute of Business Ethics;

Member, UK Takeover Appeal Board

Committee membership

Board Remuneration Committee

5 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT

Board of Directors: 

a year of renewal

Relevant skills and experience

Brian has served as Chief Financial Officer for BP

p.l.c. since 2012. He joined BP in 1986 after obtaining

a PhD in Mathematics. After performing a broad

range of commercial and financial roles across all

facets of the group, he became chief executive of

BP’s integrated supply and trading function (2005 –

2009). Brian will retire fro m BP in June 2020. His

experience outside BP includes serving as a Non-

Executive Director and audit committee member of Air

Liquide S.A., the Royal Navy, and the Francis Crick

Institute. Brian also chairs the ‘100 Group’ of the

FTSE 100 Finance Directors. Brian brings to the

Board his extensive experience of management,

finance and strategy gained at BP and other public

and private boards. His experience with, and

understanding of, the challenges and opportunities

inherent in advancing a sustainable energy future will

be invaluable as Barclays considers how it can help

to accelerate the transition to a low carbon world.

Key current appointments

Chief Financial Officer, BP p.l.c.; Non-Executive

Director, Air Liquide S.A.; Non-Executive Director, the

Royal Navy; Senior Independent Director, the Francis

Crick Institute; Chairman, the 100 Group of the FTSE

100 Finance Directors

Committee membership

None

Relevant skills and experience

Tushar is a chartered accountant with over 25 years

of strategic financial management, investment

banking, operational and regulatory relations

experience, which enables him to contribute to the

long-term sustainable success and strategy of the

business. He joined Barclays from JP Morgan, where

he held various senior roles including the CFO of its

Corporate & Investment Bank at the time of the

merger of the investment bank and the wholesale

treasury/security services business.

Key current appointments

Member, the 100 Group of the FTSE 100 Finance

Directors ; Main Committee Chair, Sterling Risk Free

Reference Rates Working Group

Committee membership

None

Relevant skills and experience

Diane is a member of the Board, Chair of Barclays

Execution Services Limited and a member of the

Board of Barclays US LLC. She brings to Barclays a

wealth of experience in managing global, cross-

discipline business operations, client services and

technology in the financial services industry, which

enables her to robustly challenge the Group’s

strategy and support the long-term sustainable

success of Barclays. Diane had an extensive career

at Merrill Lynch, holding a variety of senior roles,

including responsibility for banking, brokerage

services and technology provided to the company’s

retail and middle market clients.

Key current appointments

None

Committee membership

Board Audit Committee, Board Nominations

Committee, Board Risk Committee

Company Secretary

Relevant skills and experience

Stephen was appointed Company Secretary in

November 2017 having previously served as the

Group Company Secretary and Deputy General

Counsel of SABMiller plc. Prior to this, he practised

law as a partner in a law firm in South Africa, and

subsequently in corporate law and M&A at Hogan

Lovells in the UK. Stephen has extensive experience

in corporate governance, legal, regulatory and

compliance matt ers. Stephen serves as Vice Chair of

the GC100, the association of General Counsel and

Company Secretaries working in FTSE 100

companies, and has previously served as Chairman

of the ICC UK ’s Committee on Anti-Corruption.

6 Barclays PLC 2019 Annual Report on Form 20-F

Executive Committee: strategically

enhanced and strengthened

We have changed the composition of the

ExCo, removing a management layer and

bringing key business areas closer to, and

making their leaders a part of, the most senior

management forum for the Group.

The following new roles and additions to the

ExCo mean that it now has a stronger and

closer strategic focus on, and oversight over,

the businesses comprising our CIB and our

global consumer banking and payments

businesses:

New roles

President of Barclays Bank PLC

Paul Compton

Global Head of Consumer Banking and

Payments

Ashok Vaswani

Paul and Ashok were previously members of

the ExCo in their capacities as Chief Operating

Officer and CEO of Barclays UK respectively

Roles elevated to the ExCo

Global Head of Banking

Joe McGrath

Global Head of Markets

Stephen Dainton

Head of Corporate Banking

Alistair Currie

Group Executive Committee biographies can

be found on pages 314 to 316.

7 Barclays PLC 2019 Annual Report on Form 20-F

Striving for simplicity 

and effectiveness

Barclays is a large, diversified organisation. We are committed, through

our governance model, to driving four key features: simplification,

collaboration, accountability and quality of decision-making.

Our governance framework

Our Group-wide governance framework has

been designed to facilitate the effective

management of the Group by our CEO and his

ExCo whilst preserving the constructive

challe nge, support and oversight of our major

subsidiary boards in the UK, Ireland and the

US, consistent with their respective legal and

regulatory responsibilities. The Barclays PLC

(BPLC) Board sets the strategic direction and

risk appetite of the Group and is the ultimate

decision -making body for matters of Group-

wide strategic, financial, regulatory or

reputational significance.

BPLC is the group parent company and has a

premium listing on the London Stock

Exchange. Each of our main operating entities,

Barclays Bank PLC (BBPLC), Barclays Bank

UK PLC (BBUKPLC), Barclays Bank Ireland

PLC, Barclays US LLC and Barclays Bank

Delaware, has its own board comprising

Executive and

Non-Executive Directors. Each also has its

own board committees.

During the year, we consolidated and

streamlined membership of the BPLC and

BBPLC boards, such that membership of the

BBPLC board is now a subset of the BPLC

Board, with all members of the BPLC Board

except the Senior Independent Director (SID),

the Chairm an of BBUKPLC and one Non -

Executive Director now also serving on the

board of BBPLC. This partial consolidation has

significantly increased coordination and

efficiency, and reduced complexity and

duplication. The revised BBPLC board

composition vests oversight over the activities

of BBPLC in a board the members of which

also have direct accountability to BPLC ’s

shareholders through their separate

responsibilities as members of the BPLC

Board.

Board composition

In 2019, we welcomed our new Chairman,

Nigel Higgins. We also announced the

appointment of two new Non-Executive

Directors:

■ Dawn Fitzpatrick, who joined the Board on

25 September 2019; and

■ Mohamed A. El-Erian, who joined the Board

on 1 January 2020.

In January 2020, we announced the

appointment of Brian Gilvary who joined the

Board on 1 February 2020.

All of these appointments bring tremendous

insight and experience relevant to the markets

in which we operate. In accordance with the

recommendation of the Code, Reuben Jeffery

and Dr. Dambisa Moyo, each having served on

the Board for nine years, stepped down, as did

Sir Gerry Grimstone and Mike Turner. Matthew

Lester stepped down on 1 January

Board Governance Framework

8 Barclays PLC 2019 Annual Report on Form 20-F

2020. We also bade farewell to John

McFarlane, who stepped down after four years

as Chairman, including a period where he was

Executive Chairman. We are grateful to them all

for their service to Barclays.

We are actively seeking to complement the

current range of skills on our Board, ideally with

individuals who can bring additional retail

banking and technology experience. Our strong

belief in the benefits of diversity – of gender,

ethnicity and thought – underpins our search. In

the report of our Nominations Committee we

address the continuing evolution of our Board.

Principal committees

The principal Committees of the BPLC Board,

and the core responsibilities of each, are

described in the “Board Governance

Framework” table at the foot of the previous

page. The remit of each Committee is set out in

brief in the table, and you can read more about

the Committees and their work on pages

 11

to

32

 and 80 to 82 .

In September 2019, the Board reviewed the

responsibilities of the Reputation Committee

and reallocated them mainly to the Board so

that it could itself directly oversee the critical

topics of culture, the environment and

reputation. Responsibility for the oversight of

Conduct risk and Compliance was transferred

from the Reputation Committee to the Risk

Committee.

We measure our effectiveness

An effective Board is one that delivers for

stakeholders. We assess the effectiveness of

our Board, its Committees and Board members

each year, as required by the Code. Although

the Code only requires an externally facilitated

evaluation every three years, for each of the

past four years we have used the services of an

external agency to facilitate the assessment of

the effectiveness of the Board. This year, the

Nominations Committee decided to ask our

SID, with the support of the Company

Secretary, to conduct the assessment. They are

well placed to do this, having been closely

involved in the transition to a new Chairman

and the evolving composition of the Board and

the way it operates. You can read more about

our 2019 process and our progress against the

2018 review on page s 23 to 24.

9 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT

Our key areas of focus in 2019

We think of governance as how we govern the organisation and make

decisions to promote its success for the long-term benefit of our

stakeholders. Effective governance makes possible the delivery of our

purpose and our strategy.

Governance in action: our

programme of prioritised deep

dives

To underpin informed and sound decision-

making, the Board needs to have a deep and

granular understanding of the Group as a

whole and each of its significant businesses –

where the key risks lie, how and where

resources are allocated and the contribution

made by each part of the business.

Led by the Chairman, the Board and the

ExCo have agreed a prioritised series of deep

dives which now form a significant part of

each Board meeting, with two to four deep

dives on the agenda for a typical Board

meeting. The materials for each deep dive

facilitat e an in-depth understanding of the

issues and generate meaningful discussion,

debate, support to management and

challenge on key topics, allowing the Board to

exercise effective oversight and assist the

delivery of the Group’s strategy.

Through this process, the Board considers

strategy at every meeting, rather than in a set

piece event once a year.

The Board has discharged its responsibilities

as described in this high -level flow diagram.

10 Barclays PLC 2019 Annual Report on Form 20-F

Key priorities

Core areas of focus

Our programme of deep dives is outlined below

and in the “Governance in action” section on

the previous page. This programme

commenced in July 2019, following the

appointment of Nigel Higgins as Chairman.

The deep dives held this year included

consideration of a wide range of topics,

covering selected individual business units as

well as Group-wide matters such as our capital

allocation framework, our costs, our societal

purpose, our culture, the environment and our

risk profile.

Feedback from our shareholders and wider

stakeholders has been taken into account in

arriving at and prioritising our deep dives.

The Board received updates on the

performance of the business and execution

of the strategy at every meeting, and the

approval of our MTP, in which our strategy is

embedded, was a key Board responsibility at

its November and December 2019 mee tings.

We also gave considerable focus to

developments in the regulatory environment,

and to engagement with our regulators in the

UK and the US in particular. The oversight of

risk and of our control environment is also

a core Board responsibility and has been

addressed at meetings through the year.

The Board believes

the right culture and

values, supported by

effective leadership

and a consistent tone

from the top, are

crucial to the success

of the Group.

Stakeholder engagement

We have enjoyed extensive engagement with

our shareholders in 2019 through a variety of

mechanisms, including: 

■ In February, March and April 2019, Nigel

Higgins held around 50 meetings with

shareholders and other stakeholders. This

was a “listening tour”, the aim of which was

for Nigel to introduce himself to a wide

range of stakeholders, including our

institutional shareholders, and to hear

directly from them their views on the

Company before he became Chairman in

May 2019. We also engaged with activist

investor Sherborne Investors Management

LP as part of this process; 

■ Our AGM, where the Board engaged

extensively with shareholders, both

formally during the meeting and

informally before and after the AGM; and 

■ Through our intensive Investor Relations

programme of conference calls, webcasts

and meetings at the time of each of our

quarterly results releases.

Our broader stakeholder engagement is

described in the Strategic Report available at

home.barclays/annualreport

. Specifically

with regard to our workforce, engagement with

our colleagues has long been a part of our

DNA as an organisation. The Board conducted

a full review of our existing engagement model

and concluded that this, with certain

enhancements, would be the best and most

effectiv e means to ensure sustained

engagement with our workforce whilst also

meeting the objectives of the Code’s new

workforce engagement requirements. Our

workforce engagement model is described in

the People section on page 83 to 86.

Purpose, culture and values

Our purpose, adopted in May 2018, is

“Creating opportunities to rise”. This is

underpinned by our values: respect, integrity,

service, excellence and stewardship, and by

the behaviours associated with them. Our

purpose, values and behaviours are designed

to support each other, to drive our culture and

to guide our strategy and decision -making.

The Board has recently examined our purpose

and concluded that whilst it is fully integrated

into many of our key processes and decision-

making forums, we have further work to do to

bring to life: to express and apply it consistently

across the Group, and for it to better connect

all of our stakeholders, our businesses, ESG

activities and ambitions. This work is under

way.

Our values were adopted in January 2013.

They were, and remain, fully embedded and

integrated into the Group.

Our culture is a core area of focus for the

Board, which bel ieves that the right culture and

values, supported by effective leadership and a

consistent tone from the top, are crucial to the

success of the Group.

How does the Board review

our culture?

The Board reviews our culture in a number of

ways, including: 

■ Quantitative and qualitative feedback on

how our culture aligns with our purpose,

values and strategy through Culture

Dashboards, so the Board can see the

effect our people engagement has on our

performance, and the continued strength

of our culture; 

■ Analysis of employee survey results; 

■ Face-to-face engagement with employees

locally to hear what they think; and 

■ Review of people policies, which are

designed to provide equal opportunities

and create an inclusive culture, in line with

our values and i n support of our long term

success.

11 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT, BOARD AUDIT COMMITTEE REPORT

Ensuring reporting integrity and

an effective controls environment

The Board Audit Committee has a central role in maintaining and

challenging the quality of Barclays external disclosures and its internal

control environment.

Dear Fellow Shareholder

2019 was a year of steady progress for

the Group both in enhancing its control

environment and embedding new financial

reporting requirements, particularly in relation

to the expected credit loss (ECL) model

introduced by the implementation of IFRS 9

in 2018.

Ensuring focus on strengthening the Barclays

internal control environment

has continued to

be a key activity for the Committee. 2019 was

an important year for the Barclays Internal

Control Environment Programme (BICEP)

which commenced in January 2017 and is on

track to complete by the end of March 2020. As

at the end of 2019, 94% of issues were either

closed or in validation with 96% of the BICEP

milestones achieved. When BICEP is fully

completed, the Group’s control environment

will be in a much stronger position, but

inevitably, as expect ations and standards

change and new control events occur, work is

still required both to maintain and to further

develop it. The Committee is therefore working

to ensure that as we transition to “business as

usual”, management has a robust framework

for identifying and responding to control issues

with appropriate reporting to the Committee

and other Board Committees. A key

component of this will be the work the Chief

Controls Office is doing to further streamline

and automate the Risk and Controls Self-

Assessment (RCSA) process to make it more

dynamic.

In assessing general control issues for

disclosure in this Annual Report, the

Committee continued to apply similar concepts

to those used for assessing internal financial

controls for the purposes of the US Sarbanes-

Oxley Act. The conclusion we reached is that

there are no control issues that are considered

to be a material weakness and which therefore

merit specific disclosure.

IFRS 9

continued to be a major focus for the

Committee this year as models conti nue to be

validated and refined. In addition disclosures

have been enhanced, although more work is

required to develop the ability to generate and

disclose more meaningful sensitivity analyses.

Following the introduction of the time bar by

the FCA at the e nd of August, the level of

subjectivity of the PPI provision at 31

December 2019 has been considerably

reduced. However the Committee did consider

whether the “spike” in complaints received just

before the deadline might have been

anticipated and was satisfied that there was no

evidence that would have justified an earlier

significant increase in the provision.

I continued my regular meetings with the

Chairs of the main subsidiary audit

committees, including the Chair of the BBPLC

audit committee until the partial consolidation

of the BPLC and BBPLC boards. Since that

time I have also met with the Chair of the

Barclays US LLC audit committee, attended

a meeting of the Barclays Bank Ireland PLC

audit committee, and attended the meeting of

the BBUKPLC au dit committee which

considered the main year -end accounting

issues. The Chair of the BBUKPLC audit

committee also attends the meeting of the

Committee where we consider the control

environment of BBUKPLC as part of our year-

end evaluation. I also continued to meet

frequently with members of senior

management, including the Group Finance

Director and Chief Internal Auditor. In relation

to the latter, I am pleased that the Committee

approved the appointment in September 2019

of Lindsay O’Reilly as the new Chi ef Internal

Auditor following a joint reco mmendation from

myself and the Group Chief Executive Officer.

As she was appointed to this role from a first

line of defence function, the Committee have

taken steps to understand and safeguard

against potential and perceived conflicts of

interest that may arise in order to support BIA’s

continued independence from the business.

BIA is a key component in supporting the

Committee’s work and I am pleased with

the way that the function has continued to

develop throughout the year in scoping,

performing and reporting the outcomes

of its work both to management and

the Committee.

I have also continued my regular engagement

with the Group’s regulators both in the UK and

US. This has encompassed not only my work

as the Chair of the Committee, but also my role

as the Group’s Whistleblowing Champion. In

that respect, I also oversaw the production of

the first of three annual reports which we have

agreed to submit to the FCA and PRA in the

UK and also the New York Department of

Financial Services containing certain

information regarding our whistleblowing

programme.

Committee performance

The performance of the Committee was

assessed internally as part of the annual

effectiveness review of the Board. In line with

the approach adopted for all Board

Committees in 2019, the process involved

completion of a tailored questionnaire by

Committee members and standing attendees.

The results confirm that the Committee is

operating effectively, and the Board takes a

high level of assurance from the technical

and commercial competence and diligence

of the Committee’s work. It is considered well-

constituted, with the right balance of skills and

experience to provide an appropriately broad

level of challenge and oversight of the areas

within its remit. Consideration will need to be

given to adding an additional member of the

Committee with recent and relevant financial

experience following the departure of Matthew

Lester at the end of the year.

Last year’s review commented on the improved

focus of the Committee on key issues in the

context of managing a demanding agenda

efficiently so that time is allocated to the most

significant items for discussion. As the

Committee has taken on additional

responsibilities during the year, for example the

oversight of tax matters, continued focus on

this area will be beneficial.

In response to a request to provide feedback

on the interaction with subsidiary audit

committees, the review highlighted that

interaction with the BBUKPLC audit committee

had been helpful and effective. Following the

consolidation of the membership of the

Committee with the BBPLC audit committee,

coverage of BBPLC matters within concurrent

meetings was considered adequate, noting that

it will benefit from further embedment.

Looking ahead

In 2020 the Committee will still continue to

monitor the embedment of IFRS 9 processes

and further enhancements to our disclosure,

particularly as regards sensitivities.

We will also be looking to assess the reporting

of control issues after the conclusion of BICEP

as well as monitor the satisfactory completion

of remediation programmes which are due to

extend beyond 31 March 2020, in particular the

Designated Markets Activity remediation plan.

Mike Ashley

Chair, Board Audit Committee 

12 February 2020

12 Barclays PLC 2019 Annual Report on Form 20-F

Committee composition

and meetings

The Committee is composed solely of

independent Non-Executive Directors, with

membership designed to provide the

breadth of financial expertise and

commercial acumen it needs to fulfil its

responsibilities. Its members as a whole

have recent and relevant experience of the

banking and financial services sector, in

addition to general management and

commercial experience, and are financially

literate. In particular, Mike Ashley, who is

the designated financial expert on the

Committee for the purposes of the US

Sarbanes -Oxley Act, is a former audit

partner who, during his executive career,

acted as lead engagement partner on the

audits of a number of large financial

services groups. Matthew Lester, who

resigned from the Committee on 1 January

2020, held a number of senior finance roles

across a range of business sectors,

including financial services, during his

executive career. You can find more details

of the experience of Committee members in

their biographies on pages 3 to 6.

During 2019, the Committee met 10 times

and the chart opposite shows how it

allocated its time. Attendance by members

at Committee meetings is also shown

opposite. Committee meetings were

attended by representatives from

management, including the Group Chief

Executive Officer, Group Finance Director,

Chief Internal Auditor, Chief Controls

Officer, Chief Risk Officer, Chief Operating

Officer, Group General Counsel and Group

Chief Compliance Officer, as well as

representatives from the businesses and

other functions. The lead audit engagement

partner of KPMG, Michelle Hinchliffe, also

attended Committee meetings. The

Committee held a number of separate

private sessions with each of the Chief

Internal Auditor and the lead audit

engagement partner, which were not

attended by management.

Committee role

and responsibilities

The Committee is responsible for: 

■ Assessing the integrity of the Group’s

financial reporting and satisfying itself

that any significant financial

judgements made by management

are sound; 

■ Evaluating the effectiveness of the

Group’s internal controls, including

internal financial controls;

■ Scrutinising the activities and

performance of the internal and

external auditors, including monitoring

their independence and objectivity; 

■ Overseeing the relationship with the

Group’s external auditor; 

■ Reviewing and monitoring the

effectiveness of the Group’s

whistleblowing policies and procedures;

and

■ Overseeing significant legal and

regulatory investigations, including the

proposed litigation statement for

inclusion in the statutory accounts.

13 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT, BOARD AUDIT COMMITTEE REPORT

Ensuring reporting integrity and

an effective controls environment

Area of focus

Reporting issue

Role of the Committee

Conclusion/action taken

Fair, balanced and

understandable

reporting

(including Country-by-

Country Reporting and

Modern Slavery

Statement)

In light of the Board’s obligation

under the Code, the Committee

assesses external reporting to

ensure it is fair, balanced and

understandable.

In addition to this Annual Report and

associated year-end reports, the

Committee also reviewed the Group’s

quarterly reports and the GFD’s

presentations to analysts.

The Committee informed these

reviews by:

■ Consideration of reports of the

Disclosure Committee which

included views on content,

accuracy and tone;

■ Direct questioning of management

including the CEO and GFD on the

transparency and accuracy of

disclosures;

■ Consideration of management’s

response to letters issued by the

FRC;

■ Evaluation of the output of the

Group’s internal control

assessments and Sarbanes -Oxley

s404 internal control process; and

■ Consideration of the results of

management’s processes relating

to financial reporting matters and

to evidence the representations

provided to the external auditors.

The Committee noted specifically that

whilst the disclosures regarding

IFRS9 met nearly all the

recommendations from the Enhanced

Disclosure Task Force these were

still evolving. The Committee

encouraged management to continue

to enhance the disclosure particularly

as the ability to analyse sensitivities

was developed.

Having evaluated all of the available

information, the assurances by

management and underlying

processes used to prepare the

published financial information, the

Committee concluded and advised

the Board that the 2019 Annual

Report and financial statements are

fair balanced and understandable.

Going concern and

long-term viability

Barclays is required to assess

whether it is appropriate to prepare

the financial statements on a going

concern basis and also, in

accordance with the Code, Barclays

must provide a statement of its

viability.

The Committee considered both the

going concern assumption and the

form and content of the viability

statement having regard to:

■ The MTP and WCR;

■ The forecasted liquidity and

funding profile;

■ The results of stress tests based

on both internal and regulatory

specified assumptions as reviewed

by the Risk Committee; and

■ Current risk and strategy

disclosures.

The Committee recommended to the

Board that the financial statements

should be prepared on a going

concern basis and that there were no

material uncertainties that may cast

significant doubt on the Group’s

ability to continue as a going concern.

The Committee also agreed that the

appropriate time frame for the viability

statement continued to be three years

and recommended the viability

statement to the Board for approval.

14 Barclays PLC 2019 Annual Report on Form 20-F

Area of focus

Reporting issue

Role of the Committee

Conclusion/action taken

Impairment

(refer to Note 7

to the

financial statements)

Following implementation of IFRS9,

ECLs are modelled using a range of

forecast economic scenarios. The

key areas of judgement include

setting the modelling assumptions,

developing the macroeconomic

scenarios and the methodology for

weighting them, establishing the

criteria to determine significant

deterioration in credit quality and the

application of management

adjustments to the modelled output.

As part of their monitoring the

Committee considered a number of

reports from management on:

■ The continued development and

embedding of controls over the

internal processes supporting the

ECL calculation and related

assessment of SOx compliance

(including by the external

auditors);

■ Model changes and refinements to

the staging criteria;

■ Regeneration of the

macroeconomic variables and

associated weighting;

■ Adjustments made to the modelled

output to reflect updated data and

known model deficiencies;

■ Comparisons betwe en actual

experience and forecast losses;

and

■ Single name exposures.

Having considered and scrutinised

the reports, the Committee agreed

with management’s conclusion that

the impairment provision (including

specifically the £150m for anticipated

economic uncertainty in the UK) was

appropriate.

Going forward the Committee also

agreed with management that it

would be appropriate to review the

frequency of regenerating the

macroeconomic scenarios.

Conduct provisions

(refer to Note 24

to the

financial statements)

Barclays makes certain

assumptions and estimates,

analysis of which underpins

provisions made for the costs of

customer redress, such as for PPI.

With a view to evaluating adequacy of

the provision, the Committee

analysed the judgements and

estimates made with regard to

Barclays’ provisioning for PPI claims,

taking into account:

■ Forecasts and assumptions made

for PPI complaints;

■ Actual claims levels and validity of

claims; and

■ Increased levels of claims based

on the August 2019 time bar for

claims (including claims from the

Official Receiver).

In light of information received, the

Committee agreed with management

that the PPI provision was adequate

during H1 2019 and did not need to

be increased. The PPI provision was

increased in Q3 2019 by £1.4bn due

to the exceptionally high volume of

claims received in late August 2019

prior to the time bar. The Committee

agreed with this increase and that the

level of provision at the end of the

year was appropriate.

The Commit tee also made

recommendations regarding the

sensitivity disclosures.

Legal, competition

and regulatory

provisions

(refer to Notes 24

and 26

to the financial

statements)

Barclays is engaged in various

legal, competition and regulatory

matters which may give rise to

provisioning based on the facts.

The level of provisioning is subject

to management judgement on the

basis of legal advice and is,

therefore, an area of focus for the

Committee.

Evaluated advice on the status of

current legal, competition and

regulatory matters and assessed

management’s judgements on the

levels of provisions to be taken and

accompanying disclosure.

The Committee discussed provisions

and utilisation and having reviewed

the information available to determine

what was both probable and could be

reliably estimated, the Committee

agreed that the level of provision at

the year-end was appropriate. The

Committee also considered that the

disclosures made provided the

appropriate information for investors

regarding the legal, comp etition and

regulatory matters being addressed

by the Group.

15 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT, BOARD AUDIT COMMITTEE REPORT

Ensuring reporting integrity and

an effective controls environment

Area of focus

Reporting issue

Role of the Committee

Conclusion/action taken

Valuations

(refer to Notes 13 to 17 to

the financial statements)

Barclays exercises judgement in the

valuation and disclosure of financial

instruments, derivative assets and

certain portfolios, particularly where

quoted market prices are not

available.

The Committee:

■ Evaluated reports from the Group

Financial Controller;

■ Monitored the valuation methods

applied by management requiring

significant judgement such as the

ESHLA portfolio; and

■ Reviewed the restructuring of the

long -dated derivative portfolio

which had previously given rise to

a significant valuation disparity

with the counterparty.

The Committee noted that there were

no new significant valuation

judgements at the end of the year.

The Committee was satisfied with the

accounting treatment on an amortised

cost basis of the investments now

held as a result of the restructuring of

the long -dated derivative portfolio.

The Committee was also satisfied

that the day one valuation ascribed to

resultant instruments was appropria te

by reference both to the existing

valuation methodology and the

ongoing profitability of the instruments

now held.

Tax

(refer to Note 9

to the

financial statements)

Barclays is subject to taxation in a

number of jurisdictions globally and

makes judgements with regard to

provisioning for tax at risk, and on

the recognition and measurement of

deferred tax assets.

The Committee is responsible for

considering the Group’s tax strategy

and overseeing compliance with the

Group’s Tax Code of Conduct. In this

regard the Committee received

reports from the Tax Management

Oversight Committee and in particular

considered the utilisation of the

Luxembourg tax losses and revised

US holding company structure.

The Committee reviewed the

appropriateness of provisions made

for uncertain tax positions, including

the retrospective de-grouping of

certain entities from the UK VAT

group.

The Committee also confirmed that

the estimates and assumptions used

in assessing the recoverability of

deferred tax assets were supported

by the MTP.

The Committee was satisfied that

specific strategies were in line with

the Group’s Tax Code of Conduct and

on behalf of the Board approved the

UK Tax Strategy statement published

as part of the Country-by-Country

Report.

The Committee noted that the

uncertain tax positions covered a

diverse range of issues and as a

consequence agreed with

management’s view that there was

not a significant risk of a material

adjustment during the next year.

The Committee was also satisfied

that deferred tax assets recognition

was appropriate.

16 Barclays PLC 2019 Annual Report on Form 20-F

Area of focus

Reporting issue

Role of the Committee

Conclusion/action taken

Internal controls

and business

control environment

Read more about

Barclays’ internal control

and risk management

processes on page s 37

to 38.

The effectiveness of the overall

control environment, including the

status of any significant control

issues and the progress of specific

remediation plans. 

The Committee:

■ Evaluated and tracked the status

of the most significant control

issues through regular reports

from the Chief Controls Officer,

including updates on lessons

learned and assessment against

the Controls Maturity Model. The

Committee also received

independent evaluations from BIA

and external auditors;

■ Evaluated the status of specific

significant control Hot Spots,

specifically; transaction

operations, cyber, treasury and

capital liquidity risk reporting and

model risk (control framework and

model reporting);

■ Scrutinised reports from individual

businesses and functions on their

control environment and focused

on the progress relating to

remediation areas; and

■ Monitored CASS updates and

associated remediation activities.

At its next meeting, the Committee

will receive feedback from the Chief

Controls Office on the 2019 RCSA

process, which will help inform the

Committee’s overall assessment of

the Group’s control environment. The

Committee also received preliminary

feedback from the Chief Controls

Officer on the 2019 RCSA process

which helped inform the Committee’s

overall assessment of the Group’s

control environment.

Throughout 2019, the Committee

has:

■ Monitored progress of BICEP

against completion. At the end of

2019, the Committee noted that

BICEP was on target for

completion by March 2020;

■ Monitored key control issues

through a series of deep dives and

scrutinised the pathway to ‘Return

to Satisfactory’ in respect of

internal controls operated by the

various functions and businesses;

■ Recommended enhancements to

the RCSA review process,

including streamlining review

through integration with the

internal control process review;

and

■ Enhanced monitoring of liquidity

risk remediation actions relating to

buffer increases, following an

increase in regulatory technical

breaches.

Raising concerns

The adequacy of the Group’s

arrangements to allow employees to

raise concerns in confidence and

anonymously without fear of

retaliation, and the outcomes of any

substantiated cases.

The Committee:

■ Has overseen the embedding of a

new centralised team to manage

concerns raised; and

■ Received reports from

management and monitored

whistleblowing metrics and

retaliation reports.

The Committee received two in -depth

semi-annual reports on

whistleblowing from management. At

year-end the Co mmittee noted the

recent ‘Satisfactory’ rating by BIA of

the audit of the centralised team and

considered that the whistleblowing

programme generally met with best

practice as identified by the PRA.

However the Committee encouraged

the team to consider how interaction

with whistleblowers might be further

enhanced to improve their experience

with the process. In addition the

Committee stressed the importance

of ensuring the time taken to

investigate concerns robustly was as

short as possible in order to mini mise

the potential stress for all concerned.

17 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT, BOARD AUDIT COMMITTEE REPORT

Ensuring reporting integrity and

an effective controls environment

Area of focus

Reporting issue

Role of the Committee

Conclusion/action taken

Internal audit

The performance of BIA and

delivery of the internal audit plan,

including scope of work performed,

the level of resources, and the

methodology and coverage of the

internal audit plan.

The Committee has:

■ Scrutinised and agreed internal

audit plans, methodology and

deliverables for 2020 including

assessing internal audit resources

and hiring levels, and any impacts

on the audit plan;

■ Tracked the levels of

unsatisfactory audits, and

monitored related remediation

plans;

■ Considered the recommendation

for the appointment of the Chief

Internal Auditor;

■ Discussed BIA’s approach to data

analytics;

■ Discussed BIA’s assessment of

the management control approach

and control environment in

BBUKPLC, BBPLC and the

functions; and

■ Evaluated the outcomes from

BIA’s annual self-assessment.

At year-end the Committee approved

the 2020 Audit Plan detailing the

number of audits and areas of focus,

and was satisfied with the level of

resource to be allocated.

In particular. the Committee has

scrutinised:

■ The appointment of the new Chief

Internal Auditor;

■ Internal audit resource and the

ability of BIA to support the 2020

Audit Plan; and

■ BIA’s assessment of the overall

control environment.

External audit

The work and performance of

KPMG.

The Committee:

■ Met with key members of the

KPMG audit team to discuss the

2019 audit plan and KMPG’s

areas of focus;

■ Assessed regular reports from

KPMG on the progress of the

2019 audit and any material

accounting and control issues

identified;

■ Discussed KPMG’s feedback on

Barclays’ critical accounting

estimates and judgements;

■ Discussed KPMG’s draft report on

certain control areas and the

control environment ahead of the

2019 year end; and

■ considered the draft SOx control

report and the draft audit opinion.

The Committee approved the audit

plan and the main areas of focus.

Read more about the Committee’s

role in assessing the performance,

effectiveness and independence of

the external auditor below.

18 Barclays PLC 2019 Annual Report on Form 20-F

External auditor

Following an external audit tender in 2015,

KPMG was appointed as Barclays’ statutory

auditor with effect from the 2017 financial year.

Michelle Hinchliffe of KPMG is the Senior

Statutory Auditor and was appointed to this

role with effect for the 2018 financial year.

Assessing external auditor

effectiveness, objectivity and

independence and non-audit

services

The Committee is responsible for assessing

the effectiveness, objectivity and independence

of the Group ’s auditor, KPMG. This

responsibility was discharged throughout the

year at formal Committee meetings, during

private mee tings with KPMG, and through

discussions with key executive stakeholders. In

addition to the matters noted above, the

Committee also: 

■ Approved the terms of the audit

engagement letter and associated fees,

on behalf of the Board;

■ Discussed and agreed revisions to the

Group policy on the

Provision of Services

by the Group Statutory Auditor

(the Policy)

and regularly analysed reports from

management on the non-audit services

provided to Barclays; 

■ Evaluated and approved revisions to the

Group policy on

Employment of

Employees or Workers from the Statutory

Auditor

and ensured compliance with the

policy by regularly assessing reports from

management detailing any appointments

made;

The Committee

considered that

KPMG maintained its

independence and

objectivity, and that

the audit process

was effective.

■ Was briefed by KPMG on critical

accounting judgements and estimates and

internal controls over financial reporting;

■ Considered the formal report from the

Public Company Audit Oversight Board on

their review of KPMG ’s audit of the 2017

financial statements and the consequential

revisions made by KPMG to their audits for

both the 2018 and 2019 financial

statements. These were in lin e with the

provisional results reported last year; and 

■ Assessed any potential threats to

independence that were self-identified and

reported by KPMG.

The Committee is aware that the FRC has also

reviewed certain aspects of KPMG ’s audit of

the 2018 fina ncial statements although its

report is not yet available. KPMG has informed

the Committee of areas for improvement which

are likely to be reported by the FRC and how

these matters have been addressed in the

2019 audit. Based on its understanding to date,

the Committee believes that KPMG ’s audit

work should provide reasonable assurance that

the financial statements are free of material

misstatement.

KPMG ’s performance, independence and

objectivity during 2019 were also formally

assessed at the beginning of 2020 by way of a

questionnaire completed by key stakeholders

across the Group, including the chairs of the

BBUKPLC, Barclays US LLC and Barclays

Bank Ireland PLC audit committees. The

questionnaire was designed to evaluate

KPMG ’s audit process and addressed matters

such as the quality of planning and

communication, technical knowledge, the level

of scrutiny and challenge applied and KPMG’s

understanding of the business. In addition, as

in the prior year, KPMG nominated a senior

partner of the audit team reporting to the

Senior Statutory Auditor to have specific

responsibility for ensuring audit quality. The

Committee therefore met with the partner

concerned without the Senior Statutory Auditor

to receive a report on his assessment of audit

quality.

Taking into account the result of all of the

above, the Committee considered that KPMG

maintained its independence and objectivity

and that the audit process was effective.

Non-audit services

In order to safeguard the auditor ’s

independence and objectivity, Barclays has in

place a policy setting out the circumstances in

which the auditor may be engaged to provide

services other than those covered by the

Group audit. The Policy applies to all Barclays’

subsidiaries and other material entities over

which Barcla ys has significant influence. The

core principle of the Policy is that non -audit

services (other than those legally required to

be carried out by the Group ’s auditor) should

only be performed by the auditor in certain

controlled circumstances. The Policy sets out

those types of services that are strictly

prohibited and those that are allowable in

principle. Any service types that do not fall

within either list are considered by the

Committee Chair on a case-by-case basis,

supported by a risk assessment provided by

management. A summary of the Policy can be

found at

home.barclays/who -we-are/our-

governance/auditor -independence

.

The P olicy is reviewed on an annual basis to

ensure that it is fit for purpose, and that it

reflects applicable rules and guidelines .

The P olicy is also aligned with KPMG’s own

internal policy on non-audit services for FTSE

350 companies which broadly restricts non-

audit work to services that are ‘closely related ’

to the audit.

Any changes to the Policy are approved at a

Group level by the Committee. This is in

accordance with European Union law and FRC

guidance, pursuant to which audit committees

of Public Interest Entities (such as Barclays)

are required to approve non -audit services

provided by their auditors to such entities, and

subsidiary Public Interest Entities in the UK –

such as BBUKPLC and BBPLC – can rely on

the approval of non -audit services by the

ultimate parent’s audit committee. It should be

noted that audit services, and the fee cap, will

also be monitored by the rele vant audit

committee, as appropriate.

Under the Policy the Committee has pre-

approved all allowable services for which fees

are less than £100,000. However, all proposed

work, regardless of the fees, must be

sponsored by a senior executive and recorded

on a centralised online system, with a detailed

explanation of the clear commercial benefit

arising from engaging the auditor over other

potential service providers. The audit

engagement partner must also confirm that the

engagement has been approved in accordance

with the auditor ’s own internal ethical

standards and does not pose any threat to the

auditor ’s independence or objectivity. All

requests to engage the auditor are assessed

by independent management before work can

commence. Requests for allowable service

types in respect of which the fees are expected

to meet or exceed the above threshold must be

approved by the Chair of the Committee before

work is permitted to begin. Services where the

fees are expected to be £250,000 or higher

must be approved by the Committee as a

whole. All expenses and disbursements must

be included in the fees calculation.

19 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT: BOARD AUDIT COMMITTEE REPORT

Ensuring reporting integrity and

an effective controls environment

During 2019, all engagements where expected

fees met or exceeded the above threshold

were evaluated by either the Committee Chair

or the Committee as a whole who, before

confirming any approval, assured themselves

that there was justifiable reason for engaging

the auditor and that its independence and

objectivity would not be threatened. No

requests to use KPMG were declined by the

Committee in 2019 (2018: none). On a

quarterly basis, the Committee reviewed

details of individually approved and pre-

approved services undertaken by KPMG in

order to satisfy itself that they posed no risk

to independence, either in isolation or on an

aggregated basis.

For the purposes of the Policy, the Comm ittee

has determined that any pre-approved service

of a value of under £50,000 is to be regarded

as trivial in terms of its impact on Barclays’

financial statements and requires the Group

Financial Controller to specifically review and

confirm to the Commi ttee that any pre-

approved service with a value of £50,000-

£100,000 may be regarded as such. The

Committee undertook a review of pre-approved

services at its meeting in December 2019 and

satisfied itself that such pre-approved services

were trivial in the context of their impact on the

financial statements.

The fees payable to KPMG for the year ended

31 December 2019 amounted to £56m, of

which £11m (2018: £11m) was payable in

respect of non -audit services. A breakdown of

the fees payable to the auditor for statutory

audit and non -audit work can be found in Note

40. Of the £11m of non-audit services provided

by KPMG during 2019, the significant

categories of engagement, i.e. services where

the fees amounted to more than £500,000,

included: 

■ Audit -related services: services in

connection with CASS audits; 

■ Other services in connection with

regulatory, compliance and internal control

reports and audit procedures, required by

law or regulation to be provided by the

statutory auditor; and 

■ Other attest and assurance services, such

as ongoing attestation and assurance

services for treasury and capital markets

transactions to meet regulatory

requirements, including regular reporting

obligations and verification reports.

The Statutory Audit Services

for Large Companies Market

Investigation (Mandatory Use

of Competitive Tender Processes

and Audit Committee

Responsibilities) Order 2014

An external audit tender was conducted in 

2015 and the decision was made to appoint

KPMG as Barclays’ external auditor with effect

from the 2017 financial year, with PwC

resigning as the Group ’s statutory auditor at

the conclusion of the 2016 audit.

Barclays is in compliance with the

requirements of The Statutory Audit Services

for Large Companies Market Investigation

(Mandatory Use of Competitive Tender

Processes and Audit Committee

Responsibilities) Order 2014, which relates to

the frequency and governance of tenders for

the appointment of the external auditor and the

setting of a policy on the provision of non-audit

services.

Provided that KPMG continue to maintain their

independence and objectivity, and the

Committee remains satisfied with their

performance, the Group has no intention of

appointing an alternative external auditor

before the end of the current required period of

10 years.

20 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT: BOARD NOMINATIONS COMMITTEE REPORT

Delivering effectiveness

An effective Board is a cohesive Board that provides

informed and constructive support and challenge to

the management team. This is vital to the generation

of increased and sustainable stakeholder value.

Achieving this – through its focus on the

composition of the Board, its Committees

and the ExCo, and by ensuring a pipeline of

succession to these and other senior

management key roles – is the main role of the

Nominations Committee.

Delivering effectiveness is not however just

about the continuous task of evolving the

composition of the Board, a Committee or the

ExCo to ensure that each is diverse and well

balanced with the right mix of talent, skills and

experience (illustrated below). As important

is how the Board operates – the quality

of its agenda and its engagement with

management, of the papers and presentations

it considers and of the rigour of its

discussions. The effectiveness of the Board

was enhanced in 2019 through revisi ons

to the Board engagement process with an

intensive focus on the preparation of our

Board papers, the delivery of targeted training

sessions to the Board and our new programme

of prioritised deep dives discussed on page 10 .

Much was done in 2019 on all of these fronts,

and there is more to do.

The Committee comprises solely Non-

Executive Directors and is chaired by

our Group Chairman. Details on Committee

membership and attendance are set out on this

page.

21 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT, BOARD NOMINATIONS COMMITTEE REPORT

Delivering effectiveness

Principal activities

The Committee ’s allocation of time and

the principal activities during the year

under review are set out on page s 20 to 22.

Board composition

With the restructuring of Barclays largely

complete, and a new Chairman in place,

the Nominations Committee recognised that

balancing the existing skills on the Board with

further banking and technology experience

would enhance its ability to provide informed

and constructive challenge to management,

and therefore its effectiveness.

Building on the work of the Committee

under previous Chairman John McFarlane,

the Committee analysed the skills and

experience on the Board against those

required to drive forward the execution of

the Group ’s strategy and the performance of

the business. The Committee concluded that

the Board must now include more Directors

with experience in technology, retail banking

and wholesale banking. Capturing the clear

benefits of greater diversity of background and

opinion was also recognised as a top priority.

The Committee also concluded that to be more

effective the Board would need to be smaller.

The Board was delighted

to announce the

appointment of Dr. El-

Erian, Ms Fitzpatrick and

Dr. Gilvary as Non-

Executive Directors.

Each will make a

significant contribution to

the effectiveness of the

Board.

Working alongside independent external

search firms Egon Zehnder and Spencer

Stuart, neither of which has any connection

to Barclays or any of the Directors other than to

assist with searches for executive and non-

executive talent, the Committee set rigorous

criteria for the roles it was seeking to fill, both

in terms of technical capabilities and

cultural/style attributes, and conducted

extensive search and selection processes.

Open advertising for Board positions was not

used this year.

The Board was delighted to announce the

appointment in September 2019 of two new

Non-Executive Directors, Dawn Fitzpatrick

and Mohamed A. El-Erian, and is confident that

each will make a very significant contribution to

the effectiveness of the Board. Their respective

skills and experience are set out in their

biographies on page 3 . Since the year end, the

Board has announced the appointment of Brian

Gilva ry. The Committee ’s focus now is on

securing a further Non-Executive Director with

outstanding retail banking and technology

experience to join the Board, with the benefits

of diversity remaining a key consideration.

The Committee has also made progress

against its goal of delivering a smaller Board –

a reduction in membership during 2019 from

15 to 11, going up to 12 with the appointment

of Dawn Fitzpatrick. On 1 January 2020,

Mohamed A. El-Erian joined the Board and

Matthew Lester stepped down, as announced

on 16 December 2019. Brian Gilvary joined

the Board on 1 February 2020.

Executive succession

Executive succession is a key consideration

and during the year, the Committee closely

monitored the status and progress of Barclays’

strategies for attracting and retaining the

best talent.

The Committee played an important role in the

management changes at ExCo level which

took place in March 2019. It recognised the

significant strategic an d operational benefits of:

■ Elevating to the ExCo the heads of key

businesses within the CIB; and 

■ Aligning the Group’s global consumer

banking and payments business under a

newly created ExCo role of Global Head of

Consumer Banking and Payments.

You can read more about these and the other

management changes on page 6.

Simplification of governance

The Board is already a little smaller than it was,

and with the support of our regulators we have

simplified the multi-tier structure at the top of

the organisation by bringing about a much

greater overlap between the Board and the

board of BBPLC. We expect this to produce

more cohesive and efficient governance, and

to enhance oversight by and accountability to

the Board of this key part of our business.

Diversity

At the end of 2019 we had met our 2020 Board

gender diversity target of 33%. Although recent

appointments took us to 31% we are

committed to continuing to bring the very best,

diverse talent we can attract to the Board. 

Alongside the Board, the Committee continues

to champion the benefits of diversity – be it

religious, ethnic or gender diversity or diversity

of social backgrounds or cognative and

personal strengths – at Board, Committee and

senior management level. In pursuit of this, the

Committee is monitoring and supporting the

Group’s focus on accelerated development of

the female talent pipeline, with the aim of

moving more female talent into the ‘Ready

Now’ succession positions. The mechanisms

being used Group-wide to achieve this include:

■ Identifying female talent;

■ Providing leadership and mentoring

programmes; and

■ Launching ‘Aspire’ – a programme used

to fast track the development of high

potential Vice Presidents to Director

(of which the majority in the programme

are female).

Successful leadership and governance

comes from different experiences and

perspectives, not just one point of view.

Our commitment is to attract and retain a broad

based pool of talent – not a particular type of

person – and the Board Diversity Policy and

the Committee terms of reference support this.

Both are available at

home.barclays/corpo rate governance

.

For additional information on diversity and

inclusion, our Diversity Policy and data on the

percentage of females in senior management

positions, please see pages 28 and 31

respectively of the Strategic Report available at

home.barclays/annualreport

.

22 Barclays PLC 2019 Annual Report on Form 20-F

Committee responsibilities

Ensuring the right individuals

are appointed – in line with

suitability criteria – who can

discharge the duties and

responsibilities of directors.

Effective Exco, Board and

Committee composition, through

focus on appointment and

succession based on merit and skill,

through a diversity lens.

Leading candidate search and

identification.

Regular review of succession

planning and recommendations for

key executive and non-executive

roles.

Monitoring of time commitments for

incoming and existing Directors to

ensure sufficient time for effective

discharge of duties.

Monitoring compliance against

corporate governance guidelines

and the Diversity Policy, including

yearly review and

any recommendations for

enhancements.

Ensuring compliance by the Board

with legal and regulatory

requirements.

Individual Director, Board

and Committee effectiveness

reviews and implementing

any required actions.

Considering and authorising,

subject to ratification by the Board,

any conflicts of interest.

Principal activities

Approval of re-allocation of management positions and reporting

lines following the reorganisation of the Group’s consumer banking

and payments business.

Approval of key executive appointments including the Global Head

of Markets.

Consideration and approval of new Group Chief Operating Officer

and CEO of BX, allowing the current role holder (Paul Compton) to

focus on the role of BBPLC President.

Candidate evaluation for both executive and non-executive current

and future roles including review of core skills and (for internal

candidates) scrutiny of internal feedback.

Review of the balance of skills and diversity on the Board, and

leading the search and recruitment process (including conflict

analysis) for candidates with relevant banking and technology

experience. The Committee utilised external search consultants

Egon Zehnder and Spencer Stuart to facilitate the targeted external

search processes based on agreed and reviewed criteria.

Directors’ tenure and effectiveness review, and identifying

candidates for re-election.

Approval of the appointment of Ms Schueneman to the

Nominations Committee.

Analysed ExCo composition and succession planning for strengths

and weaknesses, focussing on increasing diversity. Reviewed

‘Ready Now’ successors for key roles such as Group Chief Risk

Officer, Group Human Resources Director and Group Chief

Compliance Officer and suggested external market mapping for

any roles where a lack of a strong pipeline was identified.

Reviewed recommendations and suggested improvements arising

from the 2018 Board Effectiveness Review.

Approved that the 2019 Effectiveness Review be conducted

internally, led by the SID with support from the Company Secretary

and Nominations Committee oversight.

Approved further enhancements to Director training through deep

dive Director training sessions.

Review and approval of the composition of the Board Committees.

23 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT: BOARD NOMINATIONS COMMITTEE REPORT

Delivering effectiveness

Review of Board, Committee and

individual Director effectiveness 

Progress against 2018 Board

effectiveness review 

The 2018 externally -facilitated effectiveness

review outlined the following key

recommendations:

■

Board size and composition:

The 2018

review highlighted that the Board, at 15

members, was large relative to peers and

suggested that a Board of 10 to12

members is optimal, with 8 to 10 Non-

Executive Directors, provided that diversity,

succession planning and skills mix criteria

continue to be met.

2019:

The size of the Board was reduced

to 11 (post AGM) and is currently 13.

The Committee believes that the size of the

Board is now more appropriate, with more

work to do to reduce it further in size, and

that its effectiveness, and the balance of

skills, experience and diversity on the

Board, have been enhanced during 2019.

■

Culture, purpose and values:

The 2018

review recommended that the Board

ensure that the Company’s purpose and

values are fully aligned with its culture

and that all Directors lead by example

and promote the desired culture.

2019:

Deep dives have been held by the

Board covering purpose, values and culture

and considerable progress has been made

in relation to these recommendations.

■

Director training and development:

The 2018 review recommended that

enhanced training be provided for Board

members and senior executives on UK

corporate governance, and that refresher

training sessions and more opportunities for

site visits be made available.

2019:

Training on UK corporate

governance has been delivered in 2019

to Non-Executive Directors and to key

executives, and a new programme of

training sessions for Directors has been

implemented, with sessions held to date

focusing on technical aspects of some

of the more complex areas of the business,

in particular within the CIB. Opportunities

for site visits in the US and the UK have

been made available to all Board members.

■

Board objectives:

The 2018 review

recommended that to enable the Board

to spend more time on longer -term

and strategic issues a short set of annual

objectives would help to bring focus

to key issues and would result in papers

and meetings being more effective.

2019:

Through the programme of deep dives,

which covers a rolling 18-month period and

reflects the Board’s key priorities and

objectives, and through the effort to address

the deep dive topics effectively in the papers to

the Board, the Committee believes that this

recommendation has, in substance,

been addressed. Time is now devoted

to strategy and strategic issues at every

meeting of the Board, rather than once a year.

2019 Board effectiveness review 

The 2019 Board effectiveness review was

conducted internally, in line with the Code, and

was led by the SID with support from the

Company Secretary. The review followed a

structured interview process with Board

members, senior management and other

stakeholders, including our auditors, building

on the last year’s externally facilitated review.

The review is an important part of the way

Barclays monitors a nd improves Board

performance and effectiveness; maximising

strengths and highlighting areas for further

development.

Feedback indicated that recent changes in the

composition of the Board have made it more

effective, with the new mix of skills and

experi ence enhancing the quality of

discussion.

Board members commented that meetings are

characterised by constructive dialogue on

strategic issues, and healthy challenge in an

open and collegiate environment. The quality

of management’s input to Board meetings is

felt to have improved, in part as a result of

more active Board engagement in shaping

materials for debate.

The induction of the new Chairman has been

effective, enabling him to quickly understand

the organisation and provide effective

challenge and a strong platform for inclusive

debate.

The integration of BBPLC and BPLC board

meetings is viewed as efficient, whilst still

enabling the appropriate focus on matters

relevant to each entity.

Recommendations

■ The breadth and complexity of some issues

may necessitate a deeper discussion than

is currently possible in Board meetings.

Consideration will be given to the best way

to achieve this without significantly

increasing demands on the Board’s time;

■ As Barclays, and the wider industry,

becomes incr easingly more digital, there

may be benefit to adding greater

technology expertise to the Board. This

could be achieved either through greater

external input, or by looking to expand or

adjust Board membership;

■ There may also be opportunities to

increase the input to the Board from outside

Barclays on a wider range of issues,

thereby further strengthening decision-

making and ensuring that Board members

have the fullest understanding of the

context for their decisions; and 

■ Barclays should ensure that its ongoing,

structured approach to workforce

engagement includes appropriate

opportunities for Board members to engage

directly with employees, to help the Board

take the issues of interest to employees

into acc ount in decision -making.

Review of Nominations

Committee effectiveness

The performance of the Committee was

assessed internally in line with the approach

adopted for all Board Committees in 2019. The

process involved completion of a tailored

questionnaire by Committee members and

standing attendees.

The results confirm that the Committee is

operating effectively. This year’s review

highlights that the Committee continues to be

well constituted and that the role and

responsibilities of the Committee are clear and

well understood. The Committee’s interaction

with the Board, Board Committees and senior

management is considered effective. In

particular, this year’s review noted the positive

steps which had been taken to address

feedback from the previous review on ensuring

the same flow of infor mation is received by all

Non-Executive Directors in relation to

discussions and decisions made by the

Committee.

The review also noted that the Committee may

benefit from a more formalised meeting

schedule. It was acknowledged that due to the

nature of the Committee’s roles and

responsibilities this is not always possible, but

further consideration will be given to this

during the year.

In response to a request to provide feedback

on interaction with subsidiary committees, the

review noted that interaction with the

BBUKPLC nominations committee had been

effective. Following the consolidation of the

membership of the Committee with the BBPLC

nominations committee, coverage of BBPLC

matters within concurrent meetings was

considered adequate, noting that it will benefit

from further embedment.

24 Barclays PLC 2019 Annual Report on Form 20-F

Review of the effectiveness of other

Committees

In addit ion to reviewing its own effectiveness,

the Committee also reviewed the outcomes

of the effectiveness reviews conducted by the

Audit, Remuneration and Risk Committees

which had also been conducted by way of

tailored questionnaire. You can read about

those reviews in the individual Committee

reports elsewhere in this Governance Report.

Following consideration of the findings of the

2019 Board and Board Committee

effectiveness reviews, the Directors remain

satisfied that the Board and each of the Board

Committees are operating effectively.

Individual Director Effectiveness

All Directors in office at the end of 2019 (with

the exception of Matthew Lester who stepped

down on 1 January 2020) were subject to an

individual effectiveness review. The Chairman

and the SID considered each Director’s

individual contribution to the Company as

well as any feedback received as part of the

broader Board and Committee effectiveness

review. The reviews were conducted by the

Chairman and the Chairman’s review was

conducte d by the SID. The Committee also

reviewed the independence of the Directors,

and in the cases of Tim Breedon, Mike Ashley

and Crawford Gillies, all of whom have served

(or will have by the time of the 2020 AGM) on

the Board for more than six years, their

independence was subjected to a more

rigorous review as required by the Code.

Based on these reviews and the additional

review in respect of Mr. Staley described

below , the Board accepted the view of the

Committee that each Director proposed for

election or re-election at the 2020 AGM

continues to be effective, and contributes to

the Company’s long -term sustainable success.

Director effectiveness assessment:

disclosure of regulatory investigation

In accordance with the Code, all of the current

Directors of the Company will be submitting

themselves for election or re-election at the

2020 AGM to be held on 7 May 2020, and will

be unanimously recommended by the Board

for election or re-election as app ropriate. 

Further information in this regard will be set

out in the Notice of Meeting which will be

published in due course.

In deciding whether to recommend Jes Staley

for re-election, the Board has carried out its

usual formal and rigorous performance

assessment, which it does in respect of the

effectiveness of each of the Directors. As part

of its determination in respect of Mr. Staley,

the Board has had regard to media reports in

the past 6 months that have highlighted

historical links between Mr. Staley and Jeffrey

Epstein. 

As has been widely reported, earlier in his

career Mr. Staley developed a professional

relationship with Mr. Epstein. In the summer

of 2019, in light of the renewed media interest

in the relationship, Mr. Staley volunteered an d

gave to certain executives, and the Chairman,

an explanation of his relationship with Mr.

Epstein. Mr. Staley also confirmed to the

Board that he has had no contact whatsoever

with Mr. Epstein at any time since taking up his

role as Barclays Group CEO in December

2015.

The relationship between Mr. Staley and Mr.

Epstein was the subject of an enquiry from the

Financial Conduct Authority (FCA), to which

the Company responded. The FCA and the

Prudential Regulation Authority subsequently

commenced an investigation, which is

ongoing, into Mr. Staley's characterisation to

the Company of his relationship with Mr.

Epstein and the subsequent description of that

relationship in the Company’s response to the

FCA. 

Based on a review, conducted with the support

of external counsel, of the information

available to us and representations made by

Mr. Staley, the Board (the Executive Directors

having been recused) believes that Mr. Staley

has been sufficiently transparent with the

Company as regards the nature and extent of

his relationship with Mr. Epstein. Accordingly,

Mr. Staley retains the full confidence of the

Board, and is being unanimously

recommended for re-election at the 2020

AGM.

The Board will continue to cooperate fully with

the regulatory investigation, and will provide a

further update as and when it is appropriate to

do so.

25 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT, BOARD RISK COMMITTEE REPORT

Effective risk management:

designed to identify, assess

and control our risks

As a British universal bank, Barclays is subject to a variety of financial,

operational, legal and conduct risks.

Dear Fellow Shareholders

During 2019, the Committee maintained its

focus on the potential impact of macro-

economic developments and market volatility

on the risk profile of the Group. These issues

remain challenging and we continue to work

with management to position the Group

conservatively in response to a heightened risk

environment.

UK risks

were the subject of particular

attention due to the economic uncertainty

arising from the planned withdrawal from the

EU. The October 2019 withdrawal agreement

and the subsequent General Election result

have reduced political uncertainty significantly

but the future trading relationship with the EU

is yet to be agreed. Given the tight timetable

and the potential economic consequences this

remains a significant area of risk. The

Committee has also been active in ensuring

the operational resilience of the Group should

the UK leave the EU without reaching an

agreement on the future trading relationship.

We have continued to encourage management

to manage consumer and corporate credit

exposure in the UK in a cautious man ner and

this has helped the Group to limit losses and

avoid a number of the high profile corporate

failures seen during 2019.

Other key risks with potential for wider

contagion include those related to the

US economy where underlying economic

performance remains robust but growth

has slowed and consumer and corporate

indebtedness is high and growing. Political and

trade tensions, notably with China and Europe,

have increased and present a threat to growth

globally. 

Despite the strength of the US economy in

2019, the Committee remains focused on the

credit quality of our consumer and corporate

lending portfolios. In particular, the US credit

cards strategy was reviewed and the

Committee supported a continued steady

transition to a higher quality book and l ower-

risk new business mix.

The Committee has also considered the

ageing of the credit cycle

and rising

recessionary risks in our major markets. In the

second half of 2019, central banks undertook

synchronised rate cuts and other monetary

easing measures, with the Federal Reserve

Bank reversing its 2018 rate increases in the

face of moderate inflationary pressure and a

weaker growth outlook. This has supported

asset markets but increased the margin

pressures on banks from very low or negative

interest rate s, whilst also presenting

operational challenges. Policy tools available

to central banks to deal with further economic

weakness are limited and with abundant

liquidity influencing risk-pricing in financial

markets, the potential exists for extreme

market moves to occur, not least in response

to policy errors. These risks are actively

managed and the Committee maintains

regular oversight of the overall risk profile of

the Group’s balance sheet and actions taken.

The ongoing focus on book quality is

evidence d by another positive impairment

performance this year.

The Committee again reviewed in detail with

management the

Group’s leveraged finance

business

in light of continued concerns

regarding reduced market liquidity, particularly

for larger transactions, lower quality issues

and more aggressive structures. The balance

of risk and reward in this market continues to

be acceptable and underwriting losses in the

year were modest. However management was

encouraged to remain particularly vigilant to

these trends.

Barclays’ strategy includes some expansion of

structured credit exposures and an enhanced

control framework has been established to

control exposures and to ensure they are in

line with strategy in both scale and type.

The Committee also took on responsibility for

Conduct risk

following the dissolution of the

Board Reputation Committee in September.

The role of the Committee is to oversee the

management of regulatory risk and challenge

the business to continue to deliver fair

outcomes for customers. We have welcomed

the opportunity to achieve further alignment in

the consideration of both financial and non-

financial risks. In addition to focusing on the

Conduct risk profile of our core businesses,

the Committee has identi fied a number of key

conduct themes requiring active management.

Finally, the Committee reviewed the significant

enhancements the Group has made in its

approach to the management of the

risks of

climate change

. Both physical and transition

risks across al l portfolios were considered in

the context of a severe but plausible climate

stress. This analysis will support the Group’s

response to the forthcoming Bank of England

(BoE) industry-wide stress test. This progress

was welcomed whilst acknowledging the need

for risk management practices generally to

evolve further across the whole industry in

respect of climate change risk.

Operational risk

During the year, the Committee continued

to monitor and challenge the progress being

made by management in the identification,

assessment and management of operational

risk. A key part of this was the further delivery

and embedding of work commenced in prior

years. Two complementary risk management

tools used by management are the Risk and

Control Self -Assessments (RCSAs) and

Structured Scenario Assessments (SSAs).

The RCSAs give “day-to-day” coverage of the

risk and control environment of the Group.

They are built on a foundation of the actual

processes the Group employs and the risks

it faces from its activities. This approach

enables management to better identify and

manage operational risks going forward and

also to review in detail risk events that have

occurred in order to identify root causes.

26 Barclays PLC 2019 Annual Report on Form 20-F

The Committee continued to see progress

on SSAs and a number of specific scenarios

were reviewed during the course of the

year covering both Conduct (e.g. mis-selling of

products) and Non-Conduct (e.g. customer

data compromise, supplier financial failure)

scenarios. The SSAs are used to evaluate

operational risk arising from more extreme but

plausible situations and so complement the

RCSA approach, in combination they enable

the Committee to oversee the risk the Group

faces at both ends of the risk likelihood

spectrum. The SSAs are also an important

input to our Operational risk stress testing and

capital frameworks.

Risk appetite and risk models

One of the most important roles of the

Committee is to recommend to the Board an

appropriate risk appetite for the Group

. This

represents the amount of risk the Group is

able to take to earn an appropriate return

whilst meeting minimum internal and

regulat ory capital requirements in a severe but

plausible stress environment. The Committee

analyses Barclays performance in both its

internally -generated stress tests and those run

externally by such bodies as the Bank of

England, the European Banking Authority and

the Federal Reserve Board, and following such

analysis, will recommend adjustments to the

Group’s overall risk profile.

For our

internal stress test

, the Committee

received a detailed briefing on the process

being applied and was satisfied that the

internally -generated scenario was

appropriately calibrated, and also stressed

the particular vulnerabilities of the Bank. They

were further satisfied that the Group would

meet internal and regulatory requirements for

capital and liquidity in such a scenario.

The Committee continued to oversee the

improvement of model risk management in the

Group and the ongoing validation of our

models, with specific progress and

methodology enhancements in the model

outputs supporting our stress tests, including

the Interna l Capital Adequacy Assessment

Process (ICAAP) and Internal Liquidity

Adequacy Assessment Process (ILAAP)

. Our

models are the core foundation upon which the

majority of our internal assessment processes

run. The Committee is pleased to report that

progress has continued during 2019 to embed

the Model risk management framework as

evidenced by an increasingly stable model

inventory and further improvements in

documentation and control. However, models

remain a key risk area for the Group, and the

Committee is closely monitoring the

development of the Group’s approach.

Risk function

The Committee is responsible for ensuring the

independence and effectiveness of the Risk

function whose primary role is the oversight

and challenge of risk-taking as the second line

of defence. It accomplishes this by

establishing the policies, limits, rules and

constraints under which first line activities shall

be performed, consistent with the Group’s risk

appetite and through monitoring the

performance of the first line of defence against

these policies, limits and constraints. The

Committee’s responsibilities include designing

a consistent classification of the risks faced by

the Group in order to organise their

management and reporting; designing and

operating the process of setting risk appetite

and material limits for the Group as a whole

and its main entities; setting or approving

strategies for approvals of transactions, and

sanctioning large individual agreements; and

establishing key controls requirements to

which customer -facing areas of Barclays must

adhere in the conduct of their businesses.

The Committee reviewed the Risk function’s

own assessment of its capability in late 2019

which showed the function continues to meet

regulatory expectations in providing effective

and independent oversight with strong

stewardship and technical competency.

Progress continued in 2019 to ensure systems

and strategic architecture are fit for purpose

with further enhancement on technology

capabilities due from the delivery of further

strategic infrastructure in 2020.

Compliance function

The Compliance function is responsible for the

overall management and oversight of Conduct

and Reputation risk management practices as

the second line of defence. Compliance

participates in the prevention, detection and

management of breaches of applicable laws,

rules, regulations and relevant procedures and

has a key role in helping Barclays achieve the

right conduct outcomes. The Committee

supports the Compliance function to be

independent from operational functions and

have sufficient authority, stature, resources

and access to the management body.

The Committee monitored the delivery of the

Compliance function’s Annual Plan for 2019

and approved the Compliance function’s

Annual Plan for 2020.

Committee effectiveness

The 2019 Committee effectiveness review

was conducted in line with the Code. This

internal review involved completion of a

tailored questionnaire by Committee members,

senior management and other stakeholders,

including our auditors, building on the prior

year’s externally -facilitated review. The review

is an important part of the way Barclays

monitors and improves Committee

performance and effectiveness, maximising

strengths and highlighting areas for further

development.

The results of the review were positive and

indicated that the Committee is operating

effectively; and that it provides an effective and

broad level of challenge and oversight of the

areas within its remit. During the year, the

Committee took on

oversight of Conduct and

Compliance matters

, following re-allocation of

the responsibilities from the Reputation

Committee.

27 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT, BOARD RISK COMMITTEE REPORT

Effective risk management:

designed to identify, assess

and control our risks

Following the consolidation of the

membership of the Committee with the

BBPLC risk committee, coverage of

BBPLC matters within concurrent

meetings was considered appropriate,

noting that it will benefit from further

embedment.

Looking ahead

In 2020, the Committee will continue to

focus on the impact of the external

environment on the Group’s risk profile,

particularly as the negotiations on the

future trade relationship with the EU

progress and the broader geopolitical

context evolves in the run up to the US

presidential election.

Tim Breedon

Chair, Board Risk Committee 

12 February 2020

Committee meetings

During 2019, the Committee met nine times

and the chart opposite shows how it allocated

its time. Two of the meetings were held at

Barclays’ New York offices. Attendance by

members at Committee meetings is shown on

this page. Committee meetings were attended

by representatives from management,

including the Group Chief Executive Officer,

Group Finance Director, Group Chief Internal

Auditor, Group Chief Risk Officer, Group

Treasurer, Group Chief Compliance Officer

and Group General Counsel, as well as

representatives from the businesses and

other representatives from the Risk function.

The lead audit engagement partner of KPMG,

Michelle Hinchliffe, also attended Committee

meetings. The Committee held a number of

separate private sessions with the Group

Chief Risk Officer and Group Chief

Compliance Officer, which were not attended

by management.

Committee role and

responsibilities

The Committee is responsible for:

■ Recommending to the Board the Group’s

risk appetite for financial, operational and

legal risk; 

■ Monitoring financial, operational and legal

risk appetite, including setting limits for

individual types of risk, e.g. credit, market

and funding risk; 

■ Mon itoring the Group’s financial,

operational and legal risk profile;

■ Commissioning, receiving and considering

reports on key financial operational and

legal risk issues; 

■ Providing input from a financial and

operational risk perspective to the

Remuneration Committee to assist in its

deliberations relating to incentive

packages; and 

■ Oversight of conduct and compliance.

28 Barclays PLC 2019 Annual Report on Form 20-F

Primary activities

The Committee has diligently discharged its responsibilities in 2019, reviewing Group exposures in the context of the current and emerging risks

facing Barclays. It has sought to promote a strong culture of disciplined risk management.

Area of focus

Matter addressed

Role of the Committee

Conclusion/action taken

Risk appetite and

stress testing

i.e. the level of

risk the

Group

chooses to take

in

pursuit of its

business

objectives,

including testing

whether the

Group’s

financial

position and

risk

profile provide

sufficient

resilience to

withstand the

impact

of severe

economic

scenarios.

The risk context to

the MTP, the

financial parameters

and constraints and

mandate and scale

limits for specific

business risk

exposures; the

Group’s internal

stress testing

exercises, including

scenario selection

and financial

constraints, stress

testing themes and

the results and

implications of

stress tests,

including those run

by the BoE.

■ To advise the Board on the

appropriate risk appetite and

tolerance for the principal risks,

including the proposed overall

Group risk appetite and limits; 

■ To discuss and agree stress loss

and mandate and scale limits, for

Credit risk, Market risk and

Treasury and Capital risk; 

■ To consider and approve internal

stress test themes and the

financial constraints and

scenarios for stress testing risk

appetite for the MTP;

■ To evaluate the results of the

BoE’s annual cyclical stress test

and the BoE’s Biennial

Exploratory Scenario; and 

■ To consider the Federal Reserve

Board’s feedback of the Barclays

US LLC’s Comprehensive

Capital Analysis and Review

(CCAR) following the submission

of the CCAR stress test results.

The Committee reviewed and recommended the

proposed risk appetite to the Board for approval. It

discussed and approved the 2019 mandate and scale

limits for the Group, which included changes to A-level

stress loss limits. 

The Committee reviewed proposed enhancements to

the Group’s stress testing processes and models. It

also attended a stress test briefing providing additional

background and context to aid the review and approval

of various stress tests.

The Committee reviewed and approved the scenarios

for, and the financial results of, the MTP internal stress

test exercise, and on the basis that the results

remained within the Group’s risk appetite constraints,

subsequently recommended the MTP to the Board for

approval. It gave particular attention to the severity of

the internal stress test scenario, as well as the

application of “perfect foresight” methodology through

the test. 

The Committee evaluated the results of the 2018

Annual Cyclical Scenario, which included increased

focus on strategic manageme nt actions, and approved

the 2019 submission to the BoE. Similarly, the

Committee approved Barclays’ initial Biennial

Exploratory Scenario submission to the BoE. 

The Committee received updates on the 2019 CCAR

submission, and reviewed the feedback from the

Federal Reserve Board following the release of the

results.

29 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT, BOARD RISK COMMITTEE REPORT

Effective risk management:

designed to identify, assess

and control our risks

Area of focus

Matter addressed

Role of the Committee

Conclusion/action taken

Capital and

funding

i.e. having

sufficient

capital

and financial

resources to meet

the

Group’s

regulatory

requirements and

its

obligations as

they fall

due, to

maintain its

credit

rating, to

support

growth and

strategic options.

The trajectory to

achieving required

regulatory and

internal targets and

capital and leverage

ratios.

■ To review, on a regular basis,

capital performance against plan,

tracking the capital trajectory,

any challenges and

opportunities, and regulatory

policy developments;

■ To assess on a regular basis

liquidity performance against

both internal and regulatory

requirements; and 

■ To monitor capital and funding

requirements.

The Committee examined and supported the forecast

capital and funding trajectory and the actions identified

by management to manage the Group’s capital

position, taking into account the potential impact of

macroeconomic factors.

The Committee considered and approved the Group’s

capital adequacy assessment, together with the

methodologies and results of the reverse stress test

for submission of the 2019 ICAAP, as well as

approving the Group’s 2019 ILAAP. Committee

members also attended an ICAAP and ILAAP briefing

to further support their review and approval of the

submissions. The Committee evaluated regulatory

feedback on the ICAAP and ILAAP and oversaw the

continued improvement of the processes. 

The Committee reviewed and agreed with

management’s approach to an out-of-cycle refresh of

the Group’s 2018 ICAAP following an increase to PPI

provisioning. 

The Committee reviewed and scrutinised the Group

Recovery Plan, which forms a part of the Group’s

capital and liquidity risk management framework, and

confirmed that it was fit for purpose, ahead of its

presentation to the Board for approval. 

The Committee approved risk appetite constraints in

relation to capital and funding which require capital

and liquidity ratios to remain at a level where all

internal and regulatory requirements, and all

obligations as they fall due can be met under stress.

Political and

economic risk

i.e. the impact on

the

Group’s risk

profile of

political

and economic

developments and

macroeconomic

conditions.

The potential impact

on the Group’s risk

profile of geopolitical

developments, as

well as continuing to

monitor the political

and economic

impact of Brexit

scenarios.

■ To review and discuss plans for

the impacts of Brexit under

various withdrawal scenarios; 

■ To consider trends in the UK and

US economies; 

■ To assess the transmission

effects of Chinese/US trade

tensions and monitor the impacts

of slowing growth in China; and 

■ To review exposures to

emerging markets as a result of

volatility in these markets arising

from the impact of global political

and economic events.

The Committee monitored the potential risk impacts of

Brexit, giving particular consideration to the impact risk

of an exit without an agreement in place. It received

updates on, and oversaw management’s preparations

for, Brexit from a risk perspective, review ing in

particular any potential impact to the capital and

liquidity positions.

The Committee monitored the Group’s performance in

light of a backdrop of uncertain global political and

economic conditions, with particular focus on Barclays’

European exposures. 

Other key material risk themes discussed and

monitored by the Committee included rising global

debt and the response of Central Banks, the low rates

environment and potential for weakness in US

consumer credit. 

The Committee received updates on the progress of

the global transition to alternative risk free reference

rates including on preparations by the LIBOR

Transition Programme to manage and mitigate the

financial and non-financial risks associated with the

transition.

30 Barclays PLC 2019 Annual Report on Form 20-F

Area of focus

Matter addressed

Role of the Committee

Conclusion/action taken

Credit risk

i.e. the potential

for

financial loss if

customers fail to

fulfil

their

contractual

obligations.

Conditions in the UK

housing market;

levels of UK

consumer

indebtedness; and

the performance of

the UK and US

cards businesses,

including levels of

impairment.

■ To assess conditions in the UK

property market and monitor

signs of stress; 

■ To monitor how management

was tracking and responding to

persistent rising levels of

consumer indebtedness,

particularly unsecured credit in

both the UK and US;

■ To review leveraged finance

portfolios in order to assess

these were within risk appetite

and manageable limits; and 

■ To review business development

activities in the CIB.

The Committee continued to iterate the need to ensure

appropriate credit selection and discipline when

selecting business, and the importance of consumer

profiling to achieve improved risk selection. It

encouraged management to consider the impact of all

associated risks. 

The Committee oversaw improvements to the control

environment in the US cards business, and received

updates on the impacts of US economic conditions on

the portfolio.

The Committee was updated on programmes initiated

to assist customers to meet their contractual credit

obligations in the UK including the review of practices

in relation to customer affordability and persistent debt.

The Committee also reviewed the procedures

implemented to manage corporate exposure to UK

sectors primarily driven by consumer spending. 

The Committee received an update on the leveraged

finance business, which continues to be one of the

largest businesses within the Investment Bank, noting

that portfolios were within appetite and that

management had a strong focus on regulatory

compliance in this area. The Committee also received

updates on the structured finance business, noting the

growth in this activity and the fact that exposures

remained within appetite.

Operational risk

i.e. costs arising

from

human

factors,

inadequate

processes

and

systems or

external events.

The Group’s

operational risk

capital requirements

and any material

changes to the

Group’s operational

risk profile and

performance of

specific operational

risks against agreed

risk appetite.

■ To track operational risk key

indicators; 

■ To consider specific areas of

operational risks, including fraud,

conduct risk, cyber risk,

execution risk, technology and

data, including the controls that

had been put in place for

managing and avoiding such

risks; and 

■ To review Barclays’ approach

to scenario analyses as a risk

management tool and assess

a range of SSAs which had been

created to support assessments

and management of tail risk

within the business, stress

testing and risk tolerance.

The Committee continued to focus its attention on the

financial and capital impacts of operational risk. 

The Committee approved and recommended the 2019

Operational Risk Tolerance Statement to the Board,

which included financial loss appetites for fraud and

transaction operations for the first time. 

The Committee used SSAs to evaluate operational

risks that might arise in extreme but plausible

scenarios. They heard updates on SSAs, including,

those in relation to unauthorised trading and supplier

risk, and requested that SSAs continue to be

presented in 2020, specifically those in relation to data

privacy and misuse.

31 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT: BOARD RISK COMMITTEE REPORT

Effective risk management:

designed to identify, assess

and control our risks

Area of focus

Matter addressed

Role of the Committee

Conclusion/action taken

Model risk

i.e. the risk of the

potential adverse

consequences

from

financial

assessments

or

decisions based

on

incorrect or

misused

model

outputs and

reports.

Model risk

governance.

■ To evaluate the appropriateness

of the Model risk management

framework, and monitor progress

on the implementation of an

enhanced modelling framework,

including receiving updates on

findings in relation to specific

modelling processes.

The Committee reviewed and approved the Model

Risk Tolerance Criteria for 2019, which included CCAR

models at the Committee’s request. The Committee

maintained oversight of Model risk and in particular

monitored planned improvements to Barclays’ Model

risk management framework and ongoing upgrade

plans. The Committee monitored progress to ensure

that the scope of Model risk management

implementation was expanded to bring into

governance non -modelled methods used in a number

of large model frameworks. 

The Committee also maintained oversight of the

models used in the 2019 CCAR, ICAAP and ILAAP

submissions, and related stress test processes to

ensure they were materially brought into governance

by management. The Committee recognised the

added value that stronger model gove rnance had on

the quality of these submissions. 

The Committee sought, and were provided with,

assurance from the Independent Validation Unit of the

validation of models in relation to specific processes,

including ICAAP and ILAAP.

Risk framework

and governance

The frameworks,

policies and tools in

place to support

effective risk

management and

oversight.

■ To track the progress of

significant risk management

projects, including progress on

achieving compliance with the

Basel Committee for Banking

Supervision (BCBS239) risk data

aggregation principles and the

RCSA process across the

Group;

■ To assess risk management

matters raised by Barclays’

regulators and the actions

being taken by management

to respond; and 

■ To review the design of the

ERMF.

The Committee monitored the delivery of an action

plan created by management to review areas identified

for potential improvement identified by the

independent assessment of the design and

effectiveness of the Risk function completed in 2018. 

The annual update to the ERMF was recommended to

the Board by the Committee. The Committee

discussed and approved an annual refresh of the

Principal Risk Frameworks. 

The Committee reviewed the results of the 2018

RCSAs across the Group and recognised that its

output was extremely useful to inform internal

processes, but also to facilitate helpful dialogue with

the regulator. 

The Committee monitored management’s progress in

achieving compliance with all aspects of BCBS239,

and received updates on the level of implementation

throughout the year recognising the progress made

towards achieving full compliance by the end of 2020. 

In relation to climate change, the Committee received

an update on the associated financial and operational

risks and endorsed management’s app roach to the

management of those risks, which included the

establishment of a Climate Change Financial Risk and

Operational Risk Policy and the inclusion of climate

change in the ERMF and principal risk frameworks.

Remuneration

The scope of any

risk adjustments to

be taken into

account by the

Board

Remuneration

Committee when

making

remuneration

decisions for 2019.

■ To debate the Risk function’s

view of performance, making

a recommendation to the

Remuneration Committee on the

financial and operational risk

factors to be taken into

account in remuneration

decisions for 2019.

The Committee discussed the report of the Group

Chief Risk Officer and considered, and reported to the

Remuneration Committee on, the proposal put forward

in relatio n to the impact of relevant risk factors in

determining 2019 remuneration.

32 Barclays PLC 2019 Annual Report on Form 20-F

Area of focus

Matter addressed

Role of the Committee

Conclusion/action taken

Conduct Risk* 

i.e. the risk of

detriment from

the

inappropriate

supply of

financial services.

Conduct robust

reviews of any

current and

emerging risks

arising from the

inappropriate

provision of financial

services, including

instances of wilful

negligent

misconduct.

■ To receive updates from

management on Conduct risk

and consider performance

against key Conduct risk

indicators, and the status of

initiatives in place to address

those risks to further strengthen

the culture of the business; 

■ To review the effectiveness of

the Conduct risk framework and

approve any amendments to it;

and 

■ Reviewed the Compliance

function’s annual compliance

plan.

The Committee accepted oversight of Conduct risk

following the disbanding of the Reputation Committee

in September 2019. Since then the Committee has

received a deep dive on Conduct risk which provided a

detailed overview of recent developments made in the

area as well as an update on the current Conduct risk

environment, and proposed areas of focus for the

future. 

The Committee approved the revised Conduct risk

management framework which provided greater clarity

on roles and responsibilities in relation to Conduct risk

compared to previous versions. The Committee also

approved the annual compliance plan which contained

key initiatives which would be implemented in 2020.

* The Risk Committee remit extended to include the oversight of Conduct risk and Compliance on 25 September 2019, following the disbanding of the Reputation

Committee.

33 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT

How we comply

Board leadership and company

purpose

Role of the Board

As highlighted earlier in this report,

our governance is structured to deliver an

effective and entrepreneurial board which: 

■ Is effective in providing challenge, advice

and support to management; 

■ Provides checks and balances and

encourages constructive challenge; 

■ Drives informed, collaborative and

accountable decision-making; and

■ Creates long -term sustainable value for our

shareholders, having regard to our other

stakeholders.

Culture

The Barclays Way

sets the framework for

achieving a dynamic and positive culture.

The Board supports

The Barclays Way

 and the

Barclays Purpose and Values. It promotes

personal accountabili ty and leadership and

monitors our culture to satisfy itself as to the

alignment of Barclays’ culture to its purpose,

values and strategy. See page 91

for more

details.

Our “whistleblowing policy” enables employees

to raise any matters of concern anonymously

and is embedded into our business. For more

detail please refer to page 16

of the Audit

Committee Report.

Relations with Shareholders

and Stakeholders

The Board recognises the importance of

listening to, and understanding the views of,

our shareholders and stakeholders in order

to inform the Board’s decision -making.

Our comprehensive Investor Relations

engagement helps us to understand

investor views about Barclays, which are

communicated regularly to the Board,

and our Chairman engages with shareholders

on governance and related matters.

Our shareholder communication guidelines

are available on our website at

home.barclays/investorrelations

. Our

approach to stakeholde r engagement is

described on pages 14 to 17 in the Strategic

Report available at

home.barclays/annualreport

.

Institutional investors

Our engagement with institutional investors

increased throughout the year as compared

to prior years.

In 2019, the Directors, in conjunction with the

senior executive team and Investor Relations

colleagues, participated in investor meetings,

seminars and conferences across many

locations, reflecting the diverse nature of

our equity and debt institutional ownership. We

held conference calls/webcasts for our

quarterly results briefings and an in -person

presentation of our 2018 full year results for

both our equity and fixed income investors.

During 2019, discussions with investors

included, but were not limi ted to: 

■ Introducing our new Group Chairman, Nigel

Higgins; 

■ Addressing shareholder queries relating to

the requisitioned resolution at the AGM to

appoint Mr. Edward Bramson as a Director

of the Company; 

■ The continued digitisation of Barclays

and the value being created by BX in

improving the efficiency of our cost base;

■ Topics including risk management and

steps taken to mitigate the potential impact

from Brexit, as well as ESG factors, our CIB

strategy, and valuation and capital levels;

and 

■ Corporate governance policy and practice.

Private shareholders

During 2019, we continued to communicate

with our private shareholders through our

shareholder mailings and via the information

available on our website and through our AGM.

Shareholders can also choose to sign up to

Shareview so that they receive information

about Barclays PLC and their shareholding

directly by email. We continue to endeavour

to trace shareholders who did not take up their

share entitlement following the Rights Issue in

September 2013, and offer a Share Dealing

Service aimed at shareholders with relatively

small shareholdings for whom it might

otherwise be uneconomi cal to deal in Barclays

shares.

34 Barclays PLC 2019 Annual Report on Form 20-F

Our AGM

The Board and the senior executive team

consider our AGM as a key date for

shareholder engagement, particularly with our

private shareholders. A number of Directors,

including the Chairman, are available for

informal discussion before or after the meeting.

All of the resolutions proposed by the Board at

the 2019 AGM were considered on a poll and

were passed with votes ‘For’ ranging from

70.79% to 99.87% of the total votes cast.

Resolution 24 of the AGM was a requisitioned

resolution submitted by Sherborne Investors

Management LP to appoint Mr. Edward

Bramson as a Director of the Company and the

Board recommended shareholders to vote

against it. The resolution was considered on a

poll and was not passed, with votes ‘Against’

being 87.21% of the total votes cast.

At the 2019 AGM, the vote on the 2018

Directors’ Remuneration Report (Resolution 2)

was passed with 70.79 % of votes cast in

favour. For further information on Barclays’

response to the significant vote against the

2018 Directors’ Remuneration Report, please

see page 80 .

The Board has decided to hold the 2020 AGM

in Glasgow and thereafter expects to alternate

AGM venues between London and a venue

other than London where we have a significant

business or customer presence. The 2020

AGM will be held on 7 May 2020 at 11:00am at

the Scottish Events Campus (SEC) in

Glasgow, Scotland.

Stakeholder engagement

The Board continues to seek to understand

all stakeholders’ views, and the impact of our

behaviour and business on customers and

clients, colleagues, suppliers, communities and

society more broadly. Accordingly, the Board

monitors key indicators across areas such as

culture, citizenship, conduct, and customer and

client satisfaction on an ongoing basis. In

2019, we built on conversations started at the

AGM to engage in a continuing dialogue with

NGOs and other interest groups, to improve

our understanding of emerging and existing

environmental and societal topics. We will

publish the Barclays ESG Report in March

2020, which will be made available on our

website at

home.barclays/annualreport

.

Throughout 2019, we have engaged with these

stakeholders through participation in forums

and roundtables and joined industry, sector

and topic debates and this will continue in

2020.

Colleague engagement

The Group has a long-standing commitment to

the importance and value of colleague

engagement. Our colleagues drive our

success. You can read more about our

commitment to colleagues and our workforce

engagement in the Our People and culture

section on page s 83 to 86.

Conflicts of interest

In accordance with the Companies Act 2006

and the Articles of Association, the Board has

the authority to authorise conflicts of interest,

and this ensures that the influence of third

parties does not compromise the independent

judgement of the Board. Directors are required

to declare any potential or actual conflicts of

interest that could interfere with their ability to

act in the best interests of the Group. The

Company Secretary maintains a conflicts

register, which is a record of actual and

potential conflicts, together with any Board

authorisation of the conflict. The authorisations

are for an indefinite period but are reviewed

annually by the Nominations Committee, which

also considers the effectiveness of the process

for authori sing Directors’ conflicts of interest.

The Board retains the power to vary or

terminate these authorisations at any time.

Division of Responsibilities 

Roles on the Board

Executive and Non -Executive Directors

share the same duties. However, in line with

the principles of the Code, a clear division

of responsibilities has been established.

The Chairman is responsible for: 

■ Leading the Board and its overall

effectiveness; 

■ Demonstrating objective judgement; 

■ Promoting a culture of openness and

constructive challenge and debate between

all Directors; 

■ Facilitating constructive board relations

and the effective contribution of all Non-

Executive Directors; and 

■ Ensurin g Directors receive accurate,

clear and timely information.

Responsibility for the day-to-day management

of the Group is delegated to the Group Chief

Executive Officer who is supported in this role

by the ExCo. Further information on the

membership of the ExCo can be found on page

6.

As a Board we have set out our expectations of

each Director in Barclays’

Charter of

Expectations

. This includes role profiles and

the behaviours and competencies required for

each role on the Board, namely the Chairman,

Deputy Chairman (to the extent one is

required), SID, Non-Executive Directors,

Executive Directors and Committee Chairs.

Pursuant to the

Charter of Expectations

, Non-

Executive Directors provide effective oversight

and scrutiny, strategic guidance and

constructive challenge, whilst holding the

Executive Directors to account against their

agreed performance objectives. The Non-

Executive Directors, led by the Nominations

Committee, have primary responsibility

for the appointment and removal of the

Executive Directors.

The SID provides a sounding board for the

Chairman, acts as an intermediary for the other

Directors when necessary, and is available to

sharehold ers if they have concerns that have

not been addressed through the normal

channels.

The

Charter of Expectations

is reviewed

annually to ensure it remains relevant,

and accurately reflects the requirements

of the Code and the Regulations, and

industry best practice. A copy of the

Charter of Expectations

can be found at

home.barclays/corporategovernance

.

Information provided to the Board

It is the responsibility of the Chairman,

as set out in our Charter of Expectations,

to ensure that Board agendas are focused on

key strategy, risk, performance and other value

creation issues, and that members of

the Board receive timely and high-quality

information to enable them to make sound

decisions and promote the success of the

Company. Working in collaboration with

the Chairman, the Company Secretary is

responsible for ensuring good governance and

information flow, to ensure an effective Board.

Throughout the year, both the Executive

Directors and senior executives keep the

Board informed of key business developments

through regular updates. These are in

addition to the presentations that the Board

and Board Committees receive as part of

their formal meetings. Directors are able to

seek independent and professional advice

at Barclays’ expense, if required, to enable

them to fulfil their obligations as members

of the Board.

35 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT

How we comply

Attendance

Directors are expected to attend every Board meeting. In 2019, attendance was very strong both at scheduled and additional meetings (including

those called at short notice), reflected in the table below. The Chairman also met privately with the Non-Executive Directors ahead of three Board

meetings. If, owing to excep tional circumstances, a Director was not able to attend a Board meeting they ensured that their views were made

known to the Chairman in advance of the meeting. In addition, the SID met the other Non-Executive Directors individually, without the Chairman, to

appraise the Chairman’s performance, the details of which are included on page 24.

Board attendance in 2019*

Independent/Executive

Scheduled

meetings

eligible to

attend

Scheduled

meetings

attended

%

attendance

Additional

meetings

eligible to

attend

Additional

meetings

attended

Chairman

Nigel Higgins

on appointment

†

6

6

100%

0

0

Executive Directors

Jes Staley

Executive Director

7

7

100%

1

1

Tushar Morzaria

Executive Director

7

7

100%

1

1

Non-executive Directors

Mike Ashley

Independent

7

7

100%

1

1

Tim Breedon

Independent

7

7

100%

1

1

Sir Ian Cheshire

Independent

7

7

100%

1

1

Mary Anne Citrino

Independent

7

7

100%

1

1

Dawn Fitzpatrick

Independent

3

3

100%

0

0

Mary Francis

Independent

7

7

100%

1

1

Crawford Gillies

Senior Independent Director

7

7

100%

1

1

Matthew Lester

Independent

7

7

100%

1

1

Diane Schueneman

Independent

7

7

100%

1

1

Former Chairman

John McFarlane

on appointment

†

2

3

100%

1

1

Former Directors

Sir Gerry Grimstone

Independent

1

1

100%

0

0

Reuben Jeffery

Independent

2

2

100%

1

1

Dambisa Moyo

Independent

2

2

100%

1

1

Mike Turner

Independent

2

2

100%

1

1

Secretary

Stephen Shapiro

7

7

100%

1

1

* Mohamed A. El-Erian and Brian Gilvary did not join the Board until 2020. 

† As required by the Code, the Chairman was independent on appointment

Board Committee Cross membership

The table below shows the number of cross-membership of our Non-Executive Directors across our Board Committees as at 31 December 2019 .

36 Barclays PLC 2019 Annual Report on Form 20-F

Composition of the Board

In line with the requirements of the Code,

a majority of the Board is comprised of

independent Non-Executive Directors. We

consider the independence of our Non-

Executive Directors annually, having regard to

the independence criteria set out in the Code.

As part of this process, the Board keeps under

review the length of tenure of all Directors,

which can affect independence. The

independence of Tim Breedon, Mike Ashley

and Crawford Gillies – all of whom have served

(or will have by the time of the 2020 AGM) on

the Board for more than six years – was

subjected to a more rigorous review as

recommended by the Code. The Board

remains satisfied that the lengths of their

tenure have no impact on their respective

levels of independence or the effectiveness of

their contributions. During 2019, the previous

Chairman and the following Non-Executive

Directors stepped down from the Board. None

of these Directors raised any concerns about

the operation of the Board management: 

■ John McFarlane 

■ Dambisa Moyo 

■ Reuben Jeffery 

■ Mike Turner 

■ Sir Gerry Grimstone 

■ Matthew Lester

The Nominations Committee Report describes

the renewal of the Board in 2019, and steps

taken to further strengthen the Board.

Time commitment

All potential new Directors are asked

to disclose their other significant commitments.

The Nominations Committee then takes this

into account when considering a proposed

appointment to ensure that Directors can

discharge their responsibilities to Barclays

effectively. This means not only attending and

preparing for formal Board and Committee

meetings, but also making time to understand

the business, and to undertake training. As

stated in our

Charter of Expectations

, the time

commitment is agreed with each Non-

Executive Director on an individual basis. In

addition, all Directors must seek approval

before accepting any significant new

commitment. Set out below is the average time

commitment expected for the role of Non-

Executive Directors and the other Non-

Executive positions on the Board.

Following careful review, the expected time

commitments for Non-Executive Directors, and

for the Chairs of the Audit and Risk

Committees, were increased as set out below.

Time commitment

Role

Expected time

commitment (increased

during the year)

Chairman

Equivalent to up to 80% of

a full time position.

Senior

Independent

Director

As required to fulfil the

role.

Non-

Executive

Director

35– 40 days per year

(membership of one Board

Committee included,

increasing to 50 days a

year if a member of two

Board Committees). This

expectation was increased

from 30 days and 40 days

respectively.

Committee

Chairs

At least 80 days per year

(including Non-Executive

Director time commitment)

for Risk and Audit

Committee Chairs,

increased from 60 days,

and at least 60 days for

the Remuneration

Committee Chair.

Where circumstances require it, all Directors

are expected to commit additional time as

necessary to their work on the Board. The

Company Secretary maintains a record of each

Director’s commitments. For the year ended 31

December 2019 and as at the date of

publication, the Board is satisfied that none of

the Directors is over-committed and that each

of the Directors allocates sufficient time to his

or her role in order to discharge their

responsibilities effectively.

Composition, succession

and evaluation

The Company has a Nominations Committee,

the purpose and activities of which are

contained in the Nominations Committee

Report on page s 20 to 24.

Board appointments

All appointments to the Board and senior

management are viewed through a diversity

lens and are based on merit and objective

criteria, which focus on the skills and

experience required for the Board’s

effectiveness and the delivery of the Group

strategy. Board appointments are made

following a rigorous and transparent process

facilitated by the Nominations Committee, with

the aid of an external search consultancy firm.

You can read more about the work of the

Nominations Committee on pages 20 to 24.

Diversity across the Group remains a key area

of focus. For more detail on our actions to

incre ase diversity please see pages 28 to 31 in

the Strategic Report available at

home.barclays/annualreport

.

The Nominations Committee regularly

reviews the composition of the Board,

Board Committees and the ExCo. It frequently

considers the skills required for the Board, its

Committees and the ExCo, identifying the core

competencies, diversity and experience

required. This, along with the annual

evaluation, helps to refresh the thinking on

Board, Committee and ExCo composition and

to determine a timeline for proposed new

appointments. For the Board, it is standard

practice to appoint any new Non-Executive

Director or Chairman for an initial three -year

term, subject to annual re-election at the AGM,

which may be extended for up to a further

three-year term. As such, Non-Executive

Directors typically serve up to a total of six

years.

All Directors are subject to election or re-

election each year by shareholders at

the AGM.

Each year we carry out an effectiveness review

in order to evaluate our performance as a

Board, as well as the performance of each

of the Board Committees and individual

Directors. More information on the 2019 Board

evaluation and effectiveness review can be

found on page s 23 to 24.

37 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT

How we comply

Our biographies containing our relevant skills

and experience, Board Committee

memberships and other principal appointments

can be found on pages 3 to 5. Details of

changes to the Board in 2019 and year to date

are disclosed on page s 7 and 8.

The service contracts for the Executive

Directors and the letters of appointment for the

Chairman and Non -Executive Directors are

available for inspection at our registered office

and at our AGM.

Induction

On appointment to the Board, all Directors

receive a comprehensive induction that is

tailored to the new Director’s individual

requirements. The induction schedule is

designed to provide the new Director with

an understanding of how the Group works and

the key issues that it faces. The Company

Secretary consults the Chairman when

designing an induction schedule, giving

consideration to the particular needs of the

new Director. When a Director is joining a

Board Committee, the schedule includes an

induction to the operation of that committee.

Following their appointment, Dawn Fitzpatrick,

Mohamed A. El-Erian and Brian Gilvary are

receiving such an induction. They have met or

will meet with the Company Secretary, the

current Non-Executive Directors, members of

the ExCo and certain other senior executives,

as part of that process.

Training and development

In order to continue to contribute effectively to

Board and Board Committee meetings,

Directors are regularly provided with the

opportunity to take part in ongoing training and

development and can also request specific

training as required. In 2019, Directors

received ongoing training i n relation to legal

and regulatory developments in the form of

regular briefings and the Board has enhanced

this proposition with bi-annual training sessions

intended to deepen and broaden the Board’s

understanding in some of the more complex

and technical areas of the business. Each of

these training events typically comprises four

topics.

Audit, Risk and Internal Control

Accountability

Internal governance processes have been

developed to ensure the effective operation of

the individual boards and board committees of

each of BPLC, BBUKPLC and BBPLC

respectively, in recognition of the fact that this

is key to the development and execution of the

Group’s strategy. Generally, there is one set of

rules for the Group. Group -wide frameworks,

policies and standards are required to be

adopted throughout the Group unless local

laws or regulations (or the ring -fencing

obligations applicable to BBUKPLC) require

otherwise, or the ExCo decides otherwise in a

particular instance.

The Company has an Audit Committee and a

Risk Committee. The purposes and activities of

the Audit and Risk Committees are contained

within their respective reports on pages 11 and

25

respectively.

Internal and external audit functions

The Board together with the Audit Committee

is responsible for ensuring the independence

and effectiveness of the internal and external

audit functions. For this reason, the Audit

Committee members met regularly with the

Group Chief Internal Auditor and external audit

partner , without management present. The

appoi ntment and removal of the Group Chief

Internal Auditor is a matter reserved to the

Audit Committee and the appointment, and

removal , of the external auditors, is a matter

reserved to the Board. Neither task is

delegated to management. This is explained in

detail on pages 11 to 17

of the Audit

Committee report.

Company’s position and prospects

The Board, together with the Audit Committee,

is responsible for ensuring the integrity of

this Annual Report and that the financial

statements as a whole present a fair, balanced

and understandable assessment of the Group

and the Company’s performance, position and

prospects. This is explained in detail on pages

11 to 17 of the Audit Committee report.

Risk management and internal

control

The Directors are responsibl e for ensuring that

management maintains an effective system

of risk management and internal control and for

assessing its effectiveness. Such a system is

designed to identify, evaluate and 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.

The Group is committed to operating within a

strong system of internal control. Barclays has

an overarching framework that sets out the

approach of the Group to internal governance,

The Barclays Guide

. This establishes the

mechanisms, principles and processes through

which management implements the strategy

set by the Board.

Processes are in place for identifying,

evaluating and managing the Principal Risks

facing the Group in accordance with the ‘

Guidance on Risk Management, Internal

Control and Related Financial and Business

Reporting published by the FRC. A key

component of The Barclays Guide is the

ERMF. The purpose of the ERMF is to identify

and set minimum requirements in respect of

the main risks to the strategic objectives of the

Group. There are eight Principal Risks under

the ERMF: Credit risk, Market risk, Treasury

and capital risk, Operational risk, Model risk,

Reputation risk, Conduct risk and Legal risk.

The system of risk management and internal

control is set out in the risk frameworks relating

to each of our eight Principal Risks and the

Barclays Control Framework, which details

requirements for the delivery of control

responsibilities. Group-wide frameworks,

policies and standards enable Barclays to meet

regulators’ expectations relating to internal

control and assurance.

38 Barclays PLC 2019 Annual Report on Form 20-F

Effectiveness of internal controls

Key controls are assessed on a regular basis

for both design and operating effectiveness.

Issues arising out of these assessments,

where appropriate, are reported to the Audit

Committee. You can read more about the work

of the Audit Committee on pages 11 to 19 .

The Audit Committee also reviews annually the

risk management and internal control system,

which includes the ERMF. It has concluded

that, throughout the year ended 31 December

2019 and to date, the Group has operated a

sound system of internal control that provides

reasonable assurance of financial and

operational controls and compliance with laws

and regulations. For more details on that

evaluation and its conclusions please see

pages 11 to 19 .

The review of the effectiveness of the system

of risk management and internal control is

achieved through reviewing the effectiveness

of the frameworks, principles and processes

contained within The Barclays Guide, the

ERMF and the Barclays Control Framework.

Regular reports are made to the Risk

Committee and the Board covering significant

risks, measurement methodologies and

appropriate risk appetite for the Group. The

Audit Committee oversees the control

environment (and remediation of related

issues), and assesses the adequacy of credit

impairment. Further details of risk management

procedures and potential risk factors are given

in the Risk review and risk management

sections on pages 87 to 170.

Controls over financial reporting

A framework of disclosure controls and

procedures is in place to support the approval

of the financial statements of the Group.

Specific governance committees are

responsible for examining the financial reports

and disclosures to ensure that they have been

subject to adequate verification and comply

with applicable standards and legislation.

These committees report their conclusions

to the Audit Committee, which debates its

conclusions and provides further challenge.

Finally, the Board scrutinises and appr oves

results announcements and the Annual Report,

and ensures that appropriate disclosures have

been made. This governance process ensures

that both management and the Board are given

sufficient opportunity to debate and challenge

the financial statements of the Group and other

significant disclosures before they are made

public.

Management’s report on internal

control over financial reporting

Management is responsible for establishing

and maintaining adequate internal control over

financial reporting under the supervision of the

principal executive and financial officers, to

provide reasonable assurance regarding the

reliability of financial reporting and the

preparation of financial statements,

in accordance with International Financial

Reporting Standard s (IFRS). Internal control

over financial reporting includes policies and

procedures that pertain to the maintenance

of records that, in reasonable detail:

■ Accurately and fairly reflect transactions

and dispositions of assets; 

■ Provide reasonable assurances that

transactions are recorded as necessary to

permit preparation of financial statements in

accordance with IFRS and that receipts and

expenditures are being made only in

accordance with authorisations of

management and the respective Directors;

and 

■ Provide reasonable assurance regarding

prevention or timely detection of

unauthorised acquisition, use or disposition

of assets that could have a material effect

on the financial statements.

Internal control systems, no matter how well

designed, have inherent limitations and may

not prevent or detect misstatements. Also,

projections of any evaluation of effectiveness

to future periods are subject to the risk that

internal controls may become inadequate

because of changes in cond itions, or that

the degree of compliance with the policies

or procedures may deteriorate.

Management has assessed the internal control

over financial reporting as of 31 December

2019. In making its assessment, management

utilised the criteria set out in the 2013 COSO

framework and concluded that, based on its

assessment, the internal control over financial

reporting was effective as of 31 December

2019.

Our independent registered public accounting

firm has issued a report on the Group’s internal

control over financial reporting, which is set out

on page s 201 to 204.

The system of internal financial and operational

controls is also subject to regulatory oversight

in the UK and overseas. Further information on

supervision by the financial services regulator s

is provided under Supervision and Regulation

in the Risk review section on pages 171 to 177 .

Changes in internal control

over financial reporting

There have been no changes that occurred

during the period covered by this report, which

have materially affected or are reasonably

likely to materially affect the Group’s internal

control over financial reporting.

Remuneration

The Company has a Remuneration Committee,

the purpose and activities of which are

described in the Remuneration Committee

reports on pages 44 to 82.

The Board has delegated responsibility

for the consideration and approval of

the remuneration arrangements of the

Chairman, the Executive Directors, other

senior executives and certain Group

employees to the Remuneration Committee.

The Remuneration Committee, when

considering the remuneration policies and

practices, seek to ensure that they support the

Company’s strategy and promote the long -term

success of the business and that they are

aligned to the successful delivery of the

Group’s strategy. All execut ive and senior

management remuneration policies be

developed in accordance with the Group’s

formal and transparent procedures (ensuring

that no Director is involved in deciding his/her

own remuneration outcome) and having regard

to workforce remuneration and related policies

and the alignment of incentives and rewards

with culture. All Remuneration Committee

members demonstrate independent judgement

and discretion when determining and

approving remuneration outcomes. The Board

as a whole, with the Non -Executive Directors

abstaining, considers annually the fees paid to

Non-Executive Directors. Information on the

activities of the Remuneration Committee in

2019 can be found in the Remuneration Report

on pages 44 to 82.

39 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT

Other statutory information

The Directors present their

report together with the audited

accounts for the year ended 31

December 2019.

Other information that is relevant to the

Directors’ Report, and which is incorporated

by reference into this report, can be located

as follows:

Page

Remuneration policy, including

details of the remuneration of

each Director and Directors’

interests in shares

51

Corporate governance report

2

Risk review

87

Disclosures required pursuant to Large

and Medium -sized Companies and Groups

(Accounts and Reports) Regulations 2008

as updated by Companies (Miscellaneous

Reporting) Regulations 2018 can be found

on the following pages:

Page

Engagement with employees

(Sch. 7, para 11 and 11A

2008/2018 Regs.)

83-86

Policy concerning the employment

of disabled persons

(Sch. 7, para 10 2008 Regs)

93

Engagement with suppliers,

customers and others in a

business relationship

(Sch. 7, para 11B 2008/2018

Regs)

40

Financial instruments

(Sch. 7, para 6 2008 Regs)

235

Hedge accounting policy

(Sch. 7, para 6 2008 Regs)

239

Disclosures required pursuant to Listing

Rule 9.8.4R can be found on the following

pages:

Page

Long -term incentive schemes

54

Waiver of Director emoluments

82

Allotment for cash of equity securities

274

Waiver of dividends

39

Profit and dividends

Statutory profit after tax for 2019 was £3,354m

(2018: £2,583m). The 2019 full year dividend

of 6.0p per share will be paid on 3 April 2020 to

shareholders whose names are on the

Register of Members at the close of business

on 28 February 2020. With the 2019 half year

dividend totalling 3.0p per ordinary share, paid

in September 2019, the total distribution for

2019 is 9.0p (2018: 6.5p) per ordinary share.

The half year and full year dividends for 2019

amounted to £1,201 m (2018: £768m).

The nominee company of certain Barclays’

employee benefit trusts holding shares in

Barclays in connection with the operation of the

Company’s share plans has lodged evergreen

dividend waivers on shares held by it that have

not been allocated to employees. The total

amount of dividends waived during the year

ended 31 December 2019 was £1.58m (2018:

£0.85m).

The Company understands the importance of

delivering attractive cash returns to

shareholders. The Company is therefore

committ ed to maintaining an appropriate

balance between total cash returns to

shareholders, investment in the business, and

maintaining a strong capital position. Going

forward, the Company intends to pay a

progressive ordinary dividend taking into

account these objectives, and the earnings

outlook of the Group. It is also the Board’s

intention to supplement the ordinary dividends

with additional cash returns, including share

buy backs, to shareholders as and when

appropriate.

The Board notes that in determining any

proposed distributions to shareholders,

the Board will consider the expectation

of servicing more senior securities.

Board of Directors

The names of the current Directors of

Barclays PLC, along with their biographical

details, are set out on pages 3 to 5

and are

incorporated into this report by reference.

Changes to Directors during 2019 are set out

below.

Name

Role

Effective

date of

appointment/

resignation

Nigel

Higgins

Non-Executive

Director &

Chairman

Appointed

1 March 2019

John

McFarlane

Chairman

Resigned

2 May 2019

Sir Gerry

Grimstone

Non-Executive

Director

Resigned

28 February

2019

Reuben

Jeffery

Non-Executive

Director

Resigned

2 May 2019

Dambisa

Moyo

Non-Executive

Director

Resigned

2 May 2019

Mike

Turner

Non-Executive

Director

Resigned

2 May 2019

Dawn

Fitzpatrick

Non-Executive

Director

Appointed

25 September

2019

40 Barclays PLC 2019 Annual Report on Form 20-F

Appointment and retirement

of Directors

The appointment and retirement of Directors is

governed by the Company’s Articl es of

Association , the Code, the Companies Act

2006 and related legislation.

The Articles may only be amended by a special

resolution of the shareholders. The Board has

the power to appoint additional Directors or to

fill a casual vacancy amongst the Directors.

Any such Director holds office only until the

next AGM and may offer himself/herself for re-

election. Consistent with the recommendation

in the Code, all Directors will stand for election

or re-election at the 2020 AGM.

Directors’ indemnities

Qualifying third party indemnity provisions

(as defined by section 234 of the Comp anies

Act 2006) were in force during the course of

the financial year ended 31 December 2019 for

the benefit of the then Directors and, at the

date of this report, are in force for the benefit of

the Directors in relation to certain losses and

liabilities which they may incur (or have

incurred) in connection with their duties,

powers or office. In addition, the Company

maintains Directors’ & Officers’ Liability

Insurance which gives appropriate cover

for legal action brought against its Directors. 

Qualifying pension scheme indemnity

provisions (as defined by section 235 of the

Companies Act 2006) were in force during

the course of the financial year ended 31

December 2019 for the benefit of the then

Directors, and at the date of this report are

in force for the benefit of directors of Barclays

Pension Funds Trustees Limited as Trustee

of the Barclays Bank UK Retirement Fund.

The directors of the Trustee are indemnified

against liability incurred in connection with that

company’s activities as Trustee of the Barclays

Bank UK Retirement Fund.

Similarly, qualifying pension scheme

indemnities were in force during 2019 for

the benefit of directors of Barclays Capital

International Pension Scheme (No.1), and

Barclays PLC Funded Unapproved Retirement

Benefi ts Scheme. The directors of the Trustee

are indemnified against liability incurred in

connection with that company’s activities

as Trustee of the schemes above.

Political donations

The Group did not give any money for political

purposes in the UK, the rest of the EU or

outside of the EU, nor did it make any political

donations to political parties or other political

organisations, or to any independent election

candidates, or incur any political expenditure

during the year.

In accordance with the US Federal Election

Campaign Act, Barclays provides

administrative support to a federal Political

Action Committee (PAC) in the US funded by

the voluntary political contributions of eligible

employees. The PAC is not controlled by

Barclays and all decisions regarding the

amounts and recipients of contributions are

directed by a steering committee comprising

employees eligible to contribute to the PAC.

Contributions to political organisations reported

by the PAC during the calendar year 2019

totalled $46,000 (2018: $140,000).

Country- by-country reporting

The Capital Requirements (Country-by-country

reporting) Regulations 2013 require the

Company to publish additional information in

respect of the year ended 31 December 2019.

This infor mation is available on the Barclays

website:

home.barclays/annualreport

.

Managing our supply chain

14,000 companies from more than 26 countries

supply Barclays across a broad range of

products and services. Nearly 90% of our third

party spend is concentrated in the UK and US.

Our supply base is diverse, including start-ups,

small and medium -sized businesses,

businesses owned, controlled and operated by

under -represented segments of local societies

as well as multinational corporations. Many of

our suppliers have their own extensive supply

chains.

Our engagement with suppliers is important.

The Directors have regard, via management

oversight, to the need to foster business

relationships with suppliers and, as such,

engage with them to ensure adherence to the

Barclays’ Supplier Code of Conduct and

Supply Control obligations which cover our

expectations of suppliers .

.

Adherence is confirmed through pre -contract

attestation. Further, Barclays PLC is a

signatory to the Prompt Payment Code in the

UK, committing to pay our suppliers within

clearly defined terms. In 2019, we achiev ed

85% (2018: 82.1%) on-time payment by value

to our suppliers, meeting our public

commitment to the suppliers of 85%.

Environment

Banks have a direct environmental and social

impact through their operational footprint, as

well as indirectly in the way that they mobilise

capital, advise clients and develop products.

Are aim is to help facilitate the transition to less

carbon intensive sources of energy, while

supporting economic development and growth

in society by helping to ensure the world’s

energy need s are met responsibly.

Barclays invests in improving the energy

efficiency of our operational footprint and

offsets the emissions remaining through the

purchase of carbon credits. In 2019 we set a

80% reduction target from our combined scope

1&2 emissions aligned to Science Based

Target methodology by 2025, and committed to

procure 100% renewable electricity for all

operational needs by 2030 with an interim goal

of 90% by 2025. At the end of 2019 we have

achieved a 53% emissions reduction and are

currently procuring 60% of our electricity

through renewable means. We also have a

long -standing commitment to managing the

environmental and social risks associated with

our lending practices, which is embedded into

our risk processes. A governance structure is

in place to facilitate clear dialogue across the

business and with suppliers around issues of

potential environmental and social risk.

We have disclosed global greenhouse gas

emissions (GHG) that we are responsible

for as set out by the Companies Act 2006

(Strategic Report and Directors’ Report)

Regulations 2013. We will provide additional

disclosure on (i) financing solutions for the

lower carbon economy, (ii) environmental risk

management and (iii) management of our

carbon and environmental footprint in the

Strategic Report

and in Barclays ESG Report

which will both be available on our website at

home.barclays /annualreport

in March 2020.

41 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT

Other statutory information

Current Reporting Year

a

2019

Previous Reporting Year

2018

U

K &

Offshore

Global

Green

House

Gas

Emissions

UK &

Offshore

Global

Green

House

Gas

Emissions

Global Green House Gas (GHG) Emissions

b

Total CO

2

e (tonnes)

146,873

278,156

164,197

298,227

Scope 1 CO

2

e emissions (tonnes)

c

17,760

24,276

17,576

25,868

Scope 2 CO

2

e emissions (tonnes)

d

99,276

185,743

116,409

203,126

Scope 3 CO

2

e emissions (tonnes)

e

29,837

68,137

30,212

69,233

Intensity Ratio

Total Full Time Employees (FTE)

47,800

80,800

49,000

83,500

Total CO

2

e per FTE (tonnes)

f

3.07

3.44

3.35

3.57

Market based emissions

Scope 2 CO

2

e market based emissions (tonnes)

d

7,464

110,071

142,107

260,731

Total gross Scope 1 & 2 (market based) emissions (tonnes)

25,224

134,347

159,683

286,599

Energy consumption used to calculate above emissions (kWh)

g

439,840,511

686,138,107

449,546,050

698,527,190

Notes

a The carbon reporting year for our GHG emissions is 1 October to 30 September. The carbon reporting year is not fully aligned to the financial reporting year covered

by the Directors’ report. Details of our approach to assurance over the data will be included in the 2019 Barclays ESG report due be released in March 2020. 

b The methodology used to calculate our GHG is the Greenhouse Gas Protocol. A Corporate Accounting and Reporting Standard Revised Edition, defined by the World

Resources Institute/World Business Council for Sustainable Development (ERI/WBCSD). We have adopted the operational control approach on reporting boundaries

to define our reporting boundary. Where properties are covered by Barclays’ consolidated financial statements but are leased to tenants, these emissions are not

included in the Group GHG calculations. Where Barclays is responsible for the utility costs, these emissions are included. We continuously review and update our

performance data based on updated carbon emission factors, improvements in data quality and updates to estimates previously applied. For 2019 we have applied

the latest emission factors available at the time of reporting. Where our performance has changed by more than 1% we have restated the balances and baseline. 2018

emissions have been updated to reflect additional consumption data which was not available at the time of reporting. The previously reported figure was 292,151

tCO

2

e. 

c Scope 1 covers direct combustion of fuels and company owned vehicles (from UK only, which is the most material contributor). Fugitive emissions reported in Scope 1

cover emissions from UK, Americas, Asia Pacific, India and Europe. 

d Scope 2 covers emissions from electricity and steam purchased for own use. Market based emissions have been reported for 2018 and 2019. We have used a zero

emission factor where we have renewable contracts already in place in the UK, US and Continental Europe. 

e Scope 3 covers indirect emissions from business travel (global flights and ground transport from the UK, USA and India. USA and India ground transport covers

onwards car hire only which has been provided directly by the supplier). Ground transportation data (excluding Scope 1 company cars) covers only countries where

robust data is available directly from the supplier.

f Intensity ratio calculations have been calculated using location based emission factors only. 

g Energy consumption data is captured through utility billing; meter reads or estimates. In 2019, we have reduced our energy consumption by 1.8% versus 2018. We

continue to work on improving the operational efficiency of our property portfolio and in 2019 conducted a number of projects globally which have achieved a total

energy reduction of 2GWH’s since implementation, enough energy to boil 13 million kettles. In 2019 we have conducted a number of LED installations across our sites

in the USA, India and in the UK, saving 490 MWh. We also saved 180 MWh of electricity globally through our switch off campaign as part of Earth Hour 2019. Across

a number of our large buildings we have conducted improvements to the building management systems to ensure efficient plant run times and aligning heating and air

conditioning to the occupancy of our buildings, saving 1,300 MWh. Globally we have conducted end of life asset replacement installing more energy efficient plants in

our buildings and achieving a 200MWh saving. Finally, we have continued with Server Decommissioning in the UK and completed cold aisle containment as well as

LED lighting retrofits at our Cranford data centre in the USA saving circa 260MWh.

Research and development

In the ordinary course of business, the Group

develops new products and services in each

of its business divisions.

Share capital

Share capital structure

The Company has ordinary shares in issue.

The Articles also allow for the issuance of

sterling, US dollar, euro and yen preference

shares (preference shares). No preference

shares have been issued as at11

February

2020 (the latest practicable date for inclusion in

this report). Ordinary shares therefore

represent 100% of the total issued share

capital as at 31 December 2019 and as at 11

February 2020 (the latest practicable date for

inclusion in this report).

Details of the movement in ordinary share

capital during the year can be found in Note 28

on page 274 .

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. Every proxy present

has one vote. The proxy will have one vote for

and one vote against a resolution if he/she has

been instructed to vote for or against the

resolution by different members or in one

direction by a member while another member

has permitted the proxy discretion as to how to

vote.

On a poll, every member who is present or

represented and who is entitled to vote has

one vote for every share held. In the case of

joint holders, only the vote of the senior holder

(as determined by order in the share register)

or his/her proxy may be counted. If any sum

payable remains unpaid in relation to a

member’s shareholding, that member is not

entitled to vote that share or exercise any other

right in relation to a meeting of the Company

unle ss the Board otherwise determines.

42 Barclays PLC 2019 Annual Report on Form 20-F

If any member, or any other person appearing

to be interested in any of the Company’s

ordinary shares, is served with a notice under

section 793 of the Companies Act 2006 and

does not supply the Company with the

information required in the notice, then the

Board, in its absolute discretion, may direct

that member shall not be entitled to attend or

vote at any meeting of the Company. The

Board may further direct that if the shares of

the defaulting member represent 0.25%

or more of the issued shares of the relevant

class, that dividends or other monies payable

on those shares shall be retained by the

Company until the direction ceases to have

effect and that no transfer of those shares shall

be registered (other than certain specified

‘excepted transfers’). A direction ceases to

have effect seven days after the Company has

received the information requested, or when

the Company is notified that an excepted

transfer of all of the relevant shares to a third

party has occurred, or as the Board otherwise

determines.

Transfers

Ordinary shares may be held in either

certificated or uncertificated form.

Certificated ordinary shares may be transferred

in writing in any usual or other form approved

by the Company Secretary and executed by or

on behalf of the transferor. Transfers of

uncertificated ordinary shares must be made in

accordan ce with the Companies Act 2006 and

CREST Regulations.

The Board is not bound to register a transfer of

partly -paid ordinary shares or fully -paid shares

in exceptional circumstances approved by the

FCA. The Board may also decline to register

an instrument of transfer of certificated ordinary

shares unless it is (i) duly stamped, deposited

at the prescribed place and accompanied by

the share certificate(s) and such other

evidence as reasonably required by the Board

to evidence right to transfer, (ii) it is in respect

of one class of shares only, and (iii) it is in

favour of a single transferee or not more than

four joint transferees (except in the case of

executors or trustees of a member).

In accordance with the provisions of section 84

of the Small Business, Enterprise and

Employment Act 2015, preference shares may

only be issued in registered form. Preference

shares shall be transferred in writing in any

usual or other form approved by the Company

Secretary and executed by or on behalf of the

transferor. The Company’s registrar shall

register such transfers of preference shares by

making the appropriate entries in the register of

preference shares. Each preference share

shall confer, in the event of a winding up or any

return of capital (other than, unless otherwise

provided by their terms of issue, a redemption

or purchase by the Company of any of its

issued shares, or a reduction of

share capital), the right to receive out of the

surplus assets of the Company available for

distribution, and in prio rity to the holders of the

ordinary shares and any other lower ranking

shares in the Company, and pari passu with

any other class of preference shares of similar

ranking, repayment of the amount paid up or

treated as paid up in respect of the nominal

value of the preference share together with any

premium which was paid or treated as paid

when the preference share was issued in

addition to an amount equal to accrued and

unpaid dividends.

Variation of rights

The rights attached to any class of shares may

be varied either with the consent in writing of

the holders of at least 75% in nominal value

of the issued shares of that class, or with the

sanction of a special resolution passed at a

separate meeting of the holders of the shares

of that class. The rights of shares shall not

(unless expressly provided by the rights

attached to such shares) be deemed varied by

the creation of further shares ranking equally

with them or subsequent to them.

Limitations on foreign shareholders

There are no restrictions imposed by the

Articles or (subject to the effect of any

economic sanctions that may be in force from

time to time) by current UK laws which relate

only to non -residents of the UK and which limit

the rights of such non -residents to hold or

(when entitled to do so) vote the

ordinary shares.

Exercisability of rights under

an employee share scheme

Employee Benefit Trusts (EBTs) operate

in connection with certain of the Group’s

Employee Share Plans (Plans). The trustees of

the EBTs may exercise all rights attached to

the shares in accordance with their fiduciary

duties other than as specifically restricted

in the relevant Plan governing documents.

The trustees of the EBTs have informed the

Company that their normal policy is to abstain

from voting in respect of the Barclays shares

held in trust. The trustees of the Global

Sharepurchase EBT and UK Sharepurchase

EBTs may vote in respect of Barclays shares

held in the EBTs, but only as instructed by

participants in those Plans in respect of

their partnership shares and (when vested)

matching and dividend shares. The trustees

will not otherwise vote in respect of shares held

in the Sharepurchase EBTs.

Special rights

There are no persons holding securities that

carry special rights with regard to the control of

the company.

Major shareholders

Major shareholders do not have different voting

rights from those of other shareholders.

Information provided to the Company by

substantial shareholders pursuant to the FCA’s

Disclosure Guidance and Transparency Rules

are publi shed via a Regulatory Information

Service and is available on the Company’s

website. As at 31 December 2019, the

Company had been notified under Rule 5 of

the Disclosure Guidance and Transparency

Rules of the following holdings of voting rights

in its shares.

Person

interested

Number of

Barclays Shares

% of total

voting

rights

attaching

to issued

share

capital

a

Nature of

holding

(direct or

indirect)

BlackRock

Inc

b

1,039,595,156

6.02

indirect

Qatar

Holding

LLC

c

1,017,455,690

5.87

direct

Sherborne

Investors

d

943,949,089

5.48

indirect

The Capital

Group

Companies

Inc

e

855,511,38 5

4.96

indirect

Notes

a The percentage of voting rights detailed above was

calculated at the time of the relevant disclosures

made in accordance with Rule 5 of the Disclosure

Guidance and Transparency Rules. 

b Total shown includes 6,950,721 contracts for

difference to which voting rights are attached. Part

of the holding is held as American Depositary

Receipts. On 4 February 2020, Blackrock Inc

disclosed by way of Schedule 13G filed with the

Securities Exchange Commission beneficial

ownership of 1,149,011,610 ordinary shares of the

Company, representing 6.6% of that class of

shares.

c Qatar Holding LLC is wholly-owned by

Qatar Investment Authority. 

d We understand from disclosures that the

Sherborne shares are held via three funds

ultimately controlled by Edward Bramson and

Stephen Welker in their capacity as managing

directors of Sherborne Investors Management GP,

LLC (Sherborne Management GP), and Sherborne

Investors GP, LLC. Sherborne Management GP is

the general partner of Sherborne Investors

Management LP (Sherborne Investors) which is the

investment manager of each of the three funds

beneficially interested in the Sherborne shares

being Whistle Investors LLC, Whistle Investors II

LLC and Whistle Investors III LLC. Amendment

No.2 to a Schedule 13D filing, filed on 7 November

2019, also disclosed that certain funded derivative

transactions, which were used to purchase

505,086,254 of such shares, have been extended

to expire on various dates during the period

beginning 14 December 2021 (previously 21

October 2019) and ending 22 July 2022 (previously

16 March 2021). 

e The Capital Group Companies Inc (CG) holds its

shares via CG Management companies. Part of the

CG holding is held as American Depositary

Receipts.

43 Barclays PLC 2019 Annual Report on Form 20-F

DIRECTORS’ REPORT

Other statutory information

Between 31 December 2019 and 11 February

2020 (the latest practicable date for inclusion

in this report), the Company was notified that

Capital Group Companies Inc, now holds

863,929,297 Barclays shares, representing

4.99% of the total voting right attached to the

shares and that Norges Bank now holds

525,031,736 Barclays shares, representing

3.03% of the total voting rights attached to the

shares.

Powers of Directors to issue or

buy back the Company’s shares

The powers of the Directors are determined

by the Companies Act 2006 and the Articles.

The Directors are authorised to issue and

allot shares and to buy back shares subject

to annual shareholder approval at the AGM.

Such authorities were granted by shareholders

at the 2019 AGM. It will be proposed at the

2020 AGM that the Directors be granted new

authorities to allot and buy back shares.

Repurchase of shares

The Company did not repurchase any of its

ordinary shares during 2019 (2018: none).

As at 11

February 2020 (the latest practicable

date for inclusion in this report) the Company

had an unexpired authority to repurchase

ordinary shares up to a maximum of 1,714m

ordinary shares.

Distributable reserves

As at 31 December 2019, the distributable

reserves of Barclays PLC were £22,457m.

Change of control

There are no significant agreements to which

the Company is a party that are affected by

a change of control of the Company following

a takeover bid. There are no agreements

between the Company and its Directors or

employees providing for compensation for loss

of office or employment that occurs because of

a takeover bid.

Disclosure of information

to the Auditor

Each Director confirms that, so far as he/she is

aware, there is no relevant audit information of

which the Company’s auditors are unaware

and that each of the Directors has taken all the

steps that he/she ought to have taken as

a Director to make himself/herself aware of

any relevant audit information and to establish

that the Company’s auditors are aware of that

information. This confirmation is given

pursuant to section 418 of the Companies Act

2006 and should be interpreted in accordance

with and subject to those provisions.

Directors’ responsibilities

The following statement, which should be read

in conjunction with the report of the

independent registered public accounting firm

set out on page s 201 to 204, is made with a

view to distinguishing for shareholders the

respective responsibilities of the Directors

and of the auditors in relation to the accounts.

Going concern

The Group’s business activities, financial

position, capital, factors likely to affect its

future development and performance and its

objectives and policies in managing the

financial risks to which it is exposed are

discussed in the Risk Review and Risk

Management sections.

The Directors considered it appropriate to

prepare the financial statements on a going

concern basis.

In preparing each of the Group and Company

financial statements, the Directors are required

to:

■ Assess the Group and Company’s ability to

continue as a going concern, disclosing, as

applicable, matters related to going

concern; and

■ Use the going concern basis of accounting

unless they either intend to liquidate the

Group or the Company or to cease

operations, or have no realistic alternative

but to do so.

Preparation of accounts

The Directors are required by the Companies

Act 2006 to prepare Group and Company

accounts for each financial year and, with

regards to Group accounts, in accordan ce with

Article 4 of the IAS Regulation. The Directors

have prepared Group and Company accounts

in accordance with IFRS as adopted by the

EU. Under the Companies Act 2006,

the Directors must not approve the accounts

unless they are satisfied that they give a true

and fair view of the state of affairs of the Group

and the Company and of their profit or loss for

that period.

The Directors consider that, in preparing

the financial statements the Group and the

Company have used appropriate accounting

policies, supported by reasonable judgements

and estimates, and that all accounting

standards which they consider to be applicable

have been followed.

The Directors are satisfied that the Annual

Report and Financial Statements, taken as a

whole, are fair, balanced and understandable,

and provide the information necessary for

shareholders to assess the Group and the

Company’s position and performance,

business model and strategy.

Directors are responsible for such internal

control as they determine is necessary to

enable the preparation of financial statements

that are free from material misstatement,

whether due to fraud or error.

Directors’ responsibility statement

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 2006.

The Directors are also responsible for

preparing a Strategic Report, Directors’

Report, Directors’ Remuneration Report and

Corporate Governance Statement in

accordance with applicable law and

regulations.

The Directors are responsible for the

maintenance and integrity of the Annual

Report and Financial Statements as they

appear on the Company’s website. Legislation

in the UK governing the preparation and

dissemination of financial statements may

differ from legislation in other jurisdictions.

The Directors have a general responsibility for

taking such steps as are reasonably open to

them to safeguard the assets of the Group and

to prevent and detect fraud and other

irregularities.

The Directors, whose names and functions are

set out on pages 3 to 5, confirm to the best of

their knowledge that:

(a) the financial statements, prepared in

accordance with the applicable set of

accounting standards, give a true and fair

view of the assets, liabilities, financial

position and profit or loss of the Company

and the undertakings included in the

consolidation taken as a whole; and

(b) the management report, on pages 6 to 42

in the Strategic Report available at

home.barclays/annualreport

 includes a

fair review of the development and

performance of the business and the

position of the Company and the

undertakings included in the consolidation

taken as a whole, together with a

description of the principal risks

and uncertainties that they face.

By order of the Board

Stephen Shapiro

Company Secretary 

12 February 2020 

Registered in England .

Company No. 48839

44 Barclays PLC 2019 Annual Report on Form 20-F

REMUNERATION REPORT

Annual statement from the Chairman

of the Board Remuneration Committee

Contents

Page

Annual statement

44

Group-wide remuneration philosophy

49

Remuneration policy for all

employees

51

Directors’ remuneration policy

52

Annual report on Directors’

remuneration

63

Remuneration

Committee members

Meetings attended/

Chairman

eligible to attend

Crawford Gillies

5/5

Members

Tim Breedon

5/5

Mary Francis

5/5

Dambisa Moyo

(1 Jan 2019 - 2 May 2019)

2/2

Dear Fellow Shareholders

I am pleased to present the Directors’

Remuneration Report for 2019. The

Committee has had many important matters to

consider during the year. Barclays’ Fair Pay

agenda continues to play an important role in

guiding the Committee in its decision -making,

and we are proud to publish our second Fair

Pay Report. We are also publishing a separate

Pay Gaps Report, so that our pay gaps are

explained as clearly as possible.

As part of this report we are introducing our

new Directors’ Remunerat ion Policy (“DRP”)

for shareholders to consider as part of voting

at the 2020 Annual General Meeting (“AGM”)

in May. The current DRP was approved

by shareholders in 2017. A summary of the

changes proposed is included in this

statement, and the full policy is detailed

on pages 52 to 62

of this report.

We also met with multiple shareholders

following the voting outcome on the Directors’

Remuneration Report (Resolution 2) at the

2019 AGM. The engagement was

constructive, and helped to clarify the reasons

for the outcome of the vote. Following the

engagement, we published a statement setting

out our response to the voting outcome. The

statement is set out on page 80 .

Fair Pay and

Pay Gaps Reports

We have continued to evolve our Fair Pay

agenda during 2019, and are pleased to

publish our second Fair Pay Report, reporting

our progress against our five themes.

This year we have also published a Pay Gaps

Report, including both our Gender Pay Gap

results and our Ethnicity Pay Gap disclosure,

which we are making for the second year on a

voluntary basis.

Our stakeholders

One of the key principles of our remuneration

philosophy is that stakeholder views are

considered when we design remuneration

policies and determine pay outcomes. In

practice, this means listening to and engaging

with our stakeholders, including our

shareholders, employees and regulators, as

well as considering broader societal factors.

Our Fair Pay agenda helps us to engage with

different stakeholders on pay. Key highlights

for 2019 include the agreement of a new one

year pay deal with Unite, with an above

inflation budget of 2.75%, and with higher

increases for the most junior entry grades. We

have also started to expand globally our UK

living wage commitment by working with the

Fair Wage Network. Separately, the

Committee has focused on reviewing wider

workforce polic ies as well as their pay

outcomes in more detail. We have a strong

partnership with Unite in the UK, and actively

engage with Works Councils in other locations.

We discussed our new plans for the DRP with

major shareholders. The discussions were

informative and productive, and we thank our

shareholders for their willingness to engage.

The main change, aligned with our Fair Pay

agenda, is a reduction in pension allowance

for the Executive Directors. This voluntary

change by the Executive Directors is set out in

more detail on page 47.

While we have considered alternative variable

pay structures for the Executive Directors, we

cannot see a superior acceptable approach

and so have decided to retain the existing

structure. We will keep this under review as

market practice develops.

45 Barclays PLC 2019 Annual Report on Form 20-F

REMUNERATION REPORT

Annual statement:

Summary of 2019 pay outcomes

Performance and pay

Rewarding sustainable performance is a

crucial aspect of our remuneration philosophy

and so the Committee spent considerable time

understanding performance. While it was

another challenging year with global

macroeconomic and political uncertainties at

play , profit before tax excluding litigation and

conduct (PBT) is up 9% from 2018. Group

return on tangible equity excluding litigation

and conduct (RoTE) is 9.0%, in line with our

target for 2019, and costs are also in line with

our 2019 guidance of less than £13.6bn. Our

capital position is strong, with a CET1 ratio of

13.8%. The Committee recognises that

significant progress on financial performance

has now been achieved over a sustained

period.

Non-financial performance has also been

strong. Customer and client outcomes are

positive, with improvements in Net Promoter

Score® (NPS) for Barclays UK and

Barclaycard, and an increase in the take-up of

mobile banking. Complaints in Barclays UK

are down 8% from 2018, though we recognise

we need to go further and fa ster. Our

employee engagement survey score is down

slightly on 2018, driven by various factors

including the tools and resources available to

employees. This is already an area of

management focus and investment for the

Group. Considering our broader impact on

Society, global carbon emissions are down by

53%, and we have helped over 2m people

improve their employability skills through

LifeSkills.

Over the years, we have considered the

appropriate balance between returns to

shareholders and rewarding employees. This

year, the Committee has approved an

incentive pool of £1,490m, down 10% from

2018. After much deliberation, we feel that this

outcome strikes the right balance between our

shareholders and our employees, enabling us

to further improve returns to our shareholders

while also maintaining a competitve pay

opportunity for our wider workforce.

Executive Director remuneration

outcomes

The annual incentive outcomes for Jes Staley

and Tushar Morzaria are assessed with

reference to a set framework against pre-

determined financial, strategic and personal

measures and objectives. For 2019,

performance against the financial objectives

(representing 60% of the overall measures)

has been very strong, with targets exceeded.

Strategic and personal performance has also

been strong – full details of this assessment

are set out on pages 63 to 68.

Using the framework, the annual bonus

outcomes for Jes Staley and Tushar Morzaria

were 83.3% and 84.3% of maximum

respectively. The Committee considered these

outcomes in the context of pay outcomes for

the wider workforce for 2019.

As part of its deliberations, the Committee

noted that the outcomes for the Executive

Directors were increasing at a time when the

overall incentive pool was decreasing. While

recognising that th is is not an unusual

outcome given the structured formulaic

approach applied to Executive Directors’

incentives (e.g. in 2018, Executive Directors

outcomes were down slightly, while the overall

incentive pool was up), the Committee

determined that for 2019 it would be

appropriate to apply a discretionary reduction

to the formulaic Executive Directors’ outcome

in line with the broader pool reduction.

Applying the 10% discretionary reduction

results in a bonus outcome of 75.0% for Jes

Staley and 75.9% for Tushar Morzaria.

Separately, the Committee decided to make

an award under the 2020 -2022 Long Term

Incentive Plan (LTIP) cycle to both Executive

Directors with a face value at grant of 120% of

Total fixed pay, reflective of the strong 2019

performance.

The outcome of the 2017-2019 LTIP which is

due to vest in June 2020 is set out on pages

68 to 72.

Looking ahead

We will continue to focus on our Fair Pay

agenda during 2020, including reviewing living

wages for locations outside of the UK, US and

India. We will also look to further our work on

pay simplification, and will continue to engage

with our shareholders and other stakeholders

on pay.

Crawford Gillies

Chairman,

Board Remuneration Committee 

February 2020

46 Barclays PLC 2019 Annual Report on Form 20-F

47 Barclays PLC 2019 Annual Report on Form 20-F

Annual statement:

Key changes to the DRP

Directors’ Remuneration Policy

Barclays’ policy on remuneration for the Directors was last reviewed in 2016, and approved by 97.91% of the shareholder vote at the May 2017

AGM.

Overall, the current DRP has served its purpose, enabling the Committee to deploy remuneration in a manner consistent with our philosophy, while

recognising that the Committee is unable to change some aspects of the policy (e.g. because of regulatory requirements).

The review of the DRP by the Committee has provided an opportunity to consider the policy against the Fair Pay agenda and the most recent

guidance from shareholders and proxy agencies.

Following engagement with major shareholders, the Investment Association, ISS and Glass Lewis, the key changes proposed are set out below.

What are the key changes to the DRP?

Key changes

Fixed Pay

In line with the approach outlined at the start of the last DRP, the Committee has reviewed its approach to Fixed Pay for the

Executive Directors. Consequently, having taken into account a number of factors, the following Fixed Pay increases are

proposed:

CEO:

An increase of 2.1%, resulting in proposed Fixed Pay of £2,400,000

Jes Staley joined Barclays in December 2015, and this is the first Fixed Pay increase proposed since that time. His increase is

below the average increase for UK employees, for the 2019/20 annual pay review.

Group Finance Director (GFD):

An increase of 4.5%, resulting in proposed Fixed Pay of £1,725,000

Since the last DRP, Tushar Morzaria has taken on additional responsibilities as a result of our new legal entity structure. He

oversees additional complexities associated with capital management and financial reporting post ring-fencing and the

establishment of the US Intermediate Holding Company. In addition, he has taken accountability for Group Strategy. This is the

first increase for Tushar Morzaria proposed since the last DRP was approved i n 2017.

We will continue to deliver Fixed Pay 50% in cash and 50% in shares (delivered quarterly and subject to a holding period with

restrictions lifting over a period of five years). Going forward, it is intended that Fixed Pay for the Executive Directors is reviewed

annually, to align with the employee review cycle, and enhance transparency.

Wider workforce context

The average annual increase for Fixed Pay for UK employees is 2.7%, with differentiation within that based on a number of

factors. We agreed a one -year pay deal with Unite, covering c.45,000 UK employees at junior and middle management levels

with a fixed pay increase budget of 2.75%. Over the term of the prior DRP, the average cumulative increase provided to the UK

wider workforce was 10%.

Pension

In our new policy, our Executive Directors have volunteered to reduce their contractual pension allowance to 5% of Fixed Pay

(equivalent to 10% of Fixed cash) – a decrease of £276,000 for the CEO and a decrease of £113,750 for the GFD.

Wider workforce context

For comparison, we operate two pension plans in the UK, Afterwork, a contributory legacy cash balance defined benefit plan

(effective employer contribution cost of 21.2% of salary), and the Barclays Pension Savings Plan, a defined contribution plan for

new joiners (current employer contribution rate of 10% of salary).

The Committee also reviewed the pension arrangements for the wider workforce. The outcome of this review was to change the

employer contribution rate from 10% to 12% for our most junior employees (c.17,500 employees). This will be implemented during

2020.

In addition, the following actions have already been taken to further improve pensionable pay.

■ We have rolled all fixed and permanent allowances into pensionable pay; and 

■ In BUK, we have transferred a material portion of bonus opportunity into salary for customer facing staff (c.19,500

employees) further increasing pensionable pay.

Our policy on pension for any new Executive Director will also be changed to align with the revised approach for existing

Executive Directors.

48 Barclays PLC 2019 Annual Report on Form 20-F

What are the key changes to the DRP?

continued

Key changes

Variable pay

Going forward we will express the variable pay opportunity as a proportion of Fixed Pay, excluding pension.

This presentational change is required as variable pay opportunity is currently presented as a multiple of Total fixed pay (i.e.

Fixed Pay and pension). This approach was initially adopted to clearly demonstrate compliance with the regulatory 2:1 regime

(which classifies pension as fixed remuneration for 2:1 purposes). Without making this change, there would be an unintended

reduction in the maximum variable pay opportunity for the Executive Directors.

This new way of expressing the variable pay opportunity does not affect regulatory compliance.

The maximum variable pay opportunity will therefore be 233% of Fixed Pay for the CEO and 224 % for the GFD. The

apportionment between annual bonus and LTIP (currently 40:60) will be maintained, resulting in a maximum annual bonus

opportunity of 93% for the CEO and 90% for the GFD and a maximum LTIP opportunity of 140% and 134% respectively. 

The diagrams below illustrate the maintenance of the variable pay opportunity based on the current level of Fixed Pay.

Shareholding

requirements

In line with best practice guidance, post-termination shareholding requirements will be increased to align with requirements

during employment. Unvested shares (net of tax) may contribute to meeting this post-termination requirement provided that

there are no outstanding performance conditions.

Shareholding requirements during employment remain unchanged, although going forward we will express them as a

proportion of Fixed Pay only, in line with our approach to variable pay. This also ensures that our shareholding requirements

are not reduced because of the change to pension allowance.

The requirement during employment will therefore be: 233% of Fixed Pay for the CEO and 224% of Fixed Pay for the GFD.

Summary

Overall, under the new policy, the net outcome across Fixed Pay and pension is a reduction of £226,000 for the CEO and £38,750 for the GFD.

Maximum total compensation is down 2% for the CEO and up 2% for the GFD.

49 Barclays PLC 2019 Annual Report on Form 20-F

Group-wide remuneration philosophy

Remuneration philosophy

While “fairness” has been a consideration and focus when making pay decisions at Barclays for many years, we reported on our approach to pay

fairness for the first time in 2018, when we published our Fair Pay agenda as part of the 2017 Annual Report. Given the importance of our Fair Pay

agenda, we have now formally included “fairness” in our Remuneration Philosophy. Similarly, we have incorporated our long held view with regards

to the need to consider the perspectives of all of our stakeholders, not just investors.

To attract and retain the people who can best deliver for our customers and clients, we must pay fairly and appropriately – balancing the interests of

all our stakeholders. Our policies and practices reward sustainable performance in line with our values and risk expectations. They are fair,

transparent and as simple as possible.

This is our remuneration philosophy. It’s how we have continued to make remuneration decisions and set remuneration policies during 2019, and it

applies to all of our employees globally , as well as our Executive Directors.

Barclays’ remuneration philosophy

Attract and retain talent needed to

deliver Barclays’ strategy

Long -term success depends on the talent of our employees. This means attracting and retaining

an appropriate range of talent to deliver against our strategy, and paying the right amount for

that talent

Align pay with investor and other

stakeholder interests

Remuneration should be designed with appropriate consideration of the views, rights and

interests of stakeholders. This means listening to our shareholders, other investors, regulators,

government, customers and employees and ensuring their views are appropriately considered in

remuneration decision-making

Reward sustainable performance

Sustainable performance means making a positive contribution to stakeholders, in both the short

and longer term, playing a valuable role in society

Support Barclays’ Values and culture

Results must be achieved in a manner consistent with our Values. Our Values and culture

should

drive the way that business is conducted

Align with risk appetite, risk exposure

and conduct expectations

Designed to reward employees for achieving results in line with the Bank’s risk appetite and

conduct expectations

Be fair, transparent and as simple as

possible

We are committed to ensuring pay is fair, simple and transparent for all our stakeholders. This

means all employees and stakeholders should understand how we reward our employees and

fairness should be a lens through which we make remuneration decisions

Review of wider workforce policies, practices and pay outcomes

During 2019, the Committee formalised its approach to ensuring consideration of wider workforce interests in remuneration, reviewing both

remuneration policies, practices and pay outcomes for the wider workforce.

Wider workforce remuneration policies were reviewed against the following criteria: 

■ The Remuneration Philosophy;

■ Barclays’ Fair Pay agenda;

■ Barclays’ purpose, values, conduct expectations and supporting long -term success; and

■ Executive Director and senior management remuneration policies.

The policies were found to be well -aligned with the criteria. The Remuneration Philosophy principles are reflected in the policies, while the themes

of our Fair Pay agenda are embedded in our practices. Barclays’ purpose, values, conduct expectations and long-term success are supported by

our approach to performance management and remuneration. Remuneration is also adjusted to take account of risk and conduct matters.

Wider workforce policies are also well aligned with those for the Executive Directors and senior management, including the setting of Fixed Pay

using market benchmarks and the determination and delivery of annual discretionary incentives. Where differences occur, they are based on

policies that reflect senior management’s ability to influence overall business outcomes (e.g. greater portion of pay delivered through variable pay)

and align senior colleagues more closely with shareholders such as the delivery of some Fixed Pay in shares, delivery of a high proportion of

incentives in shares and the use of LTIP for the Executive Directors.

As outlined earlier, the Executive Directors have voluntarily decided to reduce their contractual pension allowance to 5% of Fixed Pay (equivalent to

10% of Fixed cash).

The Committee took both top -down and bottom-up approaches to the review of pensions, agreeing to reduce the pension allowance for Executive

Directors, and also reviewing the offering for the wider workforce. As a result, we are enhancing the employer pension contribution for c.17,500 UK

employees, i ncreasing from 10% to 12%, as outlined on page 51.

The Committee also reviewed the 2019 remuneration outcomes for the wider workforce, in particular in comparison with senior management

outcomes. The Committee satisfied itself that there was appropriate alignment. The Committee Chairman provides updates to the Board on these

matters following each meeting. 

50 Barclays PLC 2019 Annual Report on Form 20-F

Be fair, transparent and as simple as possible

Paying fairly and transparently is a key priority at Barclays and updating the Remuneration Philosophy to formalise the link to the Fair Pay agenda

indicates our ongoing commitment to this. The Fair Pay agenda brings together the five themes which explain how we think about fair pay at

Barclays.

Last year we published our first standalone Fair Pay Report, which set out both our achievements and future priorities. In this year’s report, we

provide an update on our progress, and details of our next prioritie s. We use our Fair Pay Report to engage our employees on pay, explaining our

approach to fair pay, including the alignment of the Executive Directors’ and employee pay.

The infographic below highlights our 2019 achievements. We encourage you to read the full Fair Pay Report and a separate Pay Gaps Report,

setting out our mandatory UK Gender Pay Gap disclosure and voluntary Ethnicity Pay Gap disclosure, which can both be found on

home.barclays/annualreport.

51 Barclays PLC 2019 Annual Report on Form 20-F

Remuneration policy for all employees

As outlined on page 49, Barclays has a clearly articulated Remuneration Philosophy. This continues to drive our thinking in how we structure and

determine remuneration for all employees from the most senior (e.g. our Executive Directors) to our new apprentices and graduates. This year we

reviewed our remuneration policies and practices for alignment with the Directors’ Remuneration Policy and approaches for senior management,

the long -term success of Barclays and the Fair Pay agenda.

We continue to ensure that we comply with all prevailing regulation. We identify individuals who may expose Barclays to material risk, and pay them

in a way which encourages alignment of their interests and Barclays. Further information in relation to Material Risk Taker s (“MRTs”) is set out in

Appendix E of the Barclays PLC Pillar 3 Report.

The table below provides a summary of the remuneration approach for employees below the Board, alongside changes made during 2019.

Remuneration features

Changes in 2019

Salary

Salaries reflect individuals’ skills and experience and are reviewed

annually. 

They are increased where justified by role change, increased responsibility

or a change in the appropriate market rate. Salaries may also be

increased in line with local statutory requirements and in line with union

and works council commitments. 

We have been a real living wage employer in the UK since 2013.

Across the UK, the roll -in of permanent

allowances to salary has increased the

pensionable salary for c.21,000 UK employees. 

We have introduced a minimum wage of $15

per hour in the US, and have engaged the Fair

Wage Network to further expand our living

wage coverage to India, covering 93% of our

population globally with “living wage” initiatives. 

For c.19,500 customer-facing staff in Barclays

UK, we have rebalanced pay (more fixed, less

variable) meaning the amount delivered as

pensionable salary has been further increased.

Role Based

Pay (RBP)

A small number of senior employees (c.1% UK employees) receive a class

of fixed pay called RBP to recognise the seniority, scale and complexity of

their role. This may change where justified by role or responsibility change

or a change in the appropriate market rate.

No change

Pension and

benefits

The provision of a competitive package of benefits is important to

attracting and retaining the talented staff needed to deliver Barclays’

strategy. Employees have access to a range of country -specific company-

funded benefits, including pension schemes, healthcare, life assurance

and Barclays’ share plans as well as other voluntary employee funded

benefits. The cost of providing these benefits is defined and controlled.

The employer pension contribution is set to

increase from 10% to 12% for c.17,500 UK

junior employees, remaining at 10% for more

senior employees.

Annual bonus

Annual bonuses incentivise and reward the achievement of Group,

business and individual objectives, and reward employees for

demonstrating individual behaviours in line with Barclays’ Values. All

employees are considered, subject to eligibility criteria. 

For senior employees, an appropriate proportion of their incentive amount

is deferred to future years. Deferred bonuses are generally delivered in

equal portions as deferred cash and shares. They are subject to either a 3,

5 or 7-year deferral period (and further holding periods of six or 12 months

for deferrals in shares) in line with regulatory requirements. 

Consistent with regulation, the remuneration of MRTs is subject to the 2:1

maximum ratio of variable to fixed remuneration.

A new reward strategy for BUK has aligned a

portion of incentives for all front -office Barclays

UK employees, measuring success against the

same customer-focused metric for all.

Share plans

We encourage wider employee share ownership through the all-employee

share plans.

99% (2018: 98%) of the global employee

population is eligible to participate.

Performance

management

Performance assessment is based on “what” is achieved in relation to

individual, team and business objectives, as well as “how” this is achieved

in the context of Barclays’ Values. Both elements are assessed

independently of each other with no requirement to have an overall rating.

This reinforces the equal importance of the “what” and “how”.

No change

Risk and

conduct

Risk and conduct events are taken seriously at Barclays and the

Committee ensures that there are in year adjustments, malus or clawback

applied to individual remuneration, where appropriate. 

In addition to individual adjustments, the Committee considers collective

adjustment to the incentive pool for risk and conduct .

For 2019, the impact of collective adjustments

is a reduction of c.£160m.

More information on our approach to Performance Management, and Risk and Conduct are set out in Appendix E of the Barclays PLC 2019 Pillar 3

Report, which can be found on home.barclays/annualreport.

52 Barclays PLC 2019 Annual Report on Form 20-F

Directors’ remuneration policy

Remuneration policy – Executive Directors

Element and purpose

Operation

Maximum value and

performance measures

Fixed Pay 

To reward skills and

experience appropriate for the

scale, complexity and

responsibilities of the role and

to provide the basis for a

competitive remuneration

package

Fixed Pay is determined based on the individual’s role, skills and

experience with reference to market practice and market data (on which

the Committee receives independent advice). 

Executive Directors’ total compensation is benchmarked against

comparable roles in the following banks: Bank of America, BNP Paribas,

Citigroup, Credit Suisse, Deutsche Bank, HSBC, JP Morgan Chase & Co,

Lloyds, Morgan Stanley, Standard Chartered and UBS. The Committee

may amend the list of comparator companies to ensure it remains relevant

to Barclays or if circumstances make this necessary (for example, as a

result of takeovers or mergers). 

50% of Fixed Pay is delivered in cash (paid monthly), and 50% is

delivered in shares. The shares are delivered quarterly and are subject to

a holding period with restrictions lifting over five years (20% each year).

As the Executive Directors beneficially own the shares, they will be

entitled to any dividends paid on those shares. 

Risk and conduct adjustment, malus and clawback provisions do not apply

to Fixed Pay.

Fixed Pay for Executive Directors is

set within the benchmark range

determined by the Committee

taking into account their skills

experience and performance. 

The Fixed Pay is £2,400,000 for

Jes Staley (Group Chief Executive)

and £1,725,000 for Tushar

Morzaria (Group Finance Director).

Increases will normally be aligned

to the annual increase for UK

employees, and will take into

account changes in responsibilities

and market conditions. There are

no performance measures.

Pension

To enable Executive Directors

to build long-term retirement

savings

Executive Directors receive an annual cash allowance in lieu of

participation in a pension arrangement. 

Risk and conduct adjustments, malus and clawback provisions do not

apply to pension.

The maximum annual cash

allowance is 5% of Fixed Pay

(equivalent to 10% of fixed cash). 

There are no performance

measures.

Benefits 

To provide a competitive and

cost effective benefits

package

appropriate to the

role

and location

Executive Directors’ benefits provision includes, but is not restricted to,

private medical cover, annual health check, life and ill health income

protection, and use of a Company vehicle and driver when required for

business purposes (including any tax liabilities that may arise from this

benefit). 

Relocation: If an Executive Director were to relocate to perform their role,

additional support would be provided for a defined and limited period

of time in line with Barclays’ general employee mobility policy including,

but not restricted to, the provision of temporary accommodation, tax

advice, home leave related costs, payme nt of removal costs and

relocation flights for the Executive Director, spouse and children. Barclays

will pay the Executive Director’s tax on the relocation costs but will not tax

equalise and will also not pay the tax on any other employment income.

The maximum value of benefits

is determined by the nature of

the benefit itself and costs of

provision may depend on external

factors, e.g. insurance costs.

53 Barclays PLC 2019 Annual Report on Form 20-F

Directors’ remuneration policy

Element and purpose

Operation

Maximum value and

performance measures

Annual bonus 

To reward delivery of

short-

term financial targets

set each

year, the individual

performance of the Executive

Directors in achieving those

targets, and their contribution

to delivering Barclays’

strategic objectives.

Delivery in part in shares

with holding period increases

alignment with shareholders.

Deferred bonuses

encourage longer term

focus and retention

Determination of annual bonus

Individual bonuses are entirely discretionary and decisions are based on

the Committee’s judgement of Executive Directors’ performance in the

year, measured against Group and personal objectives.

Delivery structure

Annual bonuses are delivered as a combination of cash and shares,

a proportion of which may be deferred and/or subject to a holding period.

Deferral proportions and vesting profiles will be structured so that,

in combination with any LTIP award, the proportion of variable pay that is

deferred is no less than that require d by regulations (currently 60%). 

Deferred bonuses are granted by the Committee (or an authorised sub-

committee) at its discretion, subject to the relevant plan rules as amended

from time to time. 

The number of deferred bonus shares to be awarded will be based on

a share price discounted by reference to an expected dividend yield over

the vesting period, where dividend equivalents cannot be awarded due to

regulations. In such circumstances, the Committee has discretion to

reduce (not increase) the number of shares that vest if actual dividends

paid over the period are materially lower than the original dividend

assumption. 

A notional discount may be applied to the deferred bonus awards for the

purposes of calculating the 2:1 cap to the extent this is permitted by

regulations (currently a discount is permitted on up to 25% of variable pay

where the conditions for applying such a discount are met). 

Timing of receipt

Non-deferred cash components of any bonus are paid following

the performance year to which they relate, normally in March. Non-

deferred share bonuses are also awarded normally in March and are

subject to a holding period (after the payment of tax) in line with

regulations and with release no faster than permitted by regulations

(currently 1 year). 

Deferred share bonuses are structured so that no deferred shares vest

faster than permitted by regulations. Vesting is also subject to the

provisions of the plan rules including employment and the malus and

clawback provisions. Any shares that vest are subject to an additional

holding period (after payment of tax) in line with regulations and with

release no faster than permitted by regulations (currently 1 year). 

Risk and conduct adjustment, malus and clawback provisions apply

to any bonus awards, as set out on page 55.

The maximum annual bonus

opportunity is 93% of Fixed Pay

(cash and shares) for the CEO and

90% of Fixed Pay (cash and

shares) for the GFD. 

The Committee will consider

the previously disclosed financial

and non -financial (including risk-

related measures and personal

objectives) measures in

determining the annual bonus for

the Executive Directors. Financial

factors will guide at least 60% of

the bonus opportunity. 

Any bonus is discretionary and any

amount may be awarded from zero

to the maximum value. 

The Committee has the discretion

to vary the measures and their

respective weightings within

each category. The measures

and weightings will be disclosed

annually as part of the Annual

Report on Directors’ remuneration,

at the beginning of the performance

year (typically February).

54 Barclays PLC 2019 Annual Report on Form 20-F

Element and purpose

Operation

Maximum value and

performance measures

Long Term Incentive

Plan (LTIP) award 

To incentivise execution

of Barclays’ strategy over

a multi -year period.

Long -term performance

measurement, deferral and

holding periods encourage

a long -term view and align

Executive Directors’ interests

with those of shareholders.

Malus and clawback

provisions

discourage

excessive risk-

taking and

inappropriate

behaviours.

Determination of LTIP award

LTIP awards are made by the Committee following discussion of

recommendations made by the Chairman (for the Group Chief

Executive’s LTIP award) and by the Group Chief Executive (for other

Executive Directors’ LTIP awards) based on satisfactory performance

over the prior year. 

Delivery structure

LTIP awards are granted subject to the plan rules and are satisfied in

Barclays’ shares (although they may be satisfied in other instruments as

may be required by regulation). 

LTIP awards are structured so that when combined with the annual

bonus the proportion of variable pay that is deferred is no less than

that required by regulations (currently 60%). 

For each award, forward -looking performance measures are set at grant

and there is no retesting allowed of those conditions. The Committee

has, within the parameters set out across, the flexibility to vary the

weighting of performance measures and calibration for each award prior

to its grant. 

The Committee has discretion, and in li ne with the plan rules approved by

shareholders, in exceptional circumstances to amend targets, measures,

or the number of awards if an event happens (for example, a major

transaction) that, in the opinion of the Committee, causes the original

targets or measures to be no longer appropriate or such adjustment to be

reasonable. The Committee also has the discretion to reduce the vesting

of any award, including to nil, if it deems that the outcome is not

consistent with performance delivered. 

The number of shares to be awarded will be based on a share price

discounted by reference to an expected dividend yield over the vesting

period, where dividend equivalents cannot be awarded due to

regulations. In such circumstances, the Committee has discretion to

reduce (not increase) the number of shares that vest if actual dividends

paid over the period are materially lower than the original dividend

assumption. 

A notional discount may be applied to LTIP awards for the purposes

of calculating the 2:1 cap to the extent this is permitted by regulations

(currently a discount is permitted on up to 25% of variable pay where the

conditions for applying such a discount are met). 

Timing of receipt

Barclays LTIP awards are structured so that no award vests before the

third anniversary of grant and an award vests no faster than permitted by

regulations (currently in five equal tranches with the first tranche vesting

on or around the third anniversary of grant and the last tranche vesting

on or around the seventh anniversary of the grant date). Any shares that

vest are subject to an additional holding period (after payment of tax) in

line with regulations, with restrictions lifting no faster than permitted by

regulations (currently 1 year).

Malus and clawback provisions apply to LTIP awards, as set out on page

55.

The maximum annual LTIP

award for the CEO is 140% of

Fixed Pay (cash and shares) and

134% of Fixed Pay (cash and

shares for the GFD. 

Vesting is dependent on

performance measures

and service. 

Forward-looking performance

measures will be based on

financial performance and other

long -term strategic measures. The

Committee has discretion

to change the weightings but

financial measures will be at least

70% of the total opportunity. 

Measures and weightings will

be set in advance of each grant.

The threshold and maximum level

of performance for each financial

performance measure will be

disclosed annually as part of

the Annual Report on Directors’

remuneration. Straight-line vesting

applies between threshold and

maximum for the financial

measures with no more than 25%

vesting at threshold performance.

55 Barclays PLC 2019 Annual Report on Form 20-F

Directors’ remuneration policy

Element and purpose

Operation

Maximum value and

performance measures

Risk and conduct

adjustment, malus

and clawback

Malus and clawback

provisions

discourage

excessive risk-

taking and

inappropriate

behaviours

Any bonus or LTIP awarded is subject to malus and clawback provisions. 

The malus provisions enable the Committee to reduce the amount

of unvested bonus or LTIP (including to nil) prior to vesting in specified

circumstances, including, but not limited to: 

■ a participant deliberately misleading Barclays, the market and/or

shareholders in relation to the financial performance of the Barclays

Group 

■ a participant causing harm to Barclays’ reputation or where his/her

actions have amounted to misconduct, incompetence or negligence

■ a material restatement of the financial statements of the Barclays

Group or any subsidiary, or the Group or any business unit suffering a

material downturn in its financial performance 

■ a material failure of risk management in the Barclays Group 

■ a significant deterioration in the financial health of the Barclays Group. 

The clawback provisions enable amounts to be recovered after they have

vested (for a period of seven years from grant/10 years in circumstances

where a relevant investigation is ongoing at the end of the initial seven

year period) where (i) a participant’s actions or omissions have amounted

to misbehaviour or materi al error and/or (ii) Barclays or the relevant

business unit has suffered a material failure of risk management.

All employee share plans

To provide an opportunity

for Executive Directors to

voluntarily invest in the

Company through UK HMRC

employee tax advantaged

share schemes

Executive Directors are entitled to participate in: 

(i) Barclays Sharesave under which they can make monthly savings out

of post-tax pay over a period of three or five years linked to the grant of

an option over Barclays’ shares which can be at a discount of up to 20%

on the share price set at the start. 

(ii) Barclays Sharepurchase under which they can make contributions

(monthly or lump sum) out of pre-tax pay (if based in the UK) which are

used to acquire Barclays’ shares.

(i) Savings between £5 and the

maximum set by Barclays (which

will be no more than the HMRC

maximum) per month. There are

no performance measures. 

(ii) Contributions of between £10

and the maximum set by Barclays

(which will be no more than the

HMRC maximum) per tax year

which Barclays may match up to

HMRC maximum (current match is

£600). There are no performance

measures.

Outside appointments

To encourage self-

development

Executive Directors may accept one Non -Executive Director Board

appointment in another listed company. 

The Chairman’s approval must be sought before accepting an

appointment. Fees may be retained by the Executive Director. Neither

of the Executive Directors currently hold an outside appointment.

Not applicable.

56 Barclays PLC 2019 Annual Report on Form 20-F

Element and purpose

Operation

Maximum value and

performance measures

Shareholding

requirement

To further enhance the

alignment of shareholders’

and Executive Directors’

interests in long -term

value creation

Executive Directors have a contractual obligation to build up a shareholding

equivalent to the maximum variable pay opportunity within five years from the

date of appointment as Executive Director, i.e.:

■ Group Chief Executive: 233% of Fixed Pay 

■ Group Finance Director: 224% of Fixed Pay 

Executive Directors will have a reasonable period to build up to this

requirement again if it is not met because of a significant share price

depreciation. 

Executive Directors also have a contractual obligation to maintain their

shareholding for two years following the last day of active service as follows: 

(i) if the Executive Director has been employed for more than five years:

233% of Fixed Pay for the CEO and 224% of Fixed Pay for the GFD; or 

(ii) if the Executive Director has been em ployed for less than five years:

either 

(a) grow their holding to the pro-rated requirement if the pro-rated

requirement has not been met. Directors would only be allowed to

sell shares to pay for tax liabilities which crystallise when deferred

awards vest on or after termination; or 

(b) if the pro-rated requirement has been exceeded, Executive Directors

would be allowed to sell shares above this requirement and also sell

shares to pay for tax liabilities which crystallise when deferred awards

vest on or after termination. 

Shares that count toward s the requirement are beneficially owned shares

including any vested share awards subject only to holding periods (including

vested LTIPs, vested deferred share bonuses, Fixed pay shares, and any

legacy RBP shares). Shares from unvested deferred share bonuses and

unvested LTIPs do not count towards the requirement during employment,

but will count towards post-termination requirements (net of tax) provided that

there are no remaining untested performance conditions.

Barclays’ shares worth a

minimum of 233% of Fixed Pay

for the CEO and 224% of Fixed

Pay for the GFD must be held

within five years, as well as for

two years post-termination

(or pro-rata thereof) commencing

from last day in office.

Performance measures and targets

The Committee selects financial performance measures which are fundamental to delivery against the Bank’s strategy and are considered to be the

most important financial measures used by the Executive Directors to oversee the direction of the business. The non -financial performa nce

measures and sources of data are chosen to represent key indicators of sustainable performance, aligned with strategy and culture, that are

robustly monitored and reported on to management. The measures are determined in consultation with major shareholders.

Financial targets are set to be stretching but achievable and are aligned to enhancing shareholder value. In respect of the LTIP, the financial

measures, weightings and targets will be disclosed at the start of the relevant performance period. In respect of the annual bonus, the financial

measures and weightings will be disclosed at the start of the relevant performance year. The Committee is of the opinion that the financial targets

for the annual bonus are commercially sensitive in respect of the Company and that it would be detrimental to disclose details at the start of the

relevant performance year. Performance against the targets will be disclosed at the end of the relevant performance year in that year’s

remuneration report, subject to commercial sensitivity no longer remaining.

The Performance Measurement Framework assesses progress against our key strategic and non -financial goals. The evaluation will focus on key

performance measures with a detailed retrospective disclosure on progress throughout the period against each category, together with supporting

rationale for payments.

57 Barclays PLC 2019 Annual Report on Form 20-F

Directors’ remuneration policy

Alignment between the Executive Directors’ remuneration policy and all employees policy of the Group

The structure of remunerati on packages for Executive Directors is closely aligned with that for the broader employee population. Employees receive

salary, pension and benefits and are eligible to be considered for a bonus and to participate in all -employee share plans. The broader employee

population typically does not have a contractual limit on the quantum of remuneration and does not receive Role Based Pay (“RBP”) which is paid

only to some, but not all, MRTs and other senior employees.

As with Executive Directors, variable pay for the broader employee population is performance based. Variable pay for Executive Directors and the

broader employee population is subject to deferral requirements. Executive Directors and other MRTs are subject to deferral at a minimum rate of

40% (for variable pay of less than £500,000) or 60% (for variable pay between £500,000 and £1,000,000). For non -MRTs, bonuses in excess of

£65,000 are currently subject to a graduated level of deferral. The terms of deferred bonus awards for Executive Directors and the wider employee

population are broadly the same, in particular the vesting of all deferred bonuses is subject to service and malus conditions. The broader employee

population does not participate in the Barclays LTIP.

While we have not sought employee views on the DRP, we have considered all employee policies when reviewing the DRP and have explained the

DRP changes in our Fair Pay Report.

How shareholder views are taken into account by the Committee in setting the policy

We recognise that remuneratio n is an area of particular interest to shareholders and that in setting and considering changes to remuneration, it is

important that we listen to and take into account their views. Accordingly, a series of meetings are held each year with major shareholde rs and

shareholder representative groups. The Committee Chairman attended these meetings, accompanied by senior Barclays’ employees (including the

Group Reward and Performance Director and the Group Company Secretary).

In developing the new policy, we con sulted shareholders during 2019. The Committee notes that shareholder views on some matters are not

always unanimous; however, the interactions are constructive and insightful. The engagement is meaningful and helpful to the Committee in its

work and contr ibutes directly to the decisions made by the Committee.

Discretion

In addition to the various operational discretions that the Committee can exercise in the performance of its duties (including those discretions set out

in the Company’s share plans), the Committee reserves the right to make either minor or administrative amendments to the policy to benefit its

operation or to make more material amendments in order to comply with new laws, regulations and/or regulatory guidance. The Committee would

only exe rcise this right if it believed it was in the best interests of the Company to do so and where it is not possible, practicable or proportionate to

seek or await shareholder approval in General Meeting.

Provisions of previous policy which will continue to apply

For the avoidance of doubt, any awards granted under the previous directors’ remuneration policy which have not yet vested shall continue to be

capable of vesting on their normal vesting schedule.

58 Barclays PLC 2019 Annual Report on Form 20-F

Executive Directors’ policy on recruitment

Barclays operates in a highly specialised sector and many of its competitors for talent are outside of the UK. The Committee’s approach to

remuneration on recruitment is to pay the amount necessary to attract the best candidates to the role.

Approval of the remuneration packages offered on appointment to any new Executive Director is a specific requirement of the Committee’s Terms

of Reference. The terms of such packages must be approved by the Committee in consultation with the Chairman and (except for the terms of his

own remuneration) the Group Chief Executive.

Any new Executive Director’s package would include the same elements as those of the existing Executive Directors, as shown below.

Element and purpose

Commentary

Maximum value

Fixed Pay

Determined by skills,

experience, market

practice,

market conditions

and ability

to recruit.

Determined by skills and experience appropriate for the

scale, complexity and responsibilities of the role, and by

market practice, market conditions and ability to recruit. 

In line with financial regulations, Fixed Pay is a derivative

of total compensation. Executive Directors’ total

compensation is benchmarked against comparable roles

in the following banks: Bank of America, BNP Paribas,

Citigroup, Credit Suisse, Deutsche Bank, HSBC, JP

Morgan Chase & Co, Lloyds, Morgan Stanley, Standard

Chartered and UBS. The Committee may amend the list

of comparator companies to ensure it remains relevant to

Barclays or if circumstances make this necessary (for

example, as a result of takeovers or mergers).

As determined by the Committee with reference

to these factors. Fixed Pay will only exceed amounts

paid to current Executive Directors, as considered

reasonable by the Committee, by reference to

these factors.

Once ap pointed, increases will normally be aligned

to the annual increase for UK employees, and will

take into account cha nges in responsibilities and

market conditions.

Pension

In line with policy

In line with policy

Benefits

In line with policy

In line with policy

Annual bonus

In line with policy

In line with policy

Long Term Incentive

Plan

(LTIP) award

In line with policy

In line with policy

Buy-out

The Committee can consider buying out forfeited bonus

opportunity or incentive awards that the new Executive

Director has forfeited as a result of accepting the

appointment with Barclays, subject to proof of forfeiture

where applicable. 

As required by the PRA Remuneration Rules, any award

made to compensate for forfeited remuneration from the

new Executive Director’s previous employment may not

be more generous than, and must mirror as far as

possible the expected value, timing and form of delivery

of, the terms of the forfeited remuneration and must be in

the best long -term interests of Barclays. Barclays’

deferral policy shall however apply as a minimum to any

buy-out of annual bonus opportunity.

The value of any buy-out is not included within the

maximum incentive levels above since it relates to a

buy-out of forfeited bonus opportunity or incentive

awards from a previous employer.

Where a senior executive is promoted to the Board, his or her existing contractual commitments agreed prior to his or her appointment may still be

honoured in accordance with the terms of the relevant commitment, including vesting of any pre-existing deferred bonus or long -term incentive

awards.

59 Barclays PLC 2019 Annual Report on Form 20-F

Directors’ remuneration policy

Executive Directors’ policy on payment for loss of office (including or following a takeover)

The Committee’s approach to payments in the event of termination is to take account of the individual circumstances including the reason for

termination, individual performance, contractual obligations and the terms of the deferred bonus plans and LTIPs in which the Executive Director

participates.

Provisions relating to Executive Directors’ termination

Standard provision

Commentary

Maximum value

Notice periods in

Executive Directors’

service contracts

For existing Executive Directors, 12 months’ notice from

the Company and six months’ notice from the Executive

Director. 

For new Executive Director hires, six months’ notice from

the Company and six months’ notice from the Executive

Director.

Executive Directors may be required to work during

the notice period or may be placed on garden leave

or, if not required to work the full notice period, may

be provided with pay in lieu of notice (subject to

mitigation where relevant).

Pay during notice

period or payment in

lieu of notice per

service contracts

Fixed Pay payable and continuation of pension allowance

and other contractual benefits while an employee during

notice period.

Fixed Pay delivered in cash is payable in phased

instalments (or lump sum) and subject to mitigation

if paid in instalments and Executive Director obt ains

alternative employment during the notice period or

while on garden leave.

Fixed Pay delivered in shares is delivered on the

next quarterly delivery date and is pro-rated for the

number of days from the start of the relevant quarter

to the termination date. Where Barclays elects to

terminate the employment with immediate effect by

making a payment in lieu of notice, the Executive

Director will not receive any shares that would

otherwise have been payable during the period for

which the payment in lieu is made (unless required

otherwise by regulations or local law).

In the event of termination for gross misconduct

neither notice nor payment in lieu of notice is given.

Treatment of

annual bonus

on termination

No automatic entitlement to bonus on termination, but

may be considered at the Committee’s discretion, pro-

rated for service, and subject to performance measures

being met. 

No bonus would be payable in the case of gross

misconduct or resignation.

60 Barclays PLC 2019 Annual Report on Form 20-F

Standard provision

Commentary

Maximum value

Treatment of

unvested deferred

bonus awards

In the case of death or if the Executive Director is an

‘eligible leaver’ the Executive Director would continue to

be eligible to be considered for unvested portions of

deferred awards, subject to the rules of the relevant plan,

unless the Committee determines otherwise in

exceptional circumstances. ‘Eligible leaver’ is defined as

leaving due to injury, disability or ill health, retirement,

redundancy, the business or company which employs the

Executive Director ceasing to be part of the Group or the

employer terminating employment, other than in

circumstances which amount to gross misconduct or

dismissal for cause. In addition, the Committee will apply

its discretion to treat resignation on or after the fifth

anniversary of the date of grant as ‘eligible leaver’ status.

Outstanding deferred bonus awards would lapse if the

Executive Director leaves by reason of resignation prior to

fifth anniversary, is terminated for gross misconduct or

cause, or is otherwise not designated an ‘eligible leaver’. 

Deferred awards are subject to malus provisions which

enable the Committee to reduce the vesting level of

deferred bonuses (including to nil) and once vested are

subject to clawback provisions (as describe d above).

In the event of a takeover or other major corporate event,

the Committee has absolute discretion to determine

whether all outstanding awards would vest early or

whether they should continue in the same or revised form

following the change of control. The Committee may also

determine that participants may exchange existing

awards for awards over shares in an acquiring company

with the agreement of that company.

In an ‘eligible leaver’ situation, deferred bonus

awards may be considered for release in full on the

scheduled release dates unless the Committee

determines otherwise in exceptional circumstances.

On death, awards are accelerated and released in

full. After release, the shares are subject to an

additional holding period to the extent required by

regulations (currently a minimum 12 month holding

period applies).

Treatment of

unvested awards

under the LTIP

In the case of death or if the Executive Director is an

‘eligible leaver’ the Executive Director would continue to

be entitled to be considered for an award. ‘Eligible leaver’

is defined as leaving due to injury, disability or ill health,

retirement, redundancy, the business or company which

employs the Executive Director ceasing to be part of the

Group or for any other reason if the Committee decides at

its discretion. In addition, the Committee will apply its

discretion to treat resignation on or after the

fifth anniversary of the date of grant as ‘eligible leaver’

status. Outstanding unvested awards under the LTIP

would lapse if the Executive Director leaves by reason of

resignation prior to fifth anniversary, is terminated for

gross misconduct, or is otherwise not designated an

‘eligible leaver’.

Awards are subject to malus provisions which enable the

Committee to reduce the vesting level of awards

(including to nil) and once vested, awards are subject to

clawback provisions (as described above).

In the event of a takeover or other major corporate event

(but excluding an internal reorganisation of the Group),

the Committee has absolute discretion to determine

whether all outstanding awards vest subject to the

achievement of any performance conditions. The

Committee has discretion to apply a pro-rata reduction to

reflect the unexpired part of the vesting period. The

Committee may also determine that participants

may exchange awards for awards over shares in an

acquiring company with the agreement of that company.

In the event of an internal reorganisation, the Committee

may determine that outstanding awards will be

exchanged for equivalent awards in another company.

In an ‘eligible leaver’ situation awards may be

considered for release on the scheduled release

date. On death, awards are accelerated. In both

cases, awards are pro-rated for time (over the whole

performance period, including the assessment

period prior to grant) and performance, subject to

the Committee’s discretion to determine otherwise,

in accordance with the plan rules, as amended from

time to time. After release, the shares are subject to

an additional holding period to the extent required by

regulations (currently a minimum 12 month holding

period applies).

61 Barclays PLC 2019 Annual Report on Form 20-F

Directors’ remuneration policy

Standard provision

Commentary

Maximum value

Repatriation

Except in the case of gross misconduct or resignation,

where an Executive Director has been relocated at the

commencement of employment, the Company may pay

for the Executive Director’s repatriation costs in line with

Barclays’ general employee mobility policy including

temporary accommodation, payment of remo val costs

and relocation flights for the Executive Director, spouse

and children. The Company will pay the Executive

Director’s tax on the relocation costs but will not tax

equalise and will also not pay tax on his or her other

income relating to the termi nation of employment.

Other

Except in the case of gross misconduct or resignation,

the Company may pay for the Executive Director’s legal

fees and tax advice relating to the termination of

employment and provide outplacement services. The

Company may pay the Executive Director’s tax on these

particular costs.

Illustrative scenarios for Executive Directors’ remuneration

The charts below show the potential value of the current Executive Directors’ 2020 total remuneration in three main scenarios: ‘Minimum’ (i.e. Fixed

Pay, Pension and benefits), ‘Mid -point’ (i.e. Fixed Pay, Pension, benefits and 50% of the maximum variable pay that may be awarded) and

‘Maximum’ (i.e. Fixed Pay, Pension, benefits and the maximum variable pay that may be awarded). For the purposes of these charts, the value of

benefits is based on an estimated annual value for 2020 regular contractual benefits. Additional ad hoc benefits may arise, for example, overseas

relocation of Executive Directors, but will always be provided in line with the DRP. 

A significant proportion of the potential remuneration of the Executive Directors is variable and is therefore performance related. It is also subject to

deferral, additional holding periods, malus and clawback. In line with the new reporting requirements, we have provided an indication of the

maximum remuneration receivable, assuming share price appreciation of 50% on the LTIP. 

62 Barclays PLC 2019 Annual Report on Form 20-F

Remuneration policy – Non-Executive Directors

Element and purpose

Operation

Maximum value

Fees

Reflect individual responsibilities

and membership of Board

Committees and are set to

attract

Non-Executive Directors

who

have relevant skills and

experience to oversee the

implementation of our strategy

Fees are set at a level which

reflects the role, responsibilities

and time commitment which

are expected from the Chairman

and Non -Executive Directors

The Chairman is paid an all -inclusive fee for all Board

responsibilities. The Chairman has a time

commitment equivalent of up to 80% of a full -time

role. The other Non-Executive Directors receive a

basic Board fee, with additional fees payable where

individuals serve as a member or Chairman of a

Committee of the Board.

Fees are periodically reviewed by the Board.

Some Non -Executive Directors may also receive fees

as directors of subsidiary companies of Barclays

PLC. In the case of certain subsidiary appointments,

such additional remuneration is approved by the

Barclays PLC Board Remuneration Committee.

Fees are reviewed against those for Non- Executive

Directors in companies of similar size and complexity.

Othe r than in exceptional circumstances, fees will not

increase by more than 20% above the current fee

levels during this policy period.

Benefits

To provide a competitive and

cost effective benefits package

appropriate to the role

and location

The Chairman is provided with private medical cover subject to the terms of the Barclays’ scheme rules from

time to time, and is provided with the use of a Company vehicle and driver when required for business

purposes (including settlement of any tax liabilities that may arise from this benefit).

Benefits which are minor in nature and in any event do not exceed a cost of £500 may be provided to Non-

Executive Directors in specific circumstances.

Non-Executive Directors are not eligible to join Barclays’ pension plans.

Expenses

The Chairman and Non-Executive Directors are reimbursed for any reasonable and appropriate expenses

incurred for business reasons. Any tax that arises on these reimbursed expenses is paid by Barclays.

Bonus and share plans

The Chairman may be invited to participate in Sharesave, an HMRC employee tax advantaged share scheme,

due to the level of his time commitment to the role. The Chairman is not eligible to participate in any other

Barclays’ cash, share or long -term incentive plans.

All other Non-Executive Directors are not eligible to participate in Barclays’ cash, share or long -term incentive

plans.

Shareholding

requirements

Chairman: £100,000 (Non-Executive Directors: £30,000) gross before deduction of tax and other statutory

deductions per annum of each Non-Executive Director’s basic fee is used to purchase Barclays’ shares which

are retained on the Non-Executive Director’s behalf until they retire from the Board.

Notice and termination

provisions

Each non -executive Director’s appointment is for an initial three year term, renewable at Barclays’ discretion

for a further term of three years thereafter and subject to annual re-election by shareholders. Non-Executive

Directors appointed beyond six years will be at the discretion of the Board Nominations Committee.

Notice period

Chairman: Six months from the Company (six months from the Chairman).

Termination payment policy

The Chairman’s appointment may be terminated by Barclays on six months’ notice or immediately in

which case six months’ fees are payable in instalments at the times they would have been received had the

appointment continued, but subject to mitigation if he or she were to obtain alterna tive employment. No

continuing payments of fees (or benefits) are due if a Non-Executive Director is not re-elected by shareholders

at the Barclays AGM.

In accordance with the policy table above, any new Chairman would be paid an all-inclusive fee only and any new Non-Executive Director would be

paid a basic fee for their appointment as a Non-Executive Director, plus fees for their participation on and/or chairing of any Board committees, time

apportioned in the first year as necessary. No sign -on payments are offered to Non-Executive Directors.

63 Barclays PLC 2019 Annual Report on Form 20-F

Annual report on 

Directors’ remuneration

This section explains how our Directors’ remuneration policy was implemented for 2019.

Executive Directors

Executive Directors: Single total figure for 2019 remuneration (audited)

The following table shows a single total figure for 2019 remuneration in respect of qualifying service for each Executive Director together with

comparative figures for 2018.

1) Fixed Pay

£000

2) Pension

£000

3) Taxable

benefits

£000

Total

Fixed

Pay

£000

4) Annual

bonus

£000

5) LTIP

£000

6) Reduction

of unvested

deferred awards

£000

Total

Variable

Pay

£000

Total

£000

Jes Staley

2019

2,350

396

58

2,804

1,647

1,478

a

–

3,125

5,929

2018

2,350

396

55

2,801

1,061

–

(500)

d

561

3,362

Tushar Morzaria

2019

1,650

200

53

1,903

1,123

942

a

–

2,065

3,968

2018

1,650

200

49

1,899

729

845

b,c

–

1,574

3,473

Notes

a The LTIP amounts include a 14% share price depreciation between date of grant and vesting date (based on Q4 2019 average price)

b The LTIP amount includes a 4% share price depreciation between date of grant and vesting date 

c LTIP and dividend equivalent figures for 2018 have been adjusted to reflect the share price on the date of vesting (1.60p) rather than the Q4 2018 average price and

additional dividend paid in February 2019.

d As previously disclosed, malus was applied to Jes Staley’s 2016 variable compensation.

Additional information in respect of each element of pay for the Executive Directors (audited)

1) Fixed Pay

Fixed Pay is delivered 50% in cash and 50% in shares (subject to a five -year holding period lifting pro rata).

2) Pension

Executive Directors are paid cash in lieu of pension contributions. The pension cash allowance in 2019 was £396,000 for Jes Staley and £200,000

for Tushar Morzaria. No other benefits were received by the Executive Directors from any Barclays’ pension plan.

3) Taxable benefits

Taxable benefits include private medical cover, life assurance, income protection, tax advice, car allowance and the use of a Company vehicle and

driver when required for business purposes.

4) Annual bonus

The bonus amount included in the single total figure is the value awarded or scheduled to be awarded in Q1 following the financial year to which it

relates. The Committee considered the Executive Directors’ performance against the financial (60% weighting) and strategic non -financial (20%

weighting) performance measures which had been set to reflect company priorities for 2019. Perform ance against their individual personal

objectives (20% weighting) was assessed on an individual basis.

The approach taken to assessing financial performance against each of the financial measures was based on a straight -line outcome between 20%

for threshold performance and 100% applicable to each measure for achievement of maximum performance. A summary of the assessment is

provided in the following table:

2019 Outcome

Threshold

Maximum

2019

Jes

Tushar

Performance measure

Weighting

(20%)

(100%)

Actual

Staley

Morzaria

Profit before tax excluding L&C and other

material items

a

with CET1 ratio underpin

50%

£5.5bn

£6.3bn

£6.2bn

45.3%

45.3%

Cost: income ratio excluding L&C and other

material items

10%

64.6%

62.2%

62.8%

8.0%

8.0%

Strategic

20%

Performance against strategic measures, organised

around three main categories Customers and Clients,

Colleagues and Society.

14%

14%

Personal

20%

Individual performance against each of the Executive

Directors’ personal objectives assessed by the

Committee.

16%

17%

Total

83.3%

84.3%

Final outcome following Remuneration Committee discretion

75.0%

75.9%

Note 

a No other material items in 2019

64 Barclays PLC 2019 Annual Report on Form 20-F

Strategic (20% weighting)

Progress in relation to each of the strategic measures, organised around three main categories, was assessed by the Committee. Within each of

the three categories, the overall outcome was assessed based on the following scale: 0% to 1% Behind track on most measures, 1.5% to 3%

Slightly behind track on most measures, 3.5% to 5.5% On track or slightly ahead of track for most measures, and 6% or 7% Ahead of track on most

measures. On this basis, the Committee agreed an overall outcome of 14% out of a maximum of 20%. The detail supporting this assessment is

provided in the table below:

Customers and Clients

Measure

Criteria

Performance

Commentary

Outcome

Net Promoter

Scores® (NPS)

Barclays UK: +18

Barclaycard UK:

+10

Barclays UK: +18 (+17 in 2018 and

+14 in 2017) 

Barclaycard UK: +11(+9 in 2017/18)

■ Further positive progress made in Barclays UK 

■ Barclaycard UK progressed significantly

On track

Global Markets

ranking

Continued

improvement

6

th

(up from 7

th

in 2018)

■ In FY2019, Barclays increased its market share

across Global Markets and gained a rank to #6

globally from #7 in FY18 per Coalition

Institutional Client Analytics (

Source: Coalition

FY19 vs FY18 Preliminary Competitor Analysis.

Market share represents Barclays’ share of the

total industry revenue pool)

On track

UK and US

investment

banking division

ranking

5th

5th, improving one rank on 2018

■ Ongoing progress in gaining fee share and

revenue in both Advisory and Equity

Underwriting (Dealogic)

On track

Complaints

Down 10%

excluding PPI in

Barclays UK

Down 8% excluding PPI in Barclays

UK

■ Continued reduction in customer pain points,

leading to a significant reduction in complaint

volumes, just below target level

Slightly

behind

track

Lending volumes

£25.5bn completed

mortgages

£25.5bn completed mortgages

(£23bn+ in 2018)

■ Achieved desired lending volumes despite

challenging environment

On track

Digital

Increase digitally

active customers

Barclays UK: 11.4m digitally active

customers (10.8m in 2018) 

Consumer, cards and payments:

71% (2018: 66%)

■ The Barclays App is the most used mobile

banking app in UK

Ahead of

track

Total Customers and Clients : 4.5%

Colleagues

Measure

Criteria

Performance

Commentary

Outcome

Diversity

28% women in

senior leadership by

2021

25% in 2019, increasing one

percentage point from 2018 and

two points from 2017

■ Percentage of women on Board at 33%, in line

with 2020 target 

■ 34% female graduate hires 

■ Awards include The Times Top 50 Employers

for Women, Stonewall Top Global Employer for

LGBT colleagues and the National Organization

on Disability Leading Disability Employer’s Seal

(US)

On track

Inclusion

Performance

assessed in light of

broader context

80% of respondents in our Your

View survey would recommend

Barclays as a good place to work

85% said they felt included in their

team

■ ‘Inclusion’ was in the top 6 terms used by

colleagues to describe Barclays in our Your

View survey

On track

65 Barclays PLC 2019 Annual Report on Form 20-F

Annual report on

Directors’ remuneration

Colleagues

Measure

Criteria

Performance

Commentary

Outcome

Engagement

Performance

assessed in light of

broader context

Overall engagement score from

Your View survey 77%, down 2%

from 2018 

80% would recommend Barclays

as a good place to work

■ While a small decline is not what we want to

see, this reduction in a challenging year is

driven by lower scores relating to tools and

resources, an area of significant ongoing

focus and investment 

■ Other indicators were very positive, for

example, 86% of colleagues are proud of our

contribution to the community and society 

■ The ‘supporting wellbeing’ category also

received positive feedback, with 74% saying

that Barclays supports employee efforts to

enhance their wellbeing, and 80% that

managers also support these efforts

Behind track

Conduct and

culture

Performance

assessed in light of

broader context

92% of employees in Your View

Survey believe that they and their

teams demonstrate the values 

87% of colleagues believe strongly

in the goals and objectives of

Barclays

■ The top ten terms used by colleagues in the

Your View survey to describe Barclays are all

positive, with the number one term being

‘customer satisfaction’. We also have three

new entries which are ‘inclusion’, ‘personal

accountability’ and ‘ethical’ 

■ 89% of employees beli eve that Barclays is

focused on good customer and client

outcomes

On track

Total Colleagues : 3.5%

Society

Measure

Criteria

Performance

Commentary

Outcome

Environmental and

social financing

£150bn by 2025

£34.8bn (£28.5bn in 2018)

■ Good progress toward our environmental and

social financing commitment 

■ Environmental financing grew by 45% year-

on-year to a total of £7.8bn (2017: £5.3bn).

On track

Global carbon

emissions

reduction

80% reduction by

2025

53% reduction against the 2018

baseline

■ Performance driven by the purchase of

renewable energy contracts across our

operations in the UK & Europe and is in line

with our RE100 commitment.

Ahead of

track

LifeSkills

10 million people

upskilled 2018 -2022,

2 million in 2019

2.3m

■ Good progress towards 2022 target

Ahead of

track

Connect with Work

250,000 people

placed into work

2018 -2022, 62,500 in

2019

66,000 people helped into work

■ Connec t with Work supports people who face

barriers getting into work

Ahead of

track

Unreasonable

Impact

(partnership with

the Unreasonable

Group)

Support 250

businesses solving

social and

environmental

challenges (2016-

2022)

124 growth -stage ventures had

joined the programme by end 2019

■ The programme provides advice and guidance

from a community of world-class mentors and

industry specialists, including Barclays

colleagues.

Ahead of

track

Building Thriving

Local economies

2022 target of four

pilot studies

Three pilots launched 2018-2019

■ On track to deliver against 2022 target

On track

Total Society : 6.0%

Overall (out of a maximum possible 20%) : 14.0%

Further details on the Performance Measurement Framework can be found on pages18 and 19 in the Strategic Report available at:

home.barclays/annualreport

.

66 Barclays PLC 2019 Annual Report on Form 20-F

Individual outcomes including assessment of personal objectives

Individual performance against each of the Executive Directors’ personal objectives (20% weighting overall) was assessed by the Committee

(objectives as set out on page 121 of the 2018 Annual Report).

The below summarises their performance against the shared personal objectives.

Shared objectives for Jes Staley and

Tushar Morzaria

Outcomes

Continue to deliver improving shareholder

returns, whilst retaining the focus on delivering

the 2019 and 2020 external targets and

specifically profitability of the CIB.

■ Strong financial improvements delivered, 2019 RoTE in line with target of 9.0%, while CET1

increased to 13.8% 

■ Continued progress towards target of cost: income ratio below 60%, reducing 3 percentage

points over the year from 66% to 63% 

■ Material improvement to CIB profitability, with PBT increasing 15% 

■ Returns to shareholders also significantly increased, with total dividend for 2019 of 9p - up

from 6.5p in 2018

Identify opportunities for further cost

efficiencies, enabling reinvestment into

strategic priorities

■ Cost guidance of below £13.6bn delivered in 2019 

■ Significant cost focus, with numerous actions taken to drive efficiencies to create capacity for

reinvestment 

■ Reinvestment has been focussed in areas such as our long -term technology strategy

(including our focus on ‘becoming more digital’) as well as material growth initiatives in our

businesses 

■ We invested nearly twice as much last year in building the Barclays of the future as the year

before

Leverage the new Barclays Execution Services

platform to drive our technology agenda across

operating businesses to improve customer and

client experience and enhance value

■ The Barclays Execution Services platform has helped us to reduce duplication, simplify our

operating environment and re-engineer our processes. 

■ Changing our businesses to work in a more efficient way has enabled a renewed focus on our

customers and clients and how we serve them 

■ Examples include Corporate Banking, where over 80% of our corporate clients are using our

single digital platform and our retail businesses, where 91% of customer transactions are now

automated across all our channels 

■ This also extends to investment in continuing to protect our customers’ data, and ensuring

that our businesses are better controlled and more resilient, so things are less likely to go

wrong for our customers and clients

Respond to emerging Brexit decisions,

managing risks appropriately for the Group,

while continuing to support our customers and

clients in the UK.

■ Risks associated with Brexit have been proactively managed, with the Bank fully prepared for

different potential scenarios 

■ Barclays Bank Ireland fully established and prepared to transact across European client base 

■ UK customer and client service maintained throughout Brexit preparatory work

In addition to the shared personal objectives described above, the table below summarises Jes Staley’s performance against the objectives specific

to him.

Jes Staley’s objectives

Outcomes

Oversee the effective management of the risk

and controls agenda, including cyber risks

■ Jes has overseen the effective management of the risk and controls agenda. In particular, his

ongoing focus on the Barclays Improved Controls Enhancement Programme (BICEP) has

delivered significant improvements in the control environment and is close to conclusion 

■ There has also been a dramatic year on year reduction in more impactful controls-related

issues, with a corresponding improvement in performance assessments in internal audits 

■ From a cyber perspective, the result of a recent CapGemini Cyber Security Maturity

Assessment was Barclays’ highest score in four years

Further improve customer and client

satisfaction, with continued focus on complaint

reduction

■ Jes has worked with the Board to ensure that focussing on customers and clients is a key

strategic pillar for the Group. This focus has led to a number of process improvements while

designing our business around what our customers want and how they would like to achieve it 

■ Jes has also personally increased his client engagement substantially compared with 2018 

■ He has continued to personally focus on reducing customer complaints volumes, and has

overseen a further reduction in 2019 of 8% (excluding PPI), on top of the 9% reduction in

2018

67 Barclays PLC 2019 Annual Report on Form 20-F

Annual report on

Directors’ remuneration

Jes Staley’s objectives

Outcomes

Develop further a high performing culture in

line with our Values, continuing to focus on

employee engagement; the talent pipeline for

Group, Business and Functional Executive

Committees with a particular emphasis on

improving the percentage of women in senior

leadership roles

■ As outlined in the 2018 Fair Pay Report, Jes took accountability for increasing female

representation in January 2019 

■ He also personally launched a set of 2019 specific initiatives aiming to make the biggest

difference most quickly to the proportion of women in senior leadership positions. The

outcome has been an improvement to 25% (2018: 24%), with steady progress made towards

the 2021 target 

■ Significant progress has been made in succession planning and the talent pipeline. There are

now succession plans in place for all businesses and functions. Additionally Jes restructured

the Group Executive Committee to ensure closer business focus 

■ Employee engagement has remained an important focus of Jes and the Executive Committee.

As noted in the non -financial assessment, despite some very positive indicators the overall

engagement score reduced slightly based primarily on views relating to tools and resources.

Investment in technology is underway to address these issues.

Effectively manage relationships with key

external stakeholders and society more

broadly.

■ Jes has dedicated a significant amount of time to actively engaging with external stakeholders

including regulators, the government and investors 

■ The impact Jes has had on society more broadly has also been very positive across a large

number of areas. Examples include Barclays becoming a founding member of the UN

Principles for Responsible Banking, as well as being recognised in Fortune Magazine’s 2018

Change the World List for the first time for positive social impact connected to core business

strategy 

■ Overall, external relationships have been effectively managed by Jes, with positive feedback

received, in particular in relation to the delivery and execut ion of the bank’s strategy

Recognising his very strong performance against both his individual and shared personal objectives during 2019, the Committee assessed that an

outcome of 16% out of a maximum of 20% was appropriate.

The Committee reflected on the aggregate outcome for Jes Staley under the formulaic components of the annual bonus framework.

The Committee noted that the formulaic outcome of 83.3% was supported by very strong delivery against both the financial and non-financial

performance measures. In finalising the outcome, the Committee considered all relevant factors, including outcomes for the wider workforce. It

noted that overall bonus pool was down 10%. It also observed that the linkage between Executive Director outcomes and those of the wider

workforce is not always correlated, e.g. in 2018 the executive bonus outcomes were slightly down based on their performance against plan targets,

while the overall bonus pool increased. Recognising the different basis of approaches, the Committee reflected on the appropriate final bonus

outcome for the Executive Directors. It decided that to increase alignment with the wider workforce, a discretionary reduction would be applied to

the formulaic outcomes for both Executive Directors in line with the reduction to the overall incentive pool, i.e. a reduction of 10%. On that basis the

outcome for Jes Staley is a bonus of 75.0% or £1,647,000 (of which 76% will be deferred under the Share Value Plan).

The table below summarises Tushar Morzaria’s performanc e against the objectives specific to him. In addition to his performance against the

objectives below, Tushar successfully led a significant project with the UK regulators to change the capital calculation basis. Additionally, he led the

successful complet ion of the external stress tests run by the Bank of England, the European Banking Authority and the Federal Reserve (CCAR).

He also continues to oversee the significant additional reporting, capital and liquidity management requirements under the new subsidiary entity

structure (following the establishment of the ring-fenced bank and the US Intermediate Holding Com pany). During 2019, Tushar became

accountable for overseeing the Strategy function , and led the enhanced reviews of strategy by the Board.

Tushar Morzaria’s objectives

Outcomes

Demonstrate effective management of external

relationships, particularly regulators and

investors

■ Feedback continues to indicate that external relationships have been managed very

effectively, including both with regulators and investors 

■ Tushar has been appointed by the Bank of England to Chair the Sterling Risk Free Reference

Rates Working Group, which demonstrates his ongoing positive external impact

Oversee the effective management of the risk

and controls agenda in Group Finance, Tax

and Treasury

■ The Risk and Controls agenda in Group Finance, Tax and Treasury remains an area of focus,

with progress made in particular in the Treasury function 

■ While progress has been made, there is still more work to do to ensure our rigorous control

environment enables us to deliver the right outcome for all stakeholders

Progress finance transformation programme

and drive benefits across Group Finance, Tax

and Treasury

■ The transformation programme is complete, with the new operating model fully embedded

across the whole function, including Group Finance, Tax and Treasury 

■ Benefits have included the creation of additional capacity, enabling enhanced focus on

process and technology improvements, e.g. the financial planning and related stress testing

processes

68 Barclays PLC 2019 Annual Report on Form 20-F

Tushar Morzaria’s objectives

Outcomes

Continue to develop talent base, employee

engagement and gender diversity in Group

Finance, Tax and Treasury.

■ Strong progress has been made on the talent pipeline within the Finance function, combining

strategic external hiring with internal talent development. The leadership succession pipeline has

been significantly enhanced, in particular with female talent

■ Gender diversity has also been increased outside of the management team, with a 2% increase

in senior women across the function (at 26% before transfers)

■ Levels of employee engagement have increased by 1% to 76% in the Your View employee

survey

The Committee also recognised Tushar Morzaria’s very strong performance against both his individual and shared personal objectives during 2019,

assessing that an outcome of 17% out of a maximum of 20% was appropriate. In aggregate, this results in an overa ll formulaic outcome for Tushar

of 84.3%. On the same basis as described above, the Committee decided that to increase alignment with the wider workforce, a 10% reduction

would be applied to this outcome. On that basis the outcome for Tushar Morzaria is a bonus 75.9% or £1,123,000 (of which 64% will be deferred

under the Share Value Plan).

In line with the DRP, and due to the regulations prohibiting dividend equivalents being paid on unvested deferred share awards, the number of

shares awarded to each Executive Director under the Share Value Plan will be calculated using a share price at the date of award, discounted to

reflect the absence of dividend equivalents during the vesting period. The valuation will be aligned to IFRS 2, with the market expectations of

dividends during the deferral period being assessed by an independent adviser. These shares will vest in two equal tranches on the first and

second anniversary (subject to the rules of the Share Value Plan as amended from time to time). All shares (whether deferred or not) are subject to

a further one -year holding period from the point of release. 2019 bonuses are subject to clawback provisions and, additionally, unvested deferred

2019 bonuses are subject to malus provisions which enable the Committee to reduce the vesting level of deferred bonuses (including to nil).

5) LTIP

The LTIP amount included in the single total figure is the value of the amount scheduled to be released in relation to the LTIP award granted in

2017 in respect of the performance period 2017-2019 (by reference to Q4 2019 average share price). Release is dependent on, among other

things, performance over the period from 1 January 2017 to 31 December 2019 with straight-line vesting applied between the threshold and

maximum points. The performance achieved against the performance targets is as follows:

Performance measure

Weighting

Threshold

Maximum vesting

Actual

% of award

vesting

Average return

on tangible

equity

(RoTE) excluding

material items

a

25%

6.25% of award vests for RoTE

excluding material items of 7.5%

RoTE excluding material items of 9.5%

7.7%

8.1%

CET1 ratio had to remain at or above an acceptable level for any of this element

to vest. As CET1 was at or above the end -state target in each year of the period,

this element will vest as indicated.

CET1 ratio as at

31 December 2019

25%

6.25% of award vests for CET1 ratio

100 basis points above the

mandatory distribution restrictions

(MDR) hurdle (12.1% as at 31

December 2019)

CET1 ratio 200 basis points above the

MDR hurdle

13.8%

19.4% 

Cost: income ratio

excluding material

items

a

20%

5% of award vests for average cost:

income ratio of 63%

Average cost: income ratio of 58%

66%

0.0% 

Risk Scorecard

15%

The Risk Scorecard captures a range of risks and is aligned with the annual

incentive risk alignment framework reviewed with the regulators. The current

framework measures performance against three broad categories – Capital and

Liquidity, Control Environment and Conduct – using a combination of

quantitative and qualitative metrics.

11.0%

Strategic

non -financial

15%

Performance is measured against the strategic non-financial measures. The

Committee determined the percentage of the award that may vest between 0%

and 15%. The measures are organised around three equally weighted

categories: Customers and Clients, Colleag ues and Society.

10.0%

Total

100%

48.5%

Final outcome approved by the Remuneration Committee

48.5%

Note

a Material items include impairment and loss on sale of BAGL and the impact of the re-measurement of US deferred tax assets in 2017, and litigation and conduct in

2017, 2018 and 2019 (including PPI and settlement with regard to RMBS).

69 Barclays PLC 2019 Annual Report on Form 20-F

Annual report on

Directors’ remuneration

A summary of the Committee’s assessment against the Risk Scorecard performance measure over the three year performance period is provided

below. Each category is equally weighted at 5%.

Category

Performance

Outcome

Capital and

Liquidity

■

Group CET1% grew from 12.4% to 13.8% over the period, and remained comfortably above the regulatory minimum throughout.

■

Stress test results showed continued improvement over the period. In 2017, the Bank of England recognised that the increases in

CET1 capital and in Tier 1 leverage ratios over the year were sufficient for it to meet the systemic reference points in the test. Barclays

passed the 2018 and 2019 tests.

4.0%

■

Our liquidity risk appetite measure and the Liquidity Coverage Ratio remained above targets.

Controls

■

The Barclays Internal Control Enhancement Programme (BICEP) was launched in 2017 to transform the bank’s approach to the control

environment. As at the end of 2019, 99% of BICEP milestones had been achieved.

4.0%

■

The Bank has now transitioned to a ‘business as usual’ environment. The Barclays Control Framework has been implemented,

enhancing visibility on controls and risks. Assessments of the control environment have continued to improve, reflecting continued

focus on identifying and resolving control issues.

Conduct

■

Conduct remains a key focus for Barclays. Senior-level conduct breaches are viewed as a proxy for a good culture led ‘from the top’.

Breaches remained low throughout the period.

3.0%

■

Conduct Profiles across the Group showed a positive trend over the period, particularly in Culture and Strategy, although a need for

continued focus remains.

Total

15%

11.0%

A summary of the Committee’s assessment against the Strategic non -financial performance measures over the three year performance period is

provided below. Each category is equally weighted at 5%.

Category

Criteria

Performance

Outcome

Customers

and clients

Barclays NPS® 

Barclaycard NPS®

Improve 

■

NPS scores improved consistently year on year, with substantial improvement in particular

in Barclays NPS, up from +10 in 2016 to +18 in 2019. Barclaycard has increased from +9 to

+11 over the period

3.5%

Markets ranking

Banking UK+US

ranking

Improve

■

 Barclays’ Markets ranking improved from 8th globally in 2017 to 6th in 2019

(Source:

Coalition FY19 Preliminary Competitor Analytics. Analysis is based on Barclays’ internal

business structure and internal revenues)

■

Following our shift in strategy in the Investment Bank, Banking rankings initially dropped one

place from 5th to 6th in 2017, before improving to 5th in 2019 (Dealogic)

Digitally active

customers

Barclays App

users

Become more

digital

■

20% increase in digitally active users over the period, steady progress each year.

■

Barclays App was the most used banking app in the UK and named Best Mobile Banking

app in 2018 

YOY complaints

reduction (ex PPI)

Reduce

complaints 

■

Solid progress in Complaints reduction in Barclays UK, averaging 10%pa over the period,

while recognizing there is still more to do. 

Collegues

% of senior women

2021 target of

28%

■

Women in senior leadership increased from 22% in 2016 to 25% in 2019, making steady

progress towards the 2021 target of 28%

2.5%

Engagement score

(Your view survey) 

Maintain

engagement at

healthy levels

■

Engagement scores averaged 78% over the period and were consistently above the 2016

level (75%), despite significant organisational change. More positive movement would have

been desirable. There is ongoing focus and investment spend to improve technology and

processes to support colleagues in their work

‘Is it safe to speak

up at Barclays’

Improve from

2016 (81%) 

■

Favourable and increasing in 2017 and 2018. The 2019 score was down on 2018. The

average over the period was 83%, two points higher than in 2016 

Barclays is

focused on good

customer and

client outcomes’

Improve from

2016 (83%) 

■

The percentage of employees agreeing that Barclays is focused on achieving good

customer and client outcomes was at or above 88% throughout the period (above the 2016

level of 83%). 

70 Barclays PLC 2019 Annual Report on Form 20-F

Category

Criteria

Performance

Outcome

Society

Environmental

and social

financing

Facilitate

£150bn over

2018 -25

■

£95bn of environmental and social financing was facilitated over the period (of which

£63bn in 2018 and 2019) , exceeding annual targets. We have seen good growth

across our product set in all our businesses including the investment, corporate and

retail bank

4% 

People

upskilled

Upskill 10m

from 2018 -22

■

6.5m people were upskilled through our LifeSkills programme (of which 4.6 million in

2018 and 2019) , consistently exceeding annual targets and making good progress

towards our aspiration of helping 10m people by 2022

Carbon

emissions

reduction

30% by 2018 

80% by 2025

■

Carbon emissions reduced by 38% by 2018 (over 2015 baseline), exceeding the

original 2018 target (-30%). Further year-on -year reduction of 53% in 2019, making

very good progress towards the new target of 80% reduction vs 2018 baseline by

2025.

Total

15%

10.0%

The LTIP award is also subject to a discretionary underpin whereby the Committee must be satisfied with the underlying financial health of the

Group. The Committee was satisfied that this underpin was met, and accordingly determined that the award should vest at 48.5% of the maximum

number of shares under the total award, to be released in five equal tranches annually, starting from June 2020. After release, the shares are

subject to an additional six month holding period.

Outstanding LTIP awards

LTIP awards granted during 2018

The performance measures for the awards made under the 2018-2020 LTIP cycle are as follows:

Performance measure

Weighting

Threshold

Maximum vesting

Average return on

tangible equity (RoTE)

excluding material

items

50%

10% of award vests for RoTE of 7.75%

RoTE of 10.25%

(based on an assumed CET1 ratio at the target of c.13.5%)

Vesting of this element will depend on CET1 levels during the performance period:

■

if CET1 goes below the MDR hurdle (12.1% as at 31 December 2019) in any year of the period, no part

of the RoTE element will vest

■

if CET1 goes below the MDR hurdle +150bps but remains above the hurdle during the period, the

Committee will exercise its discretion to determine what portion of the RoTE element should vest, based

on the causes of the CET1 reduction.

Average cost: income

ratio excluding material

items

20%

4% of award vests for average cost: income ratio of 62.5%

Average cost: income ratio of 58%

Risk Scorecard

15%

The Risk Scorecard captures a range of risks and is aligned with the annual incentive risk alignment

framework reviewed with the regulators. The current framework measures performance against three broad

categories – Capital and Liquidity, Control Environment and Conduct – using a combination of quantitative

and qualitative metrics. The framework may be updated from time to time in line with the Group’s risk

strategy. Specific targets within each of the categories are deemed to be commercially sensitive.

Retrospective disclosure will be made in the 2020 Remuneration Report, subject to commercial sensitivity no

longer remaining.

Strategic

non

-

financial

15%

The evaluation will focus on key performance measures from the Performance Measurement Framework,

with a detailed retrospective narrative on progress throughout the period against each category. Performance

against the strategic non -financial measures will be assessed by the Committee to determine th e percentage

of the award that may vest between 0% and 15%. The measures are organised around three main

categories: Customers and Clients, Colleagues and Society. Each of the three main categories has equal

weighting. Measures will likely include, but wil l not be limited to, the following:

■

Customers and Clients: NPS for consumer businesses, client rankings and market shares for the CIB,

complaints performance and volume of lending provided to customers and clients

■

Colleagues: Diversity and Inclusion statistics (including women in senior leadership), Employee

sustainable engagement survey scores and conduct and culture measures

■

Society: Delivery against our Shared Growth Ambition, Colleague engagement in Citizenship activities

and external benchmarks and surveys.

Straight -line vesting applies between the threshold and maximum points in respect of the financial measures.

71 Barclays PLC 2019 Annual Report on Form 20-F

Annual report on

Directors’ remuneration

LTIP awards granted during 2019

An award was made to Jes Staley and Tushar Morzaria on 8 March 2019 under the 2019-2021 LTIP at a share price of £1.2288, which has been

discounted to reflect the absence of dividend equivalents during the vesting period, in accordance with our DRP. This is the price used to calculate

the number of shares below.

% of Total

fixed pay

Number of

shares

Face value

at grant

Performance

period

Jes Staley

120%

2,681,618

3,295,200

2019 -2021

Tushar Morzaria

120%

1,806,625

2,220,000

2019 -2021

The performance measures for the 2019 -2021 LTIP awards are as follows:

Performance measure

Weighting

Threshold

Maximum vesting

Average return on

tangible equity (RoTE)

ex litigation and

conduct and other

material items

50%

10% of award vests for RoTE of 8.5%

(based on an assumed CET1 ratio at the target of c.13.5%)

RoTE of 10.5%

Vesting of this element will depend on CET1 levels during the performance period:

■

if CET1 goes below the MDR hurdle (12.1% as at 31 December 2019) in any year of the performance

period, no part of the RoTE element will vest

■

if CET1 goes below the target (c.13.5%) but remains above the hurdle during the year, the Committee

will exercise its discretion to determine what portion of the RoTE element should vest, based on the

causes of the CET1 reduction.

2021 Cost: income

ratio ex litigation and

conduct and other

material items

20%

4% of award vests for cost: income ratio of 60%

Cost: income ratio of 58.5%

Risk Scorecard

15%

The Risk Scorecard captures a range of risks and is aligned with the annual incentive risk alignment

framework shared with the regulators. The current framework measures performance against three broad

categories – Capital and Liquidity, Control Environment and Conduct – using a combination of quantitative

and qualitative metrics. The framework may be updated from time to time in line with the Group’s risk

strategy. Specific targets within each of the categories are deemed to be commercially sensitive.

Retrospective disclosur e will be made in the 2021 Remuneration Report, subject to commercial sensitivity

no longer remaining.

Strategic

non -financial

15%

The evaluation will focus on key performance measures from the Performance Measurement Framework,

with a detailed retrospective narrative on progress throughout the period against each category.

Performance against the strategic non-financial measures will be assessed by the Committee to determine

the percentage of the award that may vest between 0% and 15%. The measures are organised around

three main categories: Customers and Clients, Colleagues and Society. Each of the three main categories

has equal weighting. Measures will likely include, but not be limited to, the following:

■

Customers and Clients: NPS for consumer businesses, Client rankings and market shares for the

Corporate and Investment Bank, complaints performance and volume of lending provided to customers

and clients

■

Colleagues: Diversity and Inclusion statistics (including women in senior leadership), Employee

sustainable engagement survey scores and conduct and culture measures

■

Society: Delivery against our Shared Growth Ambition, Colleague engagement in Citizenship activities

and external benchmarks and surveys.

Straight -line vesting applies between the threshold and maximum points in respect of the financial measures.

72 Barclays PLC 2019 Annual Report on Form 20-F

LTIP awards to be granted during 2020

The Committee decided to make an award under the 2020-2022 LTIP cycle to Jes Staley and Tushar Morzaria (based on their performance

in 2019) with a face value at grant of 120% of their respective Total fixed pay at 31 December 2019.

The key objective of the LTIP is to incentivise the Executive Directors to deliver on the long-term strategy. The LTIP should support a competitive

pay package for achieving good performance, while the calibration maximum should incentivise a stretch level of performance without encouraging

excessive risk-taking.

In its deliberations on the threshold and maximums for the LTIP financial measures, the Committee considered progress against the external

targets. The Committee increased the threshold for the RoTE measure from 8.5% to 9.0%.

The 2020 -2022 LTIP award will be subject to the following forward-looking performance measures.

Performance measure

Weighting

Threshold

Maximum vesting

Average return on

tangible equity (RoTE)

ex litigation and

conduct and other

material items

50%

10% of award vests for RoTE of 9.0%

RoTE of 10.5%

(based on an assumed CET1 ratio at the target of c.13.5%)

Vesting of this element will depend on CET1 levels during the performance period:

■

in line with regulatory requirements, if the CET1 ratio goes below the MDR hurdle during the

performance period, the Committee will consider what part, if any, of this element should vest.

Average cost: income

ratio ex litigation and

conduct and other

material items

20%

4% of award vests for cost: income ratio of 60%

Cost: income ratio of 58.5%

Risk Scorecard

15%

The Risk Scorecard captures a range of risks and is aligned with the annual incentive risk alignment

framework shared with the regulators. The current framework measures performance against three broad

categories – Capital and Liquidity, Control Environment and Conduct – using a combination of quantitative

and qualitative metrics. The framework may be updated from time to time in line with the Group’s risk

strategy. Specific targets within each of the categories are deemed to be commercially sensitive.

Retrospective disclosure will be made in the 2022 Remuneration Report, subject to commercial sensitivity

no longer remaining.

Strategic non -financial

15%

The evaluation will focus on key performance measures from the Performance Measurement Framework,

with a detailed retrospective narrative on progress throughout the year against each category. Performance

against the strategic non -financial measures will be assessed by the Committee to determine the

percentage of the award that may vest between 0% and 15%. The measures are organise d around three

main categories: Customer and Client, Colleagues and Society. Each of the three main categories has equal

weighting. Measures will likely include, but not be limited to, the following:

■

Customers & Clients: Improve Net Promoter Score s, Reduce UK customer complaints, Increase digital

engagement, Maintain client rankings and increase market shares within CIB

■

Colleagues: Continue to increase the % of women in leadership roles, Maintain engagement at healthy

levels, Improve key metrics from 2019, including Enable scores

■

Society: Grow social and environmental financing, Reduce carbon footprint and increase use of

renewable energy, Continue investing in our communities

73 Barclays PLC 2019 Annual Report on Form 20-F

Annual report on

Directors’ remuneration

Executive Directors: Statement of implementation of remuneration policy in 2020

The following chart provides an illustrative indication of how 2020 remuneration will be delivered to the Executive Directors.

2020 Annual bonus performance measures

Performance measures with appropriately stretching targets have been selected to cover a range of financial and non -financial goals that support

the key strategic objectives of the Company. The performance measures and weightings are shown below.

Financial 

(60% weighting)

A performance target

range has been set for

each financial measure

■ Profit before tax excluding litigation and conduct and other material items (50% weighting).

Payout of this element will depend on the CET1 ratio during the performance year:

– in line with regulatory requirements, if the CET1 ratio goes below the MDR hurdle during the performance year,

the Committee will consider what part if any of this element should pay out.

■ Cost: income ratio excluding litigation and conduct and other material items (10% weighting).

Strategic non-

financial

(20% weighting

)

The evaluation will focus on key performance measures from the Performance Measurement Framework, with a

detailed retrospective narrative on progress throughout the year against each category. Performance against the

strategic non -financial measures will be assessed by the Committee to determine the percentage of the award that

may vest between 0% and 20%. The measures are organised around three main categories: Customer and Client,

Colleagues and Society. Each of the three main categories has equal weighting. Measures will likely include, but not

be limited to, the following:

■ Customers & Clients: Improve Net Promoter Score s, Reduce UK customer complaints, Increase digital

engagement, Maintain client rankings and increase market shares within CIB 

■ Colleagues: Continue to increase the % of women in leadership roles, Maintain engagement at healthy levels,

Improve key metrics from 201 9, including scores relating to tools and resources

■ Society: Grow social and environmental financing, Reduce carbon footprint and increase use of renewable energy,

Continue investing in our communities

74 Barclays PLC 2019 Annual Report on Form 20-F

Personal 

(20% weighting)

The Executive Directors have the following joint personal objectives for 2020: 

■ Continue to deliver improving shareholder returns, including a focus on delivering a RoTE improvement versus

2019

■ Maintain robust capital ratios across the Group and within the main operating entities 

■ Seek opportunities for further cost efficiencies, enabling reinvestment into strategic priorities and growth

initiatives

■ Continue to drive our technology agenda across the Group, to support improving customer and client

experience

■ Continue to focus on external societal and environmental stewardship

Jes Staley

■

Oversee the effective management of the risk and controls agenda, including cyber risks

■ Ensure continued focus on customer and client outcomes, in particular further reductions in complaints

■ Continue to develop a high performing culture in line with our Values, with a focus on employee engagement,

succession planning, talent and diversity

■ Drive growth in fee -based, technology -led annuity businesses with lower capital intensity

■ Effectively manage relationships with all external stakeholders

Tushar Morzaria

■

Continue to optimise financial management and reporting (particularly through technolog y) to drive benefits

across the Group

■ Further improve capital productivity through enhancing capital allocation and the measurement of capital returns

■ Oversee the effective management of the risk and controls agenda in Group Finance, Strategy, Tax and

Treasury

■ Continue to focus on employee engagement, talent and diversity in Group Finance, Strategy, Tax and Treasury

■ Effectively manage relationships with key stakeholders including regulators and investors

Additional remuneration disclosures

Group performance graph and Group CEO remuneration

The performance graph below illustrates the performance of Barclays over the financial years from 2009 to 2019 in terms of total shareholder

return compared with that of the companies comprising the FTSE 100 index. The index has been selected because it represents a cross-section

of leading UK companies.

The table below presents the single figure for remuneration and annual incentive and long -term incentive plan outcomes for the Group Chief

Executive over the past 10 years.

Year

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Group Chief Executive

John

Varley

Robert

Diamond

Robert

Diamond

Antony

Jenkins

Antony

Jenkins

Antony

Jenkins

Antony

Jenkins

John

McFarlane

Jes

Staley

Jes

Staley

Jes

Staley

Jes

Staley

Jes

Staley

Single total remuneration figure CEO

4,567

11,070

a

1,892 

529

1,602

5,467

c

3,399

305

277

4,233

3,873

3,362

5,929

Annual bonus award as a % of

maximum

100%

80%

0%

0%

0%

57%

48%

N/A

N/A

60%

48.5%

48.3%

75.0%

Long -term incentive plan vesting as

a % of maximum

16%

N/A

b

0%

N/A

b

N/A

b

30%

39%

N/A

b

N/A

b

N/A

b

N/A

b

N/A

b

48.5%

Notes

a This figure

includes

 £5,745k tax equalisation as set out in the 2011 Remuneration Report. Robert Diamond was tax equalised on tax above the UK rate where that

could not be offset by a double tax treaty.

b Not a participant in a long-term incentive award which vested in the period.

c Antony Jenkins’ 2014 pay is higher than in earlier years since he declined a bonus in 2012 and 2013 and did not have LTIP vesting in those years.

75 Barclays PLC 2019 Annual Report on Form 20-F

Annual report on

Directors’ remuneration

Group Chief Executive Pay ratio

The table below shows the ratios of the Group Chief Executive’s total remuneration to the remuneration of UK employees since 2017. The change

in the pay ratios for 2019 is explained in more detail below.

Option

25th percentile

Median

75th percentile

2019

A

213 x

140 x

77 x

2018

A

126 x

85 x

45 x

2017

A

153 x

106 x

54 x

The regulations provide three options which may be used to calculate the pay for the employees at the 25th percentile, median and 75th percentile.

We have used Option A, following guidance issued by some proxy advisers and institutional shareholders. Option A calculates pay for all

employees on the same basis as the single figure for remuneration calculated for Executive Directors. The period for which employee pay has been

calculated under Option A is the 2019 calendar year. The CEO pay ratios published in 2017 and 2018 were calculated using the year end salary

and bonus for the relevant performance year only. These have now been recalculated using Option A methodology.

The single figure for remuneration for each employee includes earned salary and allowances, annual incentive awarded for the 2019 calendar year,

and an estimate of pension and benefits for 2019. Other elements of pay such as overtime and shift allowances have been excluded on the basis

that they are not compa rable with the pay structure for the CEO. The estimate of pension for each employee is based on 10% of salary, given that

this is the percentage currently available to new hires in the UK. The estimate of benefits is based on the cost of core benefits avai lable at each

Corporate Grade, being private medical insurance, income protection and life assurance. The pay for part-time employees has been grossed-up to

1 FTE.

The pay at each quartile is set out in the table below:

25th percentile

Median

75th percentile

Total pay

Of which is salary

Total pay

Of which is salary

Total pay

Of which is salary

2019

27,875

23,000

42,362

34,432

77,488

61,158

2018

26,587

21,624

39,390

31,461

74,685

57,466

2017

25,341

20,223

36,568

28,978

71,628

55,000

The pay ratios have increased between 2018 and 2019, due to an increase in the CEO single figure of remuneration, though employee pay at the

LQ, median and UQ has also increased (up 5%, 8% and 4% respectively).

The CEO single figure of remuneration for 2019 is increased significantly, largely as a result of two exceptional circumstances:

■ Due to the long -term nature of LTIP awards, the CEO has not received any vesting LTIP for his first four years of service at Barclays. He will

receive an LTIP payout for the first time in respect of 2019. This forms part of his remuneration package, as approved by shareholders. In 2019

the LTIP vested at 48.5% of maximum. Going forward, any change in LTIP will be as a result of changes in the amount vesting, rather than

entitlement to receive an award.

■ In 2018, there was a reduction of £500,000 applied to the single figure of remuneration as a result of malus adjustment made to the CEO’s

2016 incentive award during 2018. This decreased the CEO pay ratio in 2018.

Excluding these items, the median pay ratios would be 105x in 2019 and 98x in 2018.

The annual bonus for the CEO has also increased during 2019, while the overall incentive pool has decreased. While recognising that this was not

an unusual occurrence, given the structured formulaic approach applied to Executive Directors’ incentives (e.g. in 2018, Executive Directors’

outcomes were down slightly on 2017 and the overall incentive pool was up over the same period), the Remuneration Committee reduced the

formulaic bonus outcome against pre-determined performance measures by 10%.

Over the period 2017 to 2019, median employee pay has gone up from £36,568 in 2017 to £42,362 in 2019, up almost 16%. This is aligned with the

CEO increase over the same period, excluding the LTIP (up 15%).

Barclays remuneration philosophy is set out earlier in this report, and all remuneration decisions for Executive Directors and the wider workforce are

made within this framework. The CEO pay ratio is one of the outcomes of these decisions, which are explained in more detail in the Chairman’s

statement.

76 Barclays PLC 2019 Annual Report on Form 20-F

Total remuneration of the employees in the Barclays Group

The table shows the number of employees in the Barclays Group as at 31 December 2018 and 2019 in bands by reference to total remuneration.

Total remuneration comprises salary, RBP, other allowances, bonus and the value at award of LTIP awards.

Barclays is a global business. Of those employees earning above £1m in total remuneration for 2019 in the table below, 56% are based in the US,

36% in the UK and 8% in the rest of the world.

Number of employees

Remuneration band

2019

2018

£0 to £25,000

26,706

31,846

£25,001 to £50,000

26,989

25,770

£50,001 to £100,000

18,266

18,478

£100,001 to £250,000

11,428

10,804

£250,001 to £500,000

2,259

2,197

£500,001 to £1,000,000

884

916

£1,000,001 to £2,000,000

290

306

£2,000,001 to £3,000,000

68

82

£3,000,001 to £4,000,000

23

19

£4,000,001 to £5,000,000

5

6

£5,000,001 to £6,000,000

11

11

Above £6,000,000

2

6

Percentage change in Group Chief Executive’s remuneration

The table below shows how the percentage change in the Group Chief Executive’s salary, benefits and bonus between 2018 and 2019 compared

with the percentage change in the average of each of those components of pay for UK based employees.

We have chosen UK based employees as the comparator group as it is the most representative for pay structure comparisons.

Fixed Pay

Benefits

Annual

bonus

2019

Group CEO

0%

5%

55%

Average employee

5%

0%

-12%

The percentage change in the average fixed pay and the average annual bonus for UK employees is impacted by the rebalancing of a proportion of

annual bonus into fixed pay for c.19,500 customer facing staff in Barclays UK. Without this rebalancing, the percentage change is +4% for fixed

pay and -10% for annual bonus. While the average bonus is down by 10%, junior populations have been protected in line with our Fair Pay

agenda.

Relative importance of spend on pay

A year on year comparison of Group compensation costs and distributions to shareholders are shown below.

77 Barclays PLC 2019 Annual Report on Form 20-F

Annual report on

Directors’ remuneration

Chairman and Non-Executive Directors

Remuneration for Non-Executive Directors reflects their responsibilities, time commitment and the level of fees paid to Non-Executive Directors

of comparable major UK companies.

Non-Executive Directors are reimbursed expenses that are incurred for business reasons. Any tax that arises on these reimbursed expenses

is paid by Barclays.

Chairman and Non-Executive Directors: Single total figure for 2019 fees (audited)

Fees

Benefits

Total

2019

£000

2018

£000

2019

£000

2018

£000

2019

£000

2018

£000

Chairman

Nigel Higgins

a

541

–

3

–

544

–

John McFarlane

b

272

800

6

1

278

801

Non-Executive Directors

Mike Ashley

c, d, e

222

215

–

–

222

215

Tim Breedon

d, e

238

225

–

–

238

225

Sir Ian Cheshire

f

480

480

–

–

480

480

Mary Anne Citrino

d

113

39

–

–

113

39

Dawn Fitzpatrick

d, g

29

–

–

–

29

–

Mary Francis

d, h

155

154

–

–

155

154

Crawford Gillies

231

222

–

–

231

222

Sir Gerry Grimstone

i

80

498

–

–

80

498

Reuben Jeffery III

j

41

120

–

–

41

120

Matthew Lester

k

143

135

–

–

143

135

Dambisa Moyo

j

46

135

–

–

46

135

Diane Schueneman

d, l

377

337

–

–

377

337

Mike Turner

j

36

105

–

–

36

105

Total

3,004

3,465

9

1

3,013

3,466

Notes 

a Nigel Higgins joined the Board as a Non-Executive Director on 1 March 2019 and assumed the role of Chairman with effect from the conclusion of the 2019 AGM on

2 May 2019. Nigel Higgins was paid an annual fee of £80,000 for the period from 1 March 2019 to 2 May 2019, and an all-inclusive annual fee of £800,000 with effect

from 3 May 2019. He was provided with private medical cover and the use of a Company vehicle and driver when required for business purposes during 2019. He

does not receive a fee in respect of his role as Chairman of Barclays Bank PLC. 

b John McFarlane retired from the Board with effect from the conclusion of the AGM on 2 May 2019. 

c Mike Ashley was a member of the Board Reputation Committee until 25 September 2019, when the Committee was disbanded. His additional fee in respect of the

Board Reputation Committee is therefore pro-rated for the period of his service in 2019. 

d These Non-Executive Directors were appointed to the Board of Barclays Bank PLC from 25 September 2019. They receive an additional annual fee of £30,000, paid

by Barclays Bank PLC in respect of this appointment (pro-rata for 2019). From 25 September 2019, all Non-Executive Directors of Barclays Bank PLC are also

Directors of Barclays PLC. Until that date, Non-Executive Directors of Barclays Bank PLC served only on that Board and received a base fee of £75,000 in respect of

that role.

e With effect from 25 September 2019 these Non-Executive Directors received a fee of £20,000 for their services to Barclays Capital Securities Limited (pro-rata for

2019). 

f Sir Ian Cheshire’s figures include fees of £400,000 for his role as Chairman of Barclays Bank UK PLC. 

g Dawn Fitzpatrick joined the Board as a Non-Executive Director with effect from 25 September 2019. Her fees are pro-rated for the period of her appointment during

2019. 

h Mary Francis was the Chair of the Board Reputation Committee until 25 September 2019, when the Committee was disbanded. Her additional fee in respect of the

Board Reputation Committee is therefore pro-rated for the period of her service in 2019. 

i Sir Gerry Grimstone retired from the Board with effect from 28 February 2019. His fee is pro-rated for the period of his service and includes an annual fee of £400,000

for his role as the Chairman of Barclays Bank PLC. 

j These Non-Executive Directors retired from the Board with effect from 2 May 2019. 

k Matthew Lester retired from the Board with effect from 1 January 2020. 

l Diane Schueneman is Chair of Barclays Execution Services Limited (the Group Service Company) and is a member of the Barclays US LLC (the US Intermediate

Holding Company) Board. The 2019 figure includes fees of £70,000 for her role on the Barclays Execution Services Limited Board and $210k (£164k) for her role on

the Barclays US LLC Board.

78 Barclays PLC 2019 Annual Report on Form 20-F

Chairman and Non-Executive Directors: Statement of implementation of remuneration policy in 2020

Fees for the Chairman and Non -Executive Directors for 2020 are shown below. The Board approved increases to the fees for Board members, the

Chair of the Audit and Risk Committees and the members of the Board Risk Committee to take effect from1 January 2020 . These increases were

made in line with policy and following careful review of time spent on Board and Committee matters, to reflect increased time commitment and

responsibilities . The basic Board fee was last revised in 2011.

1 January 2020

1 January 2019

£000

£000

Chairman

a

800

800

Board member

90

80

Additional responsibilities

Senior Independent Director

36

36

Chairman of Board Audit or Risk Committee

80

70

Chairman of Board Remuneration Committee

70

70

Chairman of Board Reputation Committee

–

50

Membership of Board Audit or Remuneration Committee

30

30

Membership of Board Risk Committee

30

25

Membership of Board Nominations Committee

15

15

Membership of Board Reputation Committee

–

25

Notes 

a The Chairman does not receive any fees in addition to the Chairman fees.

Directors’ shareholdings and share interests

Interests in Barclays PLC shares (audited)

The table below shows shares owned beneficially by all the Directors (including any shares owned beneficially by their connected persons) and

shares over which Executive Directors hold awards, which are subject to either deferral terms and/or performance measures. The shares shown

below that are subject to performance measures are the maximum number of shares that may be released.

Unvested

Total as at

31 December 2019

(or date of retirement

from the Board, if earlier)

Owned

outright as at

31 December 2019

(or date of

retirement

from the Board, if

earlier)

Subject to

performance

measures

Not subject to

performance

measures

Total as at

11 February

2020

Executive Directors

Jes Staley

5,284,924

6,221,464

999,491

12,505,879

12,505,879

Tushar Morzaria

3,603,326

4,130,048

638,569

8,371,943

8,371,943

Chairman

Nigel Higgins

1,010,092

–

–

1,010,092

1,010,092

John McFarlane

119,279

–

–

119,279

–

Non-Executive Directors

Mike Ashley

130,858

–

–

130,858

130,858

Tim Breedon

112,475

–

–

112,475

112,475

Sir Ian Cheshire

103,530

–

–

103,530

103,530

Mary Anne Citrino

13,700

–

–

13,700

13,700

Dawn Fitzpatrick

909,000

–

–

909,000

909,000

Mary Francis

33,251

–

–

33,251

33,251

Crawford Gillies

127,463

–

–

127,463

127,463

Sir Gerry Grimstone

125,643

–

–

125,643

–

Reuben Jeffery III

308,553

–

–

308,553

–

Matthew Lester

29,222

–

–

29,222

–

Dambisa Moyo

73,977

–

–

73,977

–

Diane Schueneman

56,477

–

–

56,477

56,477

Mike Turner

71,947

–

–

71,947

–

79 Barclays PLC 2019 Annual Report on Form 20-F

Annual report on

Directors’ remuneration

Executive Directors’ shareholdings and share interests (audited)

The chart below shows the value of Barclays’ shares held beneficially by Jes Staley and Tushar Morzaria as at 11

February 2020 that count

towards the shareholding requirement of, as a minimum, Barclays’ shares worth 200% of Total fixed pay (Fixed Pay and pension). The current

Executive Directors have five years from their respective date of appointment to meet this requirement. At close of business on 11

February 2020,

the market value of Barclays’ ordinary shares was £1.79 .

Service contracts and letters of appointment

All Executive Directors have a service contract, whereas all Non -Executive Directors have a letter of appointment. Copies of the service contracts

and letters of appointment are available for inspection at the Company’s registered office. The effective dates of the current Directors’

appointments disclosed in their service contracts or letters of appointment are shown in the table below.

As stated in the letters of appointment, the Chairman and Non-Executive Directors are appointed for an initial term of three years and are subject

to annual re-election by shareholders. On expiry of the initial term and subject to the needs of the Board, Non -Executive Directors may be invited

to serve a further three years. Non-Executive Directors appointed beyond six years will be at the discretion of the Board Nominations Committee.

Effective date of appointment

Chairman

Nigel Higgins

1 March 2019 (Non -Executive Director),

2 May 2019 (Chairman)

Executive Directors

Jes Staley

1 December 2015

Tushar Morzaria

15 October 2013

Non-Executive Directors

Mike Ashley

18 September 2013

Tim Breedon

1 November 2012

Sir Ian Cheshire

3 April 2017

Mary Anne Citrino

25 July 2018

Mohamed A El-Erian

1 January 2020

Dawn Fitzpatrick

25 September 2019

Mary Francis

1 October 2016

Crawford Gillies

1 May 2014

Dr Brian Gilvary

1 February 2020

Diane Schueneman

25 June 2015

Payments to former Directors (audited)

Former Group Finance Director: Chris Lucas

In 2019, Chris Lucas continued to be eligible to receive life assurance cover, private medical cover and payments under the Executive Income

Protection Plan (EIPP). Full details of his eligibility under the EIPP were disclosed in the 2013 Directors’ Remuneration Report (page 115 of the

2013 Annual Report). Chris Lucas did not receive any other payment or benefit in 2019.

Former Chairman: John McFarlane

John McFarlane stepped down as Chairman on 2 May 2019. In accordance with his letter of appointment John McFarlane continued to receive

monthly payments equivalent to his monthly fees until 7 November 2019 (being the date his notice period would have ended ). These payments

were made in monthly cash instalments and were subject to mitigation in the event that he obtained alternative employment and/or

appointments. He also received benefits in accordance with his appointment letter for the same period.

Former Non-Executive: Sir Gerry Grimstone

Sir Gerry Grimstone stepped down as Non-Executive Director of Barclays PLC and Chairman of Barclays Bank PLC on 28 February 2019. In

relation to his role as Chairman of Barclays Bank PLC and under the terms of his appoi ntment letter, a payment of six months’ fees was paid to him

in lieu of notice in March 2019. No payment in lieu of notice was made in relation to his role as Director of Barclays PLC.

80 Barclays PLC 2019 Annual Report on Form 20-F

Former Non-Executive: Reuben Jeffery III

Reuben Jeffery III was appointed as a member of the Barclays US LLC (the US Intermediate Holding Com pany) Board on 15 October 2019. He

received fees of $150,000 per annum for his role on the Barclays LLC Board, pro-rated for his period of service in 2019.

AGM Statement

At the 2019 AGM, the vote on the 2018 Directors’ Remuneration Report (Resolution 2) was passed with 70.79% of votes cast in favour. We

describe below what we have done to identify and address the concerns of shareholders who voted against this resolution last year. 

We offered to engage with those of our top 30 shareholders who voted against Resolution 2, or who withheld their vote in relation to it, and were

able to meet with a significant proportion of those shareholders. We understand from those shareholders who we have spoken to that they voted

against Resolution 2 because of concerns over the malus adjustment applied in relation to the 2016 incentive award for the Group CEO, particularly

in light of the penalty levied against the company by the New York Department for Financial Services (“NYDFS”). 

Having reflected on the views expressed by the relevant shareholders, and as discussed with them during engagement, we are satisfied that the

malus adjustment was appropriate. However, in light of the feedback from our shareholders, we acknowledge th at we could have provided further

information regarding the factors the Board and Remuneration Committee took into account. In particular, this could have addressed the fact that no

material new facts came to light through the investigations conducted by the regulators that had not been taken into account by the Board in its

determination of the appropriate malus adjustment, and the fact that the NYDFS penalty was directed against the bank in relation to failings in its

controls, and not against the individ ual in question. 

We will take this into account in all of our external disclosures going forward, to ensure that we provide all of the information needed to properly

explain our decisions.

Previous AGM voting outcomes

For

% of votes cast

Against

% of votes cast

Withheld

Shareholder votes on remuneration

Number

Number

Number

Vote on the 2018 Remuneration Report

70.79%

29.21%

at the 2019 AGM

8,849,675,682

3,652,341,337

477,285,142

Vote on the Directors’ Remuneration Policy

97.91%

2.09%

at the 2017 AGM

12,062,616,141

257,416,828

51,369,054

At the AGM held on 24 April 2014, 96.02% (10,364,453,159 votes) of shareholders of Barclays PLC voted for the resolution in respect of a fixed

to variable remuneration ratio of 1:2 for ‘Remuneration Code Staff ’ (now known as MRTs). On 14 December 2017, the Board of Barclays PLC

as shareholder of Barclays Bank PLC approved the resolution that Barclays Bank PLC and any of its current and future subsidiaries be authorised

to apply a ratio of the fixed to variable components of total remuneration of their MRTs that exceeds 1:1, provided the ratio does not exceed 1:2.

On 15 November 2018, the Board of Barclays PLC as shareholder of Barclays Bank UK PLC approved an equivalent resolution in relation to MRTs

withi n Barclays Bank UK PLC and any of its subsidiaries.

Barclays Board Remuneration Committee

The Board Remuneration Committee is responsible for overseeing Barclays’ remuneration as described in more detail below.

Terms of Reference

The role of the Committee is to:

<

 set the overarching principles and parameters of remuneration policy across the Group;

<

 consider and approve the remuneration arrangements of (i) the Chairman, (ii) the Executive Directors, (iii) members of the Barclays Group

Executive Committee and any other senior executives specified by the Committee from time to time, and (iv) all other Group employees whose

total annual compensation exceeds an amount determined by the Committee from time to time (currently £2m); and 

<

 exercise oversight for remuneration issues.

The Committee considers the overarching objectives, principles and parameters of remuneration policy across the Group to ensure it is adopting

a coherent approach in respect of all employees. In discharging this responsibility the Committee seeks to ensure that the policy is fair and

transparent, avoids complexity and assesses, among other things, the impact of pay arrangements in supporting the Group’s culture, values and

strategy and on all elements of risk manag ement. The Committee also approves incentive pools for each of the Group, Barclays Bank PLC,

Barclays Bank UK PLC and operations and functions, periodically reviews (at least annually) all material matters of retirement benefit design and

governance, and exercises judgement in the application of remuneration policies to promote the long -term success of the Group for the benefit of

shareholders. The Committee and its members work as necessary with other Board Committees, and is authorised to select and appoint its own

advisers as required.

81 Barclays PLC 2019 Annual Report on Form 20-F

Annual report on

Directors’ remuneration

Remuneration Committee in 2019

The performance of the Committee was assessed internally as part of the annual effectiveness review of the Board of Barclays PLC. In line with the

approach adopted for all Board committees in 2019, the process involved completion of a tailored questionnaire by Committee members and

standing attendees.

The results confirm that the Committee is operating effectively. The Committee continues to be well constituted and provides an effective level of

challenge and oversight of the areas within its remit. Consideration will be given to adding an additional member of the Committee following the

departure of Dr Dambisa Moyo earlier in the year.

The Committee’s focus has moved towards oversight of an existing and effective policy and management system, having addressed a number of

important remuneration related issues in prior years.

The Committee’s interaction with the Board, Board Committees and senior management is considered effective. In response to a request to provide

feedback on interaction with subsidiary committees, the Committee’s interaction with the principal subsidiary remuneration committees was also

considered effective, and in line with regulatory requirements.

Advisers to the Remuneration Committee

The Committee appointed PricewaterhouseCoopers (PwC) as the independent adviser in October 2017. The Committee is satisfied that the advice

provided by PwC to the Committee is independent and objective. PwC is a signatory to the voluntary UK Code of Conduct for executive

remuneration consultants.

PwC was paid £112,000 (excluding VAT) for their advice to the Committee in 2019 relating to the Executive Directors (either exclusively or along

with other employees within the Committee’s Terms of Reference). In addition to advising the Committee, PwC provided unrelated consulting

advice to the Group in respect of strategic advice on business, operational models and cost, corporate taxation, climate-related financial

disclosures, data strategy, technology consulting and internal audit.

Throughout 2019, Willis Towers Watson (WTW) continued to provide the Committee with market data on compensation when considering incentive

levels and remuneration packages. WTW were paid £66,000 (excluding VAT) in fees for their services. In addition to the services provided to the

Committee, WTW also provides pensions and benefits advice, insurance brokerage and pensions advice and administration services to the

Barclays Bank UK Retirement Fund.

In the course of its deliberations, the Committee also considers the views of the Group Chief Executive, the Group Human Resources Director

and the Group Reward and Performance Director. The Group Finance Director and the Chief Risk Officer provide regular updates on Group and

business financial performance and risk profiles respectively.

No Barclays’ employee or Director participates in discussions with, or decisions of, the Committee relating to his or her own remuneration.

No other advisers provided services to the Committee in the year.

82 Barclays PLC 2019 Annual Report on Form 20-F

Remuneration Committee activity in 2019

The following provides a summary of the Committee’s activity during 2019 and at the January and February 2020 meetings at which 2019

remuneration decisions were finalised. The Committee is also provided with updates at each scheduled meeting on: operation of the Committee’s

Control Framework on hiring, retention and termination, headcount and employee attrition, and extant LTIP performance.

January

February

June

October

December

January

February

2019

2019

2019

2019

2019

2020

2020

Overall

remuneration

Incentive funding proposals including

risk adjustments

l

l

l

l

l

l

2018 Remuneration Report

l

Group fixed pay budgets

l

l

l

l

l

Finance and Risk updates

l

l

l

l

l

l

Incentive funding approach

l

Barclays’ Fair Pay agenda and Report

l

l

l

l

l

2019 Remuneration Report

l

l

Wider workforce considerations

l

l

l

l

l

Executive

Directors’ and

senior executives’

remuneration

Executive Directors’ and senior executives’ bonus

outcomes

l

l

l

l

l

Review of Directors’ Remuneration Policy

l

l

l

l

l

Annual bonus and LTIP performance measures

and target calibration

l

l

l

l

Governance

Regulatory and stakeholder matters

l

l

l

l

l

l

l

Discussion with independent advisor

l

l

l

l

l

l

Remuneration Review Panel update

l

l

l

Review of Committee effectiveness

l

l

There were two additional Remuneration Committee meetings during the course of 2019. The Committee met on 25 March 2019 and on 31 May

2019 to consider leadership changes across the organisation.

83 Barclays PLC 2019 Annual Report on Form 20-F

Our people and culture

We believe that the culture of Barclays is

built and shaped by the thousands of

professionals around the world who serve

our customers and clients with a shared

purpose and values.

Our people make a critical difference to our

success, and our investment in them protects

and strengthens our culture.

We increasingly draw on the latest thinking

from behavioural science and data science to

identify what’s most likely to be effective in

hiring, developing and engaging our people,

and then track effectiveness over time. We’re

also starting to use the same data -driven

approach to give us a much more accurate

picture of how people progress through our

organisation.

Hiring the best people

We continue to focus on hiring people with

the skills that will help us accelerate the

digital transformation of our organisation, as

well as adapt more quickly to the changing

needs of our customers and clients.

We have increased hiring across our core

strategic locations globally. Building a

modern, scale presence in a smaller number

of sites enables us to make signifi cant

investments in the workplace that would not

otherwise be possible. The transition to

having more of our people work from these

strategic sites means change for our existing

colleagues. We recognise the disruption that

this can create and we are managi ng the

impacts thoughtfully.

Within BX, we continue to rebalance the mix

of contractors and permanent colleagues, so

that more people work directly for us. We

believe this is a competitive advantage and

further strengthens our culture.

People with different

perspectives and life

experiences make our

organisation stronger.

We want to hire from within and are

increasingly using data and analytics to

identify and support high performers and

potential future leaders – particularly from

those groups that are currently

underrepresented amongst our senior

colleagues. 34% of our vacancies were filled

by internal candidates during 2019.

Just under 900 graduates joined us in 2019,

enabling us to develop our pipeline of future

leaders in -house. The percentage of

graduate female hires was 34%. We also

provided over 300 people with the

opportunity to complete a structured

apprenticeship.

We have continued to put additional effort

into supporting people who have been in

the armed forces to find a career at

Barclays, through the ‘After’ programme.

We have also supported those returning to

the workforce after a career break, through

our ‘Encore’ programme.

People with different perspectives and life

experiences make our organisation stronger.

We are committed to attracting, developing

and retaining a diverse and inclusive

workforce, and providing equal opportunities.

We aim to make sure our hiring is as diverse

as possible. Our policies require us to give

full and fair consideration to all populations

based on their aptitudes and abilities. We’re

using data and analytics to better understand

how we can improve our hiring process.

We recognise the importance of measuring

progress around our gender diversity agenda

and believe that setting targets is an effective

way to do this. We’ve set ourselves a target

of 28% female Managing Directors and

Directors by the end of 2021, and have

signed up to the Ha mpton Alexander targets

of 33% female representation on each of our

Board s and Group Executive Committee and

their direct reports by the end of 2020. We

continue to report on our results as part of

the Hampton Alexander Review and HM

Treasury Women in Fina nce Charter.

84 Barclays PLC 2019 Annual Report on Form 20-F

Developing talent for the future

We operate in a highly -regulated

environment, so it’s critical to our success

that our people understand the rules that

govern how we operate. We invested £36m

in training last year to ensure we get this

right.

A wide range of development opportunities

are available to help all our people build

their career, delivered both in-person and

through our new digital learning platform,

Learning Lab, which is making

development more available than ever.

We also launched two new flagship

leadership development programmes during

2019. This is a significant investment in our

future leaders, driven by our core belief that

quality leadership makes a difference to our

success. We track the progression of people

that have partic ipated in these programmes

to see how effective they are.

We remain committed to closing pay gaps at

Barclays; the difference in seniority between

male and female colleagues, and between

BAME and non -BAME colleagues. You can

find out more about this in our Pay Gaps

Report, available at barclays.com.

Colleague engagement

We have an established approach to

engaging colleagues which includes the

majority of recommended actions by the

UK’s Financial Reporting Council (FRC), and

is in line with new governance requirements

in 2019. This ensures that we understand

their perspective, take it into account in our

decision making at the most senior level,

and share with them our strategy and

progress.

That extends to those who work for us

indirectly as well, such as contractors,

although in a more limited way. In 2020, our

supplier code of conduct will require

organisations with more than 250 employees

to demonstrate that they have an effective

workforce engagement approach of their

own.

It’s important to us that our Board

members are engaged with our people –

directly, and indirectly through our

management team.

We regularly report on our

colleague engagement activity to

our Boards.

Together with direct engagement, this

comprehensive reporting approach and

dedicated time at board meetings helps

our Board take the issues of interest to our

colleagues into account in their decision

making.

This has enabled them to confirm that our

workforce engagement approach is

effective.

Listening to our people

Our regular colleague survey formally

captures the views of all our people and is a

key part of how we track colleague

engagement. Our overall engagement score

reduced slightly to 77% in 2019, but 80% of

our colleagues would still recommend

Barcla ys as a good place to work. Our

colleagues also shared that 79% of them feel

it’s safe to speak up to share their views.

89% of colleagues told us they believe

Barclays is focused on achieving good

customer and client outcomes and 86%

said they are proud of the contribution

Barclays makes to the community and

society.

Only 61% of our people said the stress levels

at work are manageable, and 53% believe

that we have been successful in eliminating

obstacles to efficiency. Improving these

scores is a key prio rity and we are working

on the underlying problems.

The results from the survey are an important

part of the conversations our leaders have

about how we run the business, and it’s a

specific focus for our Executive Committee

and our Board. The Executive Committee

holds a dedicated town hall for colleagues

each year specifically to talk about their

feedback and the actions we’re taking in

response and there are many follow up

communications and action plans built

across the Group.

We monitor our culture across the

organisation, and in individual business

areas, through culture dashboards. These

combine colleague survey data with other

metrics about our business, so that we can

see the effect our people’s engagement has

on our performance, and on the continued

strength of our culture. 82% of our people

have heard or read senior leaders talking

about the character and culture of Barclays.

85 Barclays PLC 2019 Annual Report on Form 20-F

Keeping our people informed

In addition to these data sources, our

leaders, including our Board, engage face to

face with colleagues locally to hear what

they think.

That might be through site visits, large-scale

town halls, training and development

activity, mentoring, informal breakfast

sessions, committee membership, diversity

and wellbeing programmes, or focus and

consultative groups.

We make sure we’re regularly keepin g

everyone up to date on the strategy,

performance and progress of the

organisation through a strategically-

coordinated, multi- channel approach across

a combination of leader-led engagement,

and digital and print communication,

including blogs, vlogs and podcasts.

We also engage with our people

collectively through a strong and effective

partnership with Unite, as well as the

Barclays Group European Forum, which

represents all colleagues within the

European Union.

These conversations help us to deliver

thi ngs like a collective pay deal for our Unite

covered colleagues, who represent 84% of

our UK-based colleagues, as well as more

complex business change and our long-

term focus on colleague wellbeing.

We regularly brief our union partners on the

strategy and progress of the business and

seek their input on ways in which we can

improve the colleague experience of working

for Barclays. The collective bargaining

coverage of Unite in the UK represents

c.52% of our global workforce.

When we make significant changes to our

business, they can affect our people and can

mean that redundancies are necessary. We

consult in detail with colleague

representatives on major change

programmes affecting our people. We do this

to help us minimise compulsory job losses

wherever possible, including through

voluntary redundancy and redeployment.

We are committed to

paying people fairly –

in a way that

balances the needs of

all our stakeholders.

Our people policies

Another way we shape the culture of our

organisation is through our people policies,

which are reviewed regularly, including by

our Board.

Our policies are designed to provide equal

opportunities and create an inclusive

culture, in line with our values and in

support of our long -term success. They

also reflect relevant employment law,

including the provisions of the Universal

Declaration of Human Rights and ILO

Declaration on Fundamental Principles and

Rights at Work.

We expect our people to treat each other

with dignity and respect, and do not tolerate

discrimi nation, bullying, harassment or

victimisation on any grounds.

We are committed to paying our people fairly

and equitably relative to their role, skills,

experience and performance – in a way that

balances the needs of all our stakeholders.

That means our remuneration policies reward

sustainable performance that’s in line with

our purpose and values, as well as our risk

expectations. You can find more information

in our Fair Pay Report, available on

barclays.com.

We encourage our people to benefit

from Barclays’ performance by enrolling

in our share plans, further strengthening

their commitment to the organisation.

The Directors’ Remuneration Report sets out

updates on remuneration outcomes and

developments during 2019. It also explains

our plans for 2020, i ncluding our proposed

new Directors’ Remuneration Policy, which

will be subject to a vote at the next AGM.

86 Barclays PLC 2019 Annual Report on Form 20-F

Building a supportive culture

Diversity of thought and experience works

best when everyone feels included. People

who feel they can be themselves at work

are happier and more productive, so we

believe that creating an inclusive and

diverse culture isn’t just the right thing to do,

but is also best for our business.

We focus on five areas: disability, gender,

LGBT+, multicultural, and multigenerational.

Each of these is represented and

championed by a senior leader, and

embedded deeply into the organisation

through colleague networks organised by

our people and funded by Barclays.

Our networks provide colleagues with

valuable support and advice, create

development opportunities, and raise

awareness of issues and challenges. Our

networks also influence our people policies,

teaching us how we need to adapt to give

our people the support they need to

succeed. 85% of our colleagues say that

they feel included within their teams.

Our policies require managers to give full and

fair consideration to those with a disability on

the basis of their aptitudes and abilities; both

when hiring and through ongoing people

management, as well as ensuring

opportunities for training, career development

and promotion are available to all. As part of

the UK government Disability Confident

scheme, we encourage applications from

people with a disability, or a physical or

mental health condition.

We encourage everyone working at Barclays,

or thinking about joining us, to tell us what

support and adjustments they need to be

their best at work. We’re working hard to

make the processes that support this more

effective, recognising that at times getting the

support colleagues need can be slow.

We track the ever-changing composition of

our people through online dashboards, to

make sure that our senior leaders

understand the diverse makeup and needs

of the organisation they lead. We’re also an

inaugural signatory of the UK’s Race at

Work Charter.

Through our BeWell programme, we provide

expert advice and guidance on the practical

steps colleagues can take to look after their

physical and mental health. In 2020, our

Mental Health Awareness training will

become mandatory for all colleagues. We

were one of the first businesses to sign up to

the Men tal Health at Work Commitment. 74%

of colleagues say that Barclays supports

employee efforts to enhance their wellbeing.

The tools to succeed

We provide tools, programmes and support

that enable colleagues to balance their work

life with their personal commitments,

supporting career development opportunities

at each life stage.

We offer enhanced maternity, paternity,

adoption and shared parental

entitlements.

We’re continuing to shape a more agile,

technology -led culture through dynamic

working, so that we can meet our

people’s desire to work more flexibly.

88% of colleagues say they are able to

work dynamically and this is one of the

biggest drivers for overall engagement,

with more favourable scores across all

questions.

However, our people also told us that we

need to invest more in the technology and

services we use internally. Only 56% of

people said they have the work tools and

resources they need to achieve excellent

performance and this is a reduction year over

year. We’ve made significant progress

particularly in our new strategic campus sites,

but we need to get the balance right between

required investment and cost discipline focus

in order to effectively balance the needs of all

of our stakeholder groups.

We’re replacing the old devices that we know

our people can find frustrating, and we’re

updating our software and connectivity so

that getting work done is easier. We’ve also

invested in the technology support we

provide to our people, so that when things do

go wrong, we can put them right more

quickly.

Over the next few years, our focus will be on

enabling much greater collaboration, right

across the organisation, so that we can

unlock the power of the connections between

our people.

Risk review

Content

87

 Barclays PLC 2019 Annual Report on Form 20-F

The management of risk is a critical underpinning to the execution of Barclays’ strategy. The

material risks and uncertainties the Group faces across its business and portfolios are key areas of

management focus.

Barclays’ risk disclosures are provided in the Annual Report and in the Barclays PLC Pillar 3 Report 2019.

Risk management strategy

Annual

Report

Pillar 3

Report

Overview of Barclays’ approach to risk

management. A detailed overview together

with more specific information on policies that

the Group determines to be of particular

significance in the current operating

environment can be found in the Barclays PLC

Pillar 3 Report 2019 or at Barclays.com.

◾

Enterprise Risk Management Framework (ERMF)

◾

Segregation of duties – the “Three Lines of Defence” model

◾

Principal risks

◾

Risk appetite for the principal risks

◾

Risk committees

◾

Frameworks, policies and standards

◾

Assurance

◾

Effectiveness of risk management arrangements

◾

Learning from our mistakes

◾

Barclays’ risk culture

◾

Group -wide risk management tools

◾

Risk management in the setting of strategy

90

90

90

90

91

n/a

n/a

n/a

n/a

98

n/a

n/a

149

149

149

150

151

151

151

152

152

152

152

156

Material existing and emerging risks

Insight into the level of risk across our business

and portfolios, the material existing and

emerging risks and uncertainties we face and

the key areas of management focus.

◾

Material existing and emerging risks potentially impacting more

than one principal risk

92

n/a

◾

Credit risk

95

n/a

◾

Market risk

96

n/a

◾

Treasury and capital risk 

96

n/a

◾

Operational risk 

97

n/a

◾

Model risk

98

n/a

◾

Conduct risk 

98

n/a

◾

Reputation risk

99

n/a

◾

Legal risk and legal, competition and regulatory matters

99

n/a

Climate change risk management

Overview of Barclays’ approach to managing

climate change risk.

◾

Overview, organisation and structure

◾

Risk management policy

101

101

n/a

n/a

Principal risk management

Barclays’ approach to risk management for

each principal risk with focus on organisation

and structure and roles and responsibilities.

◾

Credit risk management

102

157

◾

Management of credit risk mitigation techniques and counterparty

credit risk

n/a

175

◾

Market risk management

103

178

◾

Management of securitisation exposures

n/a

187

◾

Treasury and capital risk management

104

191

◾

Operational risk management

105

198

◾

Model risk management

106

202

◾

Conduct risk management

106

205

◾

Reputation risk management

107

207

◾

Legal risk management

107

209

Risk review

Content

88

 Barclays PLC 2019 Annual Report on Form 20-F

Risk performance

Annual

Report

Pillar 3

Report

Credit risk:

 The risk of loss to the Group from

the failure of clients, customers or

counterparties, including sovereigns, to fully

hono ur their obligations to the Group, including

the whole and timely payment of principal,

interest, collateral and other receivables.

◾

Credit risk overview and summary of performance

109

n/a

◾

Maximum exposure and effects of netting, collateral and risk

transfer

109

n/a

◾

Expected Credit Losses

112

n/a

◾

Movements in gross exposure and impairment allowance including

provisions for loan commitments and financial guarantees

115

n/a

◾

Management adjustments to models for impairment

120

n/a

◾

Measurement uncertainty and sensitivity analysis

121

n/a

◾

Analysis of the concentration of credit risk

◾

The Group’s approach to management and representation of credit

quality

◾

Analysis of specific portfolios and asset types

127

129

133

n/a

n/a

n/a

◾

Forbearance

136

n/a

◾

Analysis of debt securities

138

n/a

◾

Analysis of derivatives

139

n/a

Market risk:

 The risk of a loss arising from

potential adverse changes in the value of the

Group ’s assets and liabilities from fluctuation in

market variables including, but not limited to,

interest rates, foreign exchange, equity prices,

commodity prices, credit spreads, implied

volatilities and asset correlations.

◾

Market risk overview and summary of performance

◾

Balance sheet view of trading and banking books

◾

Review of management measures

◾

Review of regulatory measures

141

n/a

141

n/a

122

123

124

125

Treasury and capital risk – Liquidity: 

The risk that the Group is unable to meet its

contractual or contingent obligations or that it

does not have the appropriate amount, tenor

and composition of funding and liquidity to

support its assets.

◾

Liquidity risk overview and summary of performance

◾

Liquidity risk stress testing

◾

Liquidity pool

◾

Funding structure and funding relationships

◾

Contractual maturity of financial assets and liabilities

◾

Asset encumbrance

145

145

147

148

151

n/a

n/a

n/a

n/a

n/a

n/a

220

Treasury and capital risk – Capital: 

The risk that the Group has an insufficient level

or composition of capital to support its normal

business activities and to meet its regulatory

capital requirements under normal operating

environments or stressed conditions (both

actual and as defined for internal planning or

regulatory testing purposes). This also includes

the risk from the Group ’s pension plans.

◾

Capital risk overview and summary of performance

◾

Regulatory minimum capital and leverage requirements

◾

Analysis of capital resources

◾

Analysis of risk weighted assets

◾

Analysis of leverage ratio and exposures

◾

Minimum requirement for own funds and eligible liabilities

◾

Foreign exchange risk

◾

Pension risk review

155

155

157

159

160

161

162

163

n/a

8

18

26

31

n/a

42

43

Treasury and capital risk – Interest rate risk in

the banking book:

The risk that the Group is

exposed to capital or income volatility because

of a mismatch between the interest rate

exposures of its (non -traded) assets and

liabilities.

◾

Interest rate risk in the banking book overview and summary of

performance

◾

Net interest income sensitivity

◾

Analysis of equity sensitivity

◾

Volatility of the fair value through other comprehensive income

(FVOCI) portfolio in the liquidity pool

165

165

166

166

44

44

45

46

Operational risk:

The risk of loss to the Group

from inadequate or failed processes or systems,

human factors or due to external events (for

example fraud) where the root cause is not due

to credit or market risks.

◾

Operational risk overview and summary of performance

◾

Operational risk profile

167

167

144

146

Model risk:

The risk of the potential adverse

consequences from financial assessments or

decisions based on incorrect or misused model

outputs and reports.

◾

Model risk overview and summary of performance

170

n/a

Conduct risk:

The risk of detriment to

customers, clients, market integrity, effective

competition or Barclays from the inappropriate

supply of financial services, including instances

of wilful or negligent misconduct.

◾

Conduct risk overview and summary of performance

170

n/a

Reputation risk:

The risk that an action,

transaction, investment, event, decision, or

business relationship will reduce trust in the

Group’s integrity and/or competence.

◾

Reputation risk overview and summary of performance

170

n/a

Risk review

Content

89

 Barclays PLC 2019 Annual Report on Form 20-F

Annual

Report

Pillar 3

Report

Legal risk:

The risk of loss or imposition of

penalties, damages or fines from the failure of

the Group to meet its legal obligations

including regulatory or contractual

requirements.

◾

Legal risk overview and summary of performance

170

n/a

Supervision and regulation

The Group’s operations, including its overseas

offices, subsidiaries and associates, are subject

to a significant body of rules and regulations.

◾

Supervision of the Group

◾

Global regulatory developments

◾

Financial regulatory framework

171

171

172

n/a

n/a

n/a

Pillar 3 Report

Contains extensive information on risk as well

as capital management.

◾

Summary of risk and capital profile

◾

Notes on basis of preparation

◾

Scope of application of Basel rules

n/a

n/a

n/a

3

5

6

Risk and capital position review:

Provides a

detailed breakdown of Barclays’ regulatory

capital adequacy and how this relates to

Barclays’ risk management

.

◾

Group capital resources, requirements, leverage and liquidity

◾

Analysis of credit risk

◾

Analysis of counterparty credit risk

◾

Analysis of market risk

◾

Analysis of securitisation exposures

◾

Analysis of operational risk

n/a

n/a

n/a

n/a

n/a

n/a

16

48

104

122

129

144

Risk review

Risk management

Barclays’ risk management strategy

90

 Barclays PLC 2019 Annual Report on Form 20-F

Barclays’ risk management strategy

This section introduces the Group’s approach to managing and identifying risks, and for fostering a strong risk culture.

Enterprise Risk Management Framework (ERMF)

The ERMF sets the strategic approach for risk management by defining standards, objectives and responsibilities for all areas of the Group. It is then

approved by the Barclays PLC Board on recommendation of the Group Chief Risk Officer. It supports senior management in effective risk

management and developing a strong risk culture.

The ERMF sets out:

◾

Segregation of duties: The ERMF defines a Three Lines of Defence model

◾

Principal risks faced by the Group. This list guides the organisation of the risk management function, and the identification, management and

reporting of risks.

◾

Risk appetite requirements . This helps define the level of risk we are willing to undertake in our business.

◾

Roles and responsibilities for risk management: The ERMF sets out the accountabilities of the Group CEO and other senior managers, as well as

Barclays PLC committees

The ERMF is complemented by frameworks, policies and standards which are mainly aligned to individual principal risks:

◾

Frameworks cover the management approach for a collection of related activities and define the associated policies used to govern them.

◾

Policies set out principles and other core requirements for the activities of the Group . Policies describe “what” must be done.

◾

Standards set out the key control objectives that describe how the requirements set out in the policy are met, and who needs to carry them out.

Standards describe “how” controls should be undertaken.

Segregation of duties - the "Three Lines of Defence" model

The ERMF sets out a clear lines of defence model. All colleagues are responsible for understanding and managing risks within the context of their

individual roles and responsibilities, as set out below:

◾

First line comprises all employees engaged in the revenue generating and client facing areas of the Group and all associated support functions,

including Finance, Treasury, and Human Resources. The first line is responsible for identifying and managing the risks they generate, establishing

a control framework, and escalating risk events to Risk and Compliance.

◾

Second line is comprised of the Risk and Compliance functions. The role of the second line is to establish the limits, rules and constraints under

which first line activities shall be performed, consistent with the risk appetite of the Group , and to monitor the performance of the first line

against these limits and constraints. Note that limits for a number of first line activities, related to operational risk, will be set by the first line and

overseen by the Chief Controls Office. These will remain subject to supervision by the second line.

◾

Third line of defence is Internal Audit, who are responsible for providing independent assurance over the effectiveness of governance, risk

management and control over current, systemic and evolving risks.

◾

The Legal function provides support to all areas of the bank and is not formally part of any of the three lines. However , it is subject to second line

oversight.

Principal risks

The ERMF identifies eight principal risks and sets out associated responsibilities an d expectations around risk management standards.

Each of the principal risks is overseen by an accountable executive within the Group who is responsible for the framework, policies and standards

that detail the related requirements. Risk reports to executive and Board committees are clearly organised by p rincipal risk. In addition, certain risks

span more than one principal risk; these are also subject to the ERMF and are reported to executive and Board committees.

Risk appetite for the principal risks

Risk appetite is defined as the level of risk which the Group’s businesses are prepared to accept in the conduct of their activities. It sets the ‘tone

from the top’ and provides a basis for ongoing dialogue between management and Board with respect to the Group’s current and evolving risk

profile, allowing strategic and financial decisions to be made on an informed basis.

Risk appetite is approved by the Barclays PLC Board and disseminated across legal entities. Total Group risk appetite is supported by limits to

control exposures and activities that have material concentration risk implications.

Risk review

Risk management

Barclays’ risk management strategy

91

 Barclays PLC 2019 Annual Report on Form 20-F

Risk committees

Various committees also fulfil important roles and responsibilities. Barclays business level product/risk type committees consider risk matters

relevant to their business, and escalate as required to the Group Risk Committee (GRC), whose Chairman, in turn, escalates to the Barclays PLC

Board Committees and the Barclays PLC Board.

In addition to setting the risk appetite of the Group, the Board is responsible for approving the ERMF, and reviewing all reputation risk matters. It

receives regular information on the risk profile of the bank, and has ultimate responsibility for risk appetite and capital plans.

Further , there are three Board -level committees which oversee the application of the ERMF and implementation of key aspects. Membership of

these committees is comprised solely of non-executive directors providing independent oversight and challenge. These are detailed below:

◾

The Barclays PLC Board Risk Committee (BRC): The BRC monitors the Group’s risk profile against the agreed appetite. Where actual performance

differs from expectations, the actions taken by management are reviewed to ascertain that the BRC is comfortable with them. The BRC also

reviews certain key risk methodologies, the effectiveness of risk management, and the Group’s risk profile, including the material issues affecting

each business portfolio and forward risk trends. The committee also commissions in-depth analyses of significant risk topics, which are

presented by the Group CRO or senior risk managers.

◾

The Barclays PLC Board Audit Committee (BAC): The BAC receives regular reports on the effectiveness of internal control systems, quarterly

reports on material control issues of significance, and quarterly papers on accounting judgements (including impairment). It also receives a half-

yearly review of the adequacy of impairment allowances, which it reviews relative to the risk inherent in the portfolios, the business environment,

Barclays policies and methodologies.

◾

The Barclays PLC Board Remuneration Committee (RemCo): The RemCo receives a report on risk management performance and risk profile, and

proposals on ex-ante and ex-post risk adjustments to variable remuneration. These inputs are considered in the setting of performance

incentives.

The terms of reference and additional details on membership and activities for each of the principal Board committees are available from the

corporate governance section of the Barclays website at: home.barclays/about -barclays/barclays -corporate-governance.html.

The Group Risk Committee (GRC) is the most senior executive body responsible for reviewing and monitoring the risk profile of the Group. This

includes coverage of all principal risks, and any other material risks, to which the Group is exposed. The GRC reviews and recommends the

proposed risk appetite and relative limits to the BRC. The committee covers all business units and legal entities with the Group and incorporates

specific coverage of Barclays Bank Group.

Barclays’ risk culture

Risk culture can be defined as the norms, attitudes and behaviours related to risk awareness, risk taking and risk management. This is reflected in

how the Group identifies, escalates and manages risk matters.

Barclays is committed to maintaining a robust risk culture in which:

◾

management expect, model and reward the right behaviours from a risk and control perspective;

◾

colleagues identify, manage and escalate risk and control matters, and meet their responsibilities around risk management.

Specifically, all employees regardless of their positions, functions or locations must play their part in the Group’s risk management. Employees are

required to be familiar with risk management policies which are relevant to their responsibilities, know how to escalate actual or potential risk

issues, and have a role-appropriate level of awareness of the risk management process as defined by the ERMF.

Our Code of Conduct – the Barclays Way

Globally, all colleagues must attest to the “Barclays Way”, our Code of Conduct, and comply with all frameworks, policies and standards applicable

to their roles. The Code of Conduct outlines the purpose and values which govern our “Barclays Way” of working across our business globally. It

constitutes a reference point covering the aspects of colleagues’ working relationships, with other Barclays employees, customers and clients,

governments and regulators, business partners, suppliers, competitors and the broader community.

Risk review

Material existing and emerging risks

92

 Barclays PLC 2019 Annual Report on Form 20-F

Material existing and emerging risks to the Group’s future performance

The Group has identified a broad range of risks to which its businesses are exposed. Material risks are those to which senior management pay

particular attention and which could cause the delivery of the Group’s strategy, results of operations, financial condition and/or prospects to differ

materially from expectations. Emerging risks are those which have unknown components, the impact of which could crystallise over a longer time

period. In addition, certain other factors beyond the Group’s control, including escalation of terrorism or global conflicts, natural disasters, epidemic

outbreaks and similar events, although not detailed below, could have a similar impact on the Group. 

Material existing and emerging risks potentially impacting more than one principal risk

i)

Business conditions, general economy and geopolitical issues

The Group’s operations are subject to potentially unfavourable global and local economic and market conditions, as well as geopolitical

developments, which may have a material effect on the Group’s business, results of operations, financial condition and prospects.

A deterioration in global or local economic and market conditions may lead to (among other things): (i) deteriorating business, consumer or

investor confidence and lower levels of fixed asset investment and productivity growth, which in turn may lead to lower client activity, including

lower demand for borrowing from creditworthy customers; (ii) higher default rates, delinquencies, write-offs and impairment charges as borrowers

struggle with the burden of additional debt; (iii) subdued asset prices and payment patterns, including the value of any collateral held by the Group;

(iv) mark-to-market losses in trading portfolios resulting from changes in factors such as credit ratings, share prices and solvency of counterparties;

and (v) revisions to calculated expected credit losses (ECLs) leading to increases in impairmen t allowances. In addition, the Group’s ability to

borrow from other financial institutions or raise funding from external investors may be affected by deteriorating economic conditions and market

disruption. 

Geopolitical events may lead to further financial instability and affect economic growth. In particular:

◾

In the UK, the decision to leave the European Union (EU) may give rise to further economic and political consequences including for investment

and market confidence in the UK and the remainder of EU. See “(ii) Process of UK withdrawal from the EU” below for further details.

◾

A significant proportion of the Group’s portfolio is located in the US, including a major credit card portfolio and a range of corporate and

investment banking exposures. The possibility of significant continued changes in US policy in certain sectors (including trade, healthcare and

commodities), may have an impact on the Group’s associated portfolios. Stress in the US economy, weakening GDP and the associated exchange

rate fluctuations, heightened trade tensions (such as the current dispute between the US and China), an unexpected rise in unemployment

and/or an increase in interest rates could lead to increased levels of impairment, resulting in a negative impact on the Group’s profitability.

◾

Global GDP growth weakened in 2019, as elevated policy uncertainty weighed on manufacturing activity and investment. As a result, a number of

central banks, most notably the Federal Reserve and European Central Bank (ECB), pursued monetary easing. Growth is expected to stabilise in

2020, but macroeconomic risks remain skewed to the downside, while concerns around the efficacy of existing policy tools to counter these risks

persist. An escalation in geopolitical tensions, increased use of protectionist measures or a disorderly withdrawal from the EU may negatively

impact the Group’s business in the affected regions.

◾

In China the pace of credit growth remains a concern, given the high level of leverage and despite government and regulatory action. A stronger

than expected slowdown could result if authorities fail to appropriately manage growth during the transition from manufacturing towards

services and the end of the investment and credit-led bo om. Deterioration in emerging markets could affect the Group if it results in higher

impairment charges via sovereign or counterparty defaults.

ii)

Process of UK withdrawal from the EU

The manner in which the UK withdraws from the EU will likely have a marked impact on general economic conditions in the UK and the EU. The

UK’s future relationship with the EU and its trading relationships with the rest of the world could take a number of years to resolve. This may lead to

a prolonged period of uncertainty, unstable economic conditions and market volatility, including fluctuations in interest rates and foreign exchange

rates.

Whilst the exact impact of the UK’s withdrawal from the EU is unknown, the Group continues to monitor the risks that may have a more immediate

impact for its business, including , but not limited to:

◾

Market volatility, including in currencies and interest rates, might increase which could have an impact on the value of the Group’s trading book

positions.

◾

Credit spreads could widen leading to reduced investor appetite for the Group’s debt securities. This could negatively impact the Group’s cost of

and/or access to funding. In addition, market and interest rate volatility could affect the underlying value of assets in the banking book and

securities held by the Group for liquidity purposes.

◾

A credit rating agency downgrade applied directly to the Group, or indirectly as a result of a credit rating agency downgrade to the UK

Government, could significantly increase the Group’s cost of and/or reduce its access to funding, widen credit spreads and materially adversely

affect the Group’s interest margins and liquidity position.

◾

A UK recession with lower growth, higher unemployment and falling UK property prices could lead to increased impairments in relation to a

number of the Group’s portfolios, including, but not limited to, its UK mortgage portfolio, UK unsecured lending portfolio (including credit cards)

and its commercial real estate exposures.

◾

The ability to attract, or prevent the departure of, qualified and skilled employees may be impacted by the UK’s and the EU’s future approach to

the EU freedom of movement and immigration from the EU countries and this may impact the Group’s access to the EU talent pool. 

◾

A disorderly exit from the EU may put a strain on the capabilities of the Group’s systems, increasing the risk of failure of those systems and

potentially resulting in losses and reputational damage for the Group. 

◾

Changes to current EU ‘Passporting’ rights may require further adjustment to the current model for the Group’s cross -border banking operation

which could increase operational complexity and/or costs for the Group.

Risk review

Material existing and emerging risks

93

 Barclays PLC 2019 Annual Report on Form 20-F

◾

The legal framework within which the Group operates could change and become more uncertain if the UK takes steps to replace or repeal certain

laws currently in force, which are based on EU legislation and regulation (including EU regulation of the banking sector) following its withdrawal

from the EU. Certainty around the ability to maintain existing contracts, enforceability of certain legal obligations and uncertainty around the

jurisdiction of the UK courts may be affected until the impacts of the loss of the current legal and regulatory arrangements between the UK and

EU and the enforceability of UK judgements across the EU are fully known.

◾

Should the UK see reduced access to financial markets infrastructures (including exchanges, central counterparties and payments services, or

other support services provided by third party suppliers ) service provision for clients could be impacted, likely resulting in reduced market share

and revenue and increased operating costs for the Group.

iii)

The impact of interest rate changes on the Group’s profitability

Any changes to interest rates are significant for the Group, especially given the uncertainty as to the direction of interest rates and the pace at

which interest rates may change particularly in the Group’s main markets of the UK and the US. 

A continued period of low interest rates and flat yield curves, including any further cuts, may affect and continue to put pressure on the Group’s net

interest margins (the difference between its lending income and borrowing costs) and could adversely affect the profitability and prospects of the

Group.

However, whilst interest rate rises could positively impact the Group’s profitability as retail and corporate business income increases due to margin

de-compression, further increases in interest rates, if larger or more frequent than expected, could lead to generally weaker than expected growth,

reduced business confidence and higher unemployment, which in turn could cause stress in the lending portfolio and underwriting activity of the

Group. Resultant higher credit losses driving an increased impairment charge would most notably impact retail unsecured portfolios and wholesale

non-investment grade lending and could have a material effect on the Group’s business, results of operations, financial condition and prospects.

In addition, changes in interest rates could have an adverse impact on the value of the securities held in the Group’s liquid asset portfolio.

Consequently, this could create more volatility than expected through the Group’s FVOCI reserves.

iv)

The competitive environments of the banking and financial services industry

The Group’s businesses are conducted in competitive environments (in particular, in the UK and US), with increased competition scrutiny, and the

Group’s financial performance depends upon the Group’s ability to respond effectively to competitive pressures whether due to competitor

behaviour, new entrants to the market, consumer demand, technological changes or otherwise.

This competitive environment, and the Group’s response to it, may have a material adverse effect on the Group’s ability to maintain existing or

capture additional market share, business, results of operations, financial condition and prospects.

v)

Regulatory change agenda and impact on business model

The Group remains subject to ongoing significant levels of regulatory change and scrutiny in many of the countries in which it operates (including,

in particular, the UK and the US). As a result, regulatory risk will remain a focus for senior management. Furthermore, a more intensive regulatory

approach and enhanced requirements together with the potential lack of international regulatory co- ordination as enhanced supervisory standards

are developed and implemented may adversely affect the Group’s business, capital and risk management strategies and/or may result in the Group

deciding to modify its legal entity, capital and funding structures and business mix, or to exit certain business activities altogether or not to expand

in areas despite otherwise attractive potential.

There are several significant pieces of legislation and areas of focus which will require significant management attention, cost and resource,

including:

◾

Changes in prudential requirements may impact minimum requirements for own funds and eligible liabilities (MREL) (including requirements for

internal MREL), leverage, liquidity or funding requirements, applicable buffers and/or add -ons to such minimum requirements and risk weighted

assets calculation methodologies all as may be set by international, EU or national authorities. Such or similar changes to prudential requirements

or additional supervisory and prudential expectations, either individually or in aggregate, may result in, among other things, a need for further

management actions to meet the changed requirements, such as: 

-

increasing capital, MREL or liquidity resources, reducing leverage and risk weighted assets; 

-

restricting distributions on capital instruments; 

-

modifying the terms of outstanding capital instruments; 

-

modifying legal entity structure (including with regard to issuance and deployment of capital, MREL and funding); 

-

changing the Group’s business mix or exiting other businesses; 

-

and/or undertaking other actions to strengthen the Group’s position.

◾

The derivatives market has been the subject of particular focus for regulators in recent years across the G20 countries and beyond, with

regulations introduced which require the reporting and clearing of standardised over the counter (OTC) derivatives and the mandatory margining

of non-cleared OTC derivatives. These regulations may increase costs for market participants, as well as reduce liquidity in the derivatives

markets. More broadly, changes to the regulatory framework (in particular, the review of the second Markets in Financial Instruments Directive

and the implementation of the Benchmarks Regulation) could entail significant costs for market participants and may have a significant impact

on certain markets in which the Group operates.

◾

The Group and certain of its members are subject to supervisory stress testing exercises in a number of jurisdictions. These exercises currently

include the programmes of the BoE, the European Banking Authority (EBA), the Federal Deposit Insurance Corporation (FDIC) and the Federal

Reserve Bank (FRB) . Failure to meet the requirements of regulatory stress tests, or the failure by regulators to approve the stress test results and

capital plans of the Group, could result in the Group or cert ain of its members being required to enhance their capital position, limit capital

distributions or position additional capital in specific subsidiaries.

For further details on the regulatory supervision of, and regulations applicable to, the Group, see Supervision and regulation on pages 171 to 177 .

Risk review

Material existing and emerging risks

94

 Barclays PLC 2019 Annual Report on Form 20-F

vi)

The impact of climate change on the Group’s business

The risks associated with climate change are subject to rapidly increasing societal, regulatory and political focus, both in the UK and internationally.

Embedding climate risk into the Group’s risk framework in line with regulatory expectations, and adapting the Group’s operations and business

strategy to address both the financial risks resulting from: (i) the physical risk of climate change; and (ii) the risk from the transition to a low carbon

economy , could have a significant impact on the Group’s business.

Physical risks from climate change arise from a number of factors and relate to specific weather events and longer -term shifts in the climate. The

nature and timing of extreme weather events are uncertain but they are increasing in frequency and their impact on the economy is predicted to be

more acute in the future. The potential impact on the economy includes, but is not limited to, lower GDP growth, higher unemployment and

significant changes in asset prices and profitability of industries. Damage to the properties and operations of borrowers could impair asset values

and the creditworthiness of customers leading to increased default rates, delinquencies, write-offs and impairment charges in the Group’s

portfolios. In addition, the Group’s premises and resilience may also suffer physical damage due to weather events leading to increased costs for

the Group.

As the economy transitions to a low-carbon economy, financial institutions such as the Group may face significant and rapid development s in

stakeholder expectations, policy, law and regulation which could impact the lending activities the Group under takes, as well as the risks associated

with its lending portfolios, and the value of the Group’s financial assets. As sentiment towards climate change shifts and societal preferences

change, the Group may face greater scrutiny of the type of business it conducts, adverse media coverage and reputational damage, which may in

turn impact customer demand for the Group's products, returns on certain business activities and the value of certain assets and trading positions

resulting in impairment charges.

In addition, the impacts of physical and transition climate risks can lead to second order connected risks, which have the potential to affect the

Group’s retail and wholesale portfolios. The impacts of climate change may increase losses for those sectors sensitive to the effects of physical and

transition risks. Any subsequent increase in defaults and rising unemployment could create recessionary pressures, which may lead to wider

deterioration in the creditworthiness of the Group’s clients, higher ECLs, and increased charge -offs and defaults among retail customers.

If the Group does not adequately embed risks associated with climate change into its risk framework to appropriately measure, manage and

disclose the various financial and operational risks it faces as a result of climate change, or fails to adapt its strategy and business model to the

changing regulatory requirements and market expectations on a timely basis, it may have a material and adverse impact on the Group’s level of

business growth, competitiveness, profitability, capital requirements, cost of funding, and financial condition.

For further details on the Group’s approach to climate change, see page 101 of climate change risk management.

vii)

Impact of benchmark interest rate reforms on the Group

For several years, global regulators and central banks have been driving international efforts to reform key benchmark interest rates and indices,

such as the London Interbank Offered Rate (“LIBOR”), which are used to determine the amounts payable under a wide range of transactions and

make them more reliable and robust. This has resulted in significant changes to the methodology and operation of certain benchmarks and indices,

the adoption of alternative “risk-free” reference rates and the proposed discontinuation of certain reference rates (including LIBOR), with further

changes anticipated.

Uncertainty as to the nature of such potential changes, the availability and/or suitability of alternative “risk-free” reference rates and other reforms

may adversely affect a broad range of transactions (including any securities, loans and derivatives which use LIBOR to determine the amount of

interest paya ble that are included in the Group’s financial assets and liabilities) that use these reference rates and indices and introduce a number of

risks for the Group, including, but not limited to:

◾

Conduct risk:

 in undertaking actions to transition away from using certain reference rates (including LIBOR), the Group faces conduct risks,

which may lead to customer complaints, regulatory sanctions or reputational impact if the Group is (i) considered to be undertak ing market

activities that are manipulative or create a false or misleading impression, (ii) misusing sensitive information or not identifying or appropriately

managing or mitigating conflicts of interest, (iii) providing customers with inadequate advice, misleading information, unsuitable products or

unacceptable service, (iv) not taking an appropriate or consistent response to remediation activity or customer complaints, (v) providing

regulators with inaccurate regulatory reporting or (vi) colluding or inappropriately sharing information with competitors;

◾

Financial risks:

 the valuation of certain of the Group’s financial assets and liabilities may change. Moreover, transitioning to alternative “risk-free”

reference rates may impact the ability of members of the Group to calculate and model amounts receivable by them on certain financial assets

and determine the amounts payable on certain financial liabilities (such as debt securities issued by them) because currently alternative “risk-

free” reference rates (such as the Sterling Overnight Index Average (SONIA) and the Secured Overnight Financing Rate (SOFR)) are look-back

rates whereas term rates (such as LIBOR) allow borrowers to calculate at the start of any interest period exactly how much is payable at the end

of such interest period. This may have a material adverse effect on the Group’s cashflows;

◾

Pricing risk:

 changes to existing reference rates and indices, discontinuation of any reference rate or indices and transition to alternative “risk-

free” reference rates may impact the pricing mechanisms used by the Gr oup on certain transactions;

◾

Operational risk:

 changes to existing reference rates and indices, discontinuation of any reference rate or index and transition to alternative “risk-

free” reference rates may require changes to the Group’s IT systems, trade reporting infrastructure, operational processes, and controls. In

addition, if any reference rate or index (such as LIBOR) is no longer available to calculate amounts payable, the Group may incur additional

expenses in amending documentation for new and existing transactions and/or effecting the transition from the original reference rate or index

to a new reference rate or index; and

◾

Accounting risk:

an inability to apply hedge accounting in accordance with IFRS could lead to increased volatility in the Group’s financial results

and performance.

Any of these factors may have a material adverse effect on the Group’s business, results of operations, financial condition and prospects.

For further details on the impacts of benchmark interest rate reforms on the Group, see Note 14 on pages 236 to 243 .

Risk review

Material existing and emerging risks

95

 Barclays PLC 2019 Annual Report on Form 20-F

viii)

Holding company structure of Barclays PLC and its dependency on distributions from its subsidiaries

Barclays PLC is a holding company and its principal sources of income are, and are expected to continue to be, distributions (in the form of

dividends and interest payments) from operating subsidiaries which also hold the principal assets of the Group. As a separate legal entity, Barclays

PLC relies on such distributions in order to be able to meet its obligations as they fall due (including its payment obligations with respect to its debt

securities) and to create distributable reserves for payment of dividends to ordinary shareholders. 

The ability of Barclays PLC’s subsidiaries to pay dividends and interest and Barclays PLC’s ability to receive such distributions from its investments in

its subsidiaries and other entities will be subject not only to such subsidiaries’ and other entities' financial performance but also to applicable local

laws and other restrictions. These laws and restrictions could limit the payment of dividends and distributions to Barclays PLC by its subsidiaries

and any other entities in which it holds an investment from time to time, which could restrict Barclays PLC’s ability to meet its obligations and/or to

pay dividends to ordinary shareholders.

ix)

Application of resolution measures and stabilisation powers under the Banking Act

Under the Banking Act 2009, as amended, (the “Banking Act”) substantial powers are granted to the Bank of England (or, in certain circumstances,

HM Treasury), in consultation with the PRA, the FCA and HM Treasury, as appropriate, as part of a special resolution regime (the “SRR”). These

powers enable the relevant UK resolution authority to implement resolution measures and stabilisation options with respect to a UK bank or

investment firm and certain of its affiliates (currently including Barclays PLC) (each a “relevant entity”) in circumstances in which the relevant UK

resolution authority is satisfied that the resolution conditions are met. The SRR consists of five stabilisation options: (i) private sector transfer of all

or part of the business or shares of the relevant entity, (ii) transfer of all or part of the business of the relevant entity to a “bridge bank” established

by the Bank of England, (iii) transfer to an asset management vehicle wholly or partly owned by HM Treasury or the Bank of England, (iv) the

cancellation or transfer of the relevant entities' equity and write- down or conversion of the relevant entity’s capital instruments and liabilities (the

bail-in tool) and (v) temporary public ownership (i.e. nationalisation). 

In addition, the relevant UK resolution authority may, in certain circumstances, in accordance with the Banking Act require the permanent write-

down or conversion into equity of any outstanding tier 1 capital instruments and tier 2 capital instruments prior to the exercise of any stabilisation

option (including the bail-in tool), which may lead to the cancellation, transfer or dilution of Barclays PLC’s ordinary share capital.

Shareholders should assume that, in a resolution situation, public financial support will only be available to a relevant entity as a last resort after the

relevant UK resolution authorities have assessed and used, to the maximum extent practicable, the resolution tools, including the bail-in tool (the

Bank of England’s preferred approach for the resolution of the Group is a bail-in strategy with a single point of entry at Barclays PLC). The exercise

of any of such powers under the Banking Act or any suggestion of any such exercise could materially adversely affect the value of Barclays PLC

ordinary shares and could lead to shareholders losing some or all of their investment.

In addition, any safeguards within the Banking Act (such as the ‘no creditor worse off' principle ) may not result in compensation to shareholders

that is equivalent to the full losses incurred by them in the resolution and there can be no assurance that shareholders would recover such

compensation promptly.

Material existing and emerging risks impacting individual principal risks

i)

Credit risk

Credit risk is the risk of loss to the Group from the failure of clients, customers or counterparties, including sovereigns, to fully honour their

obligations to members of the Group, including the whole and timely payment of principal, interest, collateral and other receivables.

a)

Impairment

The introduction of the impairment requirements of IFRS 9

Financial Instruments

, resulted in impairment loss allowances that are recognised

earlier, on a more forward -looking basis and on a broader scope of financial instruments, and may continue to have a material impact on the

Group’s business, results of operations, financial condition and prospects.

Measurement involves complex judgement and impairment charges could be volatile, particularly under stressed conditions. Unsecured products

with longer expected lives, such as credit cards, are the most impacted. Taking into account the transitional regime, the capital treatment on the

increased reserves has the potential to adversely impact the Group’s regulatory capital ratios.

In addition, the move from incurred losses to ECLs has the potential to impact the Group’s performance under stressed economic conditions or

regulatory stress tests. For more information, refer to Note 1

on pages 214 to 222.

b)

Specific sectors and concentrations

The Group is subject to risks arising from changes in credit quality and recovery rates of loans and advances due from borrowers and

counterparties in any specific portfolio. Any deterioration in credit quality could lead to lower recoverability and highe r impairment in a specific

sector. The following are areas of uncertainties to the Group’s portfolio which could have a material impact on performance:

◾

UK retail, hospitality & leisure .

Softening demand, rising costs and a structural shift to online shopping is fuelling pressure on the UK High Street

and other sectors heavily reliant on consumer discretionary spending . As these sectors continue to reposition themselves, the trend represents a

potential risk in the Group’s UK corporate portfolio from the perspective of the its interactions with both retailers and their landlords.

◾

Consumer affordability

 has remained a key area of focus, particularly in unsecured lending. Macroeconomic factors, such as rising

unemployment, that impact a customer’s ability to service unsecured debt payments could lead to increased arrears in unsecured products.

◾

UK real estate market.

UK property represents a significant portion of the overall Group retail and corporate credit exposure. In 2019, property

price growth across the UK has slowed, particularly in London and the South East where the Group’s exposure has high concentration. The Group

is at risk of increased impairment from a material fall in property prices.

◾

Leverage finance underwriting.

The

Group takes on sub-investment grade underwriting exposure, including single name risk, particularly in the

US and Europe. The Group is exposed to credit events and market volatility during the underwriting period. Any adverse events during this period

may potentially result in loss for the Group, or an increased capital requirement should there be a need to hold the exposure for an extended

period.

Risk review

Material existing and emerging risks

96

 Barclays PLC 2019 Annual Report on Form 20-F

◾

Italian mortgage portfolio.

 The Group is exposed to a decline in the Italian economic environment through a mortgage portfolio in run-off and

positions to wholesale customers. Growth in the Italian economy remained weak in 2019 and should the economy deteriorate further, there

could be a material adverse effect on the Group’s results including, but not limited to, increased credit losses and higher impairment charges.

The Group also has large individual exposures to single name counterparties, both in its lending activities and in its financial services and trading

activities, including transactions in derivatives and transactions with brokers, central clearing houses, dealers, other banks, mutual and hedge funds

and other institutional clients. The default of such counterparties could have a significant impact on the carrying value of these assets. In addition,

where such counterparty risk has been mitigated by taking collateral, credit risk may remain high if the collateral held cannot be realised, or has to

be liquidated at prices which are insufficient to recover the full amount of the loan or derivative exposure. Any such defaults could have a material

adverse effect on the Group’s results due to, for example, increased credit losses and higher impairment charges.

For further details on the Group’s approach to credit risk, see credit risk management on pages 102 to 103

and credit risk performance on pages

109 to 139 .

ii)

Market risk

Market risk is the risk of loss arising from potential adverse change in the value of the Group’s assets and liabilities from fluctuation in market

variables including, but not limited to, interest rates, foreign exchange, equity prices, commodity prices, credit spreads, implied volatilities and asset

correlations. 

A broadening in trade tensions between the US and its major trading partners, slowing global growth and political concerns in the US and Europe

(including Brexit) are some of the factors that could heighten market risks for the Group’s portfolios. In addition, the Group’s trading business is

generally exposed to a prolonged period of elevated asset price volatility, particularly if it negatively affects the depth of marketplace liquidity. Such

a scenario could impact the Group’s ability to execute client trades and may also result in lower client flow-driven income and/or market-based

losses on its existing portfolio of market risks. These can include having to absorb higher hedging costs from rebalancing risks that need to be

managed dynamically as market levels and their associated volatilities change.

It is difficult to predict changes in market conditions, and such changes could have a material adverse effect on the Group’s business, results of

operations, financial condition and prospects.

For further details on the Group’s approach to market risk, see market risk management on pages 103 to 104

and market risk performance on

pages 14 0 to 142 .

iii)

Treasury and capital risk

There are three primary types of treasury and capital risk faced by the Group:

a) Liquidity risk 

Liquidity risk

is the risk that the Group is unable to meet its contractual or contingent obligations or that it does not have the appropriate amount,

tenor and composition of funding and liquidity to support its assets. This could cause the Group to fail to meet regulatory liquidity standards or be

unable to support day -to-day banking activities. Key liquidity risks that the Group faces include:

◾

The stability of the Group’s current funding profile:

 In particular, that part which is based on accounts and deposits payable on demand or at

short notice, could be affected by the Group failing to preserve the current level of customer and investor confidence. The Group also regularly

accesses the money and capital markets to provide short-term and long -term funding to support its operations. Several factors, including

adverse macroeconomic conditions, adverse outcomes in conduct and legal, competition and regulatory matters and loss of confidence by

investors, counterparties and/or customers in the Group, can affect the ability of the Group to access the capital markets and/or the cost and

other terms upon which the Group is able to obtain market funding

.

◾

Credit rating changes and the impact on funding costs

: Rating agencies regularly review credit ratings given to Barclays PLC and certain

members of the Group. Credit ratings are based on a number of factors, including some which are not within the Group’s control (such as

political and regulatory developments, changes in rating methodologies, macro -economic conditions and the sovereign credit ratings of the

countries in which the Group operates ).

Whilst the impact of a credit rating change will depend on a number of factors (including the type of issuance and prevailing market conditions),

any reductions in a credit rating (in particular, any downgrade below investment grade) may affect the Group’s access to the money or capital

markets and/or terms on which the Group is able to obtain market funding, increase costs of funding and credit spreads, reduce the size of the

Group’s deposit base, trigger additional collateral or other requirements in derivative contracts and other secured funding arrangements or limit

the range of counterparties who are willing to enter into transactions with the Group. Any of these factors could have a material adverse effect on

the Group’s business, results of operations, financial condition and prospects.

b) Capital risk

Capital risk is the risk that the Group has an insufficient level or composition of capital to support its normal business activities and to meet its

regulatory capital requirements under normal operating environments or stressed conditions (both actual and as defined for internal planning or

regulatory stress testing purposes). This includes the risk from the Group’s pension plans. Key capital risks that the Group faces include:

◾

Failure to meet prudential capital requirements

: This could lead to the Group being unable to support some or all of its business activities, a

failure to pass regulatory stress tests, increased cost of funding due to deterioration in investor appetite or credit ratings, restrictions on

distributions including the ability to meet dividend targets, and/or the need to take additional measures to strengthen the Group's capital or

leverage position.

◾

Adverse changes in FX rates impacting capital ratios

: The Group has capital resources, risk weighted assets and leverage exposures

denominated in foreign currencies. Changes in foreign currency exchange rates may adversely impact the Sterling equivalent value of these

items. As a result, the Group’s regulatory capital ratios are sensitive to foreign currency movements. Failure to appropriately manage the Group’s

balance sheet to take account of foreign currency movements could result in an adverse impact on the Group’s regulatory capital and leverage

ratios.

Risk review

Material existing and emerging risks

97

 Barclays PLC 2019 Annual Report on Form 20-F

◾

Adverse movements in the pension fund

:

Adverse movements in pension assets and liabilities for defined benefit pension schemes could

result

in deficits on a funding and/or accounting basis. This could lead to the Group making substantial additional contributions to its pension plans

and/or a deterioration in its capital position. Under IAS 19, the liabilities discount rate is derived from the yields of high quality corporate bonds.

Therefore, the valuation of the Group’ s defined benefits schemes would be adversely affected by a prolonged fall in the discount rate due to a

persistent low interest rate and/or credit spread environment. Inflation is another significant risk driver to the pension fund as the liabilities are

adversely impacted by an increase in long-term inflation expectations.

c)

 Interest rate risk in the banking book 

Interest rate risk in the banking book is the risk that the Group is exposed to capital or income volatility because of a mismatch between the interest

rate exposures of its (non -traded) assets and liabilities. The Group’s hedge programmes for interest rate risk in the banking book rely on

behavioural assumptions and, as a result, the success of the hedging strategy cannot be guaranteed. A potential mismatch in the balance or

duration of the hedge assumptions could lead to earnings deterioration. A decline in interest rates in G3 currencies may also compress net interest

margin on retail portfolios. In addition, the Group’s liquidity pool is exposed to potential capital and/or income volatility due to movements in

market rates and prices. 

For further details on the Group’s approach to treasury and capital risk, see treasury and capital risk management on pages 104 to 105

and treasury

and capital risk performance on pages 145 to 166 .

iv)

Operational risk

Operational risk is the risk of loss to the Group from inadequate or failed processes or systems, human factors or due to external events where the

root cause is not due to credit or market risks. Examples include: 

a)

Operational resilience

The loss of or disruption to business processing is a material inherent risk within the Group and across the financial services industry, whether

arising through impacts on the Group’s technology systems, real estate services including its retail branch network, or availability of personnel or

services supplied by third parties. Failure to build resilience and recovery capabilities into business processes or into the services of technology, real

estate or suppliers on which the Group’s business processes depend, may result in significant customer detriment, costs to reimburse losses

incurred by the Group’s customers, and reputational damage.

b)

Cyber threats

The frequency of cyber-attacks continues to grow and is a global threat that is inherent across all industries. The financial sector remains a primary

target for cyber criminals, hostile nation states, opportunists and hacktivists and there is an increasing level of sophistication in criminal hacking for

the purpose of stealing money, stealing, destroying or manipulating data (including customer data) and/or disrupting operations, where multiple

threats exist including threats arising from malicious emails, distributed denial of service (DDoS) attacks, payment system compromises, insider

attackers, supply chain and vulnerability exploitation. Cyber events have a compounding impact on services and customers, e.g. data breaches in

social networking sites, retail companies and payments networks. 

Any failure in the Group’s cyber- security policies, procedures or controls and/or its IT systems, may result in significant financial losses, major

business disruption, inability to deliver customer services, or loss of data or other sensitive information (including as a result of an outage) and may

cause associated reputational damage. Any of these factors could increase costs (including, but not limited to, costs relating to notification of, or

compensation for customers) or may affect the Group’s ability to retain and attract customers. Regulators in the UK, US and Europe continue to

recognise cyber -security as an increasing systemic risk to the financial sector and have highlighted the need for financial institutions to improve

their monitoring and control of, and resilience (particularly of critical services) to cyber-attacks, and to provide timely notification of them, as

appropriate. Given the Group’s reliance on technology, a cyber-attack could have a material adverse effect on its business, results of operations,

financial condition and prospects.

For further details on the Group’s approach to cyber threats, see operational risk performance on pages 167

to 169 .

c)

New and emergent technology

Technological advancements present opportunities to develop new and innovative ways of doing business across the Group, with new solutions

being developed both in-house and in association with third-party companies. Introducing new forms of technology, however, also has the

potential to increase inherent risk. Failure to evaluate, actively manage and closely monitor risk exposure during all phases of business development

could introduce new vulnerabilities and security flaws and have a material adverse effect on the Group’s business, results of operations, financial

condition and prospects .

d)

External fraud

The level and nature of fraud threats continues to evolve, particularly with the increasing use of digital products and the greater functionality

available online. Criminals continue to adapt their techniques and are increasingly focused on targeting customers and clients through ever more

sophisticated methods of social engineering. External data breaches also provide criminals with the opportunity to exploit the growing levels of

compromised data. These fraud threats could lead to customer detriment, loss of business, missed business opportunity and reputational damage,

all of which could have a material adverse effect on the Group’s business, results of operations, financial condition and prospects. Furthermore,

recent changes in the regulatory landscape has seen increased levels of liability being taken by the Group as part of a voluntary code in the UK to

provide additional protection to customers and clients who are victims of Authorised Push Payment scams. 

e)

Data management and information protection

The Group holds and processes large volumes of data, including personally identifiable information, intellectual property, and financial data. The

General Data Protection Regulation (GDPR) has strengthened the data protection rights of customers and increased the accountability of the Group

in its management of such data. Failure to accurately collect and maintain this data, protect it from breaches of confidentiality and interference

with its availability exposes the Group to the risk of loss or unavailability of data (including customer data discussed under “vi) Conduct risk, c)

Data protection and privacy” below) or data integrity issues. Any of these failures could have a material adverse effect on the Group’s business,

results of operations, financial condition and prospects.

f)

Algorithmic trading

In some areas of the investment banking business, trading algorithms are used to price and risk manage client and principal transactions. An

algorithmic error could result in erroneous or duplicated transactions, a system outage, or impact the Group’s pricing abilities, which could have a

material adverse effect on the Group’s business, results of operations, financial condition and prospects and reputation .

Risk review

Material existing and emerging risks

98

 Barclays PLC 2019 Annual Report on Form 20-F

g)

Processing error

As a large, complex financial institution, the Group faces the risk of material errors in existing operational processes, or from new processes as a

result of on-going change activity, including payments and client transactions. Material operational or payment errors could disadvantage the

Group’s customers, clients or counterparties and could have a material adverse effect on the Group’s business, results of operations, financial

condition and prospects .

h)

Supplier exposure

The Group depends on suppliers for the provision of many of its services and the development of technology. Whilst the Group depends on

suppliers, it remains fully accountable for any risk arising from the actions of suppliers. The dependency on suppliers and sub-contracting of

outsourced services introduces concentration risk where the failure of specific suppliers could have an impact on the Group’s ability to continue to

provide material services to its customers. Failure to adequately manage supplier risk could have a material adverse effect on the Group’s business,

results of operations, financial condition and prospects.

i)

Critical accounting estimates and judgements

The preparation of financial statements in accordance with IFRS requires the use of estimates. It also requires management to exercise judgement

in applying relevant accounting policies. The key areas involving a higher degree of judgement or complexity, or areas where assumptions are

significant to the consolidated and individual financial statements, include credit impairme nt charges for amortised cost assets, taxes, fair value of

financial instruments, pensions and post-retirement benefits, and provisions including conduct and legal, competition and regulatory matters.

There is a risk that if the judgement exercised, or the estimates or assumptions used, subsequently turn out to be incorrect, this could result in

material losses to the Group, beyond what was anticipated or provided for.

Further development of standards and interpretations under IFRS could

also materially impact the financial results, condition and prospects of the Group. For further details on the accounting estimates and policies, see

the Notes to the audited financial statements on pages 214 to 298.

j)

Tax risk

The Group is required to comply with the domestic and international tax laws and practice of all countries in which it has business operations.

There is a risk that the Group could suffer losses due to additional tax charges, other financial costs or reputational damage as a result of failing to

comply with such laws and practice, or by failing to manage its tax affairs in an appropriate manner, with much of this risk attributable to the

international structure of the Group. In addition, increasing reporting and disclosure requirements around the world and the digitisation of the

administration of tax has potential to increase the Group’s tax compliance obligations further.

k)

Ability to hire and retain appropriately qualified employees

As a regulated financial institution, the Group requires diversified and specialist skilled colleagues. The Group’s ability to attract, develop and retain

a diverse mix of talent is key to the delivery of its core business activity and strategy. This is impacted by a range of external and internal factors,

such as the UK’s decision to leave the EU and the enhanced individual accountability applicable to the banking industry. Failure to attract or prevent

the departure of appropriately qualified and skilled employees could have a material adverse effect on the Group’s business, results of operations,

financial condition and prospects . Additionally, this may result in disruption to service which could in turn lead to disenfranchising certain customer

groups, customer detriment and reputational damage.

For further details on the Group’s approach to operational risk, see operational risk management on pages 105 to 106

and operational risk

performance on pages 167 to 169.

v)

Model risk

Model risk is the risk of potential adverse consequences from financial assessments or decisions based on incorrect or misused model outputs and

reports. The Group relies on models to support a broad range of business and risk management activities, including informing business decisions

and strategies, measuring and limiting risk, valuing exposures (including the calculation of impairment), conducting stress testing, assessing capital

adequacy, supporting new business acceptance and risk and reward evaluation, managing client assets, and meeting reporting requirements.

Models are, by their nature, imperfect and incomplete representations of reality because they rely on assumptions and inputs, and so they may be

subject to errors affecting the accuracy of their outputs. For instance, the quality of the data used in models across the Group has a material impact

on the accuracy and completeness of its risk and financial metrics. Models may also be misused. Model errors or misuse may result in (among

other things) the Group making inappropriate business decisions and/or inaccuracies or errors being identified in the Group’s risk management

and regulatory reporting processes. This could result in significant financial loss, imposition of additional capital requirements, enhanced regulatory

supervision and reputational damage, all of which could have a material adverse effect on the Group’s business, results of operations, financial

condition and prospects.

For further details on the Group’s approach to model risk, see model risk management on page 106 and model risk performance on page 170.

vi)

Conduct risk

Conduct risk is the risk of detriment to customers, clients, market integrity, effective competition or the Group from the inappropriate supply of

financial services, including instances of wilful or negligent misconduct. This risk could manifest itself in a variety of ways:

a)

Employee misconduct

The Group’s businesses are exposed to risk from potential non -compliance with its policies and instances of wilful and negligent misconduct by

employees, all of which could result in enforcement action or reputational harm. It is not always possible to deter employee misconduct, and the

precautions we take to prevent and detect this activity may not always be effective. Employee misconduct could have a material adverse effect on

the Group’s customers, clients, market integrity as well as reputation, financial condition and prospects.

b)

Product governance and life cycle

The ongoing review, management and governance of new and amended products has come under increasing regulatory focus (for example, the

recast of the Markets in Financial Instruments Directive and guidance in relation to the adoption of the EU Benchmarks Regulation) and the Group

expects this to continue. The following could lead to poor customer outcomes: (i) ineffective product governance, including design, approval and

review of products, and (ii) inappropriate controls over internal and third party sales channels and post sales services, such as complaints handling,

collections and recoveries. The Group is at risk of financial loss and reputational damage as a result.

Risk review

Material existing and emerging risks

99

 Barclays PLC 2019 Annual Report on Form 20-F

c)

Financial crime

The Group may be adversely affected if it fails to effectively mitigate the risk that third parties or its employees facilitate, or that its products and

services are used to facilitate, financial crime (money laundering, terrorist financing and proliferation financing, breaches of economic and financial

sanctions, bribery and corruption, and the facilitation of tax evasion). UK and US regulations covering financial institutions continue to focus on

combating financial crime. Failure to comply may lead to enforcement action by the Group’s regulators, including severe penalties, which may have

a material adverse effect on the Group’s business, financial condition and prospects.

d)

Data protection and privacy

Proper handling of personal data is critical to sustaining long -term relationships with our customers and clients and complying with privacy laws

and regulations. Failure to protect personal data can lead to potential detriment to our customers and clients, reputational damage , enforcement

action and financial loss, which may be substantial (see “iv) Operational risk, (e) Data management and information protection” above).

e)

Regulatory focus on culture and accountability

Regulators around the world continue to emphasise the importance of culture and personal accountability and enforce the adoption of adequate

internal reporting and whistleblowing procedures to help to promote appropriate conduct and drive positive outcomes for customers, colleagues,

clients and markets. The requirements and expectations of the UK Senior Managers Regime, Certification Regime and Conduct Rules have driven

additional accountabilities for individuals across the Group with an increased focus on governance and rigour. Failure to meet these requirements

and expectations may lead to regulatory sanctions, both for the individuals and the Group.

For further details on the Group’s approach to conduct risk, see conduct risk management on page s 106 and 107 and conduct risk performance on

pages 17 0.

vii)

Reputation risk

Reputation risk is the risk that an action, transaction, investment, event, decision or business relationship will reduce trust in the Group’s integrity

and/or competence. 

Any material lapse in standards of integrity, compliance, customer service or operating efficiency may represent a potential reputation risk.

Stakeholder expectations constantly evolve, and so reputation risk is dynamic and varies between geographical regions, groups and individuals. A

risk arising in one business area can have an adverse effect upon the Group’s overall reputation and any one transaction, investment or event (in

the perception of key stakeholders) can reduce trust in the Group’s integrity and competence. The

Group’s association with sensitive topics and

sectors has been, and in some instances continues to be, an area of concern for stakeholders, including (i) the financing of, and investments in,

businesses which operate in sectors that are sensitive because of their relative carbon intensity or local environmental impact; (ii) potential

association with human rights violations (including combating modern slavery) in the Group’s operations or supply chain and by clients and

customers; and (iii) the financing of businesses which manufacture and export military and riot control goods and services.

Reputation risk could also arise from negative public opinion about the actual, or perceived, manner in which the Group conducts its business

activities, or the Group’s financial performance, as well as actual or perceived practices in banking and the financial services industry generally.

Modern technologies, in particular online social media channels and other broadcast tools that facilitate communication with large audiences in

short time frames and with minimal costs, may significantly enhance and accelerate the distribution and effect of damaging information and

allegations. Negative public opinion may adversely affect the Group’s ability to retain and attract customers, in particular, corporate and retail

depositors, and to retain and motivate staff, and could have a material adverse effect on the Group’s

business, results of operations, financial

condition and prospects.

In addition to the above, reputation risk has the potential to arise from operational issues or conduct matters which cause detriment to customers,

clients, market integrity, effective competition or the Group (see “iv) Operational risk” above). 

For furth er details on the Group’s approach to reputation risk, see reputation risk management on page 107 and reputation risk performance on

page 170 .

viii)

Legal risk and legal, competition and regulatory matters

The Group conducts activities in a highly regulated global market which exposes it and its employees to legal risk arising from (i) the multitude of

laws and regulations that apply to the businesses it operates, which are highly dynamic, may vary between jurisdictions, and are often unclear in

their application to particular circumstances especially in new and emerging areas; and (ii) the diversified and evolving nature of the Group’s

businesses and business practices. In each case, this exposes the Group

and its employees to the risk of loss or the imposition of penalties,

damages or fines from the failure of members of the Group to meet their respective legal obligations, including legal or contractual requirements.

Legal risk may arise in relation to a n umber of the risk factors identified above, including (without limitation) as a result of (i) the UK’s withdrawal

from the EU, (ii) benchmark reform, (iii) the regulatory change agenda, and (iv) rapidly evolving rules and regulations in relation to data protection,

privacy and cyber -security.

A breach of applicable legislation and/or regulations by the Group or its employees could result in criminal prosecution, regulatory censure,

potentially significant fines and other sanctions in the jurisdictions in which the Group operates. Where clients, customers or other third parties are

harmed by the Group’s conduct, this may also give rise to civil legal proceedings, including class actions. Other legal disputes may also arise

between the Group and third parties relating to matters such as breaches or enforcement of legal rights or obligations arising under contracts,

statutes or common law. Adverse findings in any such matters may result in the Group being liable to third parties or may result in the Group’s

rights not being enforced as intended.

Details of legal, competition and regulatory matters to which the Group is currently exposed are set out in Note 26. In addition to matters

specifically described in Note 26 , the Group is engaged in various other legal proceedings which arise in the ordinary course of business. The Group

is also subject to requests for information, investigations and other reviews by regulators, governmental and other public bodies in connection with

business activities in which the Group is, or has been, engaged.

Risk review

Material existing and emerging risks

100

 Barclays PLC 2019 Annual Report on Form 20-F

The outcome of legal, competition and regulatory matters, both those to which the Group is currently exposed and any others which may arise in

the future, is difficult to predict. In connection with such matters, the Group may incur significant expense, regardless of the ultimate outcome, and

any such matters could expose the Group to any of the following outcomes : substantial monetary damages, settlements and/or fines; remediation

of affected customers and clients; other penalties and injunctive relief; additional litigation; criminal prosecution; the loss of any existing agreed

protection from prosecution; regula tory restrictions on the Group’s business operations including the withdrawal of authorisations; increased

regulatory compliance requirements or changes to laws or regulations; suspension of operations; public reprimands; loss of significant assets or

business; a negative effect on the Group’s reputation; loss of confidence by investors, counterparties, clients and/or customers; risk of credit rating

agency downgrades; potential negative impact on the availability and/or cost of funding and liquidity; and/or dismissal or resignation of key

individuals. In light of the uncertainties involved in legal, competition and regulatory matters, there can be no assurance that the outcome of a

particular matter or matters will not have a material adverse effect on the Group’s business, results of operations, financial condition and prospects.

Risk review

Climate change risk management

101

 Barclays PLC 2019 Annual Report on Form 20-F

Climate change risk management

Overview

The Group has a longstanding commitment to Environmental Risk Management (ERM) and its approach, aided by regulatory initiatives, has

continued to evolve , incorporating climate change in recent years as the understanding of associated risks has grown. In 2018, a dedicated

Sustainability team was created to consider how the Group approaches wider sustainability and ESG matters, working closely with the ERM

function.

In 2019, the Group published an Energy & Climate Change Statement (

https://home.barclays/statements/barclays-energy-and-climate-change-

statement

) which articulates our focus on three areas: financing growth of renewables and bu sinesses addressing environmental challenges; taking

a responsible approach to financing energy sources with a greater carbon intensity; and reducing our own carbon footprint. It is supported by an

internal standard containing guidelines for restricting or supporting financing activities in carbon -intensive energy sectors, as well as enhanced due

diligence requirements for environmentally or socially sensitive sectors.

For more detail on how climate change risks arise and their impact on the Group, refer to material existing and emerging risks on page 92 .

Organisation and structure

On behalf of the Board, the BRC reviews and approves the Group’s approach to managing the financial and operational risks associated with

climate change. 

Broadly, climate change matters are co-ordinated by the Sustainability team, including reputation risks linked to the Group’s financial and societal

impact. In 2019, reputation risk became the responsibility of the Board, where the most material issues facing the Group are escalated to and

directly handled by the Board.

Risk management – Policy

In 2019, the Group published a

‘Climate Change Financial Risk and Operational Risk Policy’

. This introduced climate change as an overarching risk

impacting certain principal risks: credit risk, market risk, treasury & capital risk and operational risk. The policy is jointly owned by the relevant

Principal Risk Leads with oversight by the BRC. 

Each relevant Principal Risk Lead has developed a methodology and implementation plan for quantifying climate change risk.

Risk re view

Principal risk management

102

 Barclays PLC 2019 Annual Report on Form 20-F

Credit risk management (audited)

The risk of loss to the Group from the failure of clients, customers or counterparties, including sovereigns, to fully honour their obligations to the

Group , including the whole and timely payment of principal, interest, collateral and other receivables.

Overview

The credit risk that the Group faces arises from wholesale and retail loans and advances together with the counterparty credit risk arising from

derivative contracts with clients; trading activities, including: debt securities, settlement balances with market counterparties, FVOCI assets and

reverse repurchase loans.

Credit risk management objectives are to:

◾

maintain a framework of controls to oversee credit risk;

◾

identify, assess and measure credit risk clearly and accurately across the Group and within each separate business, from the level of individual

facilities up to the total portfolio;

◾

control and plan credit risk taking in line with external stakeholder expectations and avoiding undesirable concentrations;

◾

monitor credit risk and adherence to agreed controls .

Organisation, roles and responsibilities

The first line of defence has primary responsibility for managing credit risk within the risk appetite and limits set by the Risk function, supported by

a defined set of policies, standards and controls. In the entities, business risk committees (attended by the first line) monitor and review the credit

risk profile of each business unit where the most material issues are escalated to the Retail Credit Risk Management Committee, Wholesale Credit

Risk Management Committee and Group Risk Committee.

Wholesale and retail portfolios are managed separately to reflect the differing nature of the assets; wholesale balances tend to be larger and are

managed on an individual basis, while retail balances are greater in number but lesser in value and are, therefore, managed in aggregated

segments.

The responsibilities of the credit risk management teams in the businesses, the sanctioning team and other shared services include: sanctioning

new credit agreements (principally wholesale); setting strategies for approval of transactions (principally retail); setting risk appetite; monitoring

risk against limits and other parameters; maintaining robust processes, data gathering, quality, storage and reporting methods for effective credit

risk management; performing effective turnaround and workout scenarios for wholesale portfolios via dedicated restructuring and recoveries

teams; maintaining robust collections and recovery processes/units for retail portfolios; and review and validation of credit risk measurement

models. The credit risk management teams in each legal entity are accountable to the relevant Legal Entity CRO, who reports to the Group CRO.

For wholesale portfolios, credit risk managers are organised in sanctioning teams by geograp hy, industry and/or product. In wholesale portfolios,

credit risk approval is undertaken by experienced credit risk professionals operating within a clearly defined delegated authority framework, with

only the most senior credit officers assigned the higher levels of delegated authority. The largest credit exposures, which are outside the Risk

Sanctioning Unit or Risk Distribution Committee authority, require the support of a legal entity Senior Credit Officer. For exposures in excess of the

legal entity Senior Credit Officer’s authority, approval by Group Senior Credit Officer/Board Risk Committee is also required. The Group Credit Risk

Committee, attended by legal entity Senior Credit Officers, provides a formal mechanism for the Group Senior Credit Officer to exercise the highest

level of credit authority over the most material Group single name exposures. 

Credit risk mitigation

The Group employs a range of techniques and strategies to actively mitigate credit risks. These can broadly be divided into three 

types:

◾

netting and set-off

◾

collateral

◾

risk transfer.

Netting and set-off

Credit risk exposures can be reduced by applying netting and set-off. For derivative transactions, the Group’s normal practice is, on a legal entity

basis, to enter into standard master agreements with counterparties (e.g. ISDAs). These master agreements typically allow for netting of credit risk

exposure to a counterparty resulting from derivative transactions against the obligations to the counterparty in the event of default, and so produce

a lower net credit exposure. These agreements may also reduce settlement exposure (e.g. for foreign exchange transactions) by allowing payments

on the same day in the same currency to be set-off against one another.

Collateral

The Group has the ability to call on collateral in the event of default of the counterparty, comprising:

◾

home loans:

 a fixed charge over residential property in the form of houses, flats and other dwellings;

◾

wholesale lending:

 a fixed charge over commercial property and other ph ysical assets, in various forms;

◾

other retail lending:

 includes charges over motor vehicles and other physical assets; second lien charges over residential property ; and finance

lease receivables;

◾

derivatives:

 the Group also often seeks to enter into a margin agreement (e.g. Credit Support Annex) with counterparties with which the Group

has master netting agreements in place. These annexes to master agreements provide a mechanism for further reducing credit risk, whereby

collateral (margin) is posted on a regular basis (typically daily) to collateralise the mark to market exp osure of a derivative portfolio measured on

a net basis;

◾

reverse repurchase agreements:

 collateral typically comprises highly liquid securities which have been legally transferred to the Group subject to

an agreement to return them for a fixed price; and

◾

financial guarantees and similar off-balance sheet commitments:

 cash collateral may be held against these arrangements .

Risk review

Principal risk management

103

 Barclays PLC 2019 Annual Report on Form 20-F

Risk transfer

A range of instruments including guarantees, credit insurance, credit derivatives and securitisation can be used to transfer credit risk from one

counterparty to another. These mitigate credit risk in two main ways:

◾

if the risk is transferred to a counterparty which is more creditworthy than the original counterparty, then overall credit risk is reduced

◾

where recourse to the first counterparty remains, both counterparties must default before a loss materialises. This is less likely than the default of

either counterparty individually so credit risk is reduced.

Detailed policies are in place to appropriately recognise and record credit risk mitigation. For more information, refer to pages 175 to 177

the

Barclays PLC Pillar 3 Report 2019 (unaudited).

Governance and oversight of ECLs under IFRS 9

The Group’s organisational structure and internal governance processes oversee the estimation of ECL across several areas, including: i) setting

requirements in policy, including key assumptions and the application of key judgements; ii) the design and execut ion of models; and iii) review of

ECL results.

i)

Impairment policy requirements are set and reviewed regularly, at a minimum annually, to maintain adherence to accounting standards. Key

judgements inherent in policy, including the estimated life of revolving credit facilities and the quantitative criteria for assessing the significant

increase in credit risk (SICR), are separately supported by analytical study. In particular, the quantitative thresholds used for assessing SICR are

subject to a number of internal validation criteria, particularly in retail portfolios where thresholds decrease as the origination PD of each facility

increases. Key policy requirements are also typically aligned to the Group’s credit risk management strategy and practices, for example, wholesale

customers that are risk managed on an individual basis are assessed for ECL on an individual basis upon entering Stage 3; furthermore, key

internal risk management indicators of high risk are used to set SICR policy, for example, retail customers identified as High Risk Management

Accounts are automatically deemed to have met the SICR criteria.

ii)

ECL is estimated in line with internal policy requirements using models which are validated by a qualified independent party to the model

development area, the Independent Validation Unit (IVU), before first use and at a minimum annually thereafter. Each model is designated an

owner who is responsible for:

◾

Model maintenance: monitoring of model performance including backtesting by comparing predicted ECL versus flow into stage 3 and

coverage ratios; proposing material changes for independent IVU approval; and recalibrating model parameters on more timely data; and

◾

Proposing post-model adjustments (PMA) to address model weaknesses or to account for situations where known or expected risk factors and

information have not been considered in the modelling process. Each PMA above an absolute and relative threshold is approved by the IVU for

a set time period (usually a maximum of six months) together with a plan for remediation where related to a model deficiency. The most

material PMAs are also approved by the CRO.

Models must also assess ECL across a range of future economic conditions. These economic scenarios are generated via an independent model

and ultimately set by the Senior Scenario Review Committee. Economic scenarios are regenerated at a minimum annually, to align with the

Group’s medium term planning exercise, but also if the external consensus of the UK or US economy materially worsen. Each model used in the

estimation of ECL, including key inputs, are governed by a series of internal controls, which include the validation of completeness and accuracy

of data in golden source systems, documented data transformations and documented lineage of data transfers between systems.

iii)

The Group Impairment Committee, formed of members from both Finance and Risk and attended by both the Group Finance Director and the

Group CRO, is responsible for overseeing impairment policy and practice across the Group and will approve impairment results. Reported results

and key messages are communicated to the BAC, which has an oversight role and provides challenge of key assumptions, including the basis of

the scenarios adopted. Impairment results are then factored into management decision making, including but not limited to, business planning,

risk appetite setting and portfolio management.

Market risk management (audited)

The risk of loss arising from potential adverse changes in the value of the Group’s assets and liabilities from fluctuation in market variables

including, but not limited to, interest rates, foreign exchange, equity prices, commodity prices, credit spreads, implied volatilities and asset

correlations.

Overview

Market risk arises primarily as a result of client facilitation in wholesale markets, involving market making activities, risk management solutions and

execution of syndications. Upon execution of a trade with a client, the Group will look to hedge against the risk of the trade moving in an adverse

direction. Mismatches between client transactions and hedges result in market risk due to changes in asset prices, volatility or correlations.

Organisation, roles and responsibilitie s 

Market risk in the businesses resides primarily in Barclays International and Treasury. These businesses have the mandate to assume market risk.

The front office and Treasury trading desks are responsible for managing market risk on a day-to-day basis, where they are required to understand

and adhere to all limits applicable to their businesses. The Market Risk team support the trading desks with the day- to-day limit management of

market risk exposures through governance processes which are outlined in supporting market risk policies and standards.

Market risk oversight and challenge is provided by business committees and Group committ ees, including the Market Risk Committee.

The objectives of market risk management are to: 

◾

identify, understand and control market risk by robust measurement, limit setting, reporting and oversight

◾

facilitate business growth within a controlled and transparent risk management framework

◾

control market risk in the businesses according to the allocated appetite.

To meet the above objectives, a governance structure is in place to manage these risks consistent with the ERMF. 

Risk re view

Principal risk management

104

 Barclays PLC 2019 Annual Report on Form 20-F

The BRC recommends market risk appetite to the Board for their approval. The Market Risk Principal Risk Lead (PR Lead) is responsible for the

Market Risk Control Framework and, under delegated authority from the Group CRO, agrees with the business CROs a limit framework within the

context of the approv ed market risk appetite.

The Market Risk Committee approves and makes recommendations concerning the group -wide market risk profile. This includes overseeing the

operation of the Market Risk Framework and associated standards and policies; reviewing market or regulatory issues and limits and utilisation. The

committee is chaired by the PR Lead and attendees include the business heads of market risk and business aligned market risk managers.

The head of each business is accountable for all market risks associated with its activities, while the head of the market risk team covering each

business is responsible for implementing the risk control framework for market risk.

For more information on market risk management , refer to the Barclays PLC Pillar 3 Report 2019 (unaudited) .

Management value at risk (VaR)

VaR is an estimate of the potential loss arising from unfavourable market movements if the current positions were to be held unchanged for one

business day. For internal market risk management purposes, a historical simulation methodology with a two-year equally weighted historical

period, at the 95% confidence level is used for all trading books and some banking books.

In some instances, historical data is not available for particular market risk factors for the entire look -back period, for example, complete historical

data would not be available for an equity security following an initial public offering. In these cases, market risk managers will proxy the unavailable

market risk factor data with available data for a related market risk factor.

Limits are applied at the total level as well as by risk factor type, which are then cascaded down to particular trading desks and businesses by the

market risk management function.

See page 141 for a review of management VaR in 2019.

Treasury and capital risk management

This comprises:

Liquidity risk:

The risk that the Group is unable to meet its contractual or contingent obligations or that it does not have the appropriate amount,

tenor and composition of funding and liquidity to support its assets.

Capital risk:

The risk that the Group has an insufficient level or composition of capital to support its normal business activities and to meet its

regu latory capital requirements under normal operating environments or stressed conditions (both actual and as defined for internal planning or

regulatory testing purposes). This also includes the risk from the Group ’s pension plans.

Interest rate risk in the banking book:

The risk that the Group is exposed to capital or income volatility because of a mismatch between the

interest rate exposures of its (non traded) assets and liabilities.

The Treasury function manages treasury and capital risk exposure on a day-to-day basis with the Group Treasury Committee acting as the principal

management body. The Treasury and Capital Risk function is responsible for oversight and provide insight into key capital, liquidity, interest rate

risk in the banking book (IRRBB) and pension risk management activities.

Liquidity risk management (audited)

Overview

The efficient management of liquidity is essential to Group in order to retain the confidence of the financial markets and maintain the sustainability

of the business. The liquidity risk control framework is used to manage all liquidity risk exposures under both BAU and stressed conditions. The

framework is designed to maintain liquidity resources that are sufficient in amount, quality and funding tenor profile to support the liquidity risk

appetite as expressed by the Barclays PLC Board. The liquidity risk appetite is monitored against both internal and regulatory liquidity metrics.

Organisation, roles and responsibilities

Treasury has the primary responsibility for managing liquidity risk within the set risk appetite. Both Risk and Treasury contribute to the production

of the Internal Liquidity Adequacy Assessment Process (ILAAP) . The Treasury and Capital Risk function is responsible for the management and

governance of the liquidity risk mandate, as defined by the Board.

The liquidity risk control framework is designed to deliver the appropriate term and structure of funding, consistent with the liquidity risk appetite

set by the Board. The control framework incorporates a range of ongoing business management tools to monitor, limit and stress test the Group’s

balance sheet, contingent liabilities and the recovery plan. Limit setting and transfer pricing are tools that are designed to control the level of

liquidity risk taken and drive the appropriate mix of funds. Together, these tools reduce the likelihood that a liquidity stress event could lead to an

inability to meet Group’ s obligations as they fall due.

The Board approves the Group funding plan, internal stress tests, regulatory stress test results, and recovery plan. The Group Treasury Committee

is responsible for monitoring and managing liquidity risk in line with the Group’s funding management objectives, funding plan and risk framework.

The Treasury and Capital Risk Committee monitors and reviews the liquidity risk profile and control environment, providing second line oversight of

the management of liquidity risk. The BRC reviews the risk profile, and annually reviews risk appetite and the impact of stress scenarios on the

Group funding plan/forecast in order to agree the Group’s projected funding abilities.

Capital risk management (audited)

Overview

Capital risk is managed through ongoing monitoring and management of the capital position, regular stress testing and a robust capital

governance framework. The objectives of the framework are to maintain adequate capital for the Group and legal entities to withstand the impact

of the risks that may arise under normal and stressed conditions, and maintain adequate capital to cover current and forecast business needs and

associated risks to provide a viable and sustainable business offering.

Risk review

Principal risk management

105

 Barclays PLC 2019 Annual Report on Form 20-F

Organisation, roles and responsibilities

Treasury has the primary responsibility for managing and monitoring capital. The Treasury and Capital Risk function provides oversight of capital

risk and is an independent risk function that reports to the Group CRO. Production of the Barclays PLC Internal Capital Adequacy Assessment

Process (ICAAP) is the responsibility of Treasury.

Capital risk management is underpinned by a control framework and policy. The capital management strategy, outlined in the Group and legal

entity capital plans, is developed in alignment with the control framework and policy for capital risk, and is implemented consistently in order to

deliver on the Group’s objectives.

The Board approves the Group capital plan, internal stress tests and results of regulatory stress tests, and the Group recovery plan. The Group

Treasury Committee is responsible for monitoring and managing capital risk in line with the Group’s capital management objectives, capital plan

and risk frameworks. The Treasury and Capital Risk Committee monitors and reviews the capital risk profile and control environment , providing

second line oversight of the management of capital risk. The BRC reviews the risk profile, and annually reviews risk appetite and the impact of

stress scenarios on the Group capital plan/forecast in order to agree the Group’s projected capital adequacy. 

Local management assures compliance with an entity’s minimum regulatory capital requirements by reporting to local Asset and Liability

Committees (ALCOs) with oversight by the Group Treasury Committee, as required. In 2019, Barclays complied with all regulatory minimum capital

requirements.

Pension risk

The Group maintains a number of defined benefit pension schemes for past and current employees. The ability of schemes to meet pension

payments is achieved with investments and contributions.

Pension risk arises because the market value of pension fund assets might decline; investment returns might reduce; or the estimated value of

pension liabilities might increase. The Group monitors the pension risks arising from its defined benefit pension schemes and works with Trustees

to address shortfalls. In these circumstances, the Group could be required or might choose to make extra contributions to the pension fund. The

Group’s main defined benefit scheme was closed to new entrants in 2012

.

Interest rate risk in the banking book management (IRRBB)

Overview

Interest rate risk in the banking book is driven by customer deposit taking and lending activities, investments in the liquid asset portfolio and

funding activities. As per the Group’s policy to remain within the defined risk appetite, businesses and Treasury execute hedging strategies to

mitigate the risks. However, the Group remains susceptible to interest rate risk and other non-traded market risks from key sources:

◾

Interest rate and repricing risk:

 the risk that net interest income could be adversely impacted by a change in interest rates, differences in the

timing of interest rate changes between assets and liabilities, and other constraints on interest rate changes as per p roduct terms and conditions.

◾

Customer behavioural risk:

the risk that net interest income could be adversely impacted by the discretion that customers and counterparties

may have in respect of being able to vary their contractual obligations with Barclays. This risk is often referred to by industry regulators as

‘embedded option risk’.

◾

Investment risks in the liquid asset portfolio:

the risk that the fair value of assets held in the liquid asset portfolio and associated risk

management portfolios could be adversely impacted by market volatility, creating volatility in capital directly.

Organisation, roles and responsibilities

The entity ALCOs, together with the Group Treasury Committee, are responsible for monitoring and managing IRRBB risk in line with the Group’s

management objectives and risk frameworks. The GRC and Treasury and Capital Risk Committee monitors and reviews the IRRBB risk profile and

control environment, providing second line oversight of the management of IRRBB. The BRC reviews the interest rate risk profile, including annual

review of the risk appetite and the impact of stress scenarios on the interest rate risk of the Group’s banking books.

In addition, the Group’s IRRBB policy sets out the processes and key controls required to identify all IRRBB risks arising from banking book

operations, to monitor the risk exposures via a set of metrics with a frequency in line with the risk management horizon, and to manage these risks

within agreed risk appetite and limits.

Operational risk management

The risk of loss to the Group from inadequate or failed processes or systems, human factors or due to external events (for example fraud) where

the root cause is not due to credit or market risks.

Overview

The management of operational risk has three key objectives:

◾

deliver an operational risk capability owned and used by business leaders to enable sound risk decisions over the long term;

◾

provide the frameworks, policies and standards to enable management to meet their risk management responsibi lities while the second line of

defence provides robust, independent, and effective oversight and challenge; and

◾

deliver a consistent and aggregated measurement of operational risk that will provide clear and relevant insights, so that the right management

actions can be taken to keep the operational risk profile consistent with the Group’s strategy, the stated risk appetite and stakeholder needs.

The Group operates within a system of internal controls that enables business to be transacted and risk taken without exposing it to unacceptable

potential losses or reputational damages.

Organisation, roles and responsibilities

The prime responsibility for the management of operational risk and the compliance with control requirements rests within the business and

functional units where the risk arises. The operational risk profile and control environment is reviewed by management through business risk

committees and control committees. Legal entities, businesses and functions are required to report their operational risks on both a regular and an

event-driven basis. The reports include a profile of the material risks that may threaten the achievement of their objectives and the effectiveness of

key controls, operational risk events and a review of scenarios.

Risk re view

Principal risk management

106

 Barclays PLC 2019 Annual Report on Form 20-F

The Group Head of Operational Risk is responsible for establishing, owning and maintaining an appropriate group- wide Operational Risk

Management Framework and for overseeing the portfolio of operational risk across the Group.

Operational Risk Management (ORM) acts in a second line of d efence capacity, and is responsible for defining and overseeing the implementation

of the framework and monitoring the Group’s operational risk profile. ORM alerts management when risk levels exceed acceptable tolerance in

order to drive timely decision making and actions by the first line of defence. Operational risk issues escalated from these meetings are considered

through the second line of defence review meetings. Depending on their nature, the outputs of these meetings are presented to the operational risk

profile forum, the BRC or the BAC. In addition, specific reports are prepared by Operational Risk on a regular basis for the GRC and the BRC.

Operational risk categories

Operational risks are grouped into risk categories to support effective risk management, measurement and reporting. These comprise: Data

Management & Information Risk; Financial Reporting Risk; Fraud Risk; Payments Process Risk; People Risk; Premises Risk; Physical Security Risk;

Supplier Risk; Tax Risk; Technology Risk; Transaction Operations Risk and Execution Risk.

In addition to the above, operational risk encompasses risks associated with prudential regulation. This includes the risk of failing to: adhere to

prudential regulatory requirements, provide regulatory submissions; or monitor and manage adherence to new prudential regulatory requirements.

Enterprise risk themes

Barclays also recognises that there are certain threats/risk drivers that are more thematic and have the potential to impact the Group’s strategic

objectives. These are Enterprise Risk Themes which require an overarching and integrated risk management approach. The Group’s enterprise risk

themes include Cyber, Data, and Resilience.

For definitions of the Group’s operational risk categories and enterprise risk themes, refer to pages 198 to 201 of the Barclays PLC Pillar 3 Report

2019.

Model risk management

The risk of the potential adverse consequences from financial assessments or decisions based on incorrect or misused model outputs and reports.

Overview

The Group uses models to support a broad range of activities, including informing business decisions and strategies, measuring and limiting risk,

valuing exposures, conducting stress testing, assessing capital adequacy, managing client assets, and meeting reporting requirements.

Since models are imperfect and incomplete representations of reality, they may be subject to errors affecting the accuracy of their output. Model

errors and misuse are the primary sources of model risk.

Organisation, roles and responsibilities

The Group has a dedicated Model Risk Management (MRM) function that consists of two main units: the Independent Validation Unit (IVU),

responsible for model validation and approval, and Model Governance and Controls (MGC), covering model risk governance, controls and reporting,

including ownership of model risk policy and the model inventory.

The model risk management framework consists of the model risk policy and standards. The policy prescribes Group -wide, end-to-end

requirements for the identification, measurement and management of model risk, covering model documentation, development, implementation,

monitoring, annual review, independent validation and approval, change and reporting processes. The policy is supported by global standards

covering model inventory, documentation, validation, complexity and materiality, testing and monitoring, overlays, risk appetite, as well as vendor

models and stress testing challenger models.

The function reports to the Group CRO and operates a global framework. Implementation of best practice standards is a central objective of the

Group. 

The key model risk management activities include: 

◾

Correctly identifying models across all relevant areas of the Group, and recordin g models in the Group Models Database (GMD), the Group -wide

model inventory.

◾

Enforcing that every model has a model owner who is accountable for the model. The model owner must sign off models prior to submission to

IVU for validation and maintain that the model presented to IVU is and remains fit for purpose.

◾

Overseeing that every model is subject to validation and approval by IVU, prior to being implemented and on a continual basis.

◾

Defining model risk appetite in terms of risk tolerance, and qualitative metrics which are used to track and report model risk.

Conduct risk management

The risk of detriment to customers, clients, market integrity, effective competition or Barclays from the inappropriate supply of financial services,

including instances of wilful or negligent misconduct.

Overview

The Group defines, manages and mitigates conduct risk with the objective of providing good customer and client outcomes, protecting market integrity

and promoting effective competition.

Product Lifecycle, Culture and Strategy and Financial Crime are the risk categories under the Group definition of conduct risk. 

Organisation, roles and responsibilities

The governance of conduct risk within the Group is fulfilled through management committees and forums operated by the first and second lines of

defence with clear escalation and reporting lines to the Board.

The Group Risk Committee is the most senior executive body responsible for reviewing and monitoring the effectiveness of the Group’s management of

conduct risk.

The Conduct Risk Management Framework (CRMF) outlines how the Group manages and measures its conduct risk profile. 

Risk review

Principal risk management

107

 Barclays PLC 2019 Annual Report on Form 20-F

Senior managers have accountability for managing conduct risk in their areas of responsibility. This is expressed in their Statements of Responsibilities.

The primary responsibility for managing conduct risk sits with the business where the risk arises. The first line business control committees provide

oversight of controls relating to conduct risk. 

The Group Chief Compliance Officer is responsible for owning and maintaining an appropriate group-wide CRMF. This includes defining and owning

the relevant conduct risk policies and oversight of the implementation of controls to manage and escalate the risk.

The Group and the Barclays UK Risk Committees are the primary second line governance committees for oversight of conduct risk profile and

implementation of the CRMF. The responsibilities of these risk committees in relation to the trading entities includes the identification and discussion of

any emerging conduct risks exposures which have been identified.

Reputation risk management

The risk that an action, transaction, investment, event, decision, or business relationsh ip will reduce trust in the Group ’s integrity and/or

competence.

Overview

A reduction of trust in the Group’s integrity and competence may reduce the attractiveness of the Group to stakeholders and could lead to negative

publicity, loss of revenue, regulatory or legislative action, loss of existing and potential client business, reduced workforce morale and difficulties in

recruiting talent. Ultimately it may destroy shareholder value.

Organisation, roles and responsibilities

The GRC is the most senior executive body responsible for reviewing and monitoring the effectiveness of the Group’s management of reputation risk.

The Group Chief Compliance Officer is accountable for developing a Reputation Risk Management Framework (RRMF), and the Head of Corporate

Relations is responsible for developing a reputation risk policy and associated standards, including tolerances against which data is monitored, reported

on and escalated, as required. The RRMF sets out what is required to manage reputation risk across the Group.

The primary responsibility for identifying and managing reputation risk and adherence to the control requirements sits with the business and support

functions where the risk arises.

Barclays Bank Group and Barclays Bank UK Group are required to operate within established reputation risk appetite, and their component businesses

prepare reports for their respective Risk and Board Risk Committees highlighting their most significant current and potential reputation risks and issues

and how they are being managed. These reports are a key internal source of information for the quarterly reputation risk reports which are prepared for

the GRC and the Board.

Legal risk management 

The risk of loss or imposition of penalties, damages or fines from the failure of the Group to meet its legal obligations including regulatory or

contractual requirements.

Overview 

The Group has no tolerance for wilful breaches of laws, regulations or other legal obligations. However, the multitude of laws and regulations

across the globe are highly dynamic and their application to particular circumstances is often unclear; this results in a level of inherent legal risk, for

which the Group has limited tolerance.

Organisation, roles and responsibilities 

The Group’s businesses and functions have primary responsibility for identifying, managing and escalating legal risk in their area as well as

responsibility for adherence to minimum control requirements.

The Legal Function organisation and coverage model aligns expertise to businesses, functions, products, activities and geographic locations so that

the Group receives legal support from appropriate legal professionals. The senior management of the Legal Function oversees, monitors and

challenges legal risk across the Group. The Legal Function does not sit in any of the three lines of defence but supports them all.

The Grou p General Counsel is responsible for maintaining an appropriate Group -wide legal risk management framework. This includes defining the

relevant legal risk policies and oversight of the implementation of controls to manage and escalate legal risk. 

The legal risk profile and control environment is reviewed by management through business risk committees and control committees. The Group

Risk Committee is the most senior executive body responsible for reviewing and monitoring the effectiveness of risk management across the

Group. Escalation paths from this committee exist to the Barclays PLC Board Risk Committee.

Risk review

Risk performance

Credit risk

108

 Barclays PLC 2019 Annual Report on Form 20-F

Summary of contents

Page

Credit risk represents a significant risk and mainly arises

from exposure to wholesale and retail loans and

advances together with the counterparty credit risk

arising from derivative contracts entered into with

clients.

◾

Credit risk overview and summary of performance

◾

Maximum exposure and effects of netting, collateral and risk transfer

109

109

This section outlines the expected credit loss

allowances, the movements in allowances during the

period, material management adjustments to model

output and measurement uncertainty and sensitivity

analysis.

◾

Expected Credit Losses

-

Loans and advances at amortised cost by stage

-

Loans and advances at amortised cost by product

-

Movement in gross exposure and impairment allowance for loans and

advances at amortised cost

-

Stage 2 decomposition

-

Stage 3 decomposition

◾

Management adjustments to models for impairment

◾

Measurement uncertainty and sensitivity analysis

112

112

114

115

119

119

120

121

The Group reviews and monitors risk concentrations in

a variety of ways. This section outlines performance

against key concentration risks.

◾

Analysis of the concentration of credit risk

-

Geographic concentrations

-

Industry concentrations

◾

Approach to management and representation of credit quality

-

Asset credit quality

-

Debt securities

-

Balance sheet credit quality

-

Credit exposures by internal PD grade

127

127

127

129

129

129

129

131

Credit risk monitors exposure performance across a

range of significant portfolios.

◾

Analysis of specific portfolios and asset types

-

Secured home loans

-

Credit cards, unsecured loans and other retail lending

-

Exposure to UK commercial real estate

133

133

134

135

The Group monitors exposures to assets where there is

a heightened likelihood of default and assets where an

actual default has occurred. From time to time,

suspension of certain aspects of client credit

agreements are agreed, generally during temporary

periods of financial difficulties where the Group is

confident that the client will be able to remedy the

suspension. This section outlines the current exposure

to assets with this treatment.

◾

Forbearance

-

Retail forbearance programmes

-

Wholesale forbearance programmes

136

137

138

This section provides an analysis of credit risk on debt

securities and derivatives.

◾

Analysis of debt securities

◾

Analysis of derivatives

138

139

Risk review

Risk performance

Credit risk

109

 Barclays PLC 2019 Annual Report on Form 20-F

All disclosures in this section (pages 109 to 139) are unaudited unless otherwise stated.

Overview

Credit risk represents a significant risk to the Group and mainly arises from exposure to wholesale and retail loans and advances together with the

counterparty credit risk arising from derivative contracts entered into with clients.

Credit risk disclosures include many of the recommendations of the Taskforce on Disclosures about Expected Credit Losses (DECL) and it is

expected that relevant disclosures will continue to be developed in future periods.

Further detail can be found in the Financial statements section in Note 7 Credit impairment charges. Descriptions of terminology can be found in

the glossary, available at home.barclays/annualreport.

Summary of performance in the period

Credit impairment charges increased to £1,912m (2018: £1,468m). The 2019 charge includes the impact of macroeconomic scenario updates and

an overall reduction in unsecured gross exposures. Prior year comparatives included the impact of favourable macroecon omic scenario updates

and a £150m charge regarding the anticipated economic uncertainty in the UK. The Group loan loss rate was 55bps (2018: 44bps).

Refer to the credit risk management section on pages 102 and 103 for details of governance, policies and procedures.

Key metrics

Reduction in impairment allowances of

£411m

◾

Impairment allowances on loans and advances at amortised cost, including off -balance sheet elements of the allowance, decreased by

£411m to £6,630m (2018: £7, 041m). The decrease is driven by Barclays UK £300m, Barclays International £92m and Head Office £19m. Refer to

the Expected Credit Losses section on page 112 for further details.

Maximum exposure and effects of netting, collateral and risk transfer

Basis of preparation

The following tables present a reconciliation between the maximum exposure and its net exposure to credit risk, reflecting the financial effects of

risk mitigation reducing the exposure. 

For financial assets recognised on the balance sheet, maximum exposure to credit risk represents the balance sheet carrying value after allowance

for impairment. For off-balance sheet guarantees, the maximum exposure is the maximum amount that the Group would have to pay if the

guarantees were to be called upon. For loan commitments and other credit related commitments that are irrevocable over the life of the respective

facilities, the maximum exposure is the full amount of the committed facilities.

This and subsequent analyses of credit risk exclude other financial assets not subject to credit risk, mainly equity securities.

The Group mitigates the credit risk to which it is exposed through netting and set-off, collateral and risk transfer. Further detail on the Group’s

policies to each of these forms of credit enha ncement is presented on pages 175 to 177 of the Barclays PLC Pillar 3 Report 2019 (unaudited) .

Overview

As at 31 December 2019, the Group’s net exposure to credit risk, after taking into account credit risk mitigation, decreased 0.9% to £800.3 bn.

Overall, the extent to which the Group holds mitigation against its total exposure remained unchanged at 43% (2018: 43%).

Of the unmitigated on balance sheet exposure, a significant portion relates to cash held at central banks, cash collateral and settlement balances,

and debt securities issued by governments all of which are considered to be lower risk. The decrease in the Group’s net exposure to credit risk is

due to decreases in cash held at central banks and trading portfolio assets, offset by increases in cash collateral and settlement balances, financial

assets at fair value through other comprehensive income and off balance sheet loan commitments. Trading portfolio liability positions, which to a

significant extent economically hedge trading portfolio assets but which are not held specifically for risk management purposes, are excluded from

the analysis. The credit quality of counterparties to derivatives, financial investments and wholesale loan assets are predominantly investment

grade. Further analysis on the credit quality of assets is presented on pages 129 to 131 .

Collateral obtained

Where collateral has been obtained in the event of default, the Group does not, ordinarily, use such assets for its own operations and they are

usually sold on a timely basis. The carrying value of assets held by the Group as at 31 December 2019, as a result of the enforcement of collateral,

was £6m (2018: £6m).

Risk review

Risk performance

Credit risk

110

 Barclays PLC 2019 Annual Report on Form 20-F

Maximum exposure and effects of netting, collateral and risk transfer (audited)

Maximum

exposure

Netting and

set-off

Cash

collateral

Non-cash

collateral

Risk transfer

Net exposure

As at 31 December 2019

£m

£m

£m

£m

£m

£m

On-balance sheet:

Cash and balances at central banks

150,258

-

-

-

-

150,258

Cash collateral and settlement balances

83,256

-

-

-

-

83,256

Loans and advances at amortised cost:

Home loans

154,479

-

(294)

(153,939)

(70)

176

Credit cards, unsecured loans and other retail lending

55,296

-

(778)

(5,283)

(258)

48,977

Wholesale loans

129,340

(7,636)

(148)

(39,981)

(12,071)

69,504

Total loans and advances at amortised cost

339,115

(7,636)

(1,220)

(199,203)

(12,399)

118,657

Of which credit -impaired (Stage 3):

Home loans

1,809

-

(2)

(1,785)

(14)

8

Credit cards, unsecured loans and other retail lending

1,074

-

(12)

(250)

(2)

810

Wholesale loans

1,812

-

(9)

(909)

(20)

874

Total credit -impaired loans and advances at amortised cost

4,695

-

(23)

(2,944)

(36)

1,692

Reverse repurchase agreements and other similar secured lending

3,379

-

-

(3,379)

-

-

Trading portfolio assets:

Debt securities

52,739

-

-

(423)

-

52,316

Traded loans

5,378

-

-

(134)

-

5,244

Total trading portfolio assets

58,117

-

-

(557)

-

57,560

Financial assets at fair value through the income statement:

Loans and advances

22,692

-

(14)

(16,580)

(57)

6,041

Debt securities

5,249

-

-

-

-

5,249

Reverse repurchase agreements

96,887

-

(1,132)

(95,736)

-

19

Other financial assets

763

-

-

-

-

763

Total financial assets at fair value through the income statement

125,591

-

(1,146)

(112,316)

(57)

12,072

Derivative financial instruments

229,236

(175,998)

(33,411)

(5,511)

(5,564)

8,752

Financial assets at fair value through other comprehensive income

64,727

-

-

(305)

(1,051)

63,371

Other assets

1,375

-

-

-

-

1,375

Total on-balance sheet

1,055,054

(183,634)

(35,777)

(321,271)

(19,071)

495,301

Off-balance sheet:

Contingent liabilities

24,527

-

(400)

(4,412)

(159)

19,556

Loan commitments

334,455

-

(84)

(47,008)

(1,950)

285,413

Total off-balance sheet

358,982

-

(484)

(51,420)

(2,109)

304,969

Total 

1,414,036

(183,634)

(36,261)

(372,691)

(21,180)

800,270

Off-balance sheet exposures are shown gross of provisions of £322m (2018: £271m). See Note 25 for further details.

In addition to the above, the Group holds forward starting reverse repos with notional contract amounts of £31.1 bn (2018: £35.5bn). The balances

are fully collateralised.

For further information on credit risk mitigation techniques, refer to page 102 within the Credit risk management section.

Risk review

Risk performance

Credit risk

111

 Barclays PLC 2019 Annual Report on Form 20-F

Maximum exposure and effects of netting, collateral and risk transfer (audited)

Maximum

exposure

Netting and

set-off

Cash

collateral

Non-cash

collateral

Risk transfer

Net exposure

As at 31 December 2018

£m

£m

£m

£m

£m

£m

On-balance sheet:

Cash and balances at central banks

177,069

-

-

-

-

177,069

Cash collateral and settlement balances

77,222

-

-

-

-

77,222

Loans and advances at amortised cost:

Home loans

150,284

-

(295)

(149,679)

(132)

178

Credit cards, unsecured loans and other retail lending

56,431

-

(725)

(5,608)

(451)

49,647

Wholesale loans

119,691

(7,550)

(65)

(41,042)

(4,454)

66,580

Total loans and advances at amortised cost

326,406

(7,550)

(1,085)

(196,329)

(5,037)

116,405

Of which credit -impaired (Stage 3):

Home loans

2,125

-

(3)

(2,083)

(31)

8

Credit cards, unsecured loans and other retail lending

1,249

-

(6)

(232)

(38)

973

Wholesale loans

1,762

-

-

(895)

(17)

850

Total credit -impaired loans and advances at amortised cost

5,136

-

(9)

(3,210)

(86)

1,831

Reverse repurchase agreements and other similar secured lending

2,308

-

(17)

(2,261)

-

30

Trading portfolio assets:

Debt securities

57,283

-

-

(451)

-

56,832

Traded loans

7,234

-

-

(154)

-

7,080

Total trading portfolio assets

64,517

-

-

(605)

-

63,912

Financial assets at fair value through the income statement:

Loans and advances

19,524

-

(11)

(11,782)

(89)

7,642

Debt securities

4,522

-

-

(445)

-

4,077

Reverse repurchase agreements

119,041

-

(2,996)

(115,601)

-

444

Other financial assets

542

-

-

-

-

542

Total financial assets at fair value through the income statement

143,629

-

(3,007)

(127,828)

(89)

12,705

Derivative financial instruments

222,538

(172,001)

(31,402)

(5,502)

(4,712)

8,921

Financial assets at fair value through other comprehensive income

51,694

-

-

-

(399)

51,295

Other assets

1,006

-

-

-

-

1,006

Total on-balance sheet

1,066,389

(179,551)

(35,511)

(332,525)

(10,237)

508,565

Off-balance sheet:

Contingent liabilities

20,303

-

(399)

(1,418)

(190)

18,296

Loan commitments

324,223

-

(124)

(42,117)

(1,395)

280,587

Total off-balance sheet

344,526

-

(523)

(43,535)

(1,585)

298,883

Total 

1,410,915

(179,551)

(36,034)

(376,060)

(11,822)

807,448

Risk review

Risk performance

Credit risk

112

 Barclays PLC 2019 Annual Report on Form 20-F

Expected Credit Losses

Loans and advances at amortised cost by stage

The table below presents an analysis of loans and advances at amortised cost by gross exposure, impairment allowance, coverage ratio and

impairment charge by stage allocation and business segment as at 31 December 2019 . Also included are off-balance sheet loan commitments and

financial guarantee contracts by gross exposure and impairment allowance and coverage ratio by stage allocation as at 31 December 2019.

Impairment allowance under IFRS 9 considers both the drawn and the undrawn counterparty exposure. For retail portfolios, the total impairment

allowance is allocated to the drawn exposure to the extent that the allowance does not exceed the exposure as ECL is not reported separately. Any

excess is reported on the liability side of the balance sheet as a provision. For wholesale portfolios, the impairment allowance on the undrawn

exposure is reported on the liability side of the balance sheet as a provision.

Loans and advances at amortised cost by stage (audited)

Gross exposure

Impairment allowance

Net

exposure

Stage 1

Stage 2 

Stage 3

Total

Stage 1

Stage 2 

Stage 3

Total

As at 31 December 2019

£m

£m

£m

£m

£m

£m

£m

£m

£m

Barclays UK

143,097

23,198

2,446

168,741

198

1,277

974

2,449

166,292

Barclays International

27,886

4,026

1,875

33,787

352

774

1,359

2,485

31,302

Head Office

4,803

500

826

6,129

5

36

305

346

5,783

Total Barclays Group retail

175,786

27,724

5,147

208,657

555

2,087

2,638

5,280

203,377

Barclays UK

27,891

2,397

1,124

31,412

16

38

108

162

31,250

Barclays International

a

92,615

8,113

1,615

102,343

136

248

447

831

101,512

Head Office

2,974

-

37

3,011

-

-

35

35

2,976

Total Barclays Group wholesale

123,480

10,510

2,776

136,766

152

286

590

1,028

135,738

Total loans and advances at

amortised cost

299,266

38,234

7,923

345,423

707

2,373

3,228

6,308

339,115

Off-balance sheet loan commitments

and financial guarantee contracts

b

321,140

19,185

935

341,260

97

170

55

322

340,938

Total

c

620,406

57,419

8,858

686,683

804

2,543

3,283

6,630

680,053

Loan impairment charge

and loan loss rate

Coverage ratio 

Loan

impairment

charge

Loan loss

rate

Stage 1

Stage 2 

Stage 3

Total

As at 31 December 2019

%

%

%

%

£m

bps

Barclays UK

0.1

5.5

39.8

1.5

661

39

Barclays International

1.3

19.2

72.5

7.4

999

296

Head Office

0.1

7.2

36.9

5.6

27

44

Total Barclays Group retail

0.3

7.5

51.3

2.5

1,687

81

Barclays UK

0.1

1.6

9.6

0.5

33

11

Barclays International

a

0.1

3.1

27.7

0.8

113

11

Head Office

 - 

 - 

94.6

1.2

-

-

Total Barclays Group wholesale

0.1

2.7

21.3

0.8

146

11

Total loans and advances at

amortised cost

0.2

6.2

40.7

1.8

1,833

53

Off-balance sheet loan commitments

and financial guarantee contracts

b

-

0.9

5.9

0.1

71

Other financial assets subject to

impairment

c

8

Total

d

0.1

4.4

37.1

1.0

1,912

Notes

a Includes Wealth and Private Banking exposures measured on an individual customer exposure basis. 

b Excludes loan commitments and financial guarantees of £17.7bn carried at fair value.

c Other financial assets subject to impairment not included in the table above include cash collateral and settlement balances, financial assets at fair value through other

comprehensive income and other assets. These have a total gross exposure of £149.3bn and impairment allowance of £24m. This comprises £12m ECL on £148.5bn Stage 1

assets, £2m on £0.8bn Stage 2 fair value through other comprehensive income assets cash collateral and settlement assets and £10m on £10m Stage 3 other assets.

d The loan loss rate is 55bps after applying the total impairment charge of £1,912m.

Risk review

Risk performance

Credit risk

113

 Barclays PLC 2019 Annual Report on Form 20-F

Loans and advances at amortised cost by stage (audited)

Gross exposure

Impairment allowance

Net

exposure

Stage 1

Stage 2 

Stage 3

Total

Stage 1

Stage 2 

Stage 3

Total

As at 31 December 2018

£m

£m

£m

£m

£m

£m

£m

£m

£m

Barclays UK

134,911

25,279

3,040

163,230

183

1,389

1,152

2,724

160,506

Barclays International

26,714

4,634

1,830

33,178

352

965

1,315

2,632

30,546

Head Office

6,510

636

938

8,084

9

47

306

362

7,722

Total Barclays Group retail

168,135

30,549

5,808

204,492

544

2,401

2,773

5,718

198,774

Barclays UK

22,824

4,144

1,272

28,240

16

70

117

203

28,037

Barclays International

a

87,344

8,754

1,382

97,480

128

244

439

811

96,669

Head Office

2,923

-

41

2,964

-

-

38

38

2,926

Total Barclays Group wholesale

113,091

12,898

2,695

128,684

144

314

594

1,052

127,632

Total loans and advances at

amortised cost

281,226

43,447

8,503

333,176

688

2,715

3,367

6,770

326,406

Off-balance sheet loan commitments

and financial guarantee contracts

b

309,989

22,126

684

332,799

99

150

22

271

332,528

Total

c

591,215

65,573

9,187

665,975

787

2,865

3,389

7,041

658,934

Loan impairment charge

and loan loss rate

Coverage ratio 

Loan

impairment

charge

Loan loss

rate

Stage 1

Stage 2 

Stage 3

Total

As at 31 December 2018

%

%

%

%

£m

bps

Barclays UK

0.1

5.5

37.9

1.7

830

51

Barclays International

1.3

20.8

71.9

7.9

844

254

Head Office

0.1

7.4

32.6

4.5

15

19

Total Barclays Group retail

0.3

7.9

47.7

2.8

1,689

83

Barclays UK

0.1

1.7

9.2

0.7

74

26

Barclays International

a

0.1

2.8

31.8

0.8

(142)

-

Head Office

-

-

92.7

1.3

(31)

-

Total Barclays Group wholesale

0.1

2.4

22.0

0.8

(99)

-

Total loans and advances at

amortised cost

0.2

6.2

39.6

2.0

1,590

48

Off-balance sheet loan commitments

and financial guarantee contracts

b

-

0.7

3.2

0.1

(125)

Other financial assets subject to

impairment

c

3

Total

d

0.1

4.4

36.9

1.1

1,468

Notes

a Included in the above analysis are Wealth and Private Banking exposures measured on an individual customer exposure basis.

b Excludes loan commitments and financial guarantees of £11.7bn carried at fair value.

c Other financial assets subject to impairment not included in the table above include cash collateral and settlement balances, financial assets at fair value through other

comprehensive income and other assets. These have a total gross exposure of £129.9bn and impairment allowance of £12m. This comprises £10m ECL on £129.3bn Stage 1

assets and £2m on £0.6bn Stage 2 fair value through other comprehensive income assets.

d The loan loss rate is 44bps after applying the total impairment charge of £1,468m.

Risk review

Risk performance

Credit risk

114

 Barclays PLC 2019 Annual Report on Form 20-F

Loans and advances at amortised cost by product (audited)

The table below presents a breakdown of loans and advances at amortised cost and the impairment allowance with stage allocation by asset

classification.

Loans and advances at amortised cost by product

(audited)

Stage 2

As at 31 December 2019

Stage 1

Not past due

<=30 days

past due

>30 days past

due

Total

Stage 3

Total

Gross exposure

£m

£m

£m

£m

£m

£m

£m

Home loans

135,713

14,733

1,585

725

17,043

2,155

154,911

Credit cards, unsecured loans and other retail lending

46,012

9,759

496

504

10,759

3,409

60,180

Wholesale loans 

117,541

9,374

374

684

10,432

2,359

130,332

Total

299,266

33,866

2,455

1,913

38,234

7,923

345,423

Impairment allowance

Home loans

22

37

14

13

64

346

432

Credit cards, unsecured loans and other retail lending

542

1,597

159

251

2,007

2,335

4,884

Wholesale loans 

143

284

9

9

302

547

992

Total

707

1,918

182

273

2,373

3,228

6,308

Net exposure

Home loans

135,691

14,696

1,571

712

16,979

1,809

154,479

Credit cards, unsecured loans and other retail lending

45,470

8,162

337

253

8,752

1,074

55,296

Wholesale loans 

117,398

9,090

365

675

10,130

1,812

129,340

Total

298,559

31,948

2,273

1,640

35,861

4,695

339,115

Coverage ratio

%

%

%

%

%

%

%

Home loans

-

0.3

0.9

1.8

0.4

16.1

0.3

Credit cards, unsecured loans and other retail lending

1.2

16.4

32.1

49.8

18.7

68.5

8.1

Wholesale loans 

0.1

3.0

2.4

1.3

2.9

23.2

0.8

Total

0.2

5.7

7.4

14.3

6.2

40.7

1.8

As at 31 December 2018

Gross exposure

£m

£m

£m

£m

£m

£m

£m

Home loans

130,066

15,672

1,672

862

18,206

2,476

150,748

Credit cards, unsecured loans and other retail lending

45,785

11,262

530

437

12,229

3,760

61,774

Wholesale loans 

105,375

12,177

360

475

13,012

2,267

120,654

Total

281,226

39,111

2,562

1,774

43,447

8,503

333,176

Impairment allowance

Home loans

31

56

13

13

82

351

464

Credit cards, unsecured loans and other retail lending

528

1,895

169

240

2,304

2,511

5,343

Wholesale loans 

129

300

16

13

329

505

963

Total

688

2,251

198

266

2,715

3,367

6,770

Net exposure

Home loans

130,035

15,616

1,659

849

18,124

2,125

150,284

Credit cards, unsecured loans and other retail lending

45,257

9,367

361

197

9,925

1,249

56,431

Wholesale loans 

105,246

11,877

344

462

12,683

1,762

119,691

Total

280,538

36,860

2,364

1,508

40,732

5,136

326,406

Coverage ratio

%

%

%

%

%

%

%

Home loans

-

0.4

0.8

1.5

0.5

14.2

0.3

Credit cards, unsecured loans and other retail lending

1.2

16.8

31.9

54.9

18.8

66.8

8.6

Wholesale loans 

0.1

2.5

4.4

2.7

2.5

22.3

0.8

Total

0.2

5.8

7.7

15.0

6.2

39.6

2.0

Risk review

Risk performance

Credit risk

115

 Barclays PLC 2019 Annual Report on Form 20-F

Movement in gross exposures and impairment allowance including provisions for loan commitments and financial

guarantees

The following tables present a reconciliation of the opening to the closing balance of the exposure and impairment allowance. An explanation of

the terms: 12-month ECL, lifetime ECL and credit-impaired is included on page 225 . The disclosure has been enhanced in 2019 to provide further

granularity by product. Transfers between stages in the tables have been reflected as if they had taken place at the beginning of the year. The

movements are measured over a 12 -month period.

Loans and advances at amortised cost (audited)

Stage 1

Stage 2

Stage 3

Total

Gross

exposure

ECL

Gross

exposure

ECL

Gross

exposure

ECL

Gross

exposure

ECL

£m

£m

£m

£m

£m

£m

£m

£m

Home loans

As at 1 January 2019

130,066

31

18,206

82

2,476

351

150,748

464

Transfers from Stage 1 to Stage 2

(9,051)

(1)

9,051

1

-

-

-

-

Transfers from Stage 2 to Stage 1

8,000

28

(8,000)

(28)

-

-

-

-

Transfers to Stage 3

(199)

-

(510)

(15)

709

15

-

-

Transfers from Stage 3

43

2

294

3

(337)

(5)

-

-

Business activity in the year

24,935

3

734

2

3

-

25,672

5

Changes to models used for calculation

a

-

-

-

-

-

-

-

-

Net drawdowns, repayments, net re-

measurement and movements due to

exposure and risk parameter changes

(6,931)

(38)

(843)

27

(214)

24

(7,988)

13

Final repayments

(10,427)

(2)

(1,827)

(4)

(454)

(13)

(12,708)

(19)

Disposals

b

(723)

(1)

(62)

(4)

(2)

-

(787)

(5)

Write-offs

c

-

-

-

-

(26)

(26)

(26)

(26)

As at 31 December 2019

d

135,713

22

17,043

64

2,155

346

154,911

432

Credit cards, unsecured loans and other retail lending

As at 1 January 2019

45,785

528

12,229

2,304

3,760

2,511

61,774

5,343

Transfers from Stage 1 to Stage 2

(3,604)

(72)

3,604

72

-

-

-

-

Transfers from Stage 2 to Stage 1

4,522

701

(4,522)

(701)

-

-

-

-

Transfers to Stage 3

(857)

(21)

(1,264)

(448)

2,121

469

-

-

Transfers from Stage 3

144

103

28

14

(172)

(117)

-

-

Business activity in the year

9,664

120

704

123

89

39

10,457

282

Changes to models used for calculation

a

-

16

-

(110)

-

(7)

-

(101)

Net drawdowns, repayments, net re-

measurement and movements due to

exposure and risk parameter changes

(5,975)

(779)

351

806

373

1,836

(5,251)

1,863

Final repayments

(3,667)

(54)

(371)

(53)

(290)

(74)

(4,328)

(181)

Disposals

b

-

-

-

-

(777)

(627)

(777)

(627)

Write-offs

c

-

-

-

-

(1,695)

(1,695)

(1,695)

(1,695)

As at 31 December 2019

d

46,012

542

10,759

2,007

3,409

2,335

60,180

4,884

Wholesale loans

As at 1 January 2019

105,375

129

13,012

329

2,267

505

120,654

963

Transfers from Stage 1 to Stage 2

(3,419)

(11)

3,419

11

-

-

-

-

Transfers from Stage 2 to Stage 1

5,213

84

(5,213)

(84)

-

-

-

-

Transfers to Stage 3

(501)

(2)

(650)

(19)

1,151

21

-

-

Transfers from Stage 3

473

35

205

25

(678)

(60)

-

-

Business activity in the year

40,837

51

1,757

27

31

-

42,625

78

Changes to models used for calculation

a

-

(9)

-

(19)

-

-

-

(28)

Net drawdowns, repayments, net re-

measurement and movements due to

exposure and risk parameter changes

5,929

(104)

321

85

122

334

6,372

315

Final repayments

(34,081)

(30)

(2,419)

(53)

(372)

(91)

(36,872)

(174)

Disposals

b

(2,285)

-

-

-

-

-

(2,285)

-

Write-offs

c

-

-

-

-

(162)

(162)

(162)

(162)

As at 31 December 2019

d

117,541

143

10,432

302

2,359

547

130,332

992

Notes

a Changes to models used for calculation include a £101m movement in Credit cards, unsecured loans and other retail lending and a £28m movement in Wholesale loans. These reflect

methodology changes made during the year. Barclays continually review the output of models to determine accuracy of the ECL calculation including review of model monitoring, external

benchmarking and experience of model operation over an extended period of time. This ensures that the models used continue to reflect the risks inherent across the businesses.

b The £787m movement of gross loans and advances disposed of across Home loans relates to the sale of a portfolio of mortgages from the Italian loan book. The £777m disposal reported

within Credit cards, unsecured loans and other retail lending portfolio relates to debt sales undertaken during the year. Finally, disposals of £2,285m within Wholesale loans relate to the sale of

debt securities as part of the Group’s Treasury operations.

c In 2019, gross write-offs amounted to £1,883m (2018: £1,891m) and post write-off recoveries amounted to £124m (2018: £195m). Net write-offs represent gross write-offs less post write-off

recoveries and amounted to £1,759m (2018: £1,696m).

d Other financial assets subject to impairment not included in the table above include cash collateral and settlement balances, financial assets at fair value through other comprehensive income

and other assets. These have a total gross exposure of £149.3bn (December 2018: £129.9bn) and impairment allowance of £24m (December 2018: £12m). This comprises £12m ECL

Risk review

Risk performance

Credit risk

116

 Barclays PLC 2019 Annual Report on Form 20-F

(December 2018: £10m) on £148.5bn Stage 1 assets (December 2018: £129.3bn), £2m (December 2018: £2m) on £0.8bn Stage 2 fair value through other comprehensive income assets, cash

collateral and settlement assets (December 2018: £0.6bn) and £10m (December 2018: £nil) on £10m Stage 3 other assets (December 2018: £nil).

Reconciliation of ECL movement to impairment charge/(release) for the period

£m

Home loans

(1)

Credit cards, unsecured loans and other retail lending

1,863

Wholesale loans

191

ECL movement excluding assets derecognised due to disposals and write-offs

2,053

Post write-off recoveries

(124)

Exchange and other adjustments

a

(96)

Impairment charge on loan commitments and financial guarantees

71

Impairment charge on other financial assets

b

8

Income statement charge for the period

1,912

Notes

a Includes foreign exchange and interest and fees in suspense.

b Other financial assets subject to impairment not included in the table above include cash collateral and settlement balances, financial assets at fair value through other

comprehensive income and other assets. These have a total gross exposure of £149.3bn (December 2018: £129.9bn) and impairment allowance of £24m (December 2018:

£12m). This comprises £12m ECL (December 2018: £10m) on £148.5bn Stage 1 assets (December 2018: £129.3bn), £2m (December 2018: £2m) on £0.8bn Stage 2 fair value

through other comprehensive income assets, cash collateral and settlement assets (December 2018: £0.6bn) and £10m (December 2018: £nil) on £10m Stage 3 other assets

(December 2018: £nil)

Loan commitments and financial guarantees (audited)

Stage 1

Stage 2

Stage 3

Total

Gross

exposure

ECL

Gross

exposure

ECL

Gross

exposure

ECL

Gross

exposure

ECL

£m

£m

£m

£m

£m

£m

£m

£m

Home loans

As at 1 January 2019

6,948

-

546

-

13

-

7,507

-

Net transfers between stages

(39)

-

47

-

(8)

-

-

-

Business activity in the year

2,848

-

-

-

-

-

2,848

-

Net drawdowns, repayments, net re-

measurement and movement due to exposure

and risk parameter changes

1

-

(40)

-

-

-

(39)

-

Final repayments

(216)

-

(53)

-

(1)

-

(270)

-

As at 31 December 2019

9,542

-

500

-

4

-

10,046

-

Credit cards, unsecured loans and other retail lending

As at 1 January 2019

124,611

41

9,016

65

267

20

133,894

126

Net transfers between stages

117

44

(1,082)

(43)

965

(1)

-

-

Business activity in the year

14,619

2

218

1

6

6

14,843

9

Net drawdowns, repayments, net re-

measurement and movement due to exposure

and risk parameter changes

(1,151)

(48)

(1,172)

54

(874)

(9)

(3,197)

(3)

Final repayments

(12,437)

(4)

(742)

(6)

(114)

(2)

(13,293)

(12)

As at 31 December 2019

125,759

35

6,238

71

250

14

132,247

120

Wholesale loans

As at 1 January 2019

178,430

58

12,564

85

404

2

191,398

145

Net transfers between stages

(875)

7

580

(8)

295

1

-

-

Business activity in the year

53,685

22

2,779

22

16

-

56,480

44

Net drawdowns, repayments, net re-

measurement and movement due to exposure

and risk parameter changes

(487)

(1)

1,190

36

232

41

935

76

Final repayments

(44,914)

(24)

(4,666)

(36)

(266)

(3)

(49,846)

(63)

As at 31 December 2019

185,839

62

12,447

99

681

41

198,967

202

Risk review

Risk performance

Credit risk

117

 Barclays PLC 2019 Annual Report on Form 20-F

Gross exposure for loans and advances at amortised cost (audited)

Stage 1

Stage 2

Stage 3

Total

£m

£m

£m

£m

As at 1 January 2018

265,617

49,592

9,081

324,290

Net transfers between stages

1,385

(3,602)

2,217

-

Business activity in the year

74,419

2,680

374

77,473

- of which: Barclays UK

29,467

1,493

326

31,286

- of which: Barclays International

42,346

1,164

44

43,554

Net drawdowns and repayments

(13,140)

136

162

(12,842)

- of which: Barclays UK

(10,269)

(980)

(322)

(11,571)

- of which: Barclays International

(1,305)

1,348

561

604

Final repayments

(41,946)

(5,359)

(1,071)

(48,376)

- of which: Barclays UK

(11,728)

(1,753)

(478)

(13,959)

- of which: Barclays International

(29,421)

(3,520)

(549)

(33,490)

Disposals

(5,109)

-

(369)

(5,478)

Write-offs

-

-

(1,891)

(1,891)

As at 31 December 2018

a

281,226

43,447

8,503

333,176

Impairment allowance on loans and advances at amortised cost (audited)

Stage 1

Stage 2

Stage 3

Total

£m

£m

£m

£m

As at 1 January 2018

608

3,112

3,382

7,102

Net transfers between stages

798

(1,182)

384

-

Business activity in the year

223

173

95

491

Net re-measurement and movement due to exposure and risk

parameter changes

(865)

638

1,918

1,691

UK economic uncertainty adjustment

-

150

-

150

Final repayments

(76)

(176)

(152)

(404)

Disposals

-

-

(369)

(369)

Write-offs

-

-

(1,891)

(1,891)

As at 31 December 2018

a

688

2,715

3,367

6,770

Reconciliation of ECL movement to impairment charge/(release) for the period

ECL movement excluding assets derecognised due to disposals and

write-offs

1,928

Post write-off recoveries

(195)

Exchange and other adjustments

(143)

Impairment release on loan commitments and financial guarantees

b

(125)

Impairment charge on other financial assets

3

Income statement charge/(release) for the period

1,468

Notes

a Other financial assets subject to impairment not included in the table above include cash collateral and settlement balances, financial assets at fair value through other

comprehensive income and other assets. These have a total gross exposure of £129.9bn (1 January 2018: £128.1bn) and impairment allowance of £12m (1 January 2018: £9m).

This comprises £10m ECL on £129.3bn Stage 1 assets and £2m on £0.6bn Stage 2 fair value through other comprehensive income assets.

b Impairment release of £ 125m on loan commitments and financial guarantees represents reduction in impairment allowance of £149m partially offset by exchange and other

adjustments of £24m.

Risk review

Risk performance

Credit risk

118

 Barclays PLC 2019 Annual Report on Form 20-F

Gross exposure for loan commitments and financial guarantees (audited)

Stage 1

Stage 2

Stage 3

Total

£m

£m

£m

£m

As at 1 January 2018

275,364

38,867

1,442

315,673

Net transfers between stages

13,521

(13,552)

31

-

Business activity in the year

65,404

811

-

66,215

Net drawdowns and repayments

(14,491)

4,298

(473)

(10,666)

Final repayments

(29,809)

(8,298)

(316)

(38,423)

As at 31 December 2018

309,989

22,126

684

332,799

Provision on loan commitments and financial guarantees (audited)

Stage 1

Stage 2

Stage 3

Total

£m

£m

£m

£m

As at 1 January 2018

133

259

28

420

Net transfers between stages

42

(43)

1

-

Business activity in the year

18

-

-

18

Net remeasurement and movement due to exposure and risk

parameter changes

(79)

(22)

44

(57)

Final repayments

(15)

(44)

(51)

(110)

As at 31 December 2018

99

150

22

271

Risk review

Risk performance

Credit risk

119

 Barclays PLC 2019 Annual Report on Form 20-F

Stage 2 decomposition

Loans and advances at amortised cost

a

2019

2018

Gross exposure

Impairment

allowance

Gross exposure

Impairment

allowance

As at 31 December

£m

 £m

£m

 £m

Quantitative test

24,034

2,059

30,665

2,506

Qualitative test

12,733

278

12,206

183

30 days past due backstop

1,467

36

576

26

Total Stage 2

38,234

2,373

43,447

2,715

Note

a

Where balances satisfy more than one of the above three criteria for determining a significant increase in credit risk, the corresponding gross exposure and ECL has been assigned

in order of categories presented.

Stage 2 exposures are predominantly identified using quantitative tests where the lifetime PD has deteriorated more than a pre- determined amount

since origination. This is augmented by inclusion of accounts meeting the designated high risk criteria (including watchlist) for the portfolio under

the qualitative test. Qualitative tests predominantly include £9.3bn in Barclays UK of which £7.4bn relates to UK Home Finance, £1.1bn relates to

Business Banking and £0.4bn relates to Barclaycard UK. A further £3.4bn relates to Barclays International of which £1.7bn relates to Corporate and

Investment Bank, £0.9bn relates to Barclaycard International and £0.7bn relates to Private Bank.

A small number of other accounts (2% of impairment allowances and 4% of gross exposure) are included in Stage 2. These accounts are not

otherwise identified by the quantitative or qualitative tests but are more than 30 days past due. The percentage triggered by these backstop criteria

is a measure of the effectiveness of the Stage 2 criteria in identifying deterioration prior to delinquency . These balances include items in the

Corporate and Investment Bank for reasons such as outstanding interest and fees rather than principal balances.

For further detail on the three criteria for determining a significant increase in credit risk required for Stage 2 classification, refer to Note 7 on page

225 .

Stage 3 decomposition

Loans and advances at amortised cost

2019

2018

Gross exposure

Impairment

allowance

Gross exposure

Impairment

allowance

As at 31 December

£m

 £m

£m

 £m

Exposures not charged -off including within cure period

a

3,540

857

4,589

916

Exposures individually assessed or in recovery book

b

4,383

2,371

3,914

2,451

Total Stage 3

7,923

3,228

8,503

3,367

Notes

a

Includes £2.5bn of gross exposure in a cure period that must remain in Stage 3 for a minimum of 12 months before moving to Stage 2.

b

Exposures individually assessed or in recovery book cannot cure out of Stage 3.

Risk review

Risk performance

Credit risk

120

 Barclays PLC 2019 Annual Report on Form 20-F

Management adjustments to models for impairment (audited)

Management adjustments to impairment models are applied in order to factor in certain conditions or changes in policy that are not fully

incorporated into the impairment models, or to reflect additional facts and circumstances at the period end. Management adjustments are

reviewed and incorporated into future model development where applicable.

Total management adjustments to impairment allowance are presented b y product below.

Management adjustments to models for impairment (audited)

a

2019

2018

Management

adjustments to

impairment

allowances

Proportion of

total impairment

allowances

Management

adjustments to

impairment

allowances

Proportion of total

impairment

allowances

As at 31 December

£m

%

£m

%

Home loans

57

13.2

59

12.7

Credit cards, unsecured loans and other retail lending

308

6.3

385

7.2

Wholesale loans

(25)

(2.5)

(6)

(0.6)

Total

340

5.4

438

6.5

Note

a

Positive values relate to an increase in impairment allowance.

Home loans:

 The low average LTV nature of the UK Home Loans portfolio means that modelled ECL estimates are low in all but the most severe

economic scenarios. An adjustment is held to maintain an appropriate level of ECL.

Credit cards, unsecured loans and other retail lending:

 Management adjustments primarily relate to UK Cards where model adjustments have

been made to maintain adequacy of Loss Given Default and Probability of Default estimates.

Following recent portfolio analysis and industry benchmarking, releases were applied to the UK cards and US card s portfolios to account for

changes in the modelled lifetime of credit cards in Stage 2. These adjustments will be removed once updates to the model have been incorporated .

A £100m ECL adjustment is held in UK Cards for the anticipated impact of economic uncertainty in the UK, first taken in December 2018 and

retained as at 2019 year-end.

Wholesale loans:

Adjustments include a release in Investment Bank to reduce inappropriate ECL sensitivity to a macroeconomic variable and model

adjustments in Corporate and Investment Bank related to Probability of Default at origination and Loss Given Default floors.

A £50m ECL adjustment is held in Corporate and Investment Bank for the anticipated impact of economic uncertainty in the UK, first taken in

December 2018 and retained as at 2019 year-end. 

Risk review

Risk performance

Credit risk

121

 Barclays PLC 2019 Annual Report on Form 20-F

Measurement uncertainty and sensitivity analysis

The measurement of ECL involves complexity and judgement, including estimation of probabilities of default (PD), loss given default (LGD), a range

of unbiased future economic scenarios, estimation of expected lives, estimation of exposures at default (EAD) and assessing significant increases in

credit risk.

The Group uses a five-scenario model to calculate ECL. An external consensus forecast is assembled from key sources, including HM Treasury

(short and medium term forecasts) , Bloomberg (based on median of economic forecasts) and the Urban Land Institute (for US House Prices),

which forms the Baseline scenario. In addition, two adverse scenarios (Downside 1 and Downside 2) and two favourable scenarios (Upside 1 and

Upside 2) are derived, with associated probability weightings. The adverse scenarios are calibrated to a similar severity to internal stress tests,

whilst also considering IFRS 9 specific sensitivities and non -linearity. Downside 2 is benchmarked to the Bank of England’s annual cyclical scenarios

and to the most severe scenario from Moody’s inventory, but is not designed to be the same. The favourable scenarios are calibrated to be

symmetric to the adverse scenarios, subject to a ceiling calibrated to relevant recent favourable benchmark scenarios. All scenarios are regenerated

at a minimum annually. The scenarios include eight economic variables, (GDP, unemployment, House Price Index (HPI) and base rates in both the

UK and US markets), and expanded variables using statistical models based on historical correlations. The upside and downside shocks are

designed to evolve over a five-year stress horizon, with all five scenarios converging to a steady state after approximately eight years.

Scenario weights (audited)

The methodology for estimating probability weights for each of the scenarios involves a comparison of the distribution of key historical UK and US

macroeconomic variables against the forecast paths of the five scenarios. The methodology works such that the Baseline (reflecting current

consensus outlook) has the highest weight and the weights of adverse and favourable scenarios depend on the deviation from the Baseline; the

further from the Baseline, the smaller the weight. This is reflected in the table below where the probability weights of the scenarios as of 31

December 2019 are shown. A single set of five scenarios is used across all portfolios and all five weights are normalised to equate to 100%. The

same scenarios and weights that are used in the estimation of expected credit losses are also used for Barclays internal planning purposes. The

impacts across the portfolios are different because of the sensitivities of each of the portfolios to specific macroeconomic variables, for example,

mortgages are highly sensitive to house prices and base ra tes, credit cards and unsecured consumer loans are highly sensitive to unemployment.

The tables below show the macroeconomic variables for each scenario and their respective scenario weights. Macroeconomic variables are

presented using the most relevant basis for each variable. 5-year average tables and movement over time graphs provide additional transparency.

Scenario probability weighting (audited)

Upside 2

Upside 1

Baseline

Downside 1

Downside 2

 %

 %

 %

 %

 %

As at 31 December 2019

Scenario probability weighting

10.1

23.1

40.8

22.7

3.3

As at 31 December 2018

Scenario probability weighting

9.0

24.0

41.0

23.0

3.0

The weights of Upside 2 and Downside 2 have increased slightly reflecting the small decrease in dispersion in the scenarios. The impact on ECL is

immaterial.

Risk review

Risk performance

Credit risk

122

 Barclays PLC 2019 Annual Report on Form 20-F

Macroeconomic variables used in the calculation of ECL (specific bases)

a

 (audited)

Upside 2

Upside 1

Baseline

Downside 1

Downside 2

 %

 %

 %

 %

 %

As at 31 December 2019

UK GDP

b

4.2

2.9

1.6

0.2

(4.7)

UK unemployment

c

3.4

3.8

4.2

5.7

8.7

UK HPI

d

46.0

32.0

3.1

(8.2)

(32.4)

UK bank rate

c

0.5

0.5

0.7

2.8

4.0

US GDP

b

4.2

3.3

1.9

0.4

(3.4)

US unemployment

c

3.0

3.5

3.9

5.3

8.5

US HPI

d

37.1

23.3

3.0

0.5

(19.8)

US federal funds rate

c

1.5

1.5

1.7

3.0

3.5

As at 31 December 2018

UK GDP

b

4.5

3.1

1.7

0.3

(4.1)

UK unemployment

c

3.4

3.9

4.3

5.7

8.8

UK HPI

d

46.4

32.6

3.2

(0.5)

(32.1)

UK bank rate

c

0.8

0.8

1.0

2.5

4.0

US GDP

b

4.8

3.7

2.1

0.4

(3.3)

US unemployment

c

3.0

3.4

3.7

5.2

8.4

US HPI

d

36.9

30.2

4.1

-

(17.4)

US federal funds rate

c

2.3

2.3

2.7

3.0

3.5

Macroeconomic variables used in the calculation of ECL (5-year averages)

a

 (audited)

Upside 2

Upside 1

Baseline

Downside 1

Downside 2

 %

 %

 %

 %

 %

As at 31 December 2019

UK GDP

3.2

2.4

1.6

0.8

(0.7)

UK unemployment

3.5

3.9

4.2

5.4

7.7

UK HPI

7.9

5.7

3.1

(1.1)

(6.5)

UK bank rate

0.5

0.5

0.7

2.5

3.7

US GDP

3.5

2.8

1.9

1.0

(0.5)

US unemployment

3.1

3.6

3.9

5.0

7.5

US HPI

6.5

4.3

3.0

1.3

(3.7)

US federal funds rate

1.6

1.7

1.7

2.9

3.4

As at 31 December 2018

UK GDP

3.4

2.6

1.7

0.9

(0.6)

UK unemployment

3.7

4.0

4.3

5.1

7.9

UK HPI

7.9

5.8

3.2

0.9

(6.4)

UK bank rate

0.8

0.8

1.0

2.3

3.7

US GDP

3.7

3.0

2.1

1.1

(0.5)

US unemployment

3.1

3.5

3.7

4.7

7.4

US HPI

6.5

5.4

4.1

2.4

(2.6)

US federal funds rate

2.3

2.3

2.7

3.0

3.4

Notes

a

UK GDP = Real GDP growth seasonally adjusted; UK unemployment = UK unemployment rate 16-year+; UK HPI = Halifax All Houses, All Buyers Index; US GDP = Real GDP growth

seasonally adjusted; US unemployment = US civilian unemployment rate 16-year+; US HPI = FHFA house price index.

b

Highest annual growth in Upside scenarios; 5-year average in Baseline; lowest annual growth in Downside scenarios.

c

Lowest yearly average in Upside scenarios; 5-year average in Baseline; highest yearly average in Downside scenarios.

d

Cumulative growth (trough-to-peak) in Upside scenarios; 5-year average in Baseline; cumulative fall (peak -to-trough) in Downside scenarios.

Over the year, the macroeconomic baseline variables have worsened in the US, in part due to the trade dispute with China. Baseline expectations for

the US federal funds rate have also moved lower from 2.7% to 1.7% averaged over the first five years. Macroeconomic baseline variables in the UK

have remained fairly flat with a small decrease in bank rates driven by market expectations of lower interest rates in the next few years. The other

scenarios are generally unchanged from 2018, with the exception of UK HPI in the Downside 1 scenario where the cumulative fall in house prices

now represents a more severe fall of 8.2% versus 0.5% in 2018.

Risk review

Risk performance

Credit risk

123

 Barclays PLC 2019 Annual Report on Form 20-F

The graphs below plot the historical data for GDP growth rate and unemployment rate in the UK and US as well as the forecasted data under each

of the five scenarios.

ECL under 100% weighted scenarios for modelled portfolios (audited)

The table below shows the ECL assuming scenarios have been 100% weighted. Model exposures are allocated to a stage based on the individual

scenario rather than through a probability-weighted approach as required for Barclays reported impairment allowances. As a result, it is not

possible to back solve to the final reported weighted ECL from the individual scenarios as a balance may be assigned to a different stage dependen t

on the scenario. Model exposure uses exposure at default (EAD) values and is not directly comparable to gross exposure used in prior disclosures.

For Credit cards, unsecured loans and other retail lending, an average EAD measure is used (12 month or lifetime, depending on stage allocation in

each scenario). Therefore, the model exposure movement into Stage 2 is higher than the corresponding Stage 1 reduction.

All ECL using a Model is included, with the exception of Treasury assets (£9m of ECL), providing additional coverage as compared to the 2018 year-

end disclosure. Non-modelled exposures and management adjustments are excluded. Management adjustments can be found on page 120 . The

prior year comparative includ es key principal portfolios amounting to circa 80% of total impairment allowance.

Model Exposures allocated to Stage 3 do not change in any of the scenarios as the transition criteria relies only on observable evidence of default as

at 31 December 2019 and not on macroeconomic scenarios.

The Downside 2 scenario represents a severe global recession with substantial falls in both UK and US GDP. Unemployment in both markets rises

towards 9% and there are substantial falls in asset prices including h ousing.

Under the Downside 2 scenario, model exposure moves between stages as the economic environment weakens. This can be seen in the movement

of £29bn of model exposure into Stage 2 between the Weighted and Downside 2 scenario. ECL increases in Stage 2 predominantly due to

unsecured portfolios as economic conditions deteriorate.

Risk review

Risk performance

Credit risk

124

 Barclays PLC 2019 Annual Report on Form 20-F

Scenarios

As at 31 December 2019

Weighted

Upside 2

Upside 1

Baseline

Downside 1

Downside 2

Stage 1 Model Exposure (£m)

Home loans

137,929

139,574

138,992

138,249

136,454

132,505

Credit cards, unsecured loans and other retail lending

68,619

69,190

69,012

68,388

68,309

67,015

Wholesale loans

160,544

162,717

162,058

161,111

157,720

143,323

Stage 1 Model ECL (£m)

Home loans

6

4

5

5

7

19

Credit cards, unsecured loans and other retail lending

505

490

495

495

511

528

Wholesale loans

209

162

174

188

271

297

Stage 1 Coverage (%)

Home loans

-

-

-

-

-

-

Credit cards, unsecured loans and other retail lending

0.7

0.7

0.7

0.7

0.7

0.8

Wholesale loans

0.1

0.1

0.1

0.1

0.2

0.2

Stage 2 Model Exposure (£m)

Home loans

16,889

15,245

15,826

16,570

18,364

22,314

Credit cards, unsecured loans and other retail lending

13,406

11,449

12,108

13,075

15,663

19,615

Wholesale loans

15,947

13,773

14,433

15,380

18,770

33,168

Stage 2 Model ECL (£m)

Home loans

41

33

34

36

47

170

Credit cards, unsecured loans and other retail lending

1,844

1,412

1,562

1,771

2,384

4,285

Wholesale loans

414

285

323

374

579

1,427

Stage 2 Coverage (%)

Home loans

0.2

0.2

0.2

0.2

0.3

0.8

Credit cards, unsecured loans and other retail lending

13.8

12.3

12.9

13.5

15.2

21.8

Wholesale loans

2.6

2.1

2.2

2.4

3.1

4.3

Stage 3 Model Exposure (£m)

Home loans

1,670

1,670

1,670

1,670

1,670

1,670

Credit cards, unsecured loans and other retail lending

3,008

3,008

3,008

3,008

3,008

3,008

Wholesale loans

a

1,489

1,489

1,489

1,489

1,489

1,489

Stage 3 Model ECL (£m)

Home loans

268

262

264

266

272

316

Credit cards, unsecured loans and other retail lending

2,198

2,154

2,174

2,195

2,235

2,292

Wholesale loans

a

118

111

114

117

127

128

Stage 3 Coverage (%)

Home loans

16.0

15.7

15.8

15.9

16.3

18.9

Credit cards, unsecured loans and other retail lending

73.1

71.6

72.3

73.0

74.3

76.2

Wholesale loans

a

7.9

7.4

7.6

7.9

8.5

8.6

Total Model ECL (£m)

Home loans

315

299

303

307

326

505

Credit cards, unsecured loans and other retail lending

4,547

4,056

4,231

4,461

5,130

7,105

Wholesale loans

a

741

558

611

679

977

1,852

Note

a

Material wholesale loan defaults are individually assessed across different recovery strategies. As a result, ECL of £419m is reported as non-modelled in the table below.

Reconciliation to total ECL

£m

Total model ECL

5,603

ECL from non -modelled, individually assessed, and other

adjustments

687

ECL from management adjustments

340

Total ECL

6,630

Risk review

Risk performance

Credit risk

125

 Barclays PLC 2019 Annual Report on Form 20-F

The total weighted ECL represents a 3% uplift from the Baseline ECL, largely driven by credit card losses which have more linear loss profiles than

UK home loans and wholesale loan positions.

Home loans:

 Total weighted ECL of £315m represents a 2% increase over the Baseline ECL (£307m), and coverage ratios remain steady across the

Upside scenarios, Baseline and Downside 1 scenario. However, total ECL increases in the Downside 2 scenario to £506m, driven by a significant fall

in UK HPI (32.4%) reflecting the non-linearity of the UK portfolio. 

Credit cards, unsecured loans and other retail lending:

 Total weighted ECL of £4,547m represents a 2% increase over the Baseline ECL (£4,461m)

reflecting the range of economic scenarios used, mainly impacted by Unemployment. Total ECL increases to £7,105m under the Downside 2

scenario, mainly driven by Stage 2, where coverage rates increase to 21.8% from a weighted scenario approach of 13.8 % and circa £6bn increase

in model exposure that meets the Significant Increase in Credit Risk criteria and transitions from Stage 1 to Stage 2.

Wholesale loans:

 Total weighted ECL of £741m represents a 9% increase over the Baseline ECL (£679m) reflecting the range of economic

scenarios used, with exposures in the Investment Bank particularly sensitive to the Downside 2 scenario.

Risk review

Risk performance

Credit risk

126

 Barclays PLC 2019 Annual Report on Form 20-F

Scenarios

As at 31 December 2018

Weighted

Upside 2

Upside 1

Baseline

Downside 1

Downside 2

Stage 1 Gross Exposure (£m)

Home loans

115,573

116,814

116,402

115,924

114,858

109,305

Credit cards, unsecured loans and other retail lending

30,494

32,104

31,082

30,536

29,846

24,884

Wholesale loans

80,835

81,346

81,180

80,941

80,517

73,715

Stage 1 ECL (£m)

Home loans

1

-

-

-

1

9

Credit cards, unsecured loans and other retail lending

355

304

343

351

365

388

Wholesale loans

175

161

163

162

203

242

Stage 1 Coverage (%)

Home loans

-

-

-

-

-

-

Credit cards, unsecured loans and other retail lending

1.2

0.9

1.1

1.1

1.2

1.6

Wholesale loans

0.2

0.2

0.2

0.2

0.3

0.3

Stage 2 Gross Exposure (£m)

Home loans

17,455

16,214

16,627

17,105

18,170

23,724

Credit cards, unsecured loans and other retail lending

10,943

9,334

10,355

10,902

11,591

16,553

Wholesale loans

11,377

10,866

11,031

11,271

11,694

18,496

Stage 2 ECL (£m)

Home loans

7

1

1

3

7

172

Credit cards, unsecured loans and other retail lending

2,013

1,569

1,779

1,969

2,331

4,366

Wholesale loans

323

277

290

302

397

813

Stage 2 Coverage (%)

Home loans

-

-

-

-

-

0.7

Credit cards, unsecured loans and other retail lending

18.4

16.8

17.2

18.1

20.1

26.4

Wholesale loans

2.8

2.5

2.6

2.7

3.4

4.4

Stage 3 Gross Exposure (£m)

Home loans

1,104

1,104

1,104

1,104

1,104

1,104

Credit cards, unsecured loans and other retail lending

2,999

2,999

2,999

2,999

2,999

2,999

Wholesale loans

a

1,165

n/a

n/a

1,165

n/a

n/a

Stage 3 ECL (£m)

Home loans

6

3

4

5

7

27

Credit cards, unsecured loans and other retail lending

2,200

2,154

2,174

2,199

2,234

2,297

Wholesale loans

a

333

n/a

n/a

323

n/a

n/a

Stage 3 Coverage (%)

Home loans

0.5

0.3

0.4

0.5

0.7

2.4

Credit cards, unsecured loans and other retail lending

73.4

71.8

72.5

73.3

74.5

76.6

Wholesale loans

a

28.6

n/a

n/a

27.7

n/a

n/a

Total ECL (£m)

Home loans

14

4

5

8

15

208

Credit cards, unsecured loans and other retail lending

4,568

4,027

4,296

4,519

4,930

7,051

Wholesale loans

a

831

n/a

n/a

787

n/a

n/a

Note

a Material corporate loan defaults are individually assessed across different recovery strategies which are impacted by the macroeconomic variables. As a result, only the Baseline

scenario is shown together with the weighted estimate which reflects alternative recovery paths.

Staging sensitivity (audited)

An increase of 1% (£3,454m) of total gross exposure into Stage 2 (from Stage 1), would result in an increase in ECL impairment allowance of

£207m based on applying the difference in Stage 2 and Stage 1 average impairment coverage ratios to the movement in gross exposure (refer to

Loans and advances at amortised cost by product on page 114).

Risk review

Risk performance

Credit risk

127

 Barclays PLC 2019 Annual Report on Form 20-F

Analysis of the concentration of credit risk

A concentration of credit risk exists when a number of counterparties are located in a common geographical region or 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. The Group implements limits on concentrations in order to mitigate the risk. The analyses of credit risk

concentrations presented below are based on the location of the counterparty or customer or the industry in which they are engaged. Further detail

on the Group policies with regard to managing concentration risk is presented on page 159 of Barclays PLC Pillar 3 Report 2019 (unaudited).

Geographic concentrations

As at 31 December 2019 , the geographic concentration of the Group’s assets remained broadly consistent with 2018 . Exposure is concentrated in

the UK 40% (2018: 41 %), in the Americas 34% (2018: 34%) and Europe 20% (2018 : 21%).

Credit risk concentrations by geography (audited)

United

Kingdom

Americas

Europe

Asia

Africa and

Middle East

Total

£m

£m

£m

£m

£m

£m

As at 31 December 2019

On-balance sheet:

Cash and balances at central banks

51,477

28,273

54,632

15,130

746

150,258

Cash collateral and settlement balances

27,431

23,595

26,008

5,385

837

83,256

Loans and advances at amortised cost

257,459

46,569

25,599

6,275

3,213

339,115

Reverse repurchase agreements and other similar secured lending

1,005

15

1,056

470

833

3,379

Trading portfolio assets

11,550

27,621

13,397

4,786

763

58,117

Financial assets at fair value through the income statement

29,001

70,849

11,286

12,534

1,921

125,591

Derivative financial instruments

69,844

63,344

83,165

11,189

1,694

229,236

Financial assets at fair value through other comprehensive income

9,444

23,052

24,443

7,665

123

64,727

Other assets

1,170

126

79

-

-

1,375

Total on-balance sheet

458,595

283,267

239,628

63,434

10,130

1,055,054

Off-balance sheet:

Contingent liabilities

7,539

10,839

3,862

1,562

726

24,528

Loan commitments

105,350

188,108

36,033

3,166

1,797

334,454

Total off-balance sheet

112,889

198,947

39,895

4,728

2,523

358,982

Total

571,484

482,214

279,523

68,162

12,653

1,414,036

As at 31 December 2018

On-balance sheet:

Cash and balances at central banks

64,343

36,045

66,887

9,076

718

177,069

Cash collateral and settlement balances

27,418

22,184

22,316

4,928

376

77,222

Loans and advances at amortised cost

240,116

49,592

27,913

5,371

3,414

326,406

Reverse repurchase agreements and other similar secured lending

724

68

113

83

1,320

2,308

Trading portfolio assets

12,444

34,369

13,375

3,616

713

64,517

Financial assets at fair value through the income statement

33,842

73,489

20,984

13,556

1,758

143,629

Derivative financial instruments

69,798

58,699

80,003

12,172

1,866

222,538

Financial investments - debt securities

11,494

13,953

23,298

2,786

163

51,694

Other assets

780

100

125

 - 

1

1,006

Total on-balance sheet

460,959

288,499

255,014

51,588

10,329

1,066,389

Off-balance sheet:

Contingent liabilities

5,910

8,996

3,572

1,289

536

20,303

Loan commitments

108,506

175,995

34,524

3,346

1,852

324,223

Total off-balance sheet

114,416

184,991

38,096

4,635

2,388

344,526

Total

575,375

473,490

293,110

56,223

12,717

1,410,915

Industry concentrations

The concentration of the Group’s assets by industry remained broadly consistent year on year. As at 31 December 2019 , total assets concentrated

in banks and other financial institutions was 36% (2018 : 36%), predominantly within derivative financial instruments. The proportion of the overall

balance concentrated in governments and central banks was 19% (2018 : 20%), cards, unsecured loans and other personal lending was 13%

(2018 : 13%) and in home loans remained stable at 12 % (2018 : 11%).

Risk review

Risk performance

Credit risk

128

 Barclays PLC 2019 Annual Report on Form 20-F

Credit risk concentrations by industry (audited)

Banks

Other

financial

insti-

tutions

Manu-

facturing

Const -

ruction

and 

property

Govern-

ment and

central

bank

Energy

and

water

Whole-

sale

and retail

distri-

bution

 and

leisure

Business

and other

services

Home

loans

Cards, 

unsecured

loans and 

other

personal 

lending

Other

Total

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

As at 31 December 2019

On-balance sheet:

Cash and balances at

central banks

7

73

-

-

150,178

-

-

-

-

-

-

150,258

Cash collateral and

settlement balances 

16,599

55,262

516

64

9,251

536

51

642

-

-

335

83,256

Loans and advances at

amortised cost

8,788

20,473

8,323

24,403

23,847

5,346

10,031

17,125

154,479

55,232

11,068

339,115

Reverse repurchase

agreements and other

similar secured lending

1,172

2,134

-

-

73

-

-

-

-

-

-

3,379

Trading portfolio assets

2,872

9,049

2,787

1,053

33,092

2,996

842

3,158

-

-

2,268

58,117

Financial assets at fair

value through the income

statement

10,747

97,849

634

6,909

5,353

45

 - 

3,569

358

 - 

127

125,591

Derivative financial

instruments

125,323

83,285

2,049

2,273

7,811

3,077

562

1,520

-

2

3,334

229,236

Financial assets at fair

value through other

comprehensive income

18,596

4,370

-

286

40,763

-

-

430

-

-

282

64,727

Other assets

897

322

1

5

2

7

2

109

-

18

12

1,375

Total on-balance sheet

185,001

272,817

14,310

34,993

270,370

12,007

11,488

26,553

154,837

55,252

17,426

1,055,054

Off-balance sheet:

Contingent liabilities

1,250

8,043

3,549

703

1,981

3,318

1,072

2,831

-

109

1,671

24,527

Loan commitments

1,909

47,815

42,148

14,358

1,704

29,877

14,711

22,932

10,060

124,841

24,100

334,455

Total off-balance sheet

3,159

55,858

45,697

15,061

3,685

33,195

15,783

25,763

10,060

124,950

25,771

358,982

Total

188,160

328,675

60,007

50,054

274,055

45,202

27,271

52,316

164,897

180,202

43,197

1,414,036

As at 31 December 2018

On-balance sheet:

Cash and balances at

central banks

- 

- 

- 

- 

177,069

- 

- 

- 

- 

- 

- 

177,069

Cash collateral and

settlement balances

17,341

48,398

498

75

9,235

386

223

717

- 

- 

349

77,222

Loans and advances at

amortised cost

9,478

18,653

8,775

23,565

12,764

5,515

11,609

19,716

150,284

55,298

10,749

326,406

Reverse repurchase

agreements and other

similar secured lending

1,368

865

- 

37

38

- 

- 

- 

- 

- 

- 

2,308

Trading portfolio assets

3,500

9,550

3,825

897

34,968

4,202

1,202

3,481

- 

- 

2,892

64,517

Financial assets at fair

value through the income

statement

30,374

96,378

- 

8,914

5,331

32

13

2,178

405

- 

4

143,629

Derivative financial

instruments

123,769

80,376

2,390

1,993

5,987

2,791

486

2,004

- 

- 

2,742

222,538

Financial investments -

debt securities

12,135

2,250

- 

200

36,973

- 

- 

136

- 

- 

- 

51,694

Other assets

580

426

- 

- 

- 

- 

- 

- 

- 

- 

- 

1,006

Total on-balance sheet

198,545

256,896

15,488

35,681

282,365

12,926

13,533

28,232

150,689

55,298

16,736

1,066,389

Off-balance sheet:

Contingent liabilities

939

3,840

3,470

626

1,890

3,491

952

3,455

- 

116

1,524

20,303

Loan commitments

1,267

42,890

39,978

14,362

1,629

26,519

14,566

22,142

8,900

126,640

25,330

324,223

Total off-balance sheet

2,206

46,730

43,448

14,988

3,519

30,010

15,518

25,597

8,900

126,756

26,854

344,526

Total

200,751

303,626

58,936

50,669

285,884

42,936

29,051

53,829

159,589

182,054

43,590

1,410,915

Risk review

Risk performance

Credit risk

129

 Barclays PLC 2019 Annual Report on Form 20-F

The approach to management and representation of credit quality

Asset credit quality 

The credit quality distribution is based on the IFRS 9 12 -month probability of default (PD) at the reporting date to ensure comparability with other

ECL disclosures on pages 112 to 119.

The following internal measures are used to determine credit quality for loans:

Default Grade

Retail and Wholesale lending

Probability of default

Credit Quality Description

1-3

0.0 to <0.05%

Strong

4-5 

0.05 to <0.15%

6-8 

0.15 to <0.30%

9-11 

0.30 to <0.60%

12 -14

0.60 to <2.15%

Satisfactory

15 -19

19 

2.15 to <10%

10 to <11.35%

20- 21

11.35 to <100 %

Higher Risk

22

100%

Credit Impaired

For retail clients, a range of analytical tools is used to derive the probability of default of clients at inception and on an ongoing basis.

For loans that are not past due, these descriptions can be summarised as follows:

Strong:

 there is a very high likelihood of the asset being recovered in full.

Satisfactory:

 while there is a high likelihood that the asset will be recovered and therefore, of no cause for concern to the Group, the asset may not

be collateralised, or may relate to unsecured retail facilities. At the lower end of this grade there are customers that are being more carefully

monitored, for example, corporate customers which are indicating some evidence of deterioration, mortgages with a high loan to value, and

unsecured retail loans operating outside normal product guidelines.

Higher risk:

 there is concern over the obligor’s ability to make payments when due. However, these have not yet converted to actual delinquency.

There may also be doubts over the value of collateral or security provided. However, the borrower or counterparty is continuing to make payments

when due and is expected to settle all outstanding amounts of principal and interest.

Loans that are past due are monitore d closely, with impairment allowances raised as appropriate and in line with the Group’s impairment policies. 

Debt securities

For assets held at fair value, the carrying value on the balance sheet will include, among other things, the credit risk of the issuer. Most listed and

some unlisted securities are rated by external rating agencies. The Group mainly uses external credit ratings provided by Standard & Poor’s, Fitch or

Moody’s. Where such ratings are not available or are not current, the Group will use its own internal ratings for the securities.

Balance sheet credit quality

The following tables present the credit quality of the Group ’s assets exposed to credit risk.

Overview

As at 31 December 2019, the ratio of the Group’s on-balance sheet assets classified as strong (0.0 to <0.60%) remained stable at 86% (2018: 86%)

of total assets exposed to credit risk.

Further analysis of debt securities by issuer and issuer type and netting and collateral arrangements on derivative financial instruments is presented

on pages 138 and 139 respectively.

Risk review

Risk performance

Credit risk

130

 Barclays PLC 2019 Annual Report on Form 20-F

Balance sheet credit quality (audited)

PD range

Total

PD range

Total

0.0 to

<0.60%

0.60 to

<11.35%

11.35 to

100%

0.0 to

<0.60%

0.60 to

<11.35%

11.35 to

100%

£m

£m

£m

£m

%

%

%

%

As at 31 December 2019

Cash and balances at central banks

150,258

-

-

150,258

100

-

-

100

Cash collateral and settlement balances

73,122

10,134

-

83,256

88

12

-

100

Loans and advances at amortised cost:

Home loans

146,269

5,775

2,435

154,479

94

4

2

100

Credit cards, unsecured and other retail

lending

20,750

31,425

3,121

55,296

38

56

6

100

Wholesale loans

97,854

28,150

3,336

129,340

75

22

3

100

Total loans and advances at amortised cost

264,873

65,350

8,892

339,115

78

19

3

100

Reverse repurchase agreements and other

similar secured lending

3,290

89

-

3,379

97

3

-

100

Trading portfolio assets:

Debt securities

49,117

3,479

143

52,739

93

7

-

100

Traded loans

864

3,219

1,295

5,378

16

60

24

100

Total trading portfolio assets

49,981

6,698

1,438

58,117

86

12

2

100

Financial assets at fair value through the

income statement:

Loans and advances

14,467

7,993

232

22,692

64

35

1

100

Debt securities

4,806

413

30

5,249

91

8

1

100

Reverse repurchase agreements

62,475

34,232

180

96,887

65

35

-

100

Other financial assets

757

6

-

763

99

1

-

100

Total financial assets at fair value through the

income statement

82,505

42,644

442

125,591

66

34

-

100

Derivative financial instruments

216,103

13,012

121

229,236

94

6

-

100

Financial assets at fair value through other

comprehensive income

64,727

-

-

64,727

100

-

-

100

Other assets

1,242

133

-

1,375

90

10

-

100

Total on-balance sheet

906,101

138,060

10,893

1,055,054

86

13

1

100

As at 31 December 2018

Cash and balances at central banks

177,069

-

-

177,069

100

-

-

100

Cash collateral and settlement balances

70,455

6,763

4

77,222

91

9

-

100

Loans and advances at amortised cost:

Home loans

137,449

9,701

3,134

150,284

92

6

2

100

Credit cards, unsecured and other retail

lending

21,786

31,664

2,981

56,431

39

56

5

100

Wholesale loans

86,271

30,108

3,312

119,691

72

25

3

100

Total loans and advances at amortised cost

245,506

71,473

9,427

326,406

75

22

3

100

Reverse repurchase agreements and other

similar secured lending

1,820

444

44

2,308

79

19

2

100

Trading portfolio assets:

Debt securities

51,896

4,998

389

57,283

90

9

1

100

Traded loans

1,903

4,368

963

7,234

27

60

13

100

Total trading portfolio assets

53,799

9,366

1,352

64,517

83

15

2

100

Financial assets at fair value through the

income statement:

Loans and advances

13,177

6,295

52

19,524

68

32

-

100

Debt securities

4,380

81

61

4,522

97

2

1

100

Reverse repurchase agreements

85,887

31,813

1,341

119,041

72

27

1

100

Other financial assets

524

18

-

542

97

3

-

100

Total financial assets at fair value through the

income statement

103,968

38,207

1,454

143,629

72

27

1

100

Derivative financial instruments

211,695

10,791

52

222,538

95

5

-

100

Financial assets at fair value through other

comprehensive income

51,546

148

-

51,694

100

-

-

100

Other assets

723

283

-

1,006

72

28

-

100

Total on-balance sheet

916,581

137,475

12,333

1,066,389

86

13

1

100

Risk review

Risk performance

Credit risk

131

 Barclays PLC 2019 Annual Report on Form 20-F

Credit exposures by internal PD grade

The below tables represents credit risk profile by PD grade for loans and advances at amortised cost, contingent liabilities and loan commitments.

Stage 1 higher risk assets, presented gross of associated collateral held, are of weaker credit quality but have not significantly deteriorated since

origination. Examples would include leveraged corporate loans or non- prime credit cards.

IFRS 9 Stage 1 and Stage 2 classification is not dependent solely on the absolute probability of default but on elements that determine a Significant

Increase in Credit Risk (see Note 7 on page 225 ), including relative movement in probability of default since initial recognition. There is therefore no

direct relationship between credit quality and IFRS 9 stage classification.

Credit risk profile by internal PD grade for loans and advances at amortised cost (audited)

Gross carrying amount

Allowance for ECL

Net

exposure

Coverage

ratio

Grading

PD range

Credit quality

description

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

%

£m

£m

£m

£m

£m

£m

£m

£m

£m

%

As at 31 December 2019

1-3

0.0 to <0.05%

Strong

91,993

1,615

-

93,608

13

13

-

26

93,582

-

4-5

0.05 to <0.15%

Strong

92,668

7,704

-

100,372

12

12

-

24

100,348

-

6-8

0.15 to <0.30%

Strong

29,187

4,444

-

33,631

23

5

-

28

33,603

0.1

9-11

0.30 to <0.60%

Strong

34,515

2,932

-

37,447

91

16

-

107

37,340

0.3

12 -14

0.60 to <2.15%

Satisfactory

35,690

4,341

-

40,031

210

187

-

397

39,634

1.0

15 -19

2.15 to <10%

Satisfactory

9,041

9,190

-

18,231

232

981

-

1,213

17,018

6.7

19

10 to <11.35%

Satisfactory

5,235

3,629

-

8,864

62

104

-

166

8,698

1.9

20- 21

11.35 to <100%

Higher Risk

937

4,379

-

5,316

64

1,055

-

1,119

4,197

21.0

22

100%

Credit Impaired

-

-

7,923

7,923

-

-

3,228

3,228

4,695

40.7

Total

299,266

38,234

7,923

345,423

707

2,373

3,228

6,308

339,115

1.8

As at 31 December 2018

1-3

0.0 to <0.05%

Strong

69,216

1,413

-

70,629

26

21

-

47

70,582

0.1

4-5

0.05 to <0.15%

Strong

72,460

3,142

-

75,602

6

13

-

19

75,583

-

6-8

0.15 to <0.30%

Strong

47,172

4,728

-

51,900

37

13

-

50

51,850

0.1

9-11

0.30 to <0.60%

Strong

43,315

4,273

-

47,588

77

20

-

97

47,491

0.2

12 -14

0.60 to <2.15%

Satisfactory

38,831

9,561

-

48,392

255

339

-

594

47,798

1.2

15 -19

2.15 to <10%

Satisfactory

6,920

8,806

-

15,726

202

992

-

1,194

14,532

7.6

19

10 to <11.35%

Satisfactory

2,979

6,401

-

9,380

51

186

-

237

9,143

2.5

20- 21

11.35 to <100%

Higher Risk

333

5,123

-

5,456

34

1,131

-

1,165

4,291

21.4

22

100%

Credit Impaired

-

-

8,503

8,503

-

-

3,367

3,367

5,136

39.6

Total

281,226

43,447

8,503

333,176

688

2,715

3,367

6,770

326,406

2.0

Risk review

Risk performance

Credit risk

132

 Barclays PLC 2019 Annual Report on Form 20-F

Credit risk profile by internal PD grade for contingent liabilities (audited)

a

Gross carrying amount

Allowance for ECL

Net

exposure

Coverage

ratio

Grading

PD range

Credit quality

description

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

%

£m

£m

£m

£m

£m

£m

£m

£m

£m

%

As at 31 December 2019

1-3

0.0 to <0.05%

Strong

6,947

118

-

7,065

3

-

-

3

7,062

-

4-5

0.05 to <0.15%

Strong

4,199

40

-

4,239

1

-

-

1

4,238

-

6-8

0.15 to <0.30%

Strong

2,953

103

-

3,056

1

-

-

1

3,055

-

9-11

0.30 to <0.60%

Strong

4,551

136

-

4,687

2

2

-

4

4,683

0.1

12 -14

0.60 to <2.15%

Satisfactory

2,529

654

-

3,183

7

8

-

15

3,168

0.5

15 -19

2.15 to <10%

Satisfactory

663

244

-

907

4

8

-

12

895

1.3

19

10 to <11.35%

Satisfactory

421

172

-

593

9

9

-

18

575

3.0

20- 21

11.35 to <100%

Higher Risk

117

282

-

399

-

30

-

30

369

7.5

22

100%

Credit Impaired

-

-

355

355

-

-

5

5

350

1.4

Total

22,380

1,749

355

24,484

27

57

5

89

24,395

0.4

As at 31 December 2018

1-3

0.0 to <0.05%

Strong

6,674

37

-

6,711

3

-

-

3

6,708

-

4-5

0.05 to <0.15%

Strong

3,687

129

-

3,816

1

-

-

1

3,815

-

6-8

0.15 to <0.30%

Strong

1,433

55

-

1,488

1

-

-

1

1,487

0.1

9-11

0.30 to <0.60%

Strong

3,206

222

-

3,428

1

3

-

4

3,424

0.1

12 -14

0.60 to <2.15%

Satisfactory

2,543

509

-

3,052

3

6

-

9

3,043

0.3

15 -19

2.15 to <10%

Satisfactory

464

252

-

716

1

3

-

4

712

0.6

19

10 to <11.35%

Satisfactory

534

203

-

737

6

5

-

11

726

1.5

20- 21

11.35 to <100%

Higher Risk

49

228

-

277

-

10

-

10

267

3.6

22

100%

Credit Impaired

-

-

74

74

-

-

2

2

72

2.7

Total

18,590

1,635

74

20,299

16

27

2

45

20,254

0.2

Credit risk profile by internal PD grade for loan commitments (audited)

a

Gross carrying amount

Allowance for ECL

Net

exposure

Coverage

ratio

Grading

PD range

Credit quality

description

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

%

£m

£m

£m

£m

£m

£m

£m

£m

£m

%

As at 31 December 2019

1-3

0.0 to <0.05%

Strong

85,908

1,025

-

86,933

2

1

-

3

86,930

-

4-5

0.05 to <0.15%

Strong

70,112

1,889

-

72,001

5

1

-

6

71,995

-

6-8

0.15 to <0.30%

Strong

53,340

1,019

-

54,359

8

1

-

9

54,350

-

9-11

0.30 to <0.60%

Strong

44,097

1,592

-

45,689

13

1

-

14

45,675

-

12 -14

0.60 to <2.15%

Satisfactory

36,112

3,955

-

40,067

30

26

-

56

40,011

0.1

15 -19

2.15 to <10%

Satisfactory

4,913

3,857

-

8,770

8

55

-

63

8,707

0.7

19

10 to <11.35%

Satisfactory

3,662

2,106

-

5,768

4

7

-

11

5,757

0.2

20- 21

11.35 to <100%

Higher Risk

616

1,993

-

2,609

-

21

-

21

2,588

0.8

22

100%

Credit Impaired

-

-

580

580

-

-

50

50

530

8.6

Total

298,760

17,436

580

316,776

70

113

50

233

316,543

0.1

As at 31 December 2018

1-3

0.0 to <0.05%

Strong

80,971

1,636

-

82,607

3

2

-

5

82,602

-

4-5

0.05 to <0.15%

Strong

54,239

1,498

-

55,737

3

1

-

4

55,733

-

6-8

0.15 to <0.30%

Strong

36,714

823

-

37,537

4

1

-

5

37,532

-

9-11

0.30 to <0.60%

Strong

34,587

1,483

-

36,070

11

1

-

12

36,058

-

12 -14

0.60 to <2.15%

Satisfactory

62,217

4,142

-

66,359

32

12

-

44

66,315

0.1

15 -19

2.15 to <10%

Satisfactory

20,824

6,645

-

27,469

26

44

-

70

27,399

0.3

19

10 to <11.35%

Satisfactory

1,100

1,019

-

2,119

1

24

-

25

2,094

1.2

20- 21

11.35 to <100%

Higher Risk

747

3,245

-

3,992

3

38

-

41

3,951

1.0

22

100%

Credit Impaired

-

-

610

610

-

-

20

20

590

3.3

Total

291,399

20,491

610

312,500

83

123

20

226

312,274

0.1

Note

a Excludes loan commitments and financial guarantees of £17.7bn (2018: £11.7bn) carried at fair value .

Risk review

Risk performance

Credit risk

133

 Barclays PLC 2019 Annual Report on Form 20-F

Analysis of specific portfolios and asset types

This section provides an analysis of principal portfolios and businesses, in particular, home loans, credit cards, unsecured loans and other retail

lending.

Secured home loans

The UK home loans portfolio comprises first lien home loans and accounts for 92 % (2018: 91 %) of the Group’s total home loan balances.

Home loans principal portfolios

a

Barclays UK

As at 31 December

2019

2018

Gross loans and advances (£m)

143,259

136,517

90 day arrears rate, excluding recovery book (%)

0.2

0.2

Annualised gross charge -off rates - 180 days past due (%)

0.6

0.7

Recovery book proportion of outstanding balances (%)

0.5

0.6

Recovery book impairment coverage ratio (%)

5.3

2.9

Note

a

2018 metrics have been restated to align with the current methodology for the classification of delinquent balances and the inclusion of past maturity balances.

Within the UK home loans portfolio:

◾

Gross loans and advances increased by £6.7bn (4.9%) following increases across both Residential (3.0%) and Buy to Let (BTL) (17.6%). 

◾

Owner-occupied interest-only home loans comprised 23.4% (2018: 26.3%) of total balances.

◾

The average balance weighted LTV on owner occupied loans increased to 50.2% (2018: 47.9%) with average completion LTVs remaining higher

than for the existing portfolio.

◾

BTL home loans comprised 13.6% (2018: 12.1%) of total balances. The average balance weighted LTV increased to 56.5% (2018: 55.4%) driven

by average completion LTVs remaining higher than for the existing book.

Home loans principal portfolios - distribution of balances by LTV

a

Distribution of balances

Distribution of impairment allowance

Coverage ratio

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Barclays UK

%

%

%

%

%

%

%

%

%

%

%

%

As at 31 December 2019

<=75%

76.0

10.7

0.7

87.4

4.2

15.4

28.5

48.1

-

0.1

2.2

-

>75% and <=90%

10.4

0.7

-

11.1

2.7

11.5

12.6

26.8

-

0.9

19.7

0.1

>90% and <=100%

1.3

0.1

-

1.4

0.8

2.5

4.9

8.2

-

1.8

54.4

0.3

>100%

0.1

-

-

0.1

0.2

4.1

12.6

16.9

0.2

8.7

107.4

9.0

As at 31 December 2018

<=75%

77.9

11.9

0.8

90.6

3.3

26.7

20.9

50.9

-

0.1

1.3

-

>75% and <=90%

8.0

0.6

-

8.6

1.6

11.8

8.7

22.1

-

1.0

12.7

0.1

>90% and <=100%

0.6

0.1

-

0.7

0.3

3.0

4.4

7.7

-

1.7

44.5

0.5

>100%

-

0.1

-

0.1

-

10.0

9.3

19.3

-

5.9

88.5

10.8

Note

a

Portfolio marked to market based on the most updated valuation including recovery book balances. Updated valuations reflect the application of the latest HPI available as at 31

December 2019.

Home loans principal portfolios - average LTV

a

Barclays UK

As at 31 December

2019

2018

Overall portfolio LTV(%):

Balance weighted

51.1

48.8

Valuation weighted

37.3

35.8

For >100% LTVs:

Balances (£m)

160

150

Marked to market collateral (£m)

140

132

Average LTV: balance weighted (%)

133.5

136.3

Average LTV: valuation weighted (%)

119.7

119.5

Balances in recovery book (%)

10.0

7.7

Note

a

2018 metrics have been restated to align with the current methodology for the classification of delinquent balances and the inclusion of past maturity balances.

Risk review

Risk performance

Credit risk

134

 Barclays PLC 2019 Annual Report on Form 20-F

Home loans principal portfolios - new lending

Barclays UK

As at 31 December

2019

2018

New bookings (£m)

25,530

23,473

New home loan proportion above >90% LTV (%)

4.2

1.8

Average LTV on new home loans: balance weighted (%)

67.9

65.4

Average LTV on new home loans: valuation weighted (%)

60.0

57.4

The value of new bookings increased across both the owner -occupied and BTL portfolios, 9.2% and 6.5% respectively. High LTV lending booked in

2019 increased driven by market conditions.

Head Office:

Italian home loans and advances at amortised cost reduced to £6.0bn (2018: £7.9bn) and continue to run-off since new bookings

ceased in 2016. The portfolio is secured on residential property with an average balance weighted mark to market LTV of 64.4% (2018: 61.8%). 90-

day arrears increased to 1.8% (2018: 1.4%), a function of the balance reduction associated with the sale of £787 m assets in Q3 2019, gross

charge -off rates remained stable at 0.8% (2018: 0.8%).

Credit cards, unsecured loans and other retail lending

The principal portfolios listed below accounted for 87 % (2018: 87%) of the Group’s total credit cards, unsecured loans and other retail lending.

Credit cards, unsecured loans and other retail lending principal portfolios

Gross loans and

advances

30 day arrears,

excluding

recovery book

90 day arrears,

excluding

recovery book

Annualised gross

write-off rate

Annualised net

write-off rate

£m

%

%

%

%

As at 31 December 2019

Barclays UK

UK cards

16,457

1.7

0.8

1.6

1.6

UK personal loans

6,139

2.1

1.0

3.2

2.9

Barclays International

US cards

22,041

2.7

1.4

4.5

4.4

Barclays partner finance

4,134

0.9

0.3

1.7

1.7

Germany consumer lending

3,558

1.7

0.7

2.1

1.3

As at 31 December 2018

Barclays UK

UK cards

17,285

1.8

0.9

1.9

1.5

UK personal loans

6,335

2.3

1.1

1.9

1.5

Barclays International

US cards

22,178

2.7

1.4

3.6

3.4

Barclays partner finance

4,216

1.1

0.4

1.7

1.7

Germany consumer lending

3,400

1.9

0.8

2.7

2.0

UK cards:

Following the introduction of payment reminders both 30 and 90 day arrears rates reduced by 0.1%. The annualised gross write-off rate

reduced to 1.6% (2018: 1.9%), reflecting lower levels of delinquency and contractual charge-offs through 2019, albeit with increased debt sales

from the recovery book.

UK personal loans:

30 and 90 day arrears rates reduced by 0.2% and 0.1% respectively reflecting a continued improvement in lending quality over

the past 2 years, coupled with improvements in collections effectiveness. Write-off rates increased significantly reflecting higher charge -offs in

2018.

US cards:

30 and 90 -day arrears rates remained stable. The annualised gross and net write-off rates increased to 4.5% (2018: 3.6%) and 4.4%

(2018: 3.4%) respectively primarily driven by an increase in charge-offs in 2018. The percentage of write-offs to charge-offs has been stable year

on year.

Barclays partner finance:

Improvement in 30 and 90 days arrears was driven by better arrears management and improved customer selection.

Annualised write-off rates remained flat.

Germany consumer lending:

Improvement in 30 and 90 days arrears was driven by better collections performance across all products. The

annualised gross write-off rate has shown slight improvement and is in line with the expectations.

Risk review

Risk performance

Credit risk

135

 Barclays PLC 2019 Annual Report on Form 20-F

Exposure to UK commercial real estate (CRE)

The UK CRE portfolio includes property investment, development, trading and house builders but excludes social housing and contractors. 

UK CRE summary

2019

2018

As at 31 December

UK CRE loans and advances (£m)

9,051

8,576

Stage 3 balances (£m)

254

267

Stage 3 balances as % of UK CRE balances (%)

2.8

3.1

Impairment allowances (£m)

52

49

Stage 3 coverage ratio (%)

7.5

8.8

Total collateral (£m)

a

26,876

26,508

Twelve months ended 31 December

Impairment charge (£m)

6

(15)

Note

a

Based on the most recent valuation assessment.

Maturity analysis of exposure to UK CRE

Contractual maturity of UK CRE loans and advances at amortised cost

Stage 3

balances

Not more than

six months

Over six

months but not

more than one

year

Over one year

but not more

than two years

Over two years

but not more

than five years

Over five years

but not more

than ten years

Over ten years

Total loans and

advances

As at 31 December

£m

£m

£m

£m

£m

£m

£m

£m

2019

254

146

111

377

3,088

3,687

1,388

9,051

2018

267

100

134

492

3,569

2,778

1,236

8,576

Risk review

Risk performance

Credit risk

136

 Barclays PLC 2019 Annual Report on Form 20-F

Forbearance

Forbearance measures consist of concessions towards a debtor that is experiencing or about to experience difficulties in meeting their financial

commitments (‘financial difficulties’).

Analysis of forbearance programmes

Gross balances

Impairment allowances

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

£m

£m

£m

£m

£m

£m

£m

£m

As at 31 December 2019

Barclays UK

-

147

298

445

-

35

92

127

Barclays International

2

225

227

1

158

159

Head Office

-

130

130

-

8

8

Total retail

149

653

802

-

36

258

294

Barclays UK

-

47

449

496

-

4

31

35

Barclays International

-

918

1,016

1,934

-

37

226

263

Head Office

-

-

-

-

-

-

-

-

Total wholesale

965

1,465

2,430

41

257

298

Group total

1,114

2,118

3,232

-

77

515

592

As at 31 December 2018

Barclays UK

a

-

173

349

522

-

33

139

172

Barclays International

-

2

231

233

-

1

165

166

Head Office

-

-

165

165

-

-

10

10

Total retail

-

175

745

920

-

34

314

348

Barclays UK

-

56

615

671

-

9

36

45

Barclays International

-

1,088

1,196

2,284

-

40

201

241

Head Office

-

-

-

-

-

-

-

-

Total wholesale

-

1,144

1,811

2,955

-

49

237

286

Group total

-

1,319

2,556

3,875

-

83

551

634

Note

a

2018 metrics have been restated to exclude up to date, paying customers classified as Stage 1.

Balances on fo rbearance programmes decreased 17 % driven by better portfolio performance.

Retail balances on forbearance reduced 13% to £0.8bn, reflecting a decrease in Barclays UK and Head Office.

Wholesale balances on forbearance fell to £2.4bn (2018: £3.0bn) with lower exposure in Corporate Bank and SME of £211m and £171m

respectively. Impairment allowances rose to £298m (2018: £286m) following a small number of material single name charges in the year. Barclays

International accounted for 80% of wholesale forbearance with corporate cases representing 72% of all forborne balances.

Risk review

Risk performance

Credit risk

137

 Barclays PLC 2019 Annual Report on Form 20-F

Retail forbearance programmes

Forbearance on the Group’s principal retail portfolios is presented below. The principal portfolios account for 100 % (201 8: 100%) of total retail

forbearance balances.

Analysis of key portfolios in forbearance programmes

Gross balances on

forbearance

programmes

Marked to

market LTV of

forbearance

balances:

balance

weighted

Marked to

market LTV of

forbearance

balances:

valuation

weighted

Impairment

allowances

marked against

balances on

forbearance

programmes

Total balances

on forbearance

programmes

coverage ratio

Total

% of gross

retail loans

and

advances

£m

%

%

%

£m

%

As at 31 December 2019

Barclays UK

UK home loans

137

0.1

42.7

31.0

-

-

UK cards

254

1.5

n/a

n/a

97

38.2

UK personal loans

54

0.9

n/a

n/a

30

55.3

Barclays International

US cards

183

0.8

n/a

n/a

131

71.6

Barclays partner finance

3

0.1

n/a

n/a

2

66.7

Germany consumer lending

37

1.0

n/a

n/a

23

60.9

Head Office

Italian home loans

130

2.2

60.6

44.9

8

5.9

As at 31 December 2018

Barclays UK

UK home loans

a

182

0.1

41.3

29.9

-

-

UK cards

a

279

1.6

n/a

n/a

121

43.4

UK personal loans

62

1.0

n/a

n/a

51

82.3

Barclays International

US cards

177

0.8

n/a

n/a

131

74.0

Barclays partner finance

6

0.1

n/a

n/a

4

66.7

Germany consumer lending

46

1.3

n/a

n/a

28

60.9

Head Office

Italian home loans

165

2.1

59.5

46.6

10

6.1

Note

a

2018 metrics have been restated to exclude up to date, paying customers classified as Stage 1.

UK home loans:

Forbearance balances reduced to £137 m (2018: £182 m) due to a reduction in volumes of entries into collections and new

forbearance plans.

UK cards:

Forbearance balances decreased in line with the reduction in delinquent balances.

UK personal loans:

Forbearance balances decreased in line with the reduction in delinquent balances.

US cards:

Forbearance balances increased to £183m (2018: £177m) in line with book size but as a percentage of total balance remained low

(<1%). Lower coverage was driven by favourable macroeconomic conditions.

Barclays partner finance:

The reduction in forbearance balances was mainly driven by the rundown of the motor business over the course of 2019.

Germany consumer lending:

Improved performance and higher quality bookings led to fewer accounts moving into forbearance.

Italian home loans:

Forbearance balances reduced to £130m (2018: £165m), due to an asset sale in Q3 2019.

Risk review

Risk performance

Credit risk

138

 Barclays PLC 2019 Annual Report on Form 20-F

Wholesale forbearance programmes

The tables below detail balance information for wholesale forbearance cases.

Analysis of wholesale balances in forbearance programmes

Gross balances on forbearance

programmes

Impairment

allowances

marked against

balances on

forbearance

programmes

Total balances on

forbearance

programmes

coverage ratio

Total balances

% of gross

wholesale loans

and advances

£m

%

£m

%

As at 31 December 2019

Barclays UK

496

1.6

35

7.1

Barclays International

1,934

1.9

263

13.6

Total

2,430

1.8

298

12.3

As at 31 December 2018

Barclays UK

671

2.4

45

6.7

Barclays International

2,284

2.3

241

10.6

Total

2,955

2.3

286

9.7

Analysis of debt securities

Debt securities include government securities held as part of the Group ’s treasury management portfolio for liquidity and regulatory purposes, and

are for use on a continuing basis in the activities of the Group .

The following tables provide an analysis of debt securities held by the Group for trading and investment purposes by issuer type, and where the

Group held government securities exceeding 10% of shareholders’ equity.

Further information on the credit quality of debt securities is presented on pages 129 to 130 . 

Debt securities

2019

2018

As at 31 December

£m

%

£m

%

Of which issued by: 

Governments and other public bodies

91,058

65.1

76,646

64.6

Corporate and other issuers

39,231

28.1

30,767

26.0

US agency

4,480

3.2

7,014

5.9

Mortgage and asset backed securities

5,084

3.6

4,143

3.5

Total

139,853

100.0

118,570

100.0

Government securities

2019

2018

Fair value

Fair value

As at 31 December

£m

£m

United States

32,145

31,199

United Kingdom

28,010

19,555

Japan

6,679

1,249

Risk review

Risk performance

Credit risk

139

 Barclays PLC 2019 Annual Report on Form 20-F

Analysis of derivatives

The tables below set out the fair values of the derivative assets together with the value of those assets subject to enforceable counterparty netting

arrangements for which the Group holds offsetting liabilities and eligible collateral.

Derivative assets (audited)

2019

2018

Balance sheet

assets 

Counterparty

netting

Net

exposure

Balance sheet

assets 

Counterparty

netting

Net

exposure

As at 31 December

£m

£m

£m

£m

£m

£m

Foreign exchange

56,606

44,284

12,322

64,188

50,189

13,999

Interest rate

142,468

106,589

35,879

125,272

95,572

29,700

Credit derivatives

8,215

6,589

1,626

10,755

8,450

2,305

Equity and stock index

20,806

17,517

3,289

20,882

16,653

4,229

Commodity derivatives

1,141

1,019

122

1,441

1,137

304

Total derivative assets

229,236

175,998

53,238

222,538

172,001

50,537

Cash collateral held

33,411

31,402

Net exposure less collateral

19,827

19,135

Derivative asset exposures would be £209 bn (2018: £203bn) lower than reported under IFRS if netting were permitted for assets and liabilities with

the same counterparty or for which the Group holds cash collateral. Similarly, derivative liabilities would be £212bn (2018: £202bn) lower reflecting

counterparty netting and collateral placed. In addition, non-cash collateral of £6bn (2018: £6bn) was held in respect of derivative assets. The Group

received collateral from clients in support of over the counter derivative transactions. These transactions are generally undertaken under

International Swaps and Derivative Association (ISDA) agreements governed by either UK or New York law.

The table below sets out the fair value and notional amounts of OTC derivative instruments by type of collateral arrangement.

Derivatives by collateral arrangement

2019

2018

Notional contract

amount

Fair value

Notional contract

amount

Fair value

Assets

Liabilities

Assets

Liabilities

£m

£m

£m

£m

£m

£m

Unilateral in favour of Barclays

Foreign exchange

32,441

398

(422)

22,639

473

(369)

Interest rate

5,202

859

(13)

4,762

769

(25)

Credit derivatives

338

3

(1)

54

1

- 

Equity and stock index

158

5

(27)

107

17

- 

Total unilateral in favour of Barclays

38,139

1,265

(463)

27,562

1,260

(394)

Unilateral in favour of counterparty

Foreign exchange

11,230

424

(1,206)

14,221

530

(1,641)

Interest rate

44,360

3,094

(4,210)

64,504

2,925

(4,090)

Credit derivatives

116

- 

(1)

78

1

(3)

Equity and stock index

494

298

(40)

714

242

(31)

Total unilateral in favour of counterparty

56,200

3,816

(5,457)

79,517

3,698

(5,765)

Bilateral arrangement

Foreign exchange

4,484,380

51,571

(51,001)

4,788,711

58,772

(56,392)

Interest rate

12,303,652

131,700

(128,096)

9,699,149

116,712

(114,091)

Credit derivatives

390,790

5,034

(4,923)

380,546

6,339

(5,002)

Equity and stock index

210,267

8,925

(11,178)

177,496

7,984

(8,494)

Commodity derivatives

7,269

294

(210)

9,635

492

(330)

Total bilateral arrangement

17,396,358

197,524

(195,408)

15,055,537

190,299

(184,309)

Uncollateralised derivatives

Foreign exchange

379,741

4,117

(4,216)

371,158

4,243

(5,495)

Interest rate

284,168

4,697

(1,668)

205,050

3,454

(1,138)

Credit derivatives

8,142

216

(474)

5,830

234

(234)

Equity and stock index

21,131

1,400

(4,540)

12,179

1,468

(3,305)

Commodity derivatives

58

9

(46)

121

29

(78)

Total uncollateralised derivatives

693,240

10,439

(10,944)

594,338

9,428

(10,250)

Total OTC derivative assets/(liabilities)

18,183,937

213,044

(212,272)

15,756,954

204,685

(200,718)

Risk review

Risk performance

Market risk

140

 Barclays PLC 2019 Annual Report on Form 20-F

Summary of contents

Page

Outlines key measures used to summarise the market

risk profile of the bank such as value at risk (VaR).

◾

Market risk overview and summary of performance

141

The Group discloses details on management measures

of market risk. Total management VaR includes all

trading positions and is presented on a diversified basis

by risk factor.

This section also outlines the macroeconomic

conditions modelled as part of the Group’s risk

management framework.

◾

Traded market risk

◾

Review of management measures

-

The daily average, maximum and minimum values of management VaR

-

Business scenario stresses

141

141

141

142

Risk review

Risk performance

Market risk

141

 Barclays PLC 2019 Annual Report on Form 20-F

All disclosures in this section (pages 141 to 142) are unaudited unless otherwise stated.

Overview

This section contains key statistics describing the market risk profile of the Group. The market r isk management section on page 104 provides a

description of management VaR .

Measures of market risk in the Group and accounting measures

Traded market risk measures such as VaR and balance sheet exposure measures have fundamental differences:

◾

balance sheet measures show accruals-based balances or marked to market values as at the reporting date;

◾

VaR measures also take account of current marked to market values, but in addition hedging effects between positions are considered;

◾

market risk measures are expressed in terms of changes in value or volatilities as opposed to static values.

For these reasons, it is not possible to present direct reconciliations of traded market risk and accounting measures.

Summary of performance in the period

Overall, the Group has maintained a steady market risk profile. Average management VaR increased by 10% to £23m in 2019 (2018: £21m) and

remained relatively stable during the period. The increase in average management VaR in 2019 was driven by a small increase in equity risk and

credit risk, partially offset by a slight decrease in interest rate risk compared to 2018.

Traded market risk review

Review of management measures

The following disclosures provide details on management measures of market risk. Refer to the market risk management section on pages 179 to

186 of the Barclays PLC Pillar 3 Report 2019 (unaudited) for more detail on management measures and the differences when compared to

regulatory measures.

The table below shows the total management VaR on a diversified basis by risk factor. To tal management VaR includes all trading positions in CIB

and Treasury and it is calculated with a one-day holding period.

Limits are applied against each risk factor VaR as well as total management VaR, which are then cascaded further by risk managers to each

business.

The daily average, maximum and minimum values of management VaR

Management VaR (95%, one day) (audited) 

2019

2018

Average

High

b

Low

b

Average

High

b

Low

b

For the year ended 31 December

a

£m

£m

£m

£m

£m

£m

Credit risk 

12

17

8

11

16

8

Interest rate risk 

6

11

3

8

19

3

Equity risk 

10

22

5

7

14

4

Basis risk 

8

11

6

6

8

4

Spread risk 

4

5

3

6

9

3

Foreign exchange risk 

3

5

2

3

7

2

Commodity risk 

1

2

-

1

2

-

Inflation risk 

2

3

1

3

4

2

Diversification effect

b

(23)

n/a

n/a

(24)

n/a

n/a

Total management VaR

23

29

17

21

27

15

Notes

a

Excludes BAGL from 23 July 2018.

b

Diversification effects recognise that forecast losses from different assets or businesses are unlikely to occur concurrently, hence the expected aggregate loss is lower than the

sum of the expected losses from each area. Historical correlations between losses are taken into account in making these assessments. The high and low VaR figures reported for

each category did not necessarily occur on the same day as the high and low VaR reported as a whole. Consequently, a diversification effect balance for the high and low VaR

figures would not be meaningful and is therefore omitted from the above table.

Risk review

Risk performance

Market risk

0

20

40

60

Jan 2018

Jan 2019

Dec 2019

142

 Barclays PLC 2019 Annual Report on Form 20-F

Group Management VaR

a

 (£m)

Note 

a

Excludes BAGL from 23 July 2018.

Business scenario stresses

As part of the Group’s risk management framework, on a regular basis the performance of the trading business in hypothetical scenarios

characterised by severe macroeconomic conditions is modelled. Up to seven global scenarios are modelled on a regular basis, for example, a

sharp deterioration in liquidity, a slowdown in the global economy, global recession, and a sharp increase in economic growth.

In 2019, the scenario analyses showed that the largest market risk related impacts would be due to a severe deterioration in financial liquidity and a

global recession.

Risk review

Risk performance

Treasury and Capital risk

143

 Barclays PLC 2019 Annual Report on Form 20-F

Summary of contents

Page

Liquidity risk performance

The risk that the firm is unable to meet its contractual or

contingent obligations or that it does not have the

appropriate amount, tenor and composition of funding

and liquidity to support its assets. 

This section provides an overview of the Group’s

liquidity risk.

◾

Liquidity overview and summary of performance

◾

Liquidity risk stress testing

-

Liquidity risk appetite

-

Liquidity regulation

-

Liquidity coverage ratio

145

145

145

146

146

The liquidity pool is held unencumbered and is intended

to offset stress outflows.

◾

Liquidity pool

-

Composition of the liquidity pool

-

Liquidity pool by currency

-

Management of the liquidity pool

-

Contingent liquidity

147

147

147

147

147

The basis for sound liquidity risk management is a

funding structure that reduces the probability of a

liquidity stress leading to an inability to meet funding

obligations as they fall due.

◾

Funding structure and funding relationships

-

Deposit funding

-

Wholesale funding

148

148

148

Provides details on the contractual maturity of all

financial instruments and other assets and liabilities.

◾

Contractual maturity of financial assets and liabilities

151

Capital risk performance

Capital risk is the risk that the firm has an insufficient

level or composition of capital to support its normal

business activities and to meet its regulatory capital

requirements under normal operating environments or

stressed conditions (both actual and as defined for

internal planning or regulatory testing purposes). This

also includes the risk from the firm’s pension plans.

This section details the Group’s capital position

providing information on both capital resources and

capital requirements. It also provides details of the

leverage ratios and exposures.

◾

Capital risk overview and summary of performance

◾

Regulatory minimum capital and leverage requ irements

-

Capital

-

Leverage

155

155

155

156

This section outlines the Group’s capital ratios, capital

composition, and provides information on significant

movements in CET1 capital during the year.

◾

Analysis of capital resources

-

Capital ratios

-

Capital resources

-

Movement in CET1 capital

157

157

157

165

This section outlines risk weighted assets by risk type,

business and macro drivers.

◾

Analysis of risk weighted assets

-

Risk weighted assets by risk type and business

-

Movement analysis of risk weighted assets

166

166

166

This section outlines the Group’s leverage ratios,

leverage exposure composition, and provides

information on significant movements in the IFRS and

leverage balance sheet.

◾

Analysis of leverage ratios and exposures

-

Leverage ratios and exposures

167

167

This section outlines the Group’s Minimum requirement

for own funds and Eligible Liabilities (MREL) position

and ratios.

◾

Minimum Requirement for own funds and Eligible Liabilities 

168

The Group discloses the two sources of foreign

exchange risk that it is exposed to.

◾

Foreign exchange risk

-

Transactional foreign currency exposure

-

Translational foreign exchange exposure

-

Functional currency of operations

169

169

169

169

A review focusing on the UK retirement fund, which

represents the majority of the Group’s total retirement

benefit obligation.

◾

Pension risk review

-

Assets and liabilities

-

IAS 19 position

-

Risk measurement

170

170

171

171

Interest rate risk in the banking book performance

Risk review

Risk performance

Treasury and Capital risk

144

 Barclays PLC 2019 Annual Report on Form 20-F

A description of the non -traded market risk framework

is provided.

The Group discloses a sensitivity analysis on pre -tax net

interest income for non -trading financial assets and

liabilities. The analysis is carried out by business unit

and currency.

The Group measures some non-traded market risks, in

particular prepayment, recruitment, and residual risk

using an economic capital methodology.

The Group discloses the overall impact of a parallel shift

in interest rates on other comprehensive income and

cash flow hedges.

The Group measures the volatility of the value of the

FVOCI instruments in the liquidity pool through non-

traded market risk VaR.

◾

Interest rate risk in the banking book overview and summary of

performance

◾

Net interest income sensitivity

-

by business unit

-

by currency

◾

Analysis of equity sensitivity 

◾

Volatility of the FVOCI portfolio in the liquidity pool

172

172

172

173

173

173

Risk review

Risk performance

Treasury and Capital risk

145

 Barclays PLC 2019 Annual Report on Form 20-F

Liquidity risk

All disclosures in this section (pages 152 to 161 ) are unaudited unless otherwise stated.

Overview

The Group has a comprehensive key risk control framework for managing the Group’s liquidity risk. The Liquidity Framework meets the PRA’s

standards and is designed to maintain liquidity resources that are sufficient in amount and quality, and a funding profile that is appropriate to meet

the liquidity risk appetite. The Liquidity Framework is delivered via a combination of policy formation, review and governance, analysis, stress

testing, limit setting and monitoring.

This section provides an analysis of the Group ’s: (i) summary of performance, (ii) liquidity risk stress testing, iii) liquidity pool, (iv) funding structure

and funding relationships, (v) credit ratings, and (vi) contractual maturity of financial assets and liabilities. 

For further detail on liquidity risk governance and framework , refer to page 192 to 194 of the Barclays PLC Pillar 3 Report 2019 (unaudited).

Summary of performance

The liquidity pool at £211 bn (December 2018: £227 bn) reflects the Group’s prudent approach to liquidity management. The Liquidity Coverage

Ratio (LCR) remained well above the 100% regulatory requirement at 160 % (December 2018 : 169 %), equivalent to a surplus of £78bn (December

2018 : £90bn) . The liquidity pool, LCR and surplus have been managed down through the course of the year, supporting increased business funding

requirements while maintaining a prudent liquidity position.

During the year, the Group issued £8.6bn of minimum requirement for own funds and eligible liabilities (MREL) instruments in a range of tenors

and currencies.

Barclays Bank PLC continued to issue in the shorter-term markets and Barclays Bank UK PLC issued in the shorter-term and secured markets,

helping to maintain their stable and diversified funding bases. 

The Group has continued to reduce its reliance on short-term wholesale funding, where the proportion maturin g in less than 1 year fell to 28%

(December 2018: 30%) .

Key metrics

Liquidity Coverage Ratio

160% (2018: 169%)

Liquidity risk stress testing 

Under the Liquidity Framework, the Group has established a liquidity risk appetite (LRA) together with the appropriate limits for the management of

the liquidity risk. This is the level of liquidity risk the Group chooses to take in pursuit of its business objectives and in meeting its regulatory

obligations. The Group sets its internal liquidity risk appetite (LRA) based on internal liquidity risk assessments and , external regulatory

requirements namely the CRR (as amended by CRR II) Liquidity Coverage Ratio (LCR).

Liquidity risk appetite 

The liquidity risk assessment measures the potential contractual and contingent stress outflows under a range of stress scenarios, which are then

used to determine the size of the liquidity pool that is immediately available to meet anticipated outflows should a stress occur.

As part of the LRA, the Group runs three short-term liquidity stress scenarios, aligned to the PRA’s prescribed stresses:

◾

90 day market -wide stress event

◾

30 day Barclays -specific stress event

◾

combined 30 day market-wide and Barclays -specific stress event

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146

 Barclays PLC 2019 Annual Report on Form 20-F

Key LRA assumptions

For the year ended 31 December 2019

Drivers of Liquidity Risk

LRA Combined stress – key assumptions

Wholesale Secured and Unsecured

Funding Risk

- Zero rollover of maturing wholesale unsecured funding

- Loss of repo capacity on non- extremely liquid repos at contractual maturity date

- Roll of repo for extremely liquid repo at wider haircut at contractual maturity date

- Withdrawal of contractual buyback obligations, excess client futures margin, Prime Brokerage (PB)

client cash and overlifts

- Haircuts applied to the market value of marketable assets held in the liquidity buffer

Retail and Corporate Funding Risk

- Retail and Corporate deposit outflows as counterparties seek to diversify their deposit balances

Intraday Liquidity Risk

- Liquidity held to meet increased intraday liquidity usage due to payment and receipts volatility, loss

of unsecured credit lines and haircuts applied to collateral values used to back secured creditlines, in

a stress

Intra-Group Liquidity Risk

- Liquidity support for material subsidiaries. Surplus liquidity held within certain subsidiaries is not

taken as a benefit to the wider Group

Cross-Currency Liquidity Risk

- Deterioration in FX market capacity that may result in restriction in net currency positions

Off-Balance Sheet Liquidity Risk

- Drawdown on committed facilities based on facility and counterparty type

- Collateral outflows due to a two-notch credit rating downgrade

- Increase in the Group's initial margin requirement across all major exchanges

- Variation margin outflows from collateralised risk positions

- Outflow of collateral owing but not called

- Loss of internal sources of funding within the PB synthetics business

Franchise-Viability Risk

- Liquidity held to enable the firm to meet select non-contractual obligations to ensure market

confidence in the firm is maintained, including debt buy -backs, swap tear-ups and incresed prime

brokerage margin debits

Funding Concentration Risk

- Liquidity held against largest wholesale funding counterparty refusing to roll

As at 31 December 2019 , the Group held eligible liquid assets well in excess of 100% of net stress outflows of the 30 day combined scenario, which

has the highest net outflows of the three short- term liquidity stress scenarios.

The Group also runs a long term liquidity stress test, which measures the anticipated outflows over a 12-month market-wide scenario. As at 31

December 2019, the Group remained compliant with this internal metric.

Liquidity regulation

The Group monitors its position against the CRR (as amended by CRR II) Liquidity Coverage Ratio and the Net Stable Funding Ratio (NSFR).

The LCR is designed to promote short-term resilience of a bank’s liquidity risk profile by holding sufficient High Quality Liquid Assets to survive an

acute stress scenario lasting for 30 days. The NSFR has been developed to promote a sustainable maturity structure of assets and liabilities.

In June 2019, the EBA published CRR II which defined the final rules and minimum requirements for the NSFR. Barclays expects to be compliant

with these requirement s when they become effective in June 2021.

Liquidity coverage ratio

The external LCR requirement is prescribed by the regulator taking into account the relative stability of different sources of funding and potential

incremental funding requirements in a stress.

2019

2018

As at 31 December

£bn

£bn

Eligible liquidity buffer

206

219

Net stress outflows

(128)

(129)

Surplus

78

90

Liquidity coverage ratio

160%

169%

As part of the LRA, Barclays also establishes the minimum LCR limit. The Group plans to maintain its surplus to the internal and regulatory stress

requirements at an efficient level, while continuously assessing risks to market funding conditions and its liquidity position and taking actions to

manage the size of the liquidity pool as appropriate.

Risk review

Risk performance

Treasury and Capital risk

147

 Barclays PLC 2019 Annual Report on Form 20-F

Liquidity pool 

The Group liquidity pool as at 31 December 2019 was £211bn (2018: £227 bn). During 2019, the month-end liquidity pool ranged from £211 bn to

£256bn (2018: £207bn to £243bn), and the month-end average balance was £235 bn (2018: £2 25bn). The liquidity pool is held unencumbered and

is intended to offset stress outflows. It comprises the following cash and unencumbered assets.

Composition of the Group liquidity pool as at 31 December 2019

Liquidity pool

Liquidity pool of which CRR LCR eligible

c

2018

Cash

Level 1

Level 2A

Liquidity pool

£bn

£bn

£bn

£bn

£bn

Cash and deposits with central banks

a

153

150

-

-

181

Government bonds

b

AAA to AA-

31

-

26

-

27

BBB+ to BBB -

5

-

4

2

4

Other LCR Ineligible Government bonds

-

-

-

-

1

Total government bonds

36

-

30

2

32

Other 

Goverment Guaranteed Issuers, PSEs and GSEs 

9

-

8

1

6

International Organisations and MDBs

7

-

7

-

5

Covered bonds 

6

-

5

-

3

Other

-

-

-

-

-

Total other

22

-

20

1

14

Total as at 31 December 2019

211

150

50

3

227

Total as at 31 December 2018

227

176

40

1

Notes

a Includes cash held at central banks and surplus cash at central banks related to payment schemes. Of which over 98% (2018: over 99%) was placed with the Bank of England, US

Federal Reserve, European Central Bank, Bank of Japan and Swiss National Bank.

b Of which over 67% (2018: over 71%) comprised UK, US, French, German, Swiss and Dutch securities.

c The LCR eligible liquidity pool is adjusted for trapped liquidity and other regulatory deductions. It also incorporates other CRR (as amended by CRR II) qualif ying assets that are not

eligible under Barclays’ internal risk appetite.

The Group liquidity pool is well diversified by major currency and the Group monitors LRA stress scenarios for major currencies.

Liquidity pool by currency

USD

EUR

GBP

Other 

Total

£bn

£bn

£bn

£bn

£bn

Liquidity pool as at 31 December 2019

52

42

67

50

211

Liquidity pool as at 31 December 2018

57

64

76

30

227

Management of the liquidity pool

The composition of the liquidity pool is subject to limits set by the Board and the independent liquidity risk, credit risk and market risk functions. In

addition, the investment of the liquidity pool is monitored for concentration risk by issuer, currency and asset type. Given the returns generated by

these highly liquid assets, the risk and reward profile is continuously managed.

As at 31 December 2019, 67% (2018: 70%) of the liquidity pool was located in Barclays Bank PLC, 20 % (2018: 20%) in Barclays Bank UK PLC and

6% (2018: 2%) in Barclays Bank Ireland PLC. The residual portion of the liquidity pool is held outside of these entities, predominantly in the US

subsidiaries, to meet entity-specific stress outflows and local regu latory requirements. To the extent the use of this portion of the liquidity pool is

restricted due to local regulatory requirements, it is assumed to be unavailable to the rest of the Group in calculating the LCR.

Contingent liquidity

In addition to the Group liquidity pool, the Group has access to other unencumbered assets which provide a source of contingent liquidity.

While these are not relied on in the Group’s LRA, a portion of these assets may be monetised in a stress to generate liquidity through their use as

collateral for secured funding or through outright sale.

In a Barclays-specific, market-wide or combined liquidity stress, liquidity available via market sources could be severely disrupted. In circumstances

where market liquidity is unavailable or available only at significantly elevated prices, the Group could generate liquidity via central bank facilities.

The Group maintains a significant amount of collateral positioned at central banks.

For more detail on the Group’s other unencu mbered assets, see pages 221 to 222 of the Barclays PLC Pillar 3 Report 2019 (unaudited).

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 Barclays PLC 2019 Annual Report on Form 20-F

Funding structure and funding relationships

The basis for sound liquidity risk management is a funding structure that reduces the probability of a liquidity stress leading to an inability to meet

funding obligations as they fall due. The Group’s overall funding strategy is to develop a diversified funding base (geographically, by type and by

counterparty) and maintain access to a variety of alternative funding source s, to provide protection against unexpected fluctuations, while

minimising the cost of funding.

Within this, the Group aims to align the sources and uses of funding. As such, retail and corporate loans and advances are largely funded by

deposits in the relevant entities, with the surplus primarily funding the liquidity pool. The majority of reverse repurchase agreements are matched

by repurchase agreements. Derivative liabilities and assets are largely matched. A substantial proportion of balance sheet derivative positions

qualify for counterparty netting and the remaining portions are largely offset when netted against cash collateral received and paid. Wholesale debt

and equity is used to fund residual assets.

These funding relationships are summarised below:

2019

2018

2019

2018

Assets

£bn

£bn

Liabilities

£bn

£bn

Loans and advances at amortised cost

339

327

Deposits at amortised cost

416

395

Group liquidity pool

211

227

<1 Year wholesale funding

41

47

>1 Year wholesale funding

106

107

Reverse repurchase agreements, trading portfolio

assets, cash collateral and settlement balances

298

303

Repurchase agreements, trading portfolio liabilities,

cash collateral and settlement balances

247

262

Derivative financial instruments

229

223

Derivative financial instruments

229

220

Other assets

a

63

53

Other liabilities

35

38

Equity

66

64

Total assets

1,140

1,133

Total liabilities

1,140

1,133

Note

a Other assets include fair value assets that are not part of reverse repurchase agreements or trading portfolio assets, and other asset categories.

Deposit funding (audited)

2019

2018

Funding of loans and advances

Loans and

advances at

amortised cost

Deposits at

amortised cost

Loan: deposit

ratio

a

Loan: deposit

ratio

As at 31 December 2019

£bn

£bn

%

%

Barclays UK

198

206

96%

96%

Barclays International

133

210

63%

65%

Head Office

8

-

Barclays Group

339

416

82%

83%

Note

a The loan: deposit ratio is calculated as loans and advances at amortised cost divided by deposits at amortised cost.

As at 31 December 2019, £181 bn (2018: £172 bn) of total customer deposits were insured through the UK Financial Services Compensation

Scheme (FSCS) and other similar schemes. In addition to these customer deposits £4bn (2018: £5bn) of other liabilities are insured by other

governments.

Contractually current accounts are repayable on demand and savings accounts at short notice. In practice, their observed maturity is typically

longer than their contractual maturity. Similarly, repayment profiles of certain types of assets e.g. mortgages, overdrafts and credit card lending,

differ from their contractual profiles. The Group therefore assesses the behavioural maturity of both customer assets and liabilities to identify

structural balance sheet funding gaps. In doing so, it applies quantitative modelling and qualitative assessments which take into account historical

experience, current customer composition, and macroeconomic projections.

The Group’s broad base of customers, numerically and by depositor type, helps protect against unexpected fluctuations in balances and hence

provide s a stable funding base for the Group’s operations and liquidity needs.

Wholesale funding

Barclays Bank Gro up and Barclays Bank UK Group maintain access to a variety of sources of wholesale funds in major currencies, including those

available from term investors across a variety of distribution channels and geographies, short-term funding markets and repo markets. 

Barclays Bank Group has direct access to US, European and Asian capital markets through its global investment banking operations and to long-

term investors through its clients worldwide. Key sources of wholesale funding include money markets, certificates of deposit, commercial paper,

medium term issuances (including structured notes) and securitisations.

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 Barclays PLC 2019 Annual Report on Form 20-F

Key sources of wholesale funding for Barclays Bank UK Group include money markets, certificates of deposit, commercial pa per, covered bonds and

other securitisations.

The Group expects to continue issuing public wholesale debt from Barclays PLC (the Parent company), in order to maintain compliance with

indicative MREL requirements and maintain a stable and diverse funding base by type, currency and market.

As at 31 December 2019 , the Group’s total wholesale funding outstanding (excluding repurchase agreements) was £147.1bn (2018: £154.0 bn), of

which £19.6 bn (2018 : £22.5bn) was secured funding and £127.5 bn (2018: £131.5bn) unsecured funding. Unsecured funding includes £51.1bn

(2018 : £47.3 bn) of privately placed senior unsecured notes issued through a variety of distribution channels including intermediaries and private

banks.

During the year, the Group issued £8.6bn of minimum requirement for own funds and eligible liabilities (MREL) instruments from Barclays PLC (the

Parent company) in a range of different currencies and tenors. Barclays Bank PLC continued to issue in the shorter- term markets and Barclays Bank

UK PLC issued in the shorter -term and secured markets, helping to maintain their stable and diversified funding bases.

As at 31 December 2019 , wholesale funding of £40.6 bn (2018 : £46.7bn) matures in less than one year, of which £16.3 bn (2018 : £19.1 bn) relates

to term funding. Although not a requirement, the liquidity pool exceeded the wholesale funding matur ing in less than one year by £170 bn (2018 :

£180 bn).

Barclays Bank Group and Barclays Bank UK Group also support various central bank monetary initiatives including participation in the Bank of

England’s Term Funding Scheme. These are reported under ‘repurchase agreements and other similar secured borrowing’ on the balance sheet.

Maturity profile of wholesale funding

a,b

<1 

month

1-3

months

3-6

months

6-12

months

<1 

year

1-2 years

2-3 years

3-4 years

4-5 years

>5 years

Total

£bn

£bn

£bn

£bn

£bn

£bn

£bn

£bn

£bn

£bn

£bn

Barclays PLC (the Parent company)

Senior unsecured (Public benchmark)

 - 

 - 

0.8

0.3

1.1

4.2

0.9

8.2

4.5

14.2

33.1

Senior unsecured (Privately placed)

 - 

 - 

 - 

 - 

 - 

0.2

 - 

0.1

0.1

0.5

0.9

Subordinated liabilities

 - 

 - 

 - 

 - 

 - 

 - 

 - 

 - 

1.0

6.7

7.7

Barclays Bank PLC (including

subsidiaries)

Certificates of deposit and commercial

paper

1.1

4.2

3.6

7.3

16.2

0.9

0.5

0.1

 - 

 - 

17.7

Asset backed commercial paper

1.6

4.9

0.7

 - 

7.2

 - 

 - 

 - 

 - 

 - 

7.2

Senior unsecured (Public benchmark)

0.6

 - 

 - 

 - 

0.6

2.9

0.1

 - 

1.1

0.3

5.0

Senior unsecured (Privately placed)

c

1.1

1.5

2.4

5.9

10.9

5.7

4.8

3.9

4.0

20.9

50.2

Asset backed securities

 - 

0.4

0.6

 - 

1.0

 - 

0.2

0.6

0.9

2.1

4.8

Subordinated liabilities

 - 

0.2

0.1

0.9

1.2

5.0

3.3

0.1

 - 

0.9

10.5

Other

0.1

 - 

 - 

 - 

0.1

 - 

 - 

0.3

 - 

1.2

1.6

Barclays Bank UK PLC (including

subsidiaries)

Certificates of deposit and commercial

paper

 - 

0.4

0.2

0.2

0.8

 - 

 - 

 - 

 - 

 - 

0.8

Covered bonds

 - 

 - 

1.0

 - 

1.0

0.9

2.3

1.8

 - 

1.1

7.1

Asset backed securities

 - 

 - 

 - 

0.5

0.5

 - 

 - 

 - 

 - 

 - 

0.5

Total as at 31 December 2019

4.5

11.6

9.4

15.1

40.6

19.8

12.1

15.1

11.6

47.9

147.1

Of which secured

1.6

5.3

2.3

0.5

9.7

0.9

2.5

2.4

0.9

3.2

19.6

Of which unsecured

2.9

6.3

7.1

14.6

30.9

18.9

9.6

12.7

10.7

44.7

127.5

Total as at 31 December 2018

2.5

15.9

8.2

20.1

46.7

16.7

16.8

10.4

13.2

50.2

154.0

Of which secured

2.0

3.7

1.1

3.6

10.4

2.7

1.2

2.6

1.9

3.7

22.5

Of which unsecured

0.5

12.2

7.1

16.5

36.3

14.0

15.6

7.8

11.3

46.5

131.5

Notes

a The composition of wholesale funds comprises the balance sheet reported financial liabilities at fair value, debt securities in issue and subordinated liabilities. It does not include

participation in the central bank facilities reported within repurchase agreements and other similar secured borrowing.

b Term funding comprises public benchmark and privately placed senior unsecured notes, covered bonds, asset-backed securities and subordinated debt where the original maturity

of the instrument was more than one year.

c Includes structured notes of £42.9bn, of which £8.3bn matures within one year.

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150

 Barclays PLC 2019 Annual Report on Form 20-F

Currency composition of wholesale debt

As at 31 December 2019 , the proportion of wholesale funding by major currencies was as follows:

Currency composition of wholesale funding

USD

EUR

GBP

Other

%

%

%

%

Certificates of deposit and commercial paper

63

28

8

1

Asset backed commercial paper

85

8

7

-

Senior unsecured (Public benchmark)

48

4

43

5

Senior unsecured (Privately placed)

60

18

10

12

Covered bonds / Asset backed securities

45

27

28

-

Subordinated liabilities

55

27

16

2

Total as at 31 December 2019

60

22

13

5

Total as at 31 December 2018

53

27

13

7

To manage cross currency refinancing risk, the Group manages to foreign exchange cash flow limits, which limit risk at specific maturities. 

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 Barclays PLC 2019 Annual Report on Form 20-F

Contractual maturity of financial assets and liabilities 

The table below provides detail on the contractual maturity of all financial instruments and other assets and liabilities. Derivatives (other than those

designated in a hedging relationship) and trading portfolio assets and liabilities are included in the ‘on demand’ column at their fair value. Liquidity

risk on these items is not managed on the basis of contractual maturity since they are not held for settlement according to such maturity and will

frequently be settled before contractual maturity at fair value. Derivatives designated in a hedging relationship are included according to their

contractual maturity.

Contractual maturity of financial assets and liabilities (audited)

As at

31 December 2019

On

demand

Not more

than three

months

Over three

months but

not more

than six

months

Over six

months but

not more

than nine

months

Over nine

months but

not more

than one

year

Over one

year 

but not

more than

two years

Over two

years but

not more

than three

years

Over three

years but

not more

than five

years

Over five

years but

not more

than ten

years

Over ten

years

Total

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

Assets

Cash and balances at

central banks

149,383

766

109

-

-

-

-

-

-

-

150,258

Cash collateral and

settlement balances

2,022

81,231

3

-

-

-

-

-

-

-

83,256

Loans and advances at

amortised cost

14,824

10,944

13,108

7,738

7,031

21,771

22,478

37,408

40,702

163,111

339,115

Reverse repurchase

agreements and other

similar secured lending

13

3,097

-

-

-

77

190

-

-

2

3,379

Trading portfolio assets

114,195

-

-

-

-

-

-

-

-

-

114,195

Financial assets at fair

value through the

income statement

14,279

89,355

13,979

3,443

1,317

1,664

512

953

2,302

5,282

133,086

Derivative financial

instruments

229,063

30

-

-

-

7

24

9

79

24

229,236

Financial assets at fair

value through other

comprehensive income

-

6,694

3,241

1,164

1,159

7,711

6,521

11,896

21,195

6,169

65,750

Other financial assets

895

441

25

-

14

-

-

-

-

-

1,375

Total financial assets

524,674

192,558

30,465

12,345

9,521

31,230

29,725

50,266

64,278

174,588

1,119,650

Other assets

20,579

Total assets

1,140,229

Liabilities

Deposits at amortised

cost

348,337

42,357

10,671

3,861

4,067

3,935

930

530

545

554

415,787

Cash collateral and

settlement balances

3,053

64,275

13

-

-

-

-

-

-

-

67,341

Repurchase agreements

and other similar

secured borrowing

7

2,755

10

-

-

10,007

1,201

470

-

67

14,517

Debt securities in issue

-

12,795

6,560

4,147

3,123

8,387

3,325

18,189

14,342

5,501

76,369

Subordinated liabilities

-

207

78

75

832

4,979

3,266

1,075

5,979

1,665

18,156

Trading portfolio

liabilities

36,916

-

-

-

-

-

-

-

-

-

36,916

Financial liabilities

designated at fair value

13,952

127,939

10,890

6,519

3,798

6,981

6,235

7,706

7,127

13,179

204,326

Derivative financial

instruments

228,617

1

-

8

-

36

42

42

88

370

229,204

Other financial liabilities

251

2,361

55

52

50

1,110

138

242

351

409

5,019

Total financial liabilities

631,133

252,690

28,277

14,662

11,870

35,435

15,137

28,254

28,432

21,745

1,067,635

Other liabilities

6,934

Total liabilities

1,074,569

Cumulative liquidity

gap

(106,459)

(166,591)

(164,403)

(166,720)

(169,069)

(173,274)

(158,686)

(136,674)

(100,828)

52,015

65,660

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Contractual maturity of financial assets and liabilities (audited)

As at

31 December 2018

On

demand

Not more

than three

months

Over three

months but

not more

than six

months

Over six

months but

not more

than nine

months

Over nine

months but

not more

than one

year

Over one

year 

but not

more than

two years

Over two

years but

not more

than three

years

Over three

years but

not more

than five

years

Over five

years but

not more

than ten

years

Over ten

years

Total

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

Assets

Cash and balances at

central banks

175,534

1,353

118

-

64

-

-

-

-

-

177,069

Cash collateral and

settlement balances

2,389

74,786

19

-

22

2

-

4

-

-

77,222

Loans and advances at

amortised cost

12,506

11,171

7,938

5,416

7,072

26,336

25,559

39,604

48,606

142,198

326,406

Reverse repurchase

agreements and other

similar secured lending

31

1,245

-

-

-

586

446

-

-

-

2,308

Trading portfolio assets

104,187

-

-

-

-

-

-

-

-

-

104,187

Financial assets at fair

value through the

income statement

13,606

112,297

7,174

3,124

2,312

4,677

165

311

829

5,153

149,648

Derivative financial

instruments

222,384

-

6

1

4

14

11

11

86

21

222,538

Financial assets at fair

value through other

comprehensive income

11

3,120

2,784

1,696

2,719

6,080

2,765

7,818

18,659

7,164

52,816

Other financial assets

761

182

56

-

7

-

-

-

-

-

1,006

Total financial assets

531,409

204,154

18,095

10,237

12,200

37,695

28,946

47,748

68,180

154,536

1,113,200

Other assets

20,083

Total assets

1,133,283

Liabilities

Deposits at amortised

cost

342,967

30,029

7,282

3,672

3,237

3,983

2,053

520

349

746

394,838

Cash collateral and

settlement balances

3,542

63,973

5

2

-

-

-

-

-

-

67,522

Repurchase agreements

and other similar secured

borrowing

1,331

5,542

-

-

-

3

10,017

1,201

484

-

18,578

Debt securities in issue

26

14,779

5,937

5,159

7,686

6,984

6,248

12,988

15,812

6,667

82,286

Subordinated liabilities

-

306

-

78

45

860

5,156

3,387

6,968

3,759

20,559

Trading portfolio

liabilities

37,882

-

-

-

-

-

-

-

-

-

37,882

Financial liabilities

designated at fair value

14,280

143,635

6,809

9,051

3,577

10,383

5,689

7,116

4,415

11,879

216,834

Derivative financial

instruments

219,578

9

-

-

-

3

3

3

3

44

219,643

Other financial liabilities

277

2,984

-

-

-

554

-

-

-

-

3,815

Total financial liabilities

619,883

261,257

20,033

17,962

14,545

22,770

29,166

25,215

28,031

23,095

1,061,957

Other liabilities

7,547

Total liabilities

1,069,504

Cumulative liquidity gap

(88,474)

(145,577)

(147,515)

(155,240)

(157,585)

(142,660)

(142,880)

(120,347)

(80,198)

51,243

63,779

Expected maturity date may differ from the contractual dates, to account for:

◾

trading portfolio assets and liabilities and derivative financial instruments, which may not be held to maturity as part of the Group’s trading

strategies

◾

corporate and retail deposits, reported under deposits at amortised cost, are repayable on demand or at short notice on a contractual basis. In

practice, their behavioural maturity is typically longer than their contractual maturity, and therefore these deposits provide stable funding for the

Group’s operations and liquidity needs because of the broad base of customers, both numerically and by depositor type

◾

loans to corporate and retail customers, which are included within loans and advances at amortised cost and financial assets at fair value, may be

repaid earlier in line with terms and conditions of the contract

◾

debt securities in issue, subordinated liabilities, and financial liabilities designated at fair value, may include early redemption features.

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 Barclays PLC 2019 Annual Report on Form 20-F

Contractual maturity of financial liabilities on an undiscounted basis 

The table below presents the cash flows payable by the Group under financial liabilities by remaining contractual maturities at the balance sheet

date. The amounts disclosed in the table are the contractual undiscounted cash flows of all financial liabilities (i.e. nominal values).

The balances in the below table do not agree directly to the balances in the consolidated balance sheet as the table incorporates all cash flows, on

an undiscounted basis, related to both principal as well as those associated with all future coupon payments.

Derivative financial instruments held for trading and trading portfolio liabilities are included in the on demand column at their fair value.

Contractual maturity of financial liabilities - undiscounted (audited)

On

demand

Not more

than three

months

Over three

months but

not more

than six

months

Over six

months but

not more

than one

year

Over one

year 

but not

more than

three years

Over three

years but

not more

than five

years

Over five

years but

not more

than ten

years

Over ten

years

Total

£m

£m

£m

£m

£m

£m

£m

£m

£m

As at 31 December 2019

Deposits at amortised cost

348,337

42,369

10,682

7,946

4,869

532

554

595

415,884

Cash collateral and settlement

balances

3,053

64,297

13

-

-

-

-

-

67,363

Repurchase agreements and

other similar secured borrowing

7

2,758

10

-

11,300

485

-

149

14,709

Debt securities in issue

-

12,850

6,589

7,305

12,330

19,132

16,657

9,398

84,261

Subordinated liabilities

-

207

78

950

9,822

1,286

7,192

3,025

22,560

Trading portfolio liabilities

36,916

-

-

-

-

-

-

-

36,916

Financial liabilities designated at

fair value

13,952

128,064

11,020

10,609

13,507

8,054

7,519

19,392

212,117

Derivative financial instruments

228,617

2

-

8

80

45

99

378

229,229

Other financial liabilities

251

2,372

65

126

1,337

351

565

448

5,515

Total financial liabilities

631,133

252,919

28,457

26,944

53,245

29,885

32,586

33,385

1,088,554

As at 31 December 2018

Deposits at amortised cost

342,967

30,047

7,295

6,924

6,069

546

412

816

395,076

Cash collateral and settlement

balances

3,542

63,985

5

2

-

-

-

-

67,534

Repurchase agreements and

other similar secured borrowing

1,331

5,542

-

-

10,238

1,243

486

-

18,840

Debt securities in issue

26

14,810

5,976

12,914

13,849

13,351

17,639

10,254

88,819

Subordinated liabilities

-

306

-

123

6,147

3,568

7,917

4,413

22,474

Trading portfolio liabilities

37,882

-

-

-

-

-

-

-

37,882

Financial liabilities designated at

fair value

14,280

143,766

6,948

12,732

16,546

7,679

5,008

17,621

224,580

Derivative financial instruments

219,578

12

-

-

6

3

4

59

219,662

Other financial liabilities

277

2,984

-

-

554

-

-

-

3,815

Total financial liabilities

619,883

261,452

20,224

32,695

53,409

26,390

31,466

33,163

1,078,682

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 Barclays PLC 2019 Annual Report on Form 20-F

Maturity of off-balance sheet commitments received and given

The table below presents the maturity split of the Group’s off-balance sheet commitments received and given at the balance sheet date. The

amounts disclosed in the table are the undiscounted cash flows (i.e. nominal values) on the basis of earliest opportunity at which they are available.

Maturity analysis of off-balance sheet commitments received (audited)

On

demand

Not more

than three

months

Over three

months but

not more

than six

months

Over six

months but

not more

than nine

months

Over nine

months but

not more

than one

year

Over one

year but

not more

than two

years

Over two

years but

not more

than three

years

Over three

years but

not more

than five

years

Over five

years but

not more

than ten

years

Over ten

years

Total

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

As at 31 December 2019

Guarantees, letters of

credit and credit

insurance

13,091

106

22

81

-

11

12

21

12

34

13,390

Other commitments

received

91

-

-

-

-

-

-

-

-

-

91

Total off-balance sheet

commitments received

13,182

106

22

81

-

11

12

21

12

34

13,481

As at 31 December 2018

Guarantees, letters of

credit and credit

insurance

6,288

110

20

13

16

65

10

33

10

5

6,570

Other commitments

received

93

42

-

-

-

-

-

-

-

-

135

Total off-balance sheet

commitments received

6,381

152

20

13

16

65

10

33

10

5

6,705

Maturity analysis of off-balance sheet commitments given (audited)

On

demand

Not more

than three

months

Over three

months but

not more

than six

months

Over six

months but

not more

than nine

months

Over nine

months but

not more

than one

year

Over one

year but

not more

than two

years

Over two

years but

not more

than three

years

Over three

years but

not more

than five

years

Over five

years but

not more

than ten

years

Over ten

years

Total

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

As at 31 December

2019

Contingent liabilities

23,586

366

86

125

140

143

42

28

3

8

24,527

Documentary credits and

other short-term trade

related transactions

1,287

3

1

-

-

-

-

-

-

-

1,291

Standby facilities, credit

lines and other

commitments

328,623

1,133

792

973

639

269

98

273

139

225

333,164

Total off-balance sheet

commitments given

353,496

1,502

879

1,098

779

412

140

301

142

233

358,982

As at 31 December

2018

Contingent liabilities

16,344

1,102

553

145

170

415

435

641

319

179

20,303

Documentary credits and

other short-term trade

related transactions

70

1,263

325

55

14

11

3

-

-

-

1,741

Standby facilities, credit

lines and other

commitments

317,257

1,734

1,311

397

667

311

257

424

19

105

322,482

Total off-balance sheet

commitments given

333,671

4,099

2,189

597

851

737

695

1,065

338

284

344,526

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 Barclays PLC 2019 Annual Report on Form 20-F

Capital risk

All disclosures in this section (pages 162 to 171 ) are unaudited unless otherwise stated.

Overvie w 

The CET1 ratio, among other metrics, is a measure of the capital strength and resilience of Barclays. Maintenance of our capital resources is vital in

order to meet the overall capital requirement, and to cover the Group’s current and forecast business needs, and associated risks in order to provide

a viable and sustainable business offering. 

This section provides an overview of the Group’s: (i) CET1 capital, leverage and own funds and eligible liabilities requirements; (ii) capital resources;

(iii) risk weighted assets (RWAs); (iv) leverage ratios and exposures; and (v) own funds and eligible liabilities.

More details on monitoring and managing capital risk may be found in the risk management sections on pages 194 to 196 of the Barclays PLC Pillar

3 Report 201 9 (unaudited) .

Summary of performance in the period

The Group

continues to be in excess of overall capital requirements, minimum leverage requirements and minimum requirements for own funds

and eligible liabilities (MREL).

The CET1 ratio ended the year at 13.8% (December 201 8: 13.2 %).

CET1 capital decreased by £0.3bn to £40.8bn. This was driven by underlying profit generation of £5.0bn offset by dividends paid and foreseen of

£2.4bn, the additional provision for PPI of £1.4bn, pension deficit reduction contribution payments of £0.5bn, a decrease in the currency translation

reserve of £0.5bn mainly driven by the depreciation of period end USD against GBP and a loss on the redemption of Additional Tier 1 (AT1)

securities of £0.4bn .

RWAs decreased by £16.8bn to £295.1bn primarily driven by the reduction in the Group’s operational risk RWAs as well as the depreciation of

period end USD against GBP.

The average UK leverage ratio remained stable at 4.5% (December 2018: 4.5%) primarily driven by a net increase in AT1 capital, offset by a modest

increase in leverage exposure to £1,143bn (December 2018: £1,110bn). The UK leverage rat io remained stable at 5.1% (December 2018: 5.1%) .

Key metrics

Common Equity Tier 1 ratio

13.8%

Average UK leverage ratio

4.5%

UK leverage ratio

5.1%

Own funds and eligible liabilities ratio

32.8%

Overall capital requirements

The Group’s Overall Capital Requirement for CET1 is 12.1% comprising a 4.5% Pillar 1 minimum, a 2.5% Capital Conservation Buffer (CCB), a 1.5%

Global Systemically Important Institution (G-SII) buffer, a 3.0% Pillar 2A requirement and a 0.6% Countercyclical Capital Buffer (CCyB).

The Group’s CCyB is based on the buffer rate applicable for each jurisdiction in which the Group has exposures. On 28 November 2018, the

Financial Policy Committee (FPC) set the CCyB rate for UK exposures at 1%. The buffer rates set by other national authorities for non -UK exposures

are not currently material. Overall, this results in a 0.6% CCyB for the Group for Q419. On 16 December 2019, the FPC announced its intention to

increase the CCyB rate for UK exposures from 1% to 2%. This will take effect from December 2020 and based on current UK exposures, is expected

to increase the Group’s CCyB to approximately 1.1%.

The Group ’s Pillar 2A requirement as per the PRA’s Individual Capital Requirement is 5.4% of which at least 56.25% needs to be met with CET1

capital, equating to approximately 3 .0% of RWAs. Certain elements of the Pillar 2A requirement are a fixed quantum whilst others are a proportion

of RWAs, based on a point in time assessment. The Pillar 2A requirement is subject to at least annual review.

On 27 June 2019, CRR II came into force amending CRR. As an amending regulation, the existing provisions of CRR apply unless they are amended

by CRR II. 

Certain provisions took immediate effect and these primarily relate to MREL. Amendments within the capital risk section include changes to

qualifying criteria for CET1, AT1 and Tier 2 instruments, the inclusion of additional holdings eligible for deduction, an amendment to the treatment

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156

 Barclays PLC 2019 Annual Report on Form 20-F

of deferred tax assets and the introduction of requirements for MREL. Grandfathering and transitional provisions relating to MREL have also been

introduced. Other CRR II amendments are expected to take effect from 28 June 2021. 

Certain aspects of CRR II are dependent on final technical standards to be issued by the European Banking Authority (EBA) and adopted by the

European Commission as well as UK implementation of the rules. The disclosures in the following section reflect Barclays’ interpretation of the

current rules and guidance. 

Minimum leverage ratio requirements

The Group is subject to a leverage ratio requirement of 4.0% as at 31 December 2019. This comprises the 3.25% minimum requirement, a G-SII

additional leverage ratio buffer (G-SII ALRB) of 0.53% and a countercyclical leverage ratio buffer (CCLB) of 0.2%. Although the leverage ratio is

expressed in terms of Tier 1 (T1) capital, 75% of the minimum requirement, equating to 2.4375%, needs to be met with CET1 capital. In addition,

the G-SII ALRB and CCLB must be covered solely with CET1 capital. The CET1 capital held against the 0.53% G-SII ALRB was £6.0bn and against

the 0.2% CCLB was £2.3bn. 

MREL

The Group is required to meet the higher of: (i) the MREL set by the Bank of England; and (ii) the requirements in CRR II, both of which have RWA

and leverage based requirements. MREL is subject to phased implementation and will be fully implemented by 1 January 2022, at which time the

Group’s indicative MREL is expected to be two times the sum of its Pillar 1 and Pillar 2A requirements, as set by the Bank of England. In addition,

CET1 capital cannot be counted towards both MREL and the capital buffers, meaning that the buffers will effectively be applied above both the

Pillar 1 and Pillar 2A requirements relating to own funds and eligible liabilities. The Bank of England will review the MREL calibration by the end of

2020, including assessing the proposal for Pillar 2A recapitalisation, which may drive a different 1 January 2022 MREL than currently proposed.

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157

 Barclays PLC 2019 Annual Report on Form 20-F

Capital resources

Capital ratios

a,b,c

As at 31 December

2019

2018

CET1

13.8%

13.2%

Tier 1 (T1)

17.7%

17.0%

Total regulatory capital

21.6%

20.7%

Capital resources (audited)

2019

2018

As at 31 December

£bn

£bn

Total equity excluding non-controlling interests per the balance sheet

64.4

62.6

Less: other equity instruments (recognised as AT1 capital)

(10.9)

(9.6)

Adjustment to retained earnings for foreseeable dividends

(1.1)

(0.7)

Other regulatory adjustments and deductions

Additional value adjustments (PVA)

(1.7)

(1.7)

Goodwill and intangible assets

(8.1)

(8.0)

Deferred tax assets that rely on future profitability excluding temporary differences

(0.5)

(0.5)

Fair value reserves related to gains or losses on cash flow hedges

(1.0)

(0.7)

Gains or losses on liabilities at fair value resulting from own credit

0.3

(0.1)

Defined benefit pension fund assets

(1.6)

(1.3)

Direct and indirect holdings by an institution of own CET1 instruments

(0.1)

(0.1)

Adjustment under IFRS 9 transitional arrangements

1.1

1.3

Other regulatory adjustments

(0.1)

-

CET1 capital

40.8

41.1

AT1 capital 

Capital instruments and related share premium accounts

10.9

9.6

Qualifying AT1 capital (including minority interests) issued by subsidiaries 

0.7

2.4

Other regulatory adjustments and deductions

(0.1)

(0.1)

AT1 capital

11.4

11.9

T1 capital

52.2

53.0

T2 capital

Capital instruments and related share premium accounts

7.7

6.6

Qualifying T2 capital (including minority interests) issued by subsidiaries

4.0

5.3

Other regulatory adjustments and deductions

(0.3)

(0.3)

Total regulatory capital

63.6

64.6

Notes

a CET1, T1 and T2 capital, and RWAs are calculated applying the transitional arrangements of the CRR as amended by CRR II applicable as at the reporting date. This includes IFRS 9

transitional arrangements and the grandfathering of CRR and CRR II non-compliant capital instruments.

b The fully loaded CET1 ratio, as is relevant for assessing against the conversion trigger in Barclays PLC AT1 securities, was 13.5%, with £39.7bn of CET1 capital and £ 295.0bn

 of RWAs calculated without applying the transitional arrangements of the CRR as amended by CRR II applicable as at the reporting date.

c The Group’ s CET1 ratio, as is relevant for assessing against the conversion trigger in Barclays Bank PLC T2 Contingent Capital Notes, was 13.8%. For this calculation CET1 capital

and RWAs are calculated applying the transitional arrangements under the CRR, including the IFRS 9 transitional arrangements. The benefit of the Financial Services Authority

(FSA) October 2012 interpretation of the transitional provisions, relating to the implementation of CRD IV, expired in December 2017.

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 Barclays PLC 2019 Annual Report on Form 20-F

Movement in CET1 capital

2019

£bn

Opening balance as at 1 January

41.1

Profit for the period attributable to equity holders

3.3

Own credit relating to derivative liabilities

0.1

Dividends paid and foreseen

(2.4)

Increase in retained regulatory capital generated from earnings

1.0

Net impact of share schemes

0.3

Fair value through other comprehensive income reserve

0.1

Currency translation reserve

(0.5)

Other reserves

(0.4)

Decrease in other qualifying reserves

(0.5)

Pension remeasurements within reserves

(0.2)

Defined benefit pension fund asset deduction

(0.3)

Net impact of pensions

(0.5)

Goodwill and intangible assets

(0.1)

Adjustment under IFRS 9 transitional arrangements

(0.2)

Decrease in regulatory capital due to adjustments and deductions

(0.3)

Closing balance as at 31 December

40.8

CET1 capital decreased £0.3bn to £40.8bn (December 2018: £41.1bn). 

£3.3bn of capital generated from profits was partially offset by £2.4bn of regulatory dividends paid and foreseen including £0.8bn of AT1 coupons

paid. Other movements in the period were:

◾

A £0.5bn decrease in the currency translation reserve mainly driven by the depreciation of period end USD against GBP

◾

A £0.5bn decrease as a result of movements relating to pensions, largely due to deficit contribution payments of £0.25bn in April 2019 and

September 2019

◾

A £0.4bn loss on the redemption of AT1 securities 

◾

A £0.2bn decrease in the IFRS 9 transitional add back primarily due to the change in the phasing of transitional relief from 95% in 2018 to 85% in

2019

Risk review

Risk performance

Treasury and Capital risk

159

 Barclays PLC 2019 Annual Report on Form 20-F

Risk weighted assets

Risk weighted assets (RWAs) by risk type and business

Credit risk

Counterparty credit risk

Market risk

Operational

risk

Total RWAs

Std

IRB

Std

IRB

Settlement Risk

CVA

Std

IMA

As at 31 December 2019

£bn

£bn

£bn

£bn

£bn

£bn

£bn

£bn

£bn

£bn

Barclays UK

5.2

57.5

0.2

 - 

 - 

 - 

0.2

 - 

11.8

74.9

Corporate and Investment Bank

25.7

62.1

12.1

16.9

0.3

2.5

12.8

17.6

21.5

171.5

Consumer, Cards and Payments

27.2

2.7

0.1

 - 

 - 

 - 

 - 

0.1

7.6

37.7

Barclays International

52.9

64.8

12.2

16.9

0.3

2.5

12.8

17.7

29.1

209.2

Head Office

5.1

5.8

 - 

 - 

 - 

 - 

 - 

 - 

0.1

11.0

Barclays Group

63.2

128.1

12.4

16.9

0.3

2.5

13.0

17.7

41.0

295.1

As at 31 December 2018

Barclays UK

3.3

59.7

0.2

-

-

0.1

0.1

-

11.8

75.2

Corporate and Investment Bank

26.1

64.8

9.8

14.9

0.2

3.3

13.9

16.2

21.7

170.9

Consumer, Cards and Payments

29.5

2.2

0.1

0.1

-

-

-

0.6

7.3

39.8

Barclays International

55.6

67.0

9.9

15.0

0.2

3.3

13.9

16.8

29.0

210.7

Head Office

4.3

5.8

-

-

-

-

-

-

15.9

26.0

Barclays Group

63.2

132.5

10.1

15.0

0.2

3.4

14.0

16.8

56.7

311.9

Movement analysis of risk weighted assets

Credit risk 

Counterparty credit risk

Market risk

Operational risk

Total RWAs

Risk weighted assets

£bn

£bn

£bn

£bn

£bn

As at 31 December 2018

195.6

28.8

30.8

56.7

311.9

Book size

-

3.9

(1.0)

(1.5)

1.4

Acquisitions and disposals

(0.8)

-

-

-

(0.8)

Book quality

(2.9)

0.3

-

-

(2.6)

Model updates

1.5

0.5

-

-

2.0

Methodology and policy

0.8

(1.4)

0.9

(14.2)

(13.9)

Foreign exchange movement

a

(2.9)

-

-

-

(2.9)

As at 31 December 2019

191.3

32.1

30.7

41.0

295.1

Note

a Foreign exchange movement does not include foreign exchange for counterparty credit risk or market risk.

RWAs decreased £16.8bn to £295.1 bn:

◾

‘Book size’ increased RWAs £1.4 bn primarily due to an increase in trading activity, offset by a decrease in operational risk as per the standardised

approach 

◾

‘Book quality’ decreased RWAs £2.6bn primarily due to changes in risk profile

◾

‘Model updates’ increased RWAs £2.0bn primarily due to the recalibration of modelled wholesale RWAs

◾

‘Methodology and Policy’ decreased RWAs £13.9 bn primarily due to removal of the operational risk floor

◾

‘Foreign exchange movements’ decreased RWAs by £2.9bn primarily due to the depreciation of period end USD against GBP

Risk review

Risk performance

Treasury and Capital risk

160

 Barclays PLC 2019 Annual Report on Form 20-F

Leverage ratios and exposures

The Group is required to disclose an average UK leverage ratio which is based on capital on the last day of each month in the quarter and an

exposure measure for each day in the quarter. The Group is also required to disclose a UK leverage ratio based on capital and exposure on the last

day of the quarter. Both approaches exclude qualifying claims on central banks from the leverage exposures.

Leverage ratios

a,b

2019

2018

As at 31 December

£bn

£bn

Average UK leverage ratio

4.5%

4.5%

Average T1 capital

c

51.8

50.5

Average UK leverage exposure

1,143

1,110

UK leverage ratio

5.1%

5.1%

CET1 capital

40.8

41.1

AT1 capital

10.7

9.5

T1 capital

c

51.6

50.6

UK leverage exposure

1,008

999

UK leverage exposure

2019

2018

As at 31 December

£bn

£bn

Accounting assets

Derivative financial instruments

229

223

Derivative cash collateral

57

48

Securities financing transactions (SFTs)

d

111

130

Loans and advances and other assets

d

743

732

Total IFRS assets

1,140

1,133

Regulatory consolidation adjustments

(1)

(2)

Derivatives adjustments

Derivatives netting

(207)

(202)

Adjustments to cash collateral

(48)

(42)

Net written credit protection

14

19

Potential future exposure (PFE) on derivatives

119

123

Total derivatives adjustments

(122)

(102)

SFTs adjustments

18

17

Regulatory deductions and other adjustments

(12)

(11)

Weighted off-balance sheet commitments

105

108

Qualifying central bank claims

(120)

(144)

UK leverage exposure

b

1,008

999

Notes

a

Fully loaded average UK leverage ratio was 4.4%, with £50.7bn of T1 capital and £1,142 bn of leverage exposure. Fully loaded UK leverage ratio was 5.0%, with £50.4bn of T1

capital and £1,007bn of leverage exposure. Fully loaded UK leverage ratios are calculated without applying the transitional arrangements of the CRR as amended by CRR II

applicable as at the reporting date. 

b

Capital and leverage measures are calculated applying the transitional arrangements of the CRR as amended by CRR II applicable as at the reporting date .

c

The T1 capital is calculated in line with the PRA Handbook.

d

Comparative numbers have been revised to reflect the allocation of margin lending from Loans and advances and other assets to SFTs.

Risk review

Risk performance

Treasury and Capital risk

161

 Barclays PLC 2019 Annual Report on Form 20-F

The averag e UK leverage ratio remained stable at 4.5% (December 2018: 4.5%). T1 capital increased £1.4bn to £51.8b n, which included a net

increase in AT1 capital, partially offset by a modest increase in exposure of £33bn to £1,143 bn primarily driven by SFTs and Weighted off-balance

sheet commitments.

The UK leverage ratio also remained stable at 5.1% (December 2018: 5.1%). T1 capital increased £1.0bn to £51.6 bn, which included a net increase

in AT1 capital. The UK leverage exposure increased £9bn to £1,008 bn primarily driven by Loans and advances and other assets. 

The difference between the average UK leverage ratio and the UK leverage ratio was primarily driven by lower trading portfolio assets, settlement

exposures and SFT exposures at quarter end.

The Group also discloses a CRR leverage ratio

a

 within its additional regulatory disclosures prepared in accordance with EBA guidelines on disclosure

under Part Eight of the CRR (see Barclays PLC Pillar 3 Report 2019 (unaudited) , due to be published on 13 February 2020 and which will be

available at home.barclays/annualreport).

Note

a CRR leverage ratio as amended by CRR II applicable as at the reporting date.

Minimum requirement for own funds and eligible liabilities

CRR II requirements relating to own funds and eligible liabilities came into effect from 27 June 2019. Eligible liabilities have been calculated

reflecting the Group’s interpretation of the current rules and guidance. Certain aspects of CRR II are dependen t on final technical standards to be

issued by the EBA and adopted by the European Commission as well as UK implementation of the rules.

Own funds and eligible liabilities ratios

a

As at 31 December

2019

2018

c

CET1 capital

13.8%

13.2%

AT1 capital instruments and related share premium accounts

b

3.6%

3.1%

T2 capital instruments and related share premium accounts

b

2.5%

2.1%

Eligible liabilities

11.2%

9.7%

Total Barclays PLC (the Parent company) own funds and eligible liabilities

31.2%

28.1%

Qualifying AT1 capital (including minority interests) issued by subsidiaries

0.2%

0.7%

Qualifying T2 capital (including minority interests) issued by subsidiaries

1.3%

1.6%

Total own funds and eligible liabilities, including eligible Barclays Bank PLC instruments

32.8%

30.5%

Own funds and eligible liabilities

a

£bn

£bn

c

CET1 capital

40.8

41.1

AT1 capital instruments and related share premium accounts

b

10.7

9.6

T2 capital instruments and related share premium accounts

b

7.4

6.6

Eligible liabilities

33.0

30.4

Total Barclays PLC (the Parent company) own funds and eligible liabilities

92.0

87.7

Qualifying AT1 capital (including minority interests) issued by subsidiaries

0.7

2.3

Qualifying T2 capital (including minority interests) issued by subsidiaries

4.0

5.1

Total own funds and eligible liabilities, including eligible Barclays Bank PLC instruments

96.7

95.1

Total RWAs

a

295.1

311.9

Notes

a CET1, T1 and T2 capital, and RWAs are calculated applying the transitional arrangements of the CRR as amended by CRR II applicable as at the reporting date. This includes IFRS 9

transitional arrangements and the grandfathering of CRR and CRR II non-compliant capital instruments.

b Includes other AT1 capital regulatory adjustments and deductions of £0.1bn (included in AT1 issued by subsidiaries in December 2018: £0.1bn), and other T2 credit risk

adjustments and deductions of £0.2bn (included in T2 issued by subsidiaries in December 2018: £0.3bn).

c The comparatives are based on the Bank of Englan d's statement of policy on MREL.

Risk review

Risk performance

Treasury and Capital risk

162

 Barclays PLC 2019 Annual Report on Form 20-F

Foreign exchange risk (audited)

The Group is exposed to two sources of foreign exchange risk.

a) Transactional foreign currency exposure

Transactional foreign currency exposures represent exposure on banking assets and liabilities, denominated in currencies other than the functional

currency of the transacting entity.

The Group’s risk management policies are designed to prevent the holding of significant open positions in foreign currencies outside the trading

portfolio managed by Barclays International which is monitored through VaR.

Banking book transactional foreign exchange risk outside of Barclays International is monitored on a daily basis by the market risk function and

minimised by the businesses.

b) Translational foreign exchange exposure

The Group’s investments in overseas subsidiaries and branches create capital resources denominated in foreign currencies, principally USD and

EUR. Changes in the GBP value of the net investments due to foreign currency movements are captured in the currency translation reserve,

resulting in a movement in CET1 capital.

The Group’s strategy is to minimise the volatility of the capital ratios caused by foreign exchange movements, by matching the CET1 capital

movements to the reva luation of the Group’s foreign currency RWA exposures.

Functional currency of operations (audited)

Foreign currency

net investments

Borrowings

which hedge the

net investments

Derivatives

which hedge the

net investments

Structural

currency

exposures pre-

economic

hedges

Economic

hedges

Remaining

structural

currency

exposures

£m

£m

£m

£m

£m

£m

As at 31 December 2019

USD

25,607

(10,048)

(1,111)

14,448

(5,339)

9,109

EUR

3,068

(3)

-

3,065

(1,122)

1,943

JPY

533

-

-

533

-

533

Other currencies

2,001

-

(34)

1,967

-

1,967

Total

31,209

(10,051)

(1,145)

20,013

(6,461)

13,552

As at 31 December 2018

USD

28,857

(12,322)

(2,931)

13,604

(4,827)

8,777

EUR

2,672

(3)

-

2,669

(2,146)

523

JPY

489

-

-

489

-

489

Other currencies

2,026

-

(37)

1,989

-

1,989

Total

34,044

(12,325)

(2,968)

18,751

(6,973)

11,778

Economic hedges relate to exposures arising on foreign currency denominated preference share and AT1 instruments. These are accounted for at

historical cost under IFRS and do not qualify as hedges for accounting purposes. The gain or loss arising from changes in the GBP value of these

instruments is recognised on redemption in retained earnings.

During 2019, total structural currency exposure net of hedging instruments increased by £1.8bn to £13.6bn (2018: £11.8bn). Foreign currency

net investments decreased by £2.8bn to £31.2bn (2018: £34.0bn) driven predominantly by a £3.2bn decrease in USD offset by a £0. 4bn increase in

EUR. The hedges associated with these investments decreased by £4.1 bn to £11.2 bn (2018: £15.3bn).

Risk review

Risk performance

Treasury and Capital risk

1.1%

5.8%

13.6%

24.7%

29.9%

24.9%

0-10 Years

11-20 Years

21-30 Years

31-40 Years

41-50 Years

51 Years +

163

 Barclays PLC 2019 Annual Report on Form 20-F

Pension risk review

The UK Retirement Fund (UKRF) represents approximately 97% (2018: 97%) of the Group’s total retirement benefit obligations globally. As such

this risk review section focuses exclusively on the UKRF. The UKRF is closed to new entrants and there is no new final salary benefit being accrued.

Existing active members accrue a combination of a cash balance benefit and a defined contribution element. Pension risk arises as the market value

of the pension fund assets may decline, investment returns may reduce or the estimated value of the pension liabilities may increase.

Refer to page 196 of the Barclays PLC Pillar 3 Report 2019 (unaudited) for more information on how pension risk is managed.

Assets

The Trustee Board of the UKRF defines its overall long-term investment strategy with investments across a broad range of asset classes. This

results in an appropriate mix of return seeking assets as well as liability matching assets to better match future pension obligations. The two largest

market risks within the asset portfolio are interest rates and equities. The split of scheme assets is shown within Note

33. The fair value of the UKRF

assets was £31.4bn as at 31 December 2019 (2018: £29.0bn).

Liabilities

The UKRF retirement benefit obligations are a series of future cash flows with relatively long duration. On an IAS 19 basis these cash flows are

sensitive to changes in the expected long -term price inflation rate (RPI) and the discount rate (GBP AA corporate bond yield):

◾

An increase in long -term expected inflation corresponds to an increase in liabilities;

◾

A decrease in the discount rate corresponds to an increase in liabilities.

Pension risk is generated through the Group’s defined benefit schemes and this risk is set to reduce over time as the main defined benefit scheme is

closed to new entrants. The chart below outlines the shape of the UKRF’s liability cash flow profile as at 31 December 2019 that takes account of

the future inflation indexing of payments to beneficiaries. The majority of the cash flows (approximately 93%) fall between 0 and 40 years , peaking

between 11 and 20 years and reducing thereafter. The shape may vary depending on changes to inflation and longevity expectations and any

members who elect to transfer out. Transfers out will bring forward the liability cash flows.

For more detail on the UKRF’s financial and demographic assumptions see Note 33

to the financial statements.

Proportion of liability cash flows

Risk review

Risk performance

Treasury and Capital risk

164

 Barclays PLC 2019 Annual Report on Form 20-F

The graph above shows the evolution of the UKRF’s net IAS 19 position over the last two years. During 2019 the net improvement in the IAS 19

position was largely driven by bank contributions. Credit spreads tightening during the year had a negative impact which was broadly offset by

changes in other market levels, in particular equity prices and interest rates, and updates to demographic assumptions.

Refer to Note 33 for the sensitivity of the UKRF to changes in key assumptions.

Risk measurement

In line with Barclays’ risk management framework the assets and liabilities of the UKRF are modelled within a VaR framework to show the volatility

of the pension position at a total portfolio level. This enables the risks, diversification and liability matching characteristics of the UKRF obligations

and investments to be adequately captured. VaR is measured and monitored on a monthly basis. Risks are reviewed and reported regularly at

forums including the Board Risk Committee, the Group Risk Committee, the Pensions Management Group and the Pension Executive Board. The

VaR model takes into account the valuation of the liabilities on an IAS 19 basis (see Note 33). The Trustee receives quarterly VaR measures on a

funding basis.

The pension liability is also sensitive to post-retirement mortality assumptions which are reviewed regularly. See Note 33 for more details.

In addition, the impact of pension risk to the Group is taken into account as part of the stress testing process. Stress testing is performed internally

on at least an annual basis. The UKRF exposure is also included as part of regulatory stress tests. 

Barclays defined benefit pension schemes affects capital in two ways:

◾

An IAS 19 deficit is treated as a liability on the Group’s balance sheet. Movement in a deficit due to remeasurements, including actuarial losses,

are recognised immediately through Other Comprehensive Income and as such reduces shareholders’ equity and CET1 capital. An IAS 19 surplus

is treated as an asset on the balance sheet and increases shareholders’ equity; however, it is deducted for the purposes of determining CET1

capital.

◾

In the Group’s statutory balance sheet an IAS 19 surplus or deficit is partially offset by a deferred tax liability or asset respectively. These may or

may not be recognised for calculating CET1 capital depending on the overall deferred tax position of the Group at the particular time.

Pension risk is taken into account in the Pillar 2A capital assessment undertaken by the PRA at least annually. The Pillar 2A requirement forms part

of the Group’s Overall Capital Requirement for CET1 capital, Tier 1 capital and total capital. More detail on minimum regulatory requirements can

be found on page 168 .

Risk review

Risk performance

Treasury and Capital risk

165

 Barclays PLC 2019 Annual Report on Form 20-F

Interest rate risk in the banking book

All disclosures in this section (pages 165 to 166 ) are unaudited unless otherwise stated.

Overview

The treasury and capital risk framework covers interest rate sensitive exposures held in the banking book, mostly relating to accrual accounted and

FVOCI instruments. The potential volatility of net interest income is measured by an Annual Earnings at Risk (AEaR) metric which is monitored

regularly and reported to senior management and the Barclays PLC Board Risk Committee as part of the limit monitoring framework.

For further detail on the interest rate risk in the banking book governance and framework refer to pages 196 to 197 of the Barclays PLC Pillar 3

Report 2019 (unaudited).

Summary of performance in the period

Annual Earnings at Risk (AEaR), is a key measure of interest rate risk in the banking book (IRRBB).

Key metrics

AEaR

+£45m

AEaR across the Group from a positive 25bps shock to forward interest rate curves.

Net interest income sensitivity

The table below shows a sensitivity analysis on pre-tax net interest income for non-traded financial assets and liabilities, including the effect of any

hedging. NII sensitivity uses the Annual Earnings at Risk (AEaR) metric as described on page 196 of the Barclays PLC Pillar 3 Report 2019 (unaudited).

Note that this metric assumes an instantaneous parallel change to forward interest rate curves. The model does not apply floors to shocked market

rates, but does recognize contractual product specific interest rate floors where relevant. The main model assumptions are: (i) one-year ahead time

horizon; (ii) balance sheet is held constant; (iii) balances are adjusted for assumed behavioural profiles (i.e. considers that customers may prepay the

mortgage s before the contractual maturity); and (iv) behavioural assumptions are kept unchanged in all rate scenarios.

Net interest income sensitivity (AEaR) by business unit

a,b,c,d

 (audited)

Barclays UK

Barclays

International

Head Office

Total

£m

£m

£m

£m

As at 31 December 2019

+25bps

16

25

4

45

-25bps

(57)

(74)

(4)

(135)

As at 31 December 2018

+25bps

28

55

5

88

-25bps

(71)

(73)

(5)

(149)

Notes

a

Excludes minor investment banking business.

b

Expected fixed rate mortgage pipeline completions in Barclays UK assumed to be consistent with level and timing of pipeline hedging.

c

The Group’s customer banking book hedging activity is risk reducing from an NII sensitivity perspective. The hedges in place remove interest rate risk and smooth income over the

medium term. The NII sensitivity for the Group at 31 December 2019 without hedging in place for +/-25bp rate shocks would be £140m/£(229)m respectively.

d

NII sensitivity for December 2018 restated due to increased portfolio coverage, primarily the inclusion of the Treasury portfolio.

NII asymmetry arises due to the current low interest rate levels as some customer products have embedded floors. NII sensitivity to a +25bp shock

to rates has decreased year on year as a result of actions taken to reduce the exposure to falling interest rates and increased bond holding s outright

in the liquidity pool.

Risk review

Risk performance

Treasury and Capital risk

166

 Barclays PLC 2019 Annual Report on Form 20-F

Net interest income sensitivity (AEaR) by currency

a,b

 (audited)

2019

2018

+25 basis points

-25 basis points

+25 basis points

-25 basis points

As at 31 December

£m

£m

£m

£m

GBP

38 

(93)

56 

(112)

USD

29 

(32)

36 

(37)

EUR

(10)

(20)

(5)

3 

Other currencies

(12)

10 

1 

(3)

Total

45 

(135)

88 

(149)

Notes

a

Excludes minor investment bank businesses.

b

NII sensitivity for December 2018 restated due to increased portfolio coverage,

primarily the inclusion of the Treasury portfolio.

Analysis of equity sensitivity

Equity sensitivity measures the overall impact of a +/- 25bps movement in interest rates on retained earnings, fair value through other

comprehensive income (FVOCI), cash flow hedge reserves and pensions. For non -NII items a DV01 metric is used, which is an indicator of the shift

in value for a 1 basis point movement in the yield curve.

Analysis of equity sensitivity

a

 (audited)

2019

2018

+25 basis

points

-25 basis

points

+25 basis

points

-25 basis

points

As at 31 December

£m

£m

£m

£m

Net interest income

45

(135)

88

(149)

Taxation effects on the above

(11)

34

(22)

37

Effect on profit for the year

34

(101)

66

(112)

As percentage of net profit after tax

1.0%

(3.0%)

2.6%

(4.4%)

Effect on profit for the year (per above)

34

(101)

66

(112)

Fair value through other comprehensive income reserve

(321)

329

(253)

260

Cash flow hedge reserve

(534)

534

(574)

574

Taxation effects on the above

214

(216)

207

(209)

Effect on equity

(607)

546

(554)

513

As percentage of equity

(0.9%)

0.8%

(0.9%)

0.8%

Note 

a

December 2018 sensitivities restated due to increased portfolio coverage, primarily the inclusion of the Treasury portfolio.

Movements in the FVOCI reserve impact CET1 capital. However, movements in the cash flow hedge reserve and pensions remeasurement reserve

recognised in FVOCI do not affect CET1 capital.

Volatility of the FVOCI portfolio in the liquidity pool

Changes in value of FVOCI exposures flow directly through capital via the FVOCI reserve. The volatility of the value of the FVOCI investments in the

liquidity pool is captured and managed through a value measure rather than an earning measure, i.e. non-traded market risk VaR.

Although the underlying methodology to calculate the non-traded VaR is identical to the one used in traded management VaR, the two measures are

not directly comparable. The non- traded VaR represents the volatility to capital driven by the FVOCI exposures. These exposures are in the banking

book and do not meet the criteria for trading book treatment.

Analysis of volatility of the FVOCI portfolio in the liquidity pool

2019

2018

Average

High

Low

Average

High

Low

For the year ended 31 December

£m

£m

£m

£m

£m

£m

Non-traded market value at risk (daily, 95%)

45

53

35

45

61

32

DVaR trended upwards for the first three quarters of 2019 as outright duration and asset swap spread risk increased. The liquidity pool de- risked

substantially in early Q4, causing an associated reduction in DVaR.

Risk review

Risk performance

Operational risk

167

 Barclays PLC 2019 Annual Report on Form 20-F

All disclosures in this section are unaudited unless otherwise stated.

Overview

Operational risks are inherent in the Group’s business activities and it is not cost effective or possible to attempt to eliminate all operational risks.

The Operational Risk Framework is therefore focused on identifying operational risks, assessing them and managing them within the Group’s

approved risk appetite. 

The Operational Risk principal risk comprises the following risks: Data Management & Information Risk; Financial Reporting Risk; Fraud Risk;

Payments Process Risk; People Risk; Premises Risk; Physical Security Risk; Supplier Risk; Tax Risk; Technology Risk; Transaction Operations Risk and

Execution Risk. The operational risk profile is also informed by a number of risk themes: Cyber, Data, and Resilience. These represent threats to the

Group that extend across multiple risk types, and therefore require an integrated risk management approach.

For definitions of these risks refer to pages 199 to 200 of the Barclays PLC Pillar 3 Report 2019. In order to provide complete coverage of the

potential adverse impacts on the Group arising from operational risk, the operational risk taxonomy extends beyo nd the risks listed above to cover

operational risks associated with other principal risks too.

This section provides an analysis of the Group’s operational risk profile, including events above the Group’s reportable threshold, which have had a

financial impact in 2019. The Group’s operational risk profile is informed by bottom -up risk assessments undertaken by each business unit and top-

down qualitative review by the Operational Risk specialists for each risk type. Fraud, Transaction Operations and Technol ogy continue to be

highlighted as key operational risk exposures. 

For information on conduct risk events see page 170 .

Summary of performance in the period

During 2019, total operational risk losses

a

 decreased to £169m (2018: £230m) and the number of recorded events for 2019 (2,098) was at the

same level as 2018 (2,068). The total operational risk losses for the year were mainly driven by events falling within the Execution, Delivery and

Process Management and External Fraud categories, which tend to be high volume but low impact events.

Key metrics

84%

of the Group’s net reportable operational risk events had a loss value of £50,000 or less

67%

of events by number are due to external fraud

60%

of losses are from ev ents aligned to Execution, Delivery and Process Management

Operational risk profile

Within operational risk, there are a large number of small risk events. In 2019, 84% (2018: 84%) of the Group’s reportable operational risk events

by volume had a value of less than £50,000 each. Cumulatively, events under this £50,000 threshold accounted for only 19% (2018: 14%) of the

Group’s total net operational risk losses. A small proportion of operational risk events have a material impact on the financial results of the Group.

The analysis below presents the Group’s operational risk events by Basel event category:

Risk review

Risk performance

Operational risk

168

 Barclays PLC 2019 Annual Report on Form 20-F

Note 

a

The data disclosed includes operational risk losses for reportable events having impact of > £10,000 and excludes events that are conduct or legal risk, aggregate and boundary

events. A boundary event is an operational risk event that results in a credit risk impact. Due to the nature of risk events that keep evolving, prior year losse s have been updated.

◾

Execution, Delivery and Process Management impacts decreased to £101m (2018: £130m) and accounted for 60% (2018: 57%) of total

operational risk losses. The events in this category are typical of the banking industry as a whole where high volumes of transactions are

processed on a daily basis, mapping mainly to Barclays Transaction Operations risk type. The overall frequency of events in this category

remained stable year -on-year at 28% of total events by volume (2018: 31%).

◾

External Fraud remains the category with the highest frequency of events at 67% of total events in 2019 (2018: 62%). In this category, high

volume, low value events are driven by transactional fraud often related to debit and credit card usage. Ratio of losses in this category increased

to 28% of total 2019 losses (2018: 21%), driven mainly by increased fraud attacks on the Group’s systems following implementation of Cheque

Imaging as part of the clearing process. 

◾

Business Disruption and System Failures accounted for an increased share at 11% of total impacts (2018: 6%), although actual losses remained

broadly stable at £18m (2018: £14m) and volume of events fell slightly to 86 (2018: 99).

◾

Employment Practices and Workplace Safety impacts show a significant decrease to £1m (2018: £35m) accounting for 0.4% of total operational

risk losses in 2019 (2018: 15%), while volume of events in this category also decreased to 17 in 2019 (2018: 46). The 2018 loss was mainly

incurred from a low number of events with significant impacts (three single legacy events relating to closed businesses accounted for 90% of

total impacts).

Investment continues to be made in improving the control environment across the Group. Particular areas of focus include new and enhanced

fraud prevention systems and tools to combat the increasing level of fraud attempts being made and to minimise any disruption to genuine

transactions. Fraud remains an industry wide threat and the Group continues to work closely with external partners on various preventio n

initiatives. 

Operational Resilience is a key area of focus for the Group. Disruption to our business activities is a material inherent risk within the Group and

across the financial services industry, whether arising through impacts on our technology systems, our real estate services, availability of personnel

or services supplied by third parties. Failure to build resilience and recovery capabilities into our business activities may result in significant

customer detriment, costs to reimburse losses incurred by the Group’s customers, market impact and reputational damage. In common with the

rest of the Financial Services industry, the Group expects continued regulatory scrutiny in relation to resilience. Technology, resilience and cyber

security risks evolve rapidly so the Group maintains continued focus and investment in our control environment to manage these risks, and actively

partners with peers and relevant organisations to understand and disrupt threats originating outside the Group.

Risk review

Risk performance

Operational risk

169

 Barclays PLC 2019 Annual Report on Form 20-F

Cyber-attacks are a global threat that are inherent across all industries. The financial sector remains a primary target for cyber criminals, hostile

nation states, opportunists and hacktivists. There are high levels of sophistication in criminal hacking for the purpose of stealing money, stealing,

destroying or manipulating data (including customer data) and/or disrupting operations, where multiple threats exist including threats arising from

malicious emails, distributed denial of service (DDoS) attacks, payment system compromises, insider attackers, supply chain and vulnerability

exploitation. Cyber events can have a compounding impact on services and customers, e.g. data breaches in social networking sites, retail

companies and payments networks. 

The threat of cyber -attack is recognised by the Group along with the significant potential impact on all areas of its business ranging from

operational matters to its scrutiny of its relationships with its suppliers, customers and other external stakeholders. Regulators in the UK, US and

Europe continue to focus on cyber -security risk management in the financial sector and have highlighted the need for financial institutions to

improve their monitoring and control of, and resilience (particularly of critical services) to cyber-attacks, and to provide timely notification of them,

as appropriate. This has resulted in a number of proposed laws, regulations and other requirements that necessitate implementation of a variety of

increased controls and enhancement activities for regulated Group entities. These include, among others, the adoption of cyber security policies

and procedures meeting specified criteria, minimum required security measures, controls and procedures for enhanced reporting and public

disclosures, compliance certification requirements, and other cyber and information risk governance measures. The Group continues to use an

intelligence-driven defence approach, analysing external events for current and emerging cyber threats which allows the delivery of proactive

counter measures; the Group also completes cyber threat scenarios and incident playbooks to assess our security posture and business impacts

and runs an internal adversarial capability which simulates hackers to proactively test controls and r esponses. The increased control environment

will continue to enhance our security posture and our ability to better protect the organisation and our customers. Cyber-attacks however are

increasingly sophisticated and there can be no assurance that the measures implemented will be fully effective to prevent or mitigate future

attacks, the consequences of which could be significant to the Group. Furthermore, such measures have resulted and will result in increased

technology and other costs in connection with cyber security mitigation and compliance for the Group.

For further information, refer to operational risk management section (pages 105 -106).

Risk review

Risk performance

Model risk, Conduct risk, Reputation risk and Legal risk

170

 Barclays PLC 2019 Annual Report on Form 20-F

All disclosures in this section are unaudited unless otherwise stated.

Model risk

Since the inception of model risk as a principal risk, key achievements to date include creating a complete model inventory across the firm, roll out

of a robust Model Risk Management (MRM) framework and the validation of all high material models. In 2019 the framework and governance of

model risk was further improved by:

◾

enhancing the Barclays PLC Board oversight of model risk, through the reporting of the model risk tolerance framework and periodic updates to

the Barclays PLC Board on the progress of the MRM implementation;

◾

validating a third of the po pulation of low material models;

◾

strengthening the model inventory identification process, including enhancing the model lifecycle technology platform ; and

◾

better alignment of documentation requirements to model materiality.

In 2020 MRM will continue to focus on the validation of remaining low material models, bringing 95% of model risk into governance as well as

reviewing performance monitoring of models already in governance to assess their compliance with the framework.

Conduct risk

Barclays is committed to continuing to drive the right culture throughout all levels of the organisation. The Group will continue to enhance effective

management of conduct risk and appropriately consider the relevant tools, governance and management information in decision-making

processes. Focus on management of conduct risk is ongoing and amongst other relevant business and control management information the

Trading Entity Conduct Dashboards are a key component of this.

The Group continues to review the role and impact of conduct Risk Events and issues in the remuneration process at both the individual and

business level.

Businesses have continued to assess the potential customer, client and market impacts of strategic change. As part of the 2019 Medium-Term

Planning Process, associated Strategic Risk Assessment and Strategic Element of the Business Plan, material conduct risks associated with

strategic and financial plans were assessed. 

Throughout 2019, conduct risks were raised by each business area for consideration by relevant Board level committees. The committees reviewed

the risks raised and whether management ’s proposed actions were appropriate to mitigate the risks effectively. The Board received regular updates

with regards to key risks and issues including those relating to regulatory change and the effectiveness of the control environment. 

The Group continued to incur costs in relation to litigation and conduct matters, refer to Note 26 Legal, competition and regulatory matters and

Note 24 Provisions, for further details. Costs include customer redress and remediation, as well as fines and settlements. Resolution of these

matters remains a necessary and important part of delivering the Group’s strategy and an ongoing commitment to improve oversight of culture

and conduct. 

Barclays has operated at the overall set tolerance for conduct risk throughout 2019. The tolerance adherence is assessed by the business areas

through Key Indicators which are aggregated and provide an overall rating which is reported to relevant Board level committees. This is supported

by additional tools such as the Risk and Control Self-Assessment.

Reputation risk

Barclays is committed to identifying reputation risks and issues as early as possible and managing them appropriately. At a Group level throughout

2019, reputation risks and issues were overseen by the Board Reputation Committee (RepCo) until September 2019 and the Board thereafter (refer to

the Board report on page 3 for further detail), which reviews the processes and policies by which Barclays identifies and manages reputation risk. Within

the Barclays Bank UK Group and the Barclays Bank Group reputation risks and issues were overseen by the respective risk and board risk committees.

The top live and emerging reputation risks and issues within the Barclays Bank UK Group and the Barclays Bank Group are included within an over-

arching quarterly report at the respective Board level.

RepCo and the Board reviewed risks escalated by the businesses and considered whether management’s proposed actions, for example attaching

conditions to proposed client transactions or increased engagement with impacted stakeholders, were appropriate to mitigate the risks effectively.

RepCo and the Board also received regular updates with regard to key reputation risks and issues, including: legacy conduct issues; Barclays’ association

with sensitive sectors; cyber and data security; consumer and household debt; fraud and scams that could impact Barclays customers and the resilience

of key Barclays systems and processes.

The Group continued to incur costs in relation to litigation and conduct matters, refer to Note 26 Legal, competition and regulatory matters and Note 24

Provisions for further details. Costs include customer redress and remediation, as well as fines and settlements. Resolution of these matters remains an

ongoing commitment to improve oversight of culture and conduct and management of reputation.

In 2019, Corporate Relations received 498 referrals from across the businesses (486 referrals in 2018) for consideration. These referrals covered a

variety of potentially controversial sectors and topics including, but not limited to, environmental and social risks.

As part of Barclays 2019 Medium Term Planning process, material reputation risks associated with strategic and financial plans were also assessed.

Legal risk

The Group remains committed to continuous improvements to manage legal risk effectively. A number of enhancements have been implemented

during 2019, including updating the Group framework for managing legal risk and associated policies as well as reviewing legal risk tolerances and

risk appetite. Updated legal risk mandatory training was also implemented across the Group, reinforced by ongoing engagement and education of

the Group’s businesses and functions.

Throughout 2019, the Group operated within set tolerances for legal risk. Tolerance adherence is assessed through key indicators, which are

reviewed through the relevant risk and control committees. In addition to ongoing monitoring, legal risk controls are reviewed and assessed

annually as part of the Risk and Control Self-Assessment process.

Risk review

Supervision and regulation

171

 Barclays PLC 2019 Annual Report on Form 20-F

Supervision of the Barclays Group 

The Barclays Group’s operations, including its overseas branches, subsidiaries and associates, are subject to a large number of rules and regulations

that are a condition for authorisation to conduct banking and financial services business in each of the jurisdictions in which the Barclays Group

operates. These apply to business operations, impact financial returns and include capital, leverage and liquidity requirements, authorisation,

registration and reporting requirements, restrictions on certain activities, conduct of business regulations and many others. Regulatory

developments impact the Barclays Group globally. We focus particularly on EU, UK and US regulation due to the location of the Barclays Group’s

principal areas of business. Regulations elsewhere may also have a significant impact on the Barclays Group due to the location of its branches,

subsidiaries and, in some cases, clients. For more information on the risks related to the supervision and regulation of the Barclays Group, including

regulatory change, see the Risk Factor entitled ‘Regulatory Change agenda and impact on Business Model’ on page 93. 

Supervision in the UK and EU 

The Barclays Group’s operations in Europe are authorised and regulated by a combination of its UK home regulators and host regulators in the

European countries where the Barclays Group operates. The impact of the UK’s departure from the EU in this respect and, more broadly, its impact

on the UK domestic regulatory framework, is yet to be finally determined. In the UK, day-to-day regulation and supervision of the Barclays Group is

divided between the Prudential Regulation Authority (PRA) (a division of the Bank of England (BoE)) and the Financial Conduct Authority (FCA). In

addition, the Financial Policy Committee (FPC) of the BoE has influence on the prudential requirements that may be imposed on the banking

system through its powers of direction and recommendation. 

Barclays Bank PLC and Barclays Bank UK PLC are authorised credit institutions and subject to prudential supervision by the PRA and subject to

conduct regulation and supervision by the FCA. The Barclays Group is also subject to prudential supervision by the PRA on a group consolidated

basis. Barclays Capital Securities Limited is authorised and supervised by the PRA as a PRA-designated investment firm and subject to conduct

regulation and supervision by the FCA. Barclays Services Limited is an appointed representative of Barclays Bank PLC and Clydesdale Financial

Services Limited. 

Barclays Bank Ireland PLC is licensed as a credit institution by the Central Bank of Ireland (CBI) and is designated as a significant institution falling

under direct supervision on a solo basis by the European Central Bank (ECB). Barclays Bank Ireland PLC’s EU branches are supervised by the ECB

and are also subject to direct supervision for local conduct purposes by national supervisory authorities in the jurisdictions where they are

established. 

The Barclays Group is also subject to regulatory initiatives undertaken by the UK Pay ment Systems Regulator (PSR), as a participant in payment

systems regulated by the PSR.

The PRA’s continuing supervision of the Barclays Group is conducted through a variety of regulatory tools, including the collection of information

by way of prudential returns or cross-firm reviews, reports obtained from skilled persons, regular supervisory visits to firms and regular meetings

with management and directors to discuss issues such as strategy, governance, financial resilience, operational resilience, risk management, and

recovery and resolution.

Parliament gave the FCA a single strategic objective – to ensure that relevant markets function well – and three operational objectives: to protect

consumers, enhance market integrity and promote competition. The FCA’s supervision of the UK firms in the Barclays Group is carried out through

a combination of proactive engagement, regular thematic work and project work based on the FCA’s sector assessments, which analyse the

different areas of the market and the risks that may lie ahead. 

Both the PRA and the FCA apply standards that either anticipate or go beyond requirements established by global or EU standards, whether in

relation to capital, leverage and liquidity, resolvability and resolution or matters of conduct. 

The FCA has focused on conduct risk and on customer outcomes and will continue to do so. This has included a focus on the design and operation

of products, the behaviour of customers and the operation of markets. The FCA is conducting on -going work on fair pricing in financial services,

affordability and fair treatment of vulnerable customers. These initiatives may impact future revenues and increase conduct costs and costs of

remediation. 

The FCA and the PRA also apply the Senior Managers and Certification Regime (the SMCR) which imposes a regulatory approval, individual

accountability and fitness and propriety framework in respect of senior or key individuals within relevant firms. 

Supervision in the US 

The Barclays Group’s US activities and operations are subject to umbrella supervision by the Board of Governors of the Federal Reserve System

(FRB), as well as additional supervision, requirements and restrictions imposed by other federal and state regulators and self-regulatory

organisations (SROs). Barclays PLC, Barclays Bank PLC and its US branches and subsidiaries are subject to a comprehensive regulatory framework

involving numerous statutes, rules and regulations. In some cases, US requirements may impose restrictions on the Barclays Group’s global

activities, in addition to its activities in the US. 

Barclays PLC, Barclays Bank PLC and Barclays US LLC (BUSL) are regulated as bank holding companies (BHCs) by the FRB. BUSL is the Barclays

Group’s top-tier US holding company that holds substantially all of the Barclays Group’s US subsidiaries (including Barclays Capital Inc. and

Barclays Bank Delaware). BUSL is subject to requirements in respect of capital adequacy, capital planning and stress testing, risk management and

governance, liquidity, leverage limits, large exposure limits, activities restrictions and financial regulatory reporting. Barclays Bank PLC’s US

branches are also subject to enhanced prudential supervision requirements relating to, among other things, liquidity and risk management. 

Barclays PLC, Barclays Bank PLC and BUSL have elected to be treated as financial holding companies (FHCs) under the Bank Holding Company Act

of 1956. FHC status allows these entities to engage in a variety of financial and related activities, directly or through subsidiaries, including

underwriting, dealing and market making in securities. Failure to maintain FHC status could result in increasingly stringent penalties and ultimately,

in the closure or cessation of certain operations in the US. 

Risk review

Supervision and regulation

172

 Barclays PLC 2019 Annual Report on Form 20-F

In addition to umbrella oversight by the FRB, many of the Barclays Group’s branches and subsidiaries are regulated by additional authorities based

on the location or activities of those entities. The New York and Florida branches of Barclays Bank PLC are subject to supervision and regulation by,

respectively, the New York State Department of Financial Services (NYSDFS) and the Florida Office of Financial Regulation, as well as the applicable

Federal Reserve Banks. Barclays Bank Delaware, a Delaware chartered commercial bank, is subject to supervision and regulation by the Delaware

Office of the State Bank Commissioner, the Federal Deposit Insurance Corporation (FDIC), and the Consumer Financial Protection Bureau (CFPB).

The deposits of Barclays Bank Delaware are insured by the FDIC and Barclays PLC, Barclays Bank PLC and BUSL are required to act as a source of

strength for Barclays Bank Delaware. This could, among other things, require these entities to inject capital into Barclays Bank Delaware if it fails to

meet applicable regulatory capital requirements. Barclays Bank Delaware is subject to direct supervision and regulation by the CFPB, which has the

authority to examine and take enforcement action related to compliance with US federal consumer financial laws and regulations.

The Barclays Group’s US securities broker/dealer and investment banking operations, primarily conducted through Barclays Capital Inc., are also

subject to ongoing supervision and regulation by the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority

(FINRA) and other government agencies and SROs under US federal and state securities laws. 

The Barclays Group’s US commodity futures, commodity options and swaps-related and client clearing operations are subject to ongoing

supervision and regulation by the Commodity Futures Trading Commission (CFTC), the National Futures Association and other SROs. Barclays

Bank PLC is also a US registered swap dealer and is subject to the FRB swaps rules with respect to margin and capital requirements. 

Supervision in Asia Pacific 

The Barclays Group’s operations in Asia Pacific are supervised and regulated by a broad range of national banking and financial services regulators. 

Brexit

There remains much uncertainty regarding the state of the future relationship between the UK and the EU and therefore the potential impact of the

UK's withdrawal from the EU on the financial regulatory framework in the UK. Following the UK’s withdrawal from the EU on 31 January 2020,

pursuant to the withdrawal agreement negotiated between the UK and the EU in October 2019, firms incorporated and authorised in the UK are

able to continue to provide services into the EU27, and firms incorporated and authorised in the EU27 are able to continue to provide services into

the UK in accordance with the terms of the withdrawal agreement for the duration of the transition period set out in the agreement. Following the

expiry of that transitional period in December 2020, the ability of UK firms to access the EU market and vice versa would depend upon the terms of

any future trade deal between the UK and the EU, including whether such deal provides for any access rights in respect of financial services. It

would also depend upon whether the EU grants equivalence to the UK as a third country pursuant to equivalence regimes in existing EU financial

services legislation. If, after the expiry of the transitional period in December 2020, there is no deal or arrangement cover ing financial services in

place and assuming no third country "equivalence"-based recognition in place, the Barclays Group entities in the UK would no longer be able to

access EU markets as they do today . As a result of the onshoring of EU legislation in the UK, UK firms would (at least initially) be subject to

substantially the same rules and regulations as before Brexit. The UK may seek to make changes to these rules going forward, particularly in the

event of no deal or arrangement covering financial services, where they are not subject to any requirements to maintain particular rules or

standards for equivalence purposes. 

Financial regulatory framework 

(a) Prudential regulation 

Certain Basel III standards were implemented in EU law through the Capital Requirements Regulation (CRR) and the Capital Requirements Directive

IV (CRD IV). Beyond the minimum standards required by CRD IV, the PRA has expected the Barclays Group, in common with other major UK banks

and building societies, to meet a 7% Common Equity Tier 1 (CET1) ratio at the level of the consolidated group since 1 January 2016. 

Global systemically important banks (G- SIBs), such as the Barclays Group, are subject to a number of additional prudential requirements, including

the requirement to hold additional loss-absorbing capacity and additional capital buffers above the level required by Basel III standards. The level of

the G-SIB buffer is set by the Financial Stability Board (FSB) according to a bank’s systemic importance and can range from 1% to 3.5% of risk-

weighted assets (RWAs). The G-SIB buffer must be met with CET1. In November 2019, the FSB published an update to its list of G-SIBs, maintaining

the 1.5% G-SIB buffer that applies to the Barclays Group. 

The Barclays Group is also subject to a ‘combined buffer requirement’ consisting of (i) a capital conservation buffer, and (ii) a countercyclical

capital buffer (CCyB). The CCyB is based on rates determined by the regulatory authorities in each jurisdiction in which the Barclays Group

maintains exposures. These rates may vary in either direction. In December 2019, the FPC raised the UK CCyB rate from 1% to 2% with binding

effect from December 2020. 

The PRA requires UK firms to hold additional capital to cover risks which the PRA assesses are not fully captured by the Pillar 1 capital requirement.

The PRA sets this additional capital requirement (Pillar 2A) at least annually, derived from each firm's individual capital guidance. Under current

PRA rules, the Pillar 2A must be met with at least 56% CET1 capital and no more than 25% tier 2 capital. In addition, the capital that firms use to

meet their minimum requirements (Pillar 1 and Pillar 2A) cannot be counted towards meeting the combined buffer requirement.

The PRA may also impose a 'PRA buffer' to cover risks over a forward looking planning horizon, including with regard to firm-specific stresses or

management and governance weaknesses. If the PRA buffer is imposed on a specific firm, it must be met separately to the combined buffer

requirement, and must be met fully with CET1 capital.

The systemic risk buffer (which can be set between 0% and 3% of RWAs) is a firm-specific buffer, that is designed to increase the capacity of ring-

fenced bodies, such as Barclays Bank UK PLC, to absorb stress, and which must be met solely with CET1 capital. The buffer rate applicable to the

Barclays Group’s ring-fenced sub-group is 1% of RWAs. The systemic risk buffer is now incorporated in the calculation of banks' stress test hurdle

rates, which are the target capital ratios set by the PRA, with a view to capturing domestic as well as global systemic importance. 

Final BCBS standards on counterparty credit risk, leverage, large exposures and a Net Stable Funding Ratio (NSFR) are being implemented under EU

law via the Risk Reduc tion Measures package, which was published in the Official Journal in June 2019 and includes the CRR II regulation, the CRD

V directive and the BRRD II directive. 

Risk review

Supervision and regulation

173

 Barclays PLC 2019 Annual Report on Form 20-F

The BCBS’s finalisation of ‘Basel III – post-crisis regulatory reforms’ in December 2017, among other things, eliminated model-based approaches for

certain categories of RWAs, revised the standardised approach’s risk weights for a variety of exposure categories, replaced the four current

approaches for operational risk (including the advanced measurement approach) with a single standardised measurement approach, established

72.5% of standardised approach RWAs for exposure categories as a floor for RWAs calculated under advanced approaches (referred to as the

‘output floor’), and for G-SIBs introduced a leverage ratio buffer in an amount equal to 50% of the applicable G-SIB buffer used for RWA purposes

(meaning, for the Barclays Group, a leverage ratio buffer of 0.75%). The majority of the final Basel III changes are due to be implemented

commencin g 1 January 2022, with a five-year phase-in period for the output floor, although the precise timing as it applies to the Barclays Group

depends on national and EU legislative processes. The new market risk framework, including rules made as a result of the ‘fundamental review of

the trading book’, is expected to be implemented in the UK first as a reporting requirement, with further legislation needed to replace the existing,

binding market risk requirements. 

In the US, in October 2019, the FRB and other US regulatory agencies released final rules to tailor the applicability of prudential requirements for

large domestic US banking organisations, foreign banking organisations and their intermediate holding companies (IHCs), including BUSL. In the

final rule, BUSL is a “Category III” IHC. BUSL is therefore subject to full standardised liquidity requirements, including the liquidity coverage ratio,

which has been implemented by the US regulatory agencies, and the NSFR, which has been proposed by the US regulatory agencies but does not

have a clear timeframe for finalisation.

In June 2018 and October 2019, the FRB finalised rules regarding single counterparty credit limits (SCCL). The SCCL apply to the largest US BHCs

and foreign banks’ (including the Barclays Group’s) US operations. The SCCL creates two separate limits for foreign banks, the first on combined US

operations (CUSO) and the second on the US IHC (BUSL). The SCCL for US BHCs, including BUSL, will go into effect in 2020 and requires that

exposure to an unaffiliated counterparty of BUSL not exceed 25% of BUSL’s tier 1 capital. With respect to the CUSO, the SCCL rule allows

certification to the FRB that a foreign bank complies with comparable home country regulation.

In November 2019, the FRB issued a proposal to extend by 18 months the initial compliance date for foreign banks' CUSO to allow the home

countries of foreign banks time to finalize comparable home country regulation. Under the proposal, Barclays Bank PLC would not need to comply

with the CUSO requirement until 1 July 2021. In order to give the FRB time to finalize the November proposal, in December 2019 the FRB separately

granted Barclays Bank PLC relief from the SCCL CUSO requirement through a letter indicating that Barclays Bank PLC is not required to provide the

CUSO certification until 1 July 2020.

Stress testing 

The Barclays Group and certain of its members are subject to supervisory stress testing exercises in a number of jurisdictions, designed to assess

the resilience of banks to adverse economic or financial developments and ensure that they have robust, forward -looking capital planning

processes that account for the risks associated with their business profile. Assessment by regulators is on both a quantitative and qualitative basis,

the latter focusing on such elements as data provision, stress testing capability including model risk management and internal management

processes and controls. 

(b) Recovery and Resolution 

Stabilisation and resolution framework 

The 2014 Bank Recovery and Resolution Directive (BRRD) established a framework for the recovery and resolution of EU credit institutions and

investment firms. Amendments to BRRD (referred to as BRRD II) were made via the finalisation of the EU Risk Reduction Measures. Member states

are required to transpose BRRD II into national law by 28 December 2020 (subject to certain exceptions). 

On 28 December 2017, a related EU directive came into force harmonising the priority ranking of unsecured debt instruments under national

insolvency laws. The directive has been transposed into national law in the UK, dividing a financial institution’s non -preferred debts into three

classes in a descending ranking order (ordinary, secondary and tertiary non -preferential debts). 

UK resolution authorities are empowered by law to intervene in and resolve a UK financial institution that is failing or likely to fail. The BoE (in

consultation with the PRA and HM Treasury as appropriate) has several stabilisation options where a banking institution is failing or likely to fail,

including, for example, to transfer some or all of the securities or business of the bank to a commercial purchaser or a ‘bridge bank’ owned by the

BoE or to transfer the banking institution into temporary public ownership. When exercising any of its stabilisation powers, the BoE must generally

provide that shareholders bear first losses, followed by creditors in accordance with the priority of their claims in insolvency. 

In order to enable the exercise of its stabilisation powers, the BoE may impose a temporary stay on the rights of creditors to terminate, accelerate or

close out contracts, or override events of default or termination rights that might otherwise be invoked as a result of a resolution action and modify

contractual arrangements in certain circumstances (including a variation of the terms of any securities). In addition, the BoE has the power to

override, vary, or impose conditions or contractual obligations between a UK bank, its holding company and its group undertakings, in order to

enable any transferee or successor bank to operate effectively after any of the resolution tools have been applied. HM Treasury may also amend the

law for the purpose of enabling it to use its powers under this regime effectively, potentially with retrospective effect. These powers apply

regardless of any contractual restrictions and compensation that may be payable. 

In addition, the BoE is required by law to permanently write-down, or convert into equity, tier 1 capital instruments and tier 2 capital instruments at

the point of non -viability of the bank. This power will be extended to include eligible liabilities (such as liabilities under MREL instruments (see TLAC

and MREL below)) once BRRD II is implemented. 

The BoE’s preferred approach for the resolution of the Barclays Group is a bail-in strategy with a single point of entry at Barclays PLC. Under such a

strategy, Barclays PLC’s subsidiaries would remain operational while Barclays PLC’s eligible liabilities would be written down or converted to equity

in order to recapitalise the Barclays Group and allow for the continued provision of services and operations throughout the resolution. The order in

which the bail-in tool is applied reflects the hierarchy of capital instruments. Accordingly, the more subordinated the claim, the more likely losses

will be suffered.

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The PRA has made rules that require authorised firms to draw up recover y plans and resolution packs, as required by the BRRD. Recovery plans are

designed to outline credible actions that authorised firms could implement in the event of severe stress in order to restore their business to a stable

and sustainable condition. Removal of potential impediments to an orderly resolution of a banking group or one or more of its subsidiaries is

considered as part of the BoE’s and PRA’s supervisory strategy for each firm, and the PRA can require firms to make significant changes in order to

enhance resolvability. The Barclays Group currently provides the PRA with a recovery plan annually and with a resolution pack as requested. 

In July 2019, the BoE and PRA published final policies on the Resolvability Assessment Framework (RAF), design ed to increase transparency and

accountability and clarify the responsibilities on firms with respect to resolution. The RAF consists of three components: (i) how the BoE will assess

resolvability; (ii) the requirement for certain firms to perform an assessment of their preparations for resolution, submit a report to the PRA and

publish a summary of their most recent report; and (iii) the BoE’s publication of a statement concerning the resolvability of each in-scope firm. The

BoE will assess firms against three resolvability outcomes they must meet by 2022: (i) adequate financial resources; (ii) being able to continue to do

business through resolution and restructuring; and (iii) being able to communicate and coordinate within the firm and with authorities. 

While regulators in many jurisdictions have indicated a preference for single point of entry resolution for the Barclays Group, additional resolution

or bankruptcy provisions may apply to certain Barclays Group entities or branches. 

In the US, BUSL is subject to the Orderly Liquidation Authority established by Title II of the Dodd-Frank Act, a regime for the orderly liquidation of

systemically important financial institutions by the FDIC, as an alternative to proceedings under the US Bankruptcy Code. In addition, the licensing

authorities of each US branch of Barclays Bank PLC and of Barclays Bank Delaware have the authority to take possession of the business and

property of the applicable branch or entity they license and/or to revoke or suspend such licence. 

In the US, Title I of the DFA, as amended, and the implementing regulations issued by the FRB and the FDIC require each bank holding company

with assets of $250bn or more, including those within the Barclays Group, to prepare and submit a plan for the orderly resolution of subsidiaries

and operations in the event of future material financial distress or failure. The Barclays Group’s next submission of the US Resolution Plan in respect

of its US operations will be due on 1 July 2020. 

Barclays Bank Ireland PLC, as a significant institution under the Single Resolution Mechanism Regulation (SRMR), is subject to the powers of the

Single Resolution Board (SRB) as the Eurozone resolution authority. The CBI and the ECB require Barclays Bank Ireland PLC to submit a standalone

BRRD-compliant recovery plan on an annual basis. The SRB has the power to require data submissions specific to Barclays Bank Ireland PLC under

powers conferred upon it by the BRRD and the SRMR. The SRB will exercise these powers to determine the optimal resolution strategy for Barclays

Bank Ireland PLC in the context of the BoE’s preferred resolution strategy of single point of entry with bail-in at Barclays PLC. The SRB also has the

power under the BRRD and the SRMR to develop a resolution plan for Barclays Bank Ireland PLC.

TLAC and MREL 

The BRRD requires competent authorities to impose a Minimum Requirement for own funds and Eligible Liabilities (MREL) on financial institutions

to facilitate their orderly resolution without broader financial disruption or recourse to public funds. In November 2015, the FSB finalised its

proposals to enhance the loss-absorbing capacity of G-SIBs and set a new minimum requirement for ‘total loss-absorbing capacity’ (TLAC). The

FSB also published guiding principles on internal TLAC in July 2017. 

The EU is implementing the TLAC standard (including internal TLAC) via the MREL requirement for G-SIBs and the relevant amendments are

contained in the Risk Reduction Measures package. Under the BoE’s 2018 statement of policy on MREL, the BoE will set MREL for UK G -SIBs as

necessary to implement the TLAC standard and institution or group -specific MREL requirements will depend on the preferred resolution strategy

for that institution or group. Internal MREL for operating subsidiaries will be scaled within a 75-90% range of the external requirement that would

apply to the subsidiary if it were a resolution entity. The starting point for the scalar will be 90% for ring -fenced bank sub -groups.

The MREL requirements are being phased in as from 1 January 2019. From 1 January 2020, G- SIBs with resolution entities incorporated in the UK,

including the Barclays Group, will be subject to an MREL requirement equivalent to the higher of: (i) the sum of two times the Pillar 1 requirement

and one times the Pillar 2A requirement; or (ii) the higher of two times the leverage ratio or 6% of leverage exposures. The MREL requirements will

be fully implemented by 1 January 2022, at which time such G-SIBs will be required to meet an MREL equivalent to the higher of: (i) two times the

sum of their Pillar 1 and Pillar 2A requirements; or (ii) the higher of two times their leverage ratio or 6.75% of leverage exposures. 

Barclays Bank Ireland PLC is subject to the SRB’s MREL policy, as issued in January 2019, in respect of the internal MREL that it will be required to

issue to Barclays Bank Group. The SRB’s MREL policy will be revised in the near future to reflect the implementation of the Risk Reduction Measures

package in the EU. The SRB’s current calibration of MREL is two times the sum of: (i) the firm’s Pillar 1 requirement; (ii) its Pillar 2 requirement; and

(iii) its combined buffer requirement, minus 125 basis points. The SRB’s policy does not envisage the application of any scalar in respect of the

internal MREL requirement. 

In the US, the FRB’s TLAC rule includes provisions that require BUSL to have: (i) a specified outstanding amount of eligible long-term debt; (ii) a

specified outstanding amount of TLAC (consisting of common and preferred equity regulatory capital plus eligible long-term debt); and (iii) a

specified common equity buffer. In addition, the FRB’s TLAC rule prohibits BUSL, for so long as the Barclays Group’s overall resolution plan treats

BUSL as a non -resolution entity, from issuing TLAC to entities other than those within the Barclays Group. 

Bank Levy and FSCS

The BRRD requires EU member states to establish a pre-funded resolution financing arrangement with funding equal to 1% of covered deposits by

31 December 2024 to cover the costs of bank resolutions. The UK has implemented this requirement by way of a tax on the balance sheets of

banks known as the ‘Bank Levy’.

In addition, the UK has a statutory compensation fund called the Financial Services Compensation Scheme (FSCS), which is funded by way of

annual levies on most financial services firms authorised under FSMA. 

(c) Structural reform 

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In the UK, the Financial Services (Banking Reform) Act 2013 put in place a framework for ring -fencing certain operations of large banks and

secondary legislation passed in 2014 elaborated on the operation and application of the ring-fence. Ring -fencing requires, among other things, the

separation of the retail and smaller deposit-taking business activities of UK banks into a legally distinct, operationally separate and economically

independent entity, which is not permitted to undertake a range of activities. 

US regulation places further substantive limits on the activities that may be conducted by banks and holding companies, including foreign banking

organisations such as the Barclays Group. The ‘Volcker Rule’, which was part of the DFA and which came into effect in the US in 2015, prohibits

banking entities from undertaking certain proprietary trading activities and limits such entities’ ability to sponsor or invest in certain private equity

funds and hedge funds (in each case broadly defined). As required by the rule, the Barclays Group has developed and implemented an extensive

compliance and monitoring programme addressing proprietary trading and covered fund activities (both inside and outside of the US). In August

2019 the Volcker regulatory agencies finalised amendments to the Volcker Rule’s proprietary trading provisions, which became effective on 1

January 2020 (with a mandatory compliance date of 1 January 2021). The amendments generally provide greater flexibility for banking entities, and

in particular for business units that operate solely outside the US. The Volcker Rule agencies have indicated that further changes are likely to be

proposed in 2020 with regard to the Volcker covered funds provisions.

(d) Market infrastructure regulation 

In recent years, regulators as well as global-standard setting bodies such as the International Organisation of Securities Commissions (IOSCO) have

focused on improving transparency and reducing risk in markets, particularly risks related to over -the-counter (OTC) transactions. This focus has

resulted in a variety of new regulations across the G20 countries and beyond that require or encourage on -venue trading, clearing, posting of

margin and disclosure of pre -trade and post-trade information. Some of the most significant developments are described below. 

The European Market Infrastructure Regulation, as amended, (EMIR) has introduced requirements designed to improve transparency and reduce

the risks associated with the derivatives market, some of which are still to be fully implemented. EMIR has potential operational and financial

impacts on the Barclays Group, including by imposing new collateral requirements. Over the coming months, European regulators will undergo a

review of the exchange of collateral rules, raising the possibility of some alterations to the existing rules. European regulators are also currently

consulting on details of the recent amendments to EMIR, which could potentially have a significant impact on our clearing business.

CRD IV com plements EMIR by applying higher capital requirements for bilateral, uncleared OTC derivative trades. Lower capital requirements for

cleared derivative trades are only available if the central counterparty (CCP) through which the trade is cleared is recognised as a ‘qualifying central

counterparty’ (QCCP) which has been authorised or recognised under EMIR. 

The Markets in Financial Instruments Directive and Markets in Financial Instruments Regulation (collectively referred to as MiFID II) have largely

been applicable since 3 January 2018. MiFID II affects many of the investment markets in which the Barclays Group operates, the instruments in

which it trades and the way it transacts with market counterparties and other customers. MiFID II is currently underg oing a review process in order

to determine those areas of the regulation that require further amendment. These amendments are being considered particularly in light of the EU’s

ongoing focus on the development of a stronger Capital Markets Union. 

As par t of the EU’s sustainable finance action plan, new regulatory requirements are being introduced to provide greater transparency on the

environmental and social impact of financial investments. These include (i) the Regulation on Sustainability-Related Disclosures, which introduces

disclosure obligations regarding the way in which financial institutions integrate environmental, social and governance factors in their investment

decisions, and (ii) the Taxonomy Regulation, which provides for a general framewor k for the development of an EU-wide classification system for

environmentally sustainable economic activities. These new requirements will have an impact on the Barclays Group as an intermediary performing

investment services for customers and investors. 

The EU Benchmarks Regulation applies to the administration, contribution and use of benchmarks within the EU. Financial institutions within the

EU are prohibited from using benchmarks unless their administrators are authorised, registered or otherwise recognised in the EU, subject to

transitional provisions expiring on 1 January 2022. The FCA has stated that it does not intend to support LIBOR after the end of 2021. International

initiatives are therefore underway to develop alternative benchmarks and back stop arrangements. 

US regulators have imposed similar rules as the EU with respect to the mandatory on -venue trading and clearing of certain derivatives, and post-

trade transparency, as well as in relation to the margining of OTC derivatives. 

US regulators are continuing to review and consider their rules with respect to their application on a cross-border basis, including with respect to

their registration requirements in relation to non -US swap dealers and security-based swap dealers. The regulators may adopt further rules, or

provide further guidance, regarding cross-border applicability. In December 2017, the CFTC and the European Commission recognised the trading

venues of each other’s jurisdiction to allow market participants to comply with mandatory on -venue trading requirements while trading on certain

venues recognised by the other jurisdiction. In April 2019, the CFTC issued temporary relief that would permit trading venues and market

participants located in the UK to continue to rely on this mutual recognition framework following a withdrawal of the UK from the EU.

Certain participants in US swap markets are required to register with the CFTC as ‘swap dealers’ or ‘major swap participants’ and/or, following the

compliance date for relevant SEC rules, with the SEC as ‘security-based swap dealers’ or ‘major security-based swap participants’. Such registrants

are subject to CFTC, and will be subject to SEC, regulation and oversight. Entities required to register as swap dealers are subject to business

conduct, recordkeeping and reporting requirements under CFTC rules. Barclays Bank PLC is subject to regulation by the FRB, and has provisionally

registered with the CFTC as a swap dealer. Accordingly, Barclays Bank PLC is subject to CFTC rules on business conduct, record -keeping and

reporting and to FRB rules on capital and margin. 

The CFTC has approved certain comparability determinations that permit substituted compliance with non-US regulatory regimes for certain swap

regulations. Substituted compliance is permitted for certain transaction-level requirements, where applicable, only with respect to transactions

between a non-US swap dealer and a non -US counterparty, whereas entity-level determinations generally apply on an entity-wide basis regardless

of counterparty status. In April 2019, the CFTC issued temporary relief that would permit swap dealers located in the UK to continue to rely on

existing CFTC substituted compliance determinations with respect to EU requirements in the event of a withdrawal of the UK from the EU. In

Risk review

Supervision and regulation

176

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addition, the CFTC has issued guidance that would require a non-US swap dealer to comply with certain CFTC rules in connection with transactions

that are “arranged, negotiated or executed” from the US. The CFTC has provide d temporary no-action relief from application of the guidance. In

December 2019 the CFTC proposed rules that would, for certain CFTC requirements, codify on a permanent basis, the temporary no -action relief

for transactions that are arranged, negotiated or executed in the US. The proposed rules would also codify certain aspects of the CFTC's current

cross-border framework with respect to internal and external business conduct requirements, and it is expected that the CFTC will introduce

additional proposed rules addressing mandatory clearing, trading and reporting requirements. In October 2017, the CFTC issued an order

permitting substituted compliance with EU margin rules for certain uncleared derivatives. However, as the Barclays Group is subject to the margin

rules of the FRB, it will not benefit from the CFTC’s action unless the FRB takes a similar approach. 

The SEC finalised the rules governing security based swap dealer registration in 2015 but clarified that registration timing is contingent upon the

finalisation of certain additional rules under Title VII of DFA. In December of 2019 the SEC adopted a final cross-border rule that, upon publication

in the federal register, will trigger the timeline for security-based swap dealer registration, which will be required 18 months following the effective

date of those rules, currently expected in September 2021.

When security-based swap dealer registration is required, it is anticipated that Barclays Bank PLC and/or one or more of its affiliates will be required

to register in that capacity and thus will be required to comply with the SEC’s rules for security- based swap dealers. These rules may impose costs

and other requirements or restrictions that could impact our business. As with similar CFTC rules, substituted compliance will be available for

certain security-based swap dealer requirements; however, the SEC has not yet issued any comparability determinations, and the ultimate scope

and applicability of such determinations remains unclear.

(e) Conduct, culture and other regulation 

Conduct and culture 

The PRA and FCA measures to increase the individual accountability of senior managers and other covered individuals in the banking sector

include: the ‘Senior Managers Regime’, which applies to a limited number of individuals with senior management responsibilities within a firm; the

‘Certification Regime’, which is intended to assess and monitor the fitness and propriety of a wider range of employees who could pose a risk of

significant harm to the firm or its customers; and conduct rules that individuals subject to either regime must comply with. From March 2017, the

conduct rules have applied more widely to other staff of firms within the scope of the regime, including the Barclays Group. 

Our regulators have also enhanced their focus on the promotion of cultural values as a key area for banks, although they generally view the

responsibility for reforming culture as primarily sitting with the industry. 

Data protection and PSD2 

Most countries in which the Barclays Group operates have comprehensive laws governing the collection and use of personal information.

Prominent media reporting of recent cyber -security breaches or data losses and the significant penalties being handed down by European privacy

regulators have heightened interest in data privacy worldwide. The introduction of the EU’s General Data Protection Regulation (GDPR) does not

significantly alter the core principles established under the earlier Data Protection Directive, but it creates a harmonised privacy regime across

European member states with penalties up to the higher of 4% of global turnover or €20 million. The GDPR also institutes new mandatory breach

notification requirements, enhances the rights of individual data subjects and introduces an accountability principle concerned with openly

demonstrating compliance. The international nature of our business and IT infrastructure means personal information may be available in countries

other than from where it originated. The GDPR has extra-territorial effect where a business established outside the EU is processing personal data

of individuals located in the EU (e.g. European based customers or clients) and such processing relates to the offering of goods or services to such

individuals, or the monitoring of their behaviour in the EU. 

In the United States, the California Consumer Privacy Pro tection Act (CCPA), effective 1 January 2020 requires companies that process information

regarding California residents to make new disclosures to consumers about their data collection, use and sharing practices, allows consumers to

opt out of certain data sharing with third parties and provides a new cause of action for data breaches. It remains unclear what modifications will

be made, if any, to the CCPA and its regulations and how these will be interpreted. The introduction of the CCPA has prompted several other US

states to consider similar legislation. Elsewhere non -EU countries such as Bermuda, Brazil, India, Cayman Islands, China, Guernsey, Jersey, Isle of

Man, and Switzerland have introduced or updated existing legislation, or are considering new laws, with provisions that are either inspired by the

GDPR or that otherwise provide enhanced rights to data subjects. 

The revised Payment Services Directive (PSD2) introduces additional security requirements when customers and clients are accessing account s or

making payments online. In August 2019, the FCA agreed an 18 -month plan for firms to implement these requirements, referred to as Strong

Customer Authentication (SCA). 

Cyber security and operational resilience 

Regulators in Europe and the US continue to focus on cyber security risk management and organisational operational resilience and overall

soundness across all financial services firms, with customer and market expectations of continuous access to financial services at an all-time high. 

This has a led to a number of proposed laws and changes to regulatory frameworks being published, such as the UK regulators’ proposals for a new

operational resilience regime, that necessitate the implementation of a variety of increased controls and enhancemen t activities for regulated

Barclays Group entities. To comply with these new requirements, firms such as the Barclays Group have adopted or will adopt a variety of increased

controls and processes, including, among others, the amendment of cyber security policies and procedures to include specified criteria, additional

security measures for enhanced reporting and public disclosures, compliance certification requirements, operational resilience and more advanced

recovery solutions, as well as other cyber and information risk governance measures. These increased controls will enhance industry

standardisation, expand and enhance our resilience capabilities as well as increase our ability to protect and maintain customer service during

potential disruptions. Such measures are likely to result in increased technology and compliance costs for the Barclays Group.

Sanctions and financial crime 

The UK Bribery Act 2010 introduced a new form of corporate criminal liability focused broadly on a company’s failure to prevent bribery on its

behalf. The Criminal Finances Act 2017 introduced new corporate criminal offences of failing to prevent the facilitation of UK and overseas tax

evasion. Both pieces of legislation have broad application and in certain circumstances may have extra-territorial impact on entities, persons or

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activities located outside the UK, including Barclays PLC and its subsidiaries. The UK Bribery Act requires the Barclays Group to have adequate

procedures to prevent bribery which, due to the extra-terr itorial nature of the Act, makes this both complex and costly. Additionally, the Criminal

Finances Act requires the Barclays Group to have reasonable prevention procedures in place to prevent the criminal facilitation of tax evasion by

persons acting for, or on behalf of, the Barclays Group. 

In May 2018, the Sanctions and Anti-Money Laundering Act became law in the UK. The Act allows for the adoption of an autonomous UK

Sanctions regime, as well as a more flexible licensing regime post-Brexit. 

In July 2018, the 5th EU Anti-Money Laundering Directive entered into force. Amongst other things, the Directive introduces changes to the

Enhanced Due Diligence measures that are required in respect of customer relationships or transactions involving high risk non-EU countries. EU

Member States are required to implement the requirements of the Directive by January 2020. The UK Government has confirmed that it will

implement the requirements of the Directive, regardless of the outcome of Brexit, and on 10 January changes to the UK Money Laundering

Regulations came into force. 

In the US, the Bank Secrecy Act, the USA PATRIOT Act 2001 and regulations thereunder contain numerous anti-money laundering and anti-

terrorist financing requirements for financial institutions. In addition, the Barclays Group is subject to the US Foreign Corrupt Practices Act, which

prohibits certain payments to foreign officials, as well as rules and regulations relating to economic sanctions and embargo programs administered

by the US government, including the US Office of Foreign Assets Control and the US Department of State, which restrict certain business activities

with certain individuals, entities, groups, countries and territories.

In some cases, US state and federal regulations addressing sanctions, money laundering and other financial crimes may impact entities, persons or

activities located outside the US, including Barc lays PLC and its subsidiaries. The enforcement of these regulations has been a major focus of US

state and federal government policy relating to financial institutions in recent years, and failure of a financial institution to ensure compliance could

have serious legal, financial and reputational consequences for the institution.

Financial review 

Contents

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A review of the Group’s performance, including the key performance indicators, and the

contribution of each of our businesses to the overall performance of the Group.

Financial review

Page

◾

Key performance indicators

179

◾

Consolidated summary income statement 

181

◾

Income statement commentary 

182

◾

Consolidated summary balance sheet

183

◾

Balance sheet commentary

184

◾

Analysis of results by business

185

◾

Non-IFRS performance measures

193

Financial review 

Key performance indicators

179

 Barclays PLC 2019 Annual Report on Form 20-F

In assessing the financial performance of the Group, management uses a range of KPIs which focus on the Group’s financial strength, the delivery

of sustainable returns and cost management. Barclays continues to target greater than 10% RoTE, excluding litigation and conduct . However, given

global macroeconomic uncertainty and the current low interest rate environment, it has become more challenging to achieve this in 2020.

Notwithstanding these headwinds, the Group believes it can achieve a meaningful improvement in returns in 2020 . Cost control remains a priority

and management continues to target a cost: income ratio of lower than 60% over time.

Non-IFRS performance measures

The Group’s management believes that the non-IFRS performance measures included in this document provide valuable information to the readers

of the financial statements as they enable the reader to identify a more consistent basis for comparing the businesses’ performance between

financial periods, and provide more detail concerning the elements of performance which the managers of these businesses are most directly able

to influence or are relevant for an assessment of the Group. They also reflect an important aspect of the way in which operating targets are defined

and performance is monitored by management. However, any non -IFRS performance measures in this document are not a substitute for IFRS

measures and readers should consider the IFRS measures as well. Refer to pages 193 to 199 for further information and calculations of non-IFRS

performance measures included throughout this section, and the most directly comparable IFRS measures.

Definition

Why is it important and how the Group performed

Common Equity Tier 1 (CET1)

ratio

Capital requirements are part

of the regulatory framework

governing how banks and

depository institutions are

supervised. Capital ratios

express a bank’s capital as a

percentage of its RWAs as

defined by the PRA.

CET1 ratio is a measure of

capital that is predominantly

common equity defined by the

CRR, as amended by the CRR II

applicable as at the reporting

date.

The Group’s capital management objective is to maximise shareholder value by

prudently managing the level and mix of its capital to: ensure the Group and all

of its subsidiaries are appropriately capitalised relative to their regulatory

minimum and stressed capital requirements, support the Group’s risk appetite,

growth and strategic options, while seeking to maintain a robust credit

proposition for the Group and its subsidiaries.

The CET1 ratio increased to 13.8% (December 2018: 13.2%). CET1 capital

decreased by £0.3bn to £40.8bn. This was driven by underlying profit

generation of £5.0bn offset by dividends paid and foreseen of £2.4bn, the

additional provision for PPI of £1.4bn, pension deficit reduction contribution

payments of £0.5bn, a decrease in the currency translation reserve of £0.5bn,

mainly driven by the depreciation of period end USD against GBP, and a loss on

the redemption of AT1 securities of £0.4bn. RWAs decreased by £16.8bn to

£295.1bn primarily driven by the reduction in the Group’s operational risk

RWAs, as well as the depreciation of period end USD against GBP.

Group target: CET1 ratio of c.13.5%. Revised from c.13.0% during the period, to

reflect the removal of the operational risk RWAs floor which increased the CET1

ratio by c.60bps.

CET1 ratio

13.8%

2018: 13.2%

2017: 13.3%

Average UK leverage ratio

The ratio is calculated as the

average transitional Tier 1

capital divided by average UK

leverage exposure. The

average exposure measure

excludes qualifying central

bank claims.

The leverage ratio is non -risk based and is intended to act as a supplementary

measure to the risk-based capital metrics such as the CET1 ratio.

The average UK leverage ratio remained stable at 4.5% (2018: 4.5%) primarily

driven by a net increase in AT1 capital, offset by a modest increase in leverage

exposure to £1,143bn (2018: £1,110bn).

Group target: maintaining the UK leverage ratio above the expected minimum

requirement.

Average UK leverage

ratio

4.5%

2018: 4.5%

2017: 4.9%

Financial review 

Key performance indicators

180

 Barclays PLC 2019 Annual Report on Form 20-F

Definition

Why is it important and how the Group performed

Return on average

shareholders’ equity

RoE is calculated as profit after

tax attributable to ordinary

shareholders, as a proportion

of average shareholders’ equity

excluding non-controlling

interests and other equity

instruments.

This measure indicates the return generated by the management of the business based

on shareholders’ equity. RoE for the Group was 4.5% (2018: 3.1%).

Group RoE

4.5%

2018: 3.1%

2017: (3.1%)

Return on average tangible

shareholders’ equity

RoTE is calculated as profit

after tax attributable to

ordinary shareholders, as a

proportion of average

shareholders’ equity excluding

non-controlling interests and

other equity instruments

adjusted for the deduction of

intangible assets and goodwill.

This measure indicates the return generated by the management of the business based

on shareholders’ tangible equity. Achieving a target RoTE demonstrates the

organisation's ability to execute its strategy and align management's interests with the

shareholders'. RoTE lies at the heart of the Group's capital allocation and performance

management process. 

RoTE for the Group was 5.3% (2018: 3.6%) due to an attributable profit of £2,461m

(2018: £1,597m) which included charges for litigation and conduct of £1.8bn, reflecting

an additional PPI provision.

RoTE for the Group, excluding litigation and conduct, increased to 9.0% (2018: 8.5%), in

line with the 2019 target. Based on an average target CET1 ratio of 13.2%, RoTE was

also 9%.

Group target: Group RoTE, excluding litigation and conduct, of greater than 10%.

Group RoTE

5.3%

2018: 3.6%

2017: (3.6%)

Group RoTE excluding

litigation and conduct

9.0%

2018: 8.5%

2017: (1.2%)

Operating expenses

Operating expenses excluding

litigation and conduct.

Barclays views operating expenses as a key strategic area for banks; those who actively

manage costs and control them effectively will gain a strong competitive advantage.

Group operating expenses were £13.6bn, in line with 2019 guidance, while total

operating expenses were £15.4bn (2018: £16.2bn).

Total operating

expenses

£15.4bn

2018: £16.2bn

2017: £15.5bn

Operating expenses

£13.6bn

2018: £13.9bn

a

2017: £14.2bn

Cost: income ratio

Total operating expenses

divided by total income.

This is a measure management uses to assess the productivity of the business

operations. Managing the cost base is a key execution priority for management and

includes a review of all categories of discretionary spending and an analysis of how we

can run the business to ensure that costs increase at a slower rate than income. 

The Group cost: income ratio, including litigation and conduct, decreased to 71% (2018:

77%) due to increased income and favourable total operating expenses, which included

an additional PPI provision.

The Group cost: income ratio, excluding litigation and conduct, decreased to 63% (2018:

66%) as favourable income and cost efficiencies were partially offset by continued

investment. 

Group target: a cost: income ratio of below 60% over time.

Cost: income ratio

71%

2018: 77%

2017: 73%

Cost: income ratio

excluding litigation

and conduct

63%

2018: 66%

2017: 68%

Note

a Group operating expenses, excluding litigation and conduct, and a GMP charge of £140m.

Financial review 

Consolidated summary income statement

181

 Barclays PLC 2019 Annual Report on Form 20-F

2019

2018

2017

2016

2015

For the year ended 31 December

£m

£m

£m

£m

£m

Continuing operations

Net interest income

9,407

9,062

9,845

10,537

10,608

Net fee, commission and other income

12,225

12,074

11,231

10,914

11,432

Total income

21,632

21,136

21,076

21,451

22,040

Credit impairment charges

(1,912)

(1,468)

(2,336)

(2,373)

(1,762)

Operating costs

(13,359)

(13,627)

(13,884)

(14,565)

(13,723)

UK bank levy 

(226)

(269)

(365)

(410)

(426)

Operating expenses 

(13,585)

(13,896)

(14,249)

(14,975)

(14,149)

GMP charge 

- 

(140)

-

-

-

Litigation and conduct

(1,849)

(2,207)

(1,207)

(1,363)

(4,387)

Total operating expenses

(15,434)

(16,243)

(15,456)

(16,338)

(18,536)

Other net income/(expenses)

71

69

257

490

(596)

Profit before tax

4,357

3,494

3,541

3,230

1,146

Tax charge

a

(1,003)

(911)

(2,066)

(865)

(1,079)

Profit after tax in respect of continuing operations

3,354

2,583

1,475

2,365

67

(Loss)/profit after tax in respect of discontinued operation

-

-

(2,195)

591

626

Non-controlling interests in respect of continuing operations

(80)

(234)

(249)

(346)

(348)

Non-controlling interests in respect of discontinued operation

- 

- 

(140)

(402)

(324)

Other equity instrument holders

(813)

(752)

(639)

(457)

(345)

Attributable profit/(loss)

2,461

1,597

(1,748)

1,751

(324)

Selected financial statistics

Basic earnings/(loss) per share

14.3p

9.4p

(10.3p)

10.4p

(1.9p)

Diluted earnings/(loss) per share

14.1p

9.2p

(10.1p)

10.3p

(1.9p)

Dividend per ordinary share

9.0p

6.5p

3.0p

4.5p

6.5p

Return on average shareholders’ equity

4.5%

3.1%

(3.1%)

3.0%

(0.6%)

Return on average tangible shareholders’ equity

5.3%

3.6%

(3.6%)

3.6%

(0.7%)

Cost: income ratio

71%

77%

73%

76%

84%

Return on average total assets

0.19%

0.13%

(0.14%)

0.13%

(0.02%)

Dividend payout ratio

b

49%

48%

(29%)

43%

(334%)

Average total equity to average total assets

5.2%

5.2%

5.7%

5.3%

5.0%

Performance measures excluding litigation and conduct

c

Profit before tax

6,206

5,701

4,748

4,593

5,533

Attributable profit/(loss)

4,194

3,733

(598)

3,036

3,640

Return on average tangible shareholders’ equity

9.0%

8.5%

(1.2%)

6.2%

7.6%

Cost: income ratio

63%

66%

68%

70%

64%

Notes

a From 2019, due to an IAS 12 update, the tax re lief on payments in relation to AT1 instruments has been recognised in the tax charge of the income statement, whereas it was

previously recorded in retained earnings. Comparatives have been restated, reducing the tax charge for 2018 by £211m, 2017 by £174m , 2016 by £128m and 2015 by £70m. This

change does not impact earnings per share or return on average tangible shareholders’ equity. Further detail can be found in Note 1.

b Total dividends paid to ordinary equity holders of the parent during the year divided by profit after tax attributable to ordinary equity holders of the parent.

c Refer to pages 197 to 199 for further information and calculations of performance measures excluding litigation and conduct.

The financial information above is extracted from the published accounts. This information should be read together with the information included

in the accompanying consolidated financial statements.

Financial review 

Income statement commentary 

182

 Barclays PLC 2019 Annual Report on Form 20-F

2019 compared to 2018

RoE was 4.5% (2018: 3.1%). RoTE, excluding litigation and conduct, increased to 9.0% (2018: 8.5%), in line with the 2019 target. Statutory EPS

was 14.3p (2018: 9.4p) and diluted EPS was 14.1p (2018: 9.2p).

Profit before tax was £4,357m (2018: £3,494m), including an additional provision for PPI of £1,400m (2018: £400m). Excluding litigation and

conduct, profit before tax was £6,206m (2018: £5,701m), with higher income and lower operating expenses partially offset by increased year- on-

year credit impairment charges. The 4% appreciation of average USD against GBP positively impacted income and profits and adversely impacted

credit impairment charges and operating expenses.

Total income increased 2% to £21,632m. Barclays UK income was stable, as ongoing margin pressure and continued reduced risk appetite in UK

cards were offset by mortgage and deposit balance growth. Barclays International income increased 5%, with CIB income up 5% and CC&P income

up 4%. Within CIB, Markets income increased due to continued market share gains

a

, while Banking fees income was stable and a reduction in

Corporate lending income was partially offset by an increase in Transaction banking income. Higher CC&P income reflected growth in US co-

branded cards and payments partnerships .

Credit impairment charges increased to £1,912m (2018: £1,468m). The 2019 charge includes the impact of macroeconomic scenario updates and

an overall reduction in unsecured gross exposures. Prior year comparatives included the impact of favourable macroeconomic scenario updates

and a £150m charge regarding the anticipated economic uncertainty in the UK.

Operating expenses decreased to £13,585m (2018: £13,896m) in line with 2019 guidance, as cost efficiencies were partially offset by co ntinued

investment. Barclays UK and Barclays International each generated positive cost: income jaws, resulting in the Group cost: income ratio, excluding

litigation and conduct, reducing to 63% (2018: 66%).

Total operating expenses of £15,434m (2018: £16,243m) included litigation and conduct charges of £1,849m (2018: £2,207m) .

The effective tax rate was 23.0% (2018: 26.1%). Excluding litigation and conduct, the effective tax rate was 18.0% (2018: 17.2%). The Group’s

effective tax rate for future periods is expected to remain around 20%, excluding litigation and conduct .

Attributable profit was £2,461m (2018: £1,597m) , generating an RoE of 4.5% (2018: 3.1%) . Excluding litigation and conduct, attributable profit

was £4,194m (2018: £3,733m), generating an RoTE of 9.0% (2018: 8.5%) and EPS of 24.4p (2018: 21.9p) .

Please refer to the Financial review section in the Annual Report on Form 20- F 2018 for a comparative discussion of 2018 financial results

compared to 2017.

Note

a Data Source: Coalition, FY19 Preliminary Competitor Analysis. Market share represents Barclays share of the total industry Revenue Pool. Analysis is based on Barclays internal

business structure and internal revenues.

Financial review 

Consolidated summary balance sheet

183

 Barclays PLC 2019 Annual Report on Form 20-F

2019

2018

2017

2016

2015

As at 31 December

£m

£m

£m

£m

£m

Assets

Cash and balances at central banks 

150,258

177,069

171,082

102,353

49,711

Cash collateral and settlement balances

83,256

77,222

77,168

90,135

82,980

Loans and advances at amortised cost

339,115

326,406

324,048

345,900

357,586

Reverse repurchase agreements and other similar secured lending

3,379

2,308

12,546

13,454

28,187

Trading portfolio assets

114,195

104,187

113,760

80,240

77,348

Financial assets at fair value through the income statement

133,086

149,648

116,281

78,608

76,830

Derivative financial instruments

229,236

222,538

237,669

346,626

327,709

Financial investments

- 

- 

58,915

63,317

90,267

Financial assets at fair value through other comprehensive income

65,750

52,816

- 

- 

- 

Assets included in disposal groups classified as held for sale

- 

- 

1,193

71,454

7,364

Other assets

21,954

21,089

20,586

21,039

22,030

Total assets

1,140,229

1,133,283

1,133,248

1,213,126

1,120,012

Liabilities

Deposits at amortised cost

415,787

394,838

398,701

390,744

390,307

Cash collateral and settlement balances

67,341

67,522

68,143

80,648

75,015

Repurchase agreements and other similar secured borrowings

14,517

18,578

40,338

19,760

25,035

Debt securities in issue

a

76,369

82,286

73,314

75,932

69,150

Subordinated liabilities

18,156

20,559

23,826

23,383

21,467

Trading portfolio liabilities 

36,916

37,882

37,351

34,687

33,967

Financial liabilities designated at fair value

204,326

216,834

173,718

96,031

91,745

Derivative financial instruments

229,204

219,643

238,345

340,487

324,252

Liabilities included in disposal groups classified as held for sale

- 

- 

- 

65,292

5,997

Other liabilities

11,953

11,362

13,496

14,797

17,213

Total liabilities

1,074,569

1,069,504

1,067,232

1,141,761

1,054,148

Equity

Called up share capital and share premium

4,594

4,311

22,045

21,842

21,586

Other equity instruments

10,871

9,632

8,941

6,449

5,305

Other reserves

4,760

5,153

5,383

6,051

1,898

Retained earnings 

44,204

43,460

27,536

30,531

31,021

Total equity excluding non -controlling interests

64,429

62,556

63,905

64,873

59,810

Non-controlling interests

1,231

1,223

2,111

6,492

6,054

Total equity

65,660

63,779

66,016

71,365

65,864

Total liabilities and equity

1,140,229

1,133,283

1,133,248

1,213,126

1,120,012

Net asset value per ordinary share

309p

309p

322p

344p

324p

Tangible net asset value per share

262p

262p

276p

290p

275p

Number of ordinary shares of Barclays PLC (in millions)

17,322

17,133

17,060

16,963

16,805

Year -end USD exchange rate

1.32

1.28

1.35

1.23

1.48

Year -end EUR exchange rate

1.18

1.12

1.13

1.17

1.36

Note

a Debt securities in issue include covered bonds of £7.0bn (2018: £8.5bn).

Financial review 

Balance sheet commentary

184

 Barclays PLC 2019 Annual Report on Form 20-F

Total assets

Total assets increased £7bn to £1,140bn.

Cash and balances at central banks has decreased by £27bn to £150bn. The cash balance has reduced as the Group actively managed the cash

component of the liquidity pool it holds to meet its funding and regulatory requirements. This management has seen a change in the composition

of the liquidity pool and an increase in the proportion of debt securities held within it. The change in holding of liquid debt securities can be seen

through the increase in assets held at fair value through other comprehensive income of £13bn to £66bn.

Cash collateral and settlement balances increased by £6bn to £83bn, primarily driven by derivative fair value changes.

Loans and advances at amortised cost increased £13bn to £339bn, principally driven by a £6bn increase in mortgage lending in Barclays UK and a

£3bn increase in debt securities held as part of Treasury.

Trading portfolio assets increased £10bn to £114bn due to increased trading activity, principally relating to the Equities business.

Financial assets at fair value through the income statement decreased £17bn to £133 bn as a result of more capital-efficient secured lending within

Barclays International.

Derivative financial instrument assets increased £6bn to £229bn, driven by a decrease in major interest rate curves, partially offset by a decrease in

foreign exchange volumes.

Total liabilities

Total liabilities increased £5bn to £1,075bn.

Deposits at amortised cost increased £21bn to £416bn driven by increased deposit taking within Personal and Business Banking and the

broadening of the CIB business across Europe.

Debt securities in issue decreased £6bn to £76bn due to the maturity of a number of issuances which were not refinanced.

Financial liabilities designated at fair value decreased £13bn to £204bn as a result of more capital-efficient secured lending within Barclays

International.

Derivative financial instruments liabilities increased £9bn to £229bn, driven by a decrease in major interest rate curves, partially offset by a decrease

in foreign exchange volumes. This is consistent with the movement in derivative financial instrument assets.

Total shareholders’ equity

Total shareholders’ equity increased £1.8 bn to £64.4bn.

Share capital and share premium increased £0.3bn to £4.6bn as a result of shares issued under employee share schemes and the Scrip Dividend

Programme.

Other equity instruments increased £1.3bn to £10.9bn due to the issuance of three AT1 instruments with principal amounts of $2.0bn, £1.0bn and

£1.0bn, partially offset by redemptions with principa l amounts of $1.2bn, €1.1bn and £0.7bn. AT1 securities are perpetual subordinated contingent

convertible securities structured to qualify as AT1 instruments under prevailing capital rules applicable as at the relevant issue date.

The fair value through other comprehensive income reserve represents the unrealised change in the fair value through other comprehensive

income investments since initial recognition. The reserve remained broadly flat at £0.2bn.

The cash flow hedging reserve increased £0.3bn to £1.0bn as a result of the fair value movements on interest rate swaps held for hedging

purposes, as interest rate forward curves flattened across major currencies.

The currency translation reserve decreased £0.5bn to £3.3bn due to strengthening of GBP against USD and EUR of 3% and 5% respectively, when

comparing year end closing rates.

The own credit reserve decreased £0.3bn to £0.4bn debit, reflecting a tightening of Barclays’ credit spreads increasing the fair value of liabilities on

balance sheet.