TIDM96ES
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Barclays Bank PLC
18 February 2021
18 February 2021
Barclays Bank PLC
Annual Report and Accounts 2020
UK Listing Authority submission
In compliance with Disclosure Guidance & Transparency Rule
(DTR) 4.1, Barclays Bank PLC announces that its Annual Report 2020
will today be submitted to the National Storage Mechanism and will
shortly be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The document may also be accessed via Barclays PLC's website at
home.barclays/annualreport
Additional information
The following information is extracted from the Barclays Bank
PLC Annual Report 2020 (page references are to pages in the Annual
Report) which can be found at home.barclays/annualreport and
constitutes the material required by DTR 6.3.5 to be communicated
to the media in unedited full text through a Regulatory Information
Service. This material is not a substitute for reading the Barclays
Bank PLC Annual Report 2020 in full.
Strategic report
Performance review
The Strategic Report was approved by the Board of Directors on
17 February 2021 and signed on their behalf by the Chairman.
Overview
Barclays Bank PLC is a wholly-owned subsidiary of Barclays PLC.
The consolidation of Barclays Bank PLC and its subsidiaries is
referred to as Barclays Bank Group. The terms Barclays Group and
Barclays, each refers to Barclays PLC, together with its
subsidiaries.
Barclays Bank PLC is the non ring-fenced bank within the
Barclays Group. The Barclays Bank Group contains the majority of
the Barclays Group's Barclays International division, which is
comprised of the Corporate and Investment Bank (CIB) and Consumer,
Cards and Payments (CC&P) businesses. Barclays Bank PLC offers
customers and clients a range of products and services spanning
consumer and wholesale banking and is supported by the Barclays PLC
Group-wide service company, Barclays Execution Services (BX), which
provides technology, operations and functional services to
businesses across the Barclays Group.
With relentless focus on delivering for customers and clients
around the world, Barclays Bank PLC's diversified business
portfolio provides balance, resilience and exciting growth
opportunities. Barclays Bank PLC has strong global market positions
and continues to invest in people and technology in order to
deliver sustainable, improved returns.
Our structure
Barclays Bank PLC consists of CIB and CC&P.
CIB
The CIB is comprised primarily of the Investment Banking,
Corporate Banking and global Markets businesses, providing products
and services to money managers, financial institutions,
governments, supranational organisations and corporate clients to
manage their funding, financing, strategic and risk management
needs.
-- Banking provides clients with strategic advice on mergers and acquisitions
(M&A), corporate finance and financial risk-management solutions,
as well as equity and debt fundraising services.
-- Our Corporate Banking business provides GBP and EUR working capital,
transaction banking, including trade and payments, and lending
services for multinational corporates and institutions, and for
large and medium-sized corporate clients in the UK.
-- Our Markets business provides a broad range of clients with market
insight, execution services and tailored risk management and financing
solutions across equities, credit, rates and foreign exchange products.
CC&P
CC&P is comprised of our US Consumer Bank, Barclays
Payments, Barclaycard Germany and our Private Bank.
-- Barclays Payments enables businesses of all sizes to make and receive
payments and we continue to be a leader in payment processing and
commercial payments (a) .
-- In the US, we have a partnership focused business model, offering
credit cards to consumers through our partners, such as American
Airlines and Wyndham Hotels & Resorts, as well as online retail
savings products.
-- We also offer multiple consumer products in Germany, including
credit cards, online loans, instalment purchase-financing, electronic
Point of Sale financing and deposits.
-- Our Private Bank offers banking, credit and investment capabilities
to meet the needs of our clients across the UK, Europe, the Middle
East and Africa, and Asia.
Notes
a Source: Nilson Report #1175.
Strategy and strategic priorities
Barclays Bank Group's business model provides a diversified
earnings portfolio to its shareholder, Barclays PLC.
Our diversification is a real strength, and we will seek to
maintain and increase our diversity as we evolve. Our revenue today
comes from different businesses, different types of customers and
clients, and different geographies. We believe this diversification
creates the balance and resilience required to deliver through the
economic cycle as has been shown through 2020 during the COVID-19
pandemic.
Our strategy is to focus on customers and clients putting them
at the heart of decision making. We look to maintain and increase
our diversification whilst protecting and strengthening our
culture.
CIB
Barclays is a European headquartered investment bank competing
at scale in the US and providing universal banking services around
the world. At a time of heightened stress for many corporates,
governments and institutions, we maintain our client-centric focus
and our commitment to a full capability offering in our CIB.
We are focused on the following areas:
1. Adapting to the evolving needs of our clients : We continue to
invest in technology that makes it easier for our clients to do
business with us. That includes the development of our electronic
offering in Market s and the build out of our full service Corporate
Banking digital proposition.
2. Running an efficient and effective business: Our focus is a chieving
better operational performance and driving improvements in market
share. At the same time, we want to maintain cost discipline and
drive more productive use of capital by recycling risk-weighted
assets to the highest returning opportunities.
3. Improving returns by investing in and growing our capital markets
and capital efficient businesses: The capital markets are an increasingly
important source of financing and growth for the global economy.
In order to ensure we remain globally relevant, we want to invest
to grow our share of global debt and equity underwriting. At the
same time, we remain focused on growing capital-light parts of
our business, including Transaction Banking and fee-led advisory
work in Banking. We are also developing other higher-returning
businesses where we see opportunities, including in securitised
products and our prime financing business.
CC&P
Leveraging the combined strength of our CC&P businesses, we
continue to serve and strive to deliver best-in-class consumer
finance, private banking and payment solutions to our customers and
clients.
We are focused on the following areas:
1. Responding to changing consumer behaviour: We continue to invest
in the digitalisation of our businesses, delivering new products
and capabilities to reflect the growing trends within our CC&P
businesses. This includes investing in a new platform based business
model to build digital connections between our customers and our
corporates and small businesses, creating a new multi-way value
exchange ecosystem with Barclays at the centre.
2. Building a more efficient and seamless business: We are accelerating
our automation agenda to drive operational efficiency and create
seamless digital journeys to enhance customer experience. For example,
we launched our first fully digital application for our commercial
payments cardholders who can now view their accounts through the
Barclays App, as well as our new mobile app for corporate card
customers.
3. Winning new partnerships: We are focused on delivering across
all our markets, through broadening our product penetration with
our existing partners and pursuing new partnerships, particularly
in the US, as well as building capabilities to offer new financing
solutions in markets such as Germany.
Operating environment
The health and economic impacts of the COVID-19 pandemic
continue to have significant implications for Barclays Bank Group,
our customers and clients, and the economies and societies we
serve. The global economy has experienced unprecedented
fluctuations in activity levels over the last 12 months, and GDP in
many of our key markets is still well below the pre-COVID-19
pandemic levels. The implications for wider society, and the way we
live and interact, have also been dramatic and will continue to be
for some time.
Throughout a challenging year, we are proud of the support we
have been able to provide to our customers and clients. Now, we are
committed to helping them re-build and, where required, adapt to
new trends that may arise in the coming years such as long-term
implications for population centres or global supply chains. While
the vaccine rollout continues to progress, we are optimistic about
the opportunities that will exist for Barclays and for our
customers and clients in a recovery environment.
As a direct result of the economic consequences of the COVID-19
pandemic, there have been changes in the financial environment that
we have adapted to meet. In particular, we have seen a reduction in
interest rates in many of the jurisdictions where we operate,
intensifying an already long-term, low-interest rate environment
which we expect to endure for some time.
In the financial markets, the last 12 months were characterised
by initial periods of high volatility, market dislocation and
significant trading activity. The global markets revenue pool(a)
grew by 30% in 2020 due to heightened trading activity in the first
part of the year, while overall capital markets issuance(b) rose by
9% as companies sought to strengthen their balance sheets.
The impact of the COVID-19 pandemic on society has accelerated a
number of existing trends in consumer behaviour and preferences for
how to manage, spend and save money. In the last 12 months, for
example, we have seen a significant further shift away from cash
usage and towards contactless payments as customers adapt and
embrace a low-touch environment necessitated by the COVID-19
pandemic.
These trends present significant opportunities to transform and
continue to improve our services, finding further efficiencies
through technology and automation, and creating new business models
and partnerships based on digital engagement, customer trust and
our Payments capabilities.
Post the UK's withdrawal from the EU, the UK continues to
develop a new framework for financial services regulation. We
anticipate a new architecture for rulemaking and enforcement and an
increase in public policy and legislative activities in the near
term.
Barclays Bank Group remains subject to ongoing and significant
levels of regulatory change. In particular, we continue to pay
close attention to the changing landscape of prudential
requirements and supervisory expectations and changing approaches
to stress testing.
Notes
a Source : Coalition Greenwich, Preliminary FY20 Competitor analysis.
Based on Barclays internal business structure.
b Source: Dealogic for the period covering 1 January to 31 December
2020.
Year in review
CIB
In Banking, we helped some of the world's largest governments,
corporations and public institutions issue debt in order to help
them manage the strain that the COVID-19 pandemic placed on their
operating environments. In total, we helped our corporate clients
raise c.GBP1.6trn and governments, government-related clients and
supranationals raise c.GBP430bn of capital in 2020. While our
Banking global fee ranking (a) fell to 7(th) in 2020 from 6(th) in
2019, largely attributable to a decline in activity in the sectors
where we have relative strength, our revenue growth of 8% is
testament to a resilient performance in a challenging year.
Our Corporate Banking business played a key role in supporting
the UK economy through the COVID-19 pandemic, helping clients to
raise funding in excess of GBP15bn under UK government lending
schemes including the Coronavirus Large Business Interruption
Scheme and the Covid Corporate Financing Facility. In the UK,
Corporate Banking deposits grew by 22% during the year, and we had
over 600 net new client wins, illustrating the extent to which our
corporate clients trusted us during a time of uncertainty.
Our Markets business acted as a market-maker and liquidity
provider to institutions across the globe, playing a pivotal role
in allowing them to manage risk during a time of unprecedented
disruption. Despite a challenging environment, we were able to gain
share (b) to 4.9% (2019:4.3%), maintaining our global ranking (b)
at 6(th) - the largest non-US bank. In line with our strategy, we
have made significant progress in our multi-year e ffort to provide
our clients with market-leading electronic capabilities.
We continued to invest in enhancing our digital proposition,
including our electronic trading capabilities and our digital
self-service platform. Our BARX (cross-asset electronic trading)
and options platforms continue to benefit from sustained multi-year
investment. The user base of iPortal, our digital self-service
platform, grew in 2020, and we are seeing a continued reduction in
cost to serve through digital adoption. In order to ensure a
seamless experience, we have invested in resilience with
client-impacting technology incidents down 14% compared to last
year.
We continued to broaden our digital footprint business across
Europe, with our Transaction Banking offering now digitally live
across nine key EU countries, without the overheads of a branch
network. Despite the challenging environment, we on-boarded over
640 new clients and attracted over GBP2bn of new deposits in the
year.
We also continued to enjoy a strong partnership with our
colleagues in BX, including in our Transaction Banking business,
which had significant demand placed on its technology
infrastructure during the early days of the COVID-19 pandemic,
including the rapid deployment of the UK Government schemes and the
distribution of support via Local Authorities. We remain committed
to growing capital-light business across our expanded geographic
presence and through investments in our digitalised offering.
CC&P
We forged new partnerships across all our businesses, notably in
the US, where we signed a multi-year partnership agreement with
Emirates, the world's largest international airline, as well as
successfully renewed partnerships with key clients across our US
Consumer Bank and as such, maintained our position as a top 10
credit card issuer in the US (c) . Additionally, we signed a
multi-year agreement for a card programme relationship with AARP,
the largest non-profit, non-partisan organisation in the US
dedicated to empowering people aged 50 and older to choose how they
live as they age.
We launched a streamlined credit card process on Frontier
Airline's native mobile app, simplifying the application process
for customers within Frontier's booking journey. For us, it creates
an exciting new capability for existing and future partners. As
part of our push to broaden our product set, we also launched our
card-based Equal Payment Plan proposition, which helps customers
finance purchases with our partners.
The investments we have made in digital servicing have allowed
us to reach a digital active user rate of 71.4% and enabled strong
delivery of customer supporting programmes, including payment
relief and merchant disputes. The Net Promoter Score (NPS (d) ) for
the US Consumer Bank in 2020 was +35 demonstrating an increase on
our 2019 score (e) .
Our Payments business maintained its position as one of the
largest payment processors in Europe (f) and secured significant
new client relationships, and retained others, including BT/EE and
The Range. We also launched the first phase of our Smartpay Fuse
gateway solution - an intermediary merchant service that provides
omni-channel transaction processing services - through our
relationship with CyberSource, a Visa solution. This complements
our existing suite of gateway solutions and enables us to bring
best-in-class commerce products to more clients in the UK and
Europe.
In Germany, we continue to be a leading lender in credit cards
(g) as well as providing loans. This year, we established a new
partnership with leading e-commerce provider, Amazon, to offer
their customers instalment lending at the point of purchase - a
product that has seen increased popularity in the market.
Our Private Bank continues to strive to become a leading
investments house for Ultra High Net-Worth (UHNW) and High
Net-Worth (HNW) customers and Family Offices, offering more complex
solutions, in collaboration with our CIB. By leveraging the global
reach of our universal banking model to seamlessly deliver
capabilities, we have won numerous notable client mandates. We have
seen significant inflows into our discretionary investment offering
as we deliver continued outperformance as highlighted by our
Multi-Asset Portfolio award at the 2020 Wealth Manager Investment
Performance Awards in association with Asset Risk Consultants.
Additionally, our sustainable solutions won "Best ESG Investment
Fund: Multi Asset" at the ESG Investing Awards 2020, aligning to
our wider sustainability ambitions.
Notes
a Source: Dealogic for the period covering 1 January to 31 December
2020.
b Source: Coalition Greenwich, Preliminary FY20 Competitor analysis.
Market share represents Barclays share of the Global Industry Revenue
Pool. Analysis is based on Barclays internal business structure
and internal revenues
c Source: Nilson Report #1183.
d Source: The Net Promoter score (NPS) is a view of how willing customers
are to recommend our products and services to others.
e Source: NICE Satmetrix Survey.
f Source: Nilson Report #1175.
g Source: Deutsche Bundesbank, Advanzia Bank S.A plus own calculations
.
Looking ahead
CIB
Across our CIB, we will look to remain focused on maintaining
our client-centric approach and, in doing so, developing
opportunities to grow our business and increase returns. We will
continue to focus on growth in high-returning, capital efficient
parts of our business and to sustain our focus on cost discipline
and operational rigour.
We will look to make further, selective investments for the long
term, establishing ourselves as the leading European Corporate and
Investment Bank, competing on an even footing with our US peers and
operating at the most efficient scale possible.
Banking will continue to invest in select sectors, particularly
Healthcare and Technology, in the US and Europe to improve revenue
contribution from our equity and advisory offerings and help us
narrow the gap to our US peers. We will continue to build our
Sustainable and Impact Investment Banking team, ensuring that we
accelerate our efforts to support growth stage companies as well as
our broader client base on implementing Environmental Social
Governance (ESG).
In Corporate Banking, we will look to continue the investment in
our digital proposition and in our European offering, a critical
enabler for Barclays ambitions across the continent. We will also
focus on steadily improving our credit portfolio returns by
reallocating risk-weighted assets to higher-returning
opportunities, as well as making selective investments in expanding
the footprint of our US Corporate Banking offering.
Markets will continue to focus on growing balances, driving
client-centricity and building a large and stable income base. We
will keep investing in low-touch electronic execution platforms, to
drive efficiency and scale and will also seek to utilise the
strength of our integrated financing platform to drive growth in
client balances.
CC&P
Across our CC&P businesses, we will look to accelerate our
strategy to invest in and build world-class technology and digital
capabilities. This includes our focus on building out a new
platform based business model, to be launched later this year, to
offer differentiated products and services in partnership with our
clients, to Barclays' customers.
In the US, as we continue to pursue a partnership-centric
business model, we are extending our product set to deliver
incremental value to our existing partners and win new partners
across a broader range of sectors.
Throughout the COVID-19 pandemic, we have seen an increase in
the number of customer complaints in the US Consumer Bank, however
we have largely identified the root causes and have plans in place
to address these going forward.
We will drive further scale in our Payments business through
best-in-class digital capabilities, expanding and diversifying our
customers and partnerships, and unlocking further opportunity in
Europe. We will remain closely aligned with the Corporate Bank and
Business Banking in Barclays UK to maximise value for clients and
leverage our proprietary digitally integrated merchant platforms to
deepen penetration.
In Germany, we will seek to continue to expand our
Business-to-Business-to-Consumer business and pursue
instalment-lending partnerships with other retail merchants.
Through more seamless client journeys for our Private Banking
clients, we will aim to drive operational efficiency and develop
our existing platforms as part of our digitalisation agenda. We
will continue to enhance our offering for UHNW and HNW customers,
particularly across Credit and Alternatives solutions, and
increasingly focus on our sustainable investment offerings.
Our role in society
Our success is judged not only by commercial performance, but
also by how we act sustainably and responsibly for each other and
the long term. We believe that we can, and should, make a positive
difference to society, locally and globally. We do that through the
choices we make about how we run our business, and through the
commitments we make proactively to support others in our
communities to achieve their goals. For detail on our integration
of social and environmental issues into our business, please refer
to pages 39 to 44 in the Barclays PLC Annual Report 2020.
As the global effort to tackle climate change grows, the
Barclays Group is working to take a leading role in contributing to
the transition to a low-carbon economy. In March last year, the
Barclays Group set out its ambition to be a net zero bank by 2050.
In November 2020, as part of its work to achieve that ambition, the
Barclays Group set out the methodology and targets that begin to
align the emissions the Barclays Group finances with the Paris
Climate Agreement. More information is set out in the Barclays
Group Environmental, Social and Governance report. More information
is set out in the Barclays Group ESG report available at
home.barclays/esg.
Looking ahead, we recognise that the transition to a zero-carbon
economy creates commercial opportunities across our business. We
see opportunity in the transition to a low-carbon economy: to
strengthen relationships with our clients as we help them to adapt;
to build new relationships with innovative, fast-growth
organisations that are developing new green technology; and to work
in partnership with academics and industry associations to
contribute to the latest thinking and learn from the experience of
others.
Barclays Group has also increased its commitment to green and
sustainable finance, with a target to provide at least GBP100bn of
green financing by 2030. Green financing supports the transition by
providing financing that is specifically focused on green activity,
including for renewables, energy efficiency and sustainable
transport. This includes specific products such as Green Loans,
Green Project Finance and Green Bonds.
In 2020, Barclays Group updated our Sustainable Finance
Framework, which sets out our approach to classifying financing as
sustainable, and references industry guidelines and principles.
Barclays Group welcomes and encourages greater global harmonisation
in the way this financing is defined, supported by improved data
availability and company disclosures, and will be working with
other financial institutions towards this goal.
For an overview of the Barclays Bank Group's approach to
managing climate change risk, please refer to pages 50 to 51 in the
climate change risk management section.
Strategic report
Managing risk
The Barclays Bank Group is exposed to internal and external
risks as part of our ongoing activities. These risks are managed as
part of our business model.
Enterprise Risk Management Framework
Within the Barclays Bank Group, risks are identified and
overseen through the Enterprise Risk Management Framework (ERMF),
which supports the business in its aim to embed effective risk
management and a strong risk management culture.
This ERMF governs the way in which the Barclays Bank Group
identifies and manages its risks. The ERMF is approved by the
Barclays PLC Board on recommendation of the Barclays Group Chief
Risk Officer; it is then adopted by the Barclays Bank Group with
minor modifications where needed.
The management of risk is embedded into each level of the
business, with all colleagues being responsible for identifying and
controlling risks.
Risk appetite
Risk appetite defines the level of risk we are prepared to
accept across the different risk types, taking into consideration
varying levels of financial and operational stress. Risk appetite
is key for our decision making processes, including ongoing
business planning and setting of strategy, new product approvals
and business change initiatives.
The Barclays Bank Group may choose to adopt a lower risk
appetite than allocated to it by Barclays Group.
Three Lines of Defence
The first line of defence is comprised of the revenue generating
and client facing areas, along with all associated support
functions, including Finance, Treasury, Human Resources and
Operations and Technology. The first line identifies the risks,
sets the controls and escalates risk events to the second line of
defence.
The second line of defence is made up of Risk and Compliance and
oversees the first line by setting the limits, rules and
constraints on their operation, consistent with the risk
appetite.
The third line of defence is comprised of Internal Audit,
providing independent assurance over the effectiveness of
governance, risk management and control over current, systemic and
evolving risks.
Although the Legal function does not sit in any of the three
lines, it works to support them all and plays a key role in
overseeing Legal risk throughout the bank. The Legal function is
also subject to oversight from the Risk and Compliance functions
(second line) with respect to the management of operational and
conduct risks.
Monitoring the risk profile
Together with a strong governance process, using business and
Barclays Group level Risk Committees, as well as Board level
forums, the Barclays Bank PLC Board receives regular information in
respect of the risk profile of the Barclays Bank Group. Information
received includes measures of risk profile against risk appetite as
well as the identification of new and emerging risks.
We believe that our structure and governance supports us in
managing risk in the changing economic, political and market
environments.
The ERMF defines eight principal risks How risks are managed
--------------------------------------------------------------------- ---------------------------------------
Financial Credit The risk of loss to the Barclays Credit risk teams identify,
Principal Risk Bank Group from the failure evaluate, sanction, limit and
Risks of clients, customers or monitor various forms of credit
counterparties, including exposure, individually and in
sovereigns, to fully honour aggregate.
their obligations to the
Barclays Bank Group, including
the whole and timely payment
of principal, interest, collateral
and other receivables.
-------------- ------------- -------------------------------------- ---------------------------------------
Market The risk of loss arising A range of complementary approaches
Risk from potential adverse changes to identify and evaluate market
in the value of the Barclays risk are used to capture exposure
Bank Group's assets and liabilities to market risk. These are measured,
from fluctuation in market controlled and monitored by
variables including, but market risk specialists.
not limited to, interest
rates, foreign exchange,
equity prices, commodity
prices, credit spreads, implied
volatilities and asset correlations.
-------------- ------------- -------------------------------------- ---------------------------------------
Treasury Liquidity risk: Treasury and capital risk is
and Capital The risk that the Barclays identified and managed by specialists
Risk Bank Group is unable to meet in Capital Planning, Liquidity,
its contractual or contingent Asset and Liability Management
obligations or that it does and Market Risk. A range of
not have the appropriate approaches are used appropriate
amount, tenor and composition to the risk, such as; limits;
of funding and liquidity plan monitoring; internal and
to support its assets. external stress testing.
Capital risk:
The risk that the Barclays
Bank Group has an insufficient
level or composition of capital
to support its normal business
activities and to meet its
regulatory capital requirements
under normal operating environments
or stressed conditions (both
actual and as defined for
internal planning or regulatory
testing purposes). This includes
the risk from the Barclays
Bank Group's pension plans.
Interest rate risk in the
Banking Book:
The risk that the Barclays
Bank Group is exposed to
capital or income volatility
because of a mismatch between
the interest rate exposures
of its (non-traded) assets
and liabilities.
-------------- ------------- -------------------------------------- ---------------------------------------
Non-Financial Operational The risk of loss to the Barclays Operational risk comprises the
Principal Risk Bank Group from inadequate following risks; data management
Risks or failed processes or systems, and information, execution risk,
human factors or due to external financial reporting, fraud,
events (for example fraud) payments processing, people,
where the root cause is not physical security, premises,
due to credit or market risks. prudential regulation, supplier,
tax, technology and transaction
operations.
It is not always cost effective
or possible to attempt to eliminate
all operational risks.
Operational risk is managed
across the businesses and functions
through an internal control
environment with a view to limiting
the risk to acceptable residual
levels.
-------------- ------------- -------------------------------------- ---------------------------------------
Model The risk of the potential Models are independently validated
Risk adverse consequences from and approved prior to implementation
financial assessments or and their performance is monitored
decisions based on incorrect on a continual basis.
or misused model outputs
and reports.
-------------- ------------- -------------------------------------- ---------------------------------------
Conduct The risk of detriment to The Compliance function sets
Risk customers, clients, market the minimum standards required,
integrity, competition or and provides oversight to monitor
the Barclays Bank Group from that these risks are effectively
the inappropriate supply managed and escalated where
of financial services, including appropriate.
instances of wilful or negligent
misconduct.
------------- -------------------------------------- ---------------------------------------
Reputation The risk that an action, Reputation risk is managed by
Risk transaction, investment or embedding our purpose and values
event, decision or business and maintaining a controlled
relationship will reduce culture within the Barclays
trust in the Barclays Bank Bank Group, with the objective
Group's integrity and/or of acting with integrity, enabling
competence. strong and trusted relationships
with customers and clients,
colleagues and broader society.
------------- -------------------------------------- ---------------------------------------
Legal The risk of loss or imposition The Legal function supports
Risk of penalties, damages or colleagues in identifying and
fines from the failure of limiting legal risks.
the Barclays Bank Group to
meet its legal obligations
including regulatory or contractual
requirements.
-------------- ------------- -------------------------------------- ---------------------------------------
Note
a The ERMF defines eight principal risks. For further information
on how these principal risks apply specifically to the Barclays
Bank Group, please see pages 52 to 57
Strategic report
Performance measures
Financial performance measures
The performance of Barclays Bank PLC contributes to the Barclays
Group, upon which the delivery of strategy is measured.
Income Statement
Barclays Bank Group results 2020 2019 2018
For the year ended 31 December GBPm GBPm GBPm
-------------------------------------------------------- ------- ------- --------
Total income 15,778 14,151 13,600
Credit impairment charges (3,377) (1,202) (643)
-------------------------------------------------------- ------- ------- --------
Net operating income 12,401 12,949 12,957
Operating expenses (9,383) (9,718) (9,893)
GMP charge(a) - - (140)
Litigation and conduct (76) (264) (1,706)
-------------------------------------------------------- ------- ------- --------
Total operating expenses (9,459) (9,982) (11,739)
Other net income 133 145 68
-------------------------------------------------------- ------- ------- --------
Profit before tax 3,075 3,112 1,286
Taxation (624) (332) (229)
-------------------------------------------------------- ------- ------- --------
Profit after tax in respect of continuing operations 2,451 2,780 1,057
Loss after tax in respect of discontinued operations(b) - - (47)
Other equity instrument holders (677) (660) (647)
-------------------------------------------------------- ------- ------- --------
Attributable profit 1,774 2,120 363
-------------------------------------------------------- ------- ------- --------
Notes
a A GBP140m charge for Guaranteed Minimum Pensions in relation to
the equalisation of obligations for members of the Barclays Bank
UKRF. There was no capital impact of this charge as at 31 December
2018, as the Barclays Bank UKRF remained in accounting surplus.
b Barclays Bank PLC transferred its UK banking business on 1 April
2018 to Barclays Bank UK PLC. Results relating to the UK banking
business for the three months ended 31 March 2018 have been reported
as a discontinued operation.
Income Statement commentary
Barclays Bank PLC continued to support its customers and clients
through the COVID-19 pandemic by providing or facilitating lending,
through a range of support programmes which have been introduced,
as well as enabling the raising of debt and equity financing in the
capital markets. Support actions, including payment holidays, were
introduced to help customers and clients.
2020 compared to 2019
-- Profit before tax decreased 1% to GBP3,075m driven by a GBP1,412m
decrease in CC&P to a loss before tax of GBP292m. This was partially
offset by a GBP1,339m increase in CIB to GBP3,929m and a lower
loss in Head Office of GBP562m (2019: GBP598m)
-- Total income increased 11% to GBP15,778m
- CIB income increased 26% to GBP12,607m driven by a 52% increase
in Markets, reflecting gains in market share as well as an increase
in market size(a) , wider spreads, higher levels of client activity
and volatility, an 8% increase in Banking fees, partially offset
by a 12% decline in Corporate as deposit balance growth was more
than offset by margin compression and due to the impact of losses
on the mark to market of lending and related hedge positions,
and the carry costs of those hedges
- CC&P income decreased 22% to GBP3,490m reflecting lower cards
balances, margin compression and reduced payments, which were
impacted by the COVID-19 pandemic, and disposal of Barclays Partner
Finance (BPF) within the Barclays Group in Q220. Q220 included
a c.GBP100m valuation loss on Barclays' preference shares in
Visa Inc. resulting from the Q220 Supreme Court ruling concerning
charges paid by merchants
- Head Office income was an expense of GBP319m (2019: GBP320m)
which included hedge accounting and funding costs on legacy capital
instruments, including GBP85m from repurchases of the Barclays
Bank PLC 7.625% Contingent Capital Note.
-- Credit impairment charges increased to GBP3,377m (2019: GBP1,202m)
- CIB credit impairment charges increased to GBP1,565m (2019: GBP157m)
due to the deterioration in economic outlook driven by the COVID-19
pandemic. The current year charge is broadly driven by GBP711m
of non default provisions for future expected customer and client
stress and c.GBP800m of single name wholesale loan charges
- CC&P credit impairment charges increased to GBP1,720m (2019:
GBP1,016m) due to the deterioration in economic outlook driven
by the COVID-19 pandemic. The current year charge is broadly
driven by GBP752m of non default provisions for future expected
customer and client stress. As at 31 December 2020, 30 and 90
day arrears in US cards were 2.5% (Q419: 2.7%) and 1.4% (Q419:
1.4%) respectively
- Head Office credit impairment charges increased to GBP92m (2019:
GBP29m) due to the deterioration in economic outlook driven by
the COVID-19 pandemic. The incremental GBP63m charge is primarily
driven by provision for future expected customer stress in the
Italian home loan portfolio
-- Total operating expenses decreased 5% to GBP9,459m
- CIB total operating expenses decreased 3% to GBP7,129m due to
cost efficiencies and discipline in the current environment,
partially offset by higher bank levy charge mainly due to the
non recurrence of prior year adjustments
- CC&P total operating expenses decreased 8% to GBP2,176m reflecting
cost efficiencies, lower marketing spend due to the impacts of
the COVID-19 pandemic and disposal of BPF
- Head Office total operating expenses decreased 36% to GBP154m
due to lower litigation and conduct charges, partially offset
by charitable donations from Barclays' COVID-19 Community Aid
Package
-- Other net income of GBP133m (2019: GBP145m) reflects gains on disposals
following the sale of a number of subsidiaries within the Barclays
Group
Notes
a Data source: Coalition, Preliminary FY20 Competitor Analysis. Market
share represents Barclays share of the Global Industry Revenue
Pool. Analysis is based on Barclays internal business structure
and internal revenues.
Balance Sheet Information
The following assets and liabilities represent key balance
sheet items for Barclays Bank Group
2020 2019
As at 31 December GBPm GBPm
------------------------------------------------------------ ------- -------
Assets
Cash and balances at central banks 155,902 125,940
Loans and advances at amortised cost 134,267 141,636
Trading portfolio assets 127,664 113,337
Financial assets at fair value through the income statement 171,761 129,470
Derivative financial instruments 302,693 229,641
Liabilities
Deposits at amortised cost 244,696 213,881
Financial liabilities designated at fair value 249,626 204,446
Derivative financial instruments 300,580 228,940
------------------------------------------------------------ ------- -------
Balance Sheet commentary
-- Cash and balances at central banks increased GBP30.0bn to GBP155.9bn
within the liquidity pool
-- Loans and advances decreased GBP7.4bn to GBP134.3bn due to lower
unsecured lending balances in CC&P
-- Trading portfolio assets increased GBP14.3bn to GBP127.7bn due
to increased client activity
-- Financial assets at fair value through the income statement increased
GBP42.3bn to GBP171.8bn driven by reverse repurchase agreements
and similar secured lending
-- Derivative financial instrument assets and liabilities increased
GBP73.1bn to GBP302.7bn and GBP71.6bn to GBP300.6bn respectively
driven by a decrease in major interest rate curves and increased
client activity
-- Deposits at amortised cost increased GBP30.8bn to GBP244.7bn due
to CIB clients increasing liquidity
-- Financial liabilities designated at fair value increased GBP45.2bn
to GBP249.6bn driven by repurchase agreements and similar secured
borrowing
The financial information above is extracted from the financial
statements. This information should be read together with the
information included in the accompanying consolidated financial
statements.
Other Metrics and Capital(a)
Barclays Bank PLC is regulated by the Prudential Regulation Authority
(PRA) on a solo-consolidated basis. Barclays Bank PLC solo-consolidated
comprises Barclays Bank PLC plus certain additional subsidiaries, subject
to PRA approval. The disclosures below provide key metrics for Barclays
Bank PLC solo-consolidated.
2020 2019 2018
----------------------------------------------- ---------- ---------- ----------
Common equity tier 1 (CET1) ratio 14.2% 13.9% 13.5%
Total risk weighted assets (RWAs) GBP178.2bn GBP158.4bn GBP173.2bn
Capital Requirements Regulation (CRR) leverage
ratio 3.9% 3.9% 4.0%
----------------------------------------------- ---------- ---------- ----------
Note
a Capital, RWAs and leverage are calculated applying the IFRS 9 transitional
arrangement of the CRR as amended by CRR II.
Capital Commentary
As at 31 December 2020, Barclays Bank PLC's solo-consolidated
CET1 ratio was 14.2%, which exceeded minimum regulatory capital
requirements.
Non-financial performance measures
Barclays Bank PLC is part of the Barclays Group which uses a
variety of quantitative and qualitative measures to track and
assess holistic strategic delivery. Barclays Group maintains a
robust internal and external assurance process for our key metrics,
ensuring that we have strong controls and clear data management in
place.
Barclays Bank PLC has addressed the Non-Financial Reporting
requirements contained in sections 414CA and 414CB of the Companies
Act 2006 through the disclosure contained in the Barclays PLC
Annual Report 2020 on pages 52 to 53.
Strategic report
Our people and culture
The strength and success of Barclays is in our people. We want
to support their health and wellbeing, enable them to build their
career and empower and motivate them to be able to provide
excellent service. The following sub-sections are consistent with
those detailed in the People Section of the Barclays PLC Annual
Report 2020 and figures mentioned are for the Barclays Group other
than where specifically mentioned.
Adapting to challenge
Events over the last 12 months have affected all our lives, and
the potential for disruption has been significant. Nevertheless, we
have continued to invest in our colleagues in order to strengthen
our business and protect our culture. Our people have shown
extraordinary adaptability and resilience, and thanks to them so
has Barclays.
Throughout the COVID-19 pandemic, colleagues around the world
have been working incredibly hard to continue to support our
customers and clients. Many were designated as frontline or
critical workers in the countries in which they work. At all times,
we have worked tirelessly to prioritise each other's safety and
wellbeing, as well as taking all necessary steps to slow the spread
of the virus.
We put in place a set of global principles to ensure we were
doing as much as possible to support our people. This included
instigation of new working patterns and technology. We also helped
colleagues cope with some of the personal challenges the COVID-19
pandemic created, including offering paid leave to support
self-quarantine, sickness or care for dependents, financial help
with childcare and advice made available to help protect physical
and mental health. Through our colleague surveys, we have also
regularly checked in with our people to better understand the
impact that working through the COVID-19 pandemic has had.
Barclays continues to believe that people working together in
the same physical location reinforces our culture and helps with
collaboration and inspiration. Where possible, and in line with
local government guidance, we have instigated gradual returns to
the office in certain parts of the business and in certain parts of
the world. In time, with the safety and wellbeing of colleagues as
our first priority, we envisage more people will return to on-site
working. In advance of this, we have already put in place
additional measures to ensure we are COVID-secure, including risk
assessments at our sites and Return to Office Crews to support
social distancing and minimise risks.
Over the last 12 months, we have learnt an enormous amount about
the benefits and challenges of working more flexibly. Ultimately,
we believe this will inform our ambitions for future ways of
working.
A continuous conversation with colleagues
We think colleague engagement should be a two-way exercise, with
equal weight placed on listening to our people as it is on keeping
them informed. We want to be able to consider our colleagues'
perspective when we make decisions, including at the most senior
level.
Our regular Here to Listen and Your View surveys are a key part
of how we track engagement. In 2020, in part in response to the
challenge of the COVID-19 pandemic, we improved the effectiveness
and regularity of how we do this.
We saw a 3 percentage point increase in the response rate to our
annual Your View employee engagement survey with 62% of Barclays
Bank PLC colleagues responding. The results showed an increase in
Barclays Bank PLC engagement levels, up 9 percentage points to 82%,
and an increase of 9 percentage points to 86% of colleagues saying
they would recommend Barclays as a good place to work. We were also
very pleased to see that our colleagues have continued their focus
on customer and client feedback, with 83% of Barclays Bank PLC
respondents responding favourably to this question. In addition,
93% of Barclays Bank PLC respondents said they believe they and
their teams do a good job of role modelling the values every day,
an increase of 2 percentage points.
Overall, we are encouraged by our ability to work remotely in
many more roles than we had previously thought possible. Our
colleagues told us that they enjoyed having more flexibility in
their lives, with 73% of Barclays Bank PLC respondents saying they
have been able to balance personal and work demands, and 78% saying
there is effective collaboration between teams.
With that said, we recognise there are also areas where we need
to do more. We saw a 3 percentage point decrease this year to 77%
in the number of Barclays Bank PLC colleagues who feel it is safe
to speak up, while colleague feedback also indicates we have room
to make our internal processes more user friendly, with only 52% of
Barclays Bank PLC colleagues saying work processes make it easy for
employees to be productive.
We maintain an engagement approach that is in line with the UK's
Financial Reporting Council (FRC) governance requirements. This
extends to those who work for us indirectly as well, such as
contractors, although in a more limited way. As of 2020, our
supplier code of conduct requires organisations with more than 250
employees to demonstrate that they have an effective workforce
engagement approach of their own.
The results from our surveys are an important part of the
conversations our Executive Committee and Board have about our
culture and how we run Barclays. We also update the Board and its
relevant sub-committees throughout the year.
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 wider leadership can identify areas of continued
strength of our culture and areas of focus for leaders.
In addition to these data sources, our leaders engage regularly
with colleagues locally to hear what they think. Where possible
this year, leaders visited branches or trading floors to support
colleagues during the COVID-19 pandemic. However, the majority of
engagement activities moved to virtual forums, with opportunities
for face to face engagement being more limited due to social
distancing requirements, including large-scale virtual town halls,
training and development activity, mentoring, informal breakfast
sessions, committee membership, ex-officio roles, diversity and
wellbeing programmes, focus and consultative groups.
Direct engagement, a 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.
We make sure we are keeping everyone up to date on the strategy,
performance and progress of the organisation through a strategic,
multichannel approach. This combines leader-led engagement, digital
and print communication, blogs, vlogs and podcasts. In response to
the COVID-19 pandemic, this year we also provided additional
regular updates to colleagues to provide practical advice and
support, including via a dedicated COVID-19 pandemic
intranet-page.
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. In 2020 we worked together closely with the specific goal of
ensuring the safety and wellbeing of our colleagues throughout the
COVID-19 pandemic. Unite strongly supported the transition of many
colleagues to homeworking, as well as the introduction of measures
to protect colleagues working in our branches and offices. As we
progress to return more colleagues to work, our union partners
remain centrally involved.
We regularly brief our union partners on the strategy and
progress of the business, seeking 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 around
84% of the Barclays Group UK workforce and 50% of the global
Barclays workforce. 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.
Creating an inclusive and supportive culture
Creating an inclusive and supportive culture is not only the
right thing to do, but also best for our business. It creates a
sense of belonging and value and enables colleagues to perform at
their best.
In 2020, we increased our focus on embedding a culture of
inclusion and encouraged colleagues to become allies in the
workplace. Through a new toolkit we supported them to take
conscious, positive steps to make everyone feel that they belong,
and develop empathy towards another group's challenges or issues.
In our Your View survey, 83% of Barclays Bank PLC colleagues told
us they believe we are all in this together.
Events last year rightly prompted organisations like ours to
appraise what we have been doing to aid the fight against racism,
and to ask ourselves whether we can do more. Over recent months,
Barclays has worked extensively with its Black colleague forums in
both the UK and the US to produce a Race at Work Action Plan. The
plan comprises a thorough set of actions that will open up new
opportunities to attract, develop, and add to our great Black
talent, using data to measure success. From 2021, we will expand
our plan to include all ethnically diverse groups as well as
actions to enhance our long-standing support for citizenship
programmes dedicated to tackling racial inequalities in
communities, as well as support of this agenda for customers and
clients.
We want to become one of the most accessible and inclusive FTSE
companies for all our customers, clients and colleagues. We require
managers to give full and fair consideration to those with a
disability on the basis of strengths, potential and ability, both
when hiring and managing. We also ensure 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.
Through our BeWell programme, we continue to 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 e-learning became mandatory, and we regularly
check-in with managers to ensure they are supporting colleagues'
wellbeing. We were also one of the first businesses to sign up to
the Mental Health at Work Commitment. In our Your View survey, 77%
of Barclays Bank PLC colleagues told us that Barclays supports
their efforts to enhance their wellbeing.
We encourage our people to benefit from Barclays' performance by
enrolling in our share ownership plans, further strengthening their
commitment to the organisation.
Strategic Report
Section 172(1) statement
Having regard to our stakeholders in Board decision-making
The Directors have acted in the way that they considered, in
good faith, would be most likely to promote the success of the
company for the benefit of its members as a whole and this section
forms our Section 172 disclosure, describing how, in doing so, the
Directors considered the matters set out in section 172(1)(a) to
(f) of the Companies Act 2006.
Details on who our stakeholders are, how management and/or the
Directors engaged with them and the actions taken in response to
that engagement are set out in the Barclays PLC Annual Report 2020
on pages 16 to 21 and are incorporated by reference into this
statement. The Directors also took into account the views and
interests of a wider set of stakeholders, including our pensioners,
regulators, the Government and non-governmental organisations.
The Directors recognise that having a good understanding of the
views and interests of our key stakeholders will help them to
deliver our strategy in line with the Barclays Group purpose and to
operate the business in a sustainable way. Consistent with its
regulatory responsibilities, the Board also considers carefully the
impact its decisions will have on our risk and control environment,
and on business outcomes. Considering a broad range of stakeholders
and their relative interests is an important part of the way in
which the Board makes decisions, although in having regard to those
different perspectives it is not always possible to deliver
everyone's desired result or necessarily achieve a positive outcome
for all stakeholders.
How does the Board engage with stakeholders?
Depending on the decision in question, the relevance of each
particular stakeholder group may differ, and equally the Board
adopts a variety of methods of engagement with different
stakeholder groups. The Board will sometimes engage directly with
certain stakeholders on certain issues, but the number and
distribution of our stakeholders and our size overall means that
stakeholder engagement often takes place at an operational level.
In addition to direct engagement with stakeholders by Board
members, the Board regularly receives reports and considers and
discusses information from across the organisation to help it
understand the impact of the Barclays Bank Group's operations on,
and the interests and views of, our key stakeholders. As a result
of these activities and the information it receives, the Board has
an overview of engagement with stakeholders, and other relevant
factors, which enables the Directors to comply with their legal
duty under section 172 of the Companies Act 2006.
For more details on how our Board operates, and the way in which
it reaches decisions, including the matters it discussed and
debated during the year, please see our Corporate Governance
Statement on pages 16 to 27. For further information on how we
engage with our colleagues see the Our people and culture section
on pages 11 to 12.
Engagement in action
The following example shows how the Directors have had regard to
the matters set out in section 172 when discharging their duties,
and the effect of those considerations in reaching certain
decisions taken by them, in the context of responding to the
challenges arising from the COVID-19 pandemic.
COVID-19 pandemic
The current COVID-related challenges are unprecedented in
nature. Our Directors recognised that the uncertainties brought
about by the prevailing macro-economic environment had
wide-reaching impacts across our business and raised significant
matters for consideration by the Board in the context of the
Board's responsibility for the long-term sustainable success of our
organisation. In response to the growing pandemic, during 2020 our
Board deep dives programme was kept under regular review in order
to allow for the discussion of new topics flowing directly from the
COVID-19 pandemic and topics were also informed by discussions with
our shareholders and other stakeholders, as well as formal and
informal Board discussions. Deep dive topics discussed by the Board
during the year covered a wide range of topics, including our
purpose and values, our operational mind-set during the COVID-19
pandemic and the unwinding of crisis measures, alongside updates
from selected individual businesses and from key business functions
including Compliance, Legal, Risk and HR. Between formal meetings,
the Board received regular updates on the implementation of our
strategy. In order to support our customers and clients financially
throughout these unprecedented times, the Board supported
management in making appropriate adjustments to our strategy and
policies. COVID-19 had a wide-ranging impact on our customers and
clients, and it became clear that certain support measures and
products would become more relevant.
The Board also received regular updates about the steps being
taken to safeguard the health and well-being of our colleagues. We
have a long established approach to engaging regularly with
colleagues to ensure that our Board listens and takes all
perspectives into account in its decision making and action plans.
As a result of COVID-19, many of our events this year have been web
based. The Board has also ensured that colleagues have been
provided with the necessary tools to enable the shift to remote
working, including by the provision of increased technological
support, laptops and other home office equipment and human
resources support. Recognising the additional pressures and
challenges faced by colleagues as a result of the pandemic, the
Board has also endorsed the provision of support services and
helplines for colleagues as well as the provision of education and
training tools, including increased support in relation to mental
health and wellbeing. Read more about how we supported our
colleagues during the pandemic in the Our people and culture
section on pages 11 to 12.
Nigel Higgins
Chairman - Barclays Bank PLC
17 February 2021
Governance
Directors' responsibility statement
The Directors have responsibility for ensuring that the Company
and the Barclays Bank Group keeps accounting records which
disclose, with reasonable accuracy, the financial position of the
Company and the Barclays Bank Group, and which enable them to
ensure that the accounts comply with the Act.
The Directors are also responsible for preparing a Strategic
Report, Directors' Report and Corporate Governance Statement in
accordance with applicable law and regulations.
The Directors are responsible for the maintenance and integrity
of the Annual Report and Financial Statements as they appear on the
Company's website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
The Directors have a general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the
Company and to prevent and detect fraud and other
irregularities.
The Directors, whose names and functions are set out on page 19,
confirm to the best of their knowledge that:
(a) the financial statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company
and the undertakings included in the consolidation taken as a whole;
and
(b) the management report, on pages 1 to 13, which is incorporated
in the Directors' Report, includes a fair review of the development
and performance of the business and the position of the Company
and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties
that they face.
By order of the Board
Stephen Shapiro
Company Secretary
17 February 2021
Barclays Bank PLC
Registered in England. Company No. 1026167
Risk review
Material existing and emerging risks
Material existing and emerging risks to the Barclays Bank
Group's future performance
The Barclays Bank Group has identified a broad range of risks to
which its businesses are exposed. Material risks are those to which
senior management pay particular attention and which could cause
the delivery of the Barclays Bank Group's strategy, results of
operations, financial condition and/or prospects to differ
materially from expectations. Emerging risks are those which have
unknown components, the impact of which could crystallise over a
longer time period. In addition, certain other factors beyond the
Barclays Bank Group's control, including escalation of terrorism or
global conflicts, natural disasters, pandemics and similar events,
although not detailed below, could have a similar impact on the
Barclays Bank Group.
Material existing and emerging risks potentially impacting more
than one principal risk
i) Risks relating to the impact of COVID-19
The COVID-19 pandemic has had, and continues to have, a material
impact on businesses around the world and the economic environments
in which they operate. There are a number of factors associated
with the pandemic and its impact on global economies that could
have a material adverse effect on (among other things) the
profitability, capital and liquidity of financial institutions such
as Barclays Bank Group.
The COVID-19 pandemic has caused disruption to the Barclays Bank
Group's customers, suppliers and staff globally. Most jurisdictions
in which the Barclays Bank Group operates have implemented severe
restrictions on the movement of their respective populations, with
a resultant significant impact on economic activity in those
jurisdictions. These restrictions are being determined by the
governments of individual jurisdictions (including through the
implementation of emergency powers) and impacts (including the
timing of implementation and any subsequent lifting or extension of
restrictions) may vary from jurisdiction to jurisdiction and/or
within jurisdictions. It remains unclear how the COVID-19 pandemic
will evolve through 2021 (including whether there will be further
waves of the COVID-19 pandemic, whether COVID-19 vaccines approved
for use by regulatory authorities will be deployed successfully
with desired results, whether further new strains of COVID-19 will
emerge and whether, and in what manner, additional restrictions
will be imposed and/or existing restrictions extended) and the
Barclays Bank Group continues to monitor the situation closely.
However, despite the COVID-19 contingency plans established by the
Barclays Bank Group, the ability to conduct business may be
adversely affected by disruptions to infrastructure, business
processes and technology services, resulting from the
unavailability of staff due to illness or the failure of third
parties to supply services. This may cause significant customer
detriment, costs to reimburse losses incurred by the Barclays Bank
Group's customers, potential litigation costs (including regulatory
fines, penalties and other sanctions), and reputational damage.
In many of the jurisdictions in which the Barclays Bank Group
operates, schemes have been initiated by central banks, national
governments and regulators to provide financial support to parts of
the economy most impacted by the COVID-19 pandemic. These schemes
have been designed and implemented at pace, meaning lenders
(including Barclays) continue to address operational issues which
have arisen in connection with the implementation of the schemes,
including resolving the interaction between the schemes and
existing law and regulation. In addition, the full extent of how
these schemes will impact the Barclays Bank Group's customers and
therefore the impact on the Barclays Bank Group remains uncertain
at this stage. However, certain actions (such as the introduction
of payment holidays for various consumer lending products or the
cancellation or waiver of fees associated with certain products)
may negatively impact the effective interest rate earned on certain
of the Barclays Bank Group's portfolios and may reduce fee income
being earned on certain products and negatively impact the Barclays
Bank Group's profitability. Furthermore, the introduction of, and
participation in, central-bank supported loan and other financing
schemes introduced as a result of the COVID-19 pandemic may
negatively impact the Barclays Bank Group's risk weighted assets
(RWAs), level of impairment and, in turn, capital position
(particularly when any transitional relief applied to the
calculation of RWAs and impairment expires). This may be
exacerbated if the Barclays Bank Group is required by any
government or regulator to offer forbearance or additional
financial relief to borrowers or if the Barclays Bank Group is
unable to rely on guarantees provided by governments in connection
with financial support schemes as a result of the Barclays Banks
Group's failure to comply with scheme requirements or
otherwise.
As these schemes and other financial support schemes provided by
national governments (such as job retention and furlough schemes)
expire, are withdrawn or are no longer supported, economic growth
may be negatively impacted which may impact the Barclays Bank
Group's results of operations and profitability. In addition, the
Barclays Bank Group may experience a higher volume of defaults and
delinquencies in certain portfolios and may initiate collection and
enforcement actions to recover defaulted debts. Where defaulting
borrowers are harmed by the Barclays Bank Group's conduct, this may
give rise to civil legal proceedings, including class actions,
regulatory censure, potentially significant fines and other
sanctions, and reputational damage. Other legal disputes may also
arise between the Barclays Bank Group and defaulting borrowers
relating to matters such as breaches or enforcement of legal rights
or obligations arising under loan and other credit agreements.
Adverse findings in any such matters may result in the Barclays
Bank Group's rights not being enforced as intended. For further
details, refer to "viii) Legal risk and legal, competition and
regulatory matters" below.
The actions taken by various governments and central banks, in
particular in the United Kingdom and the United States, may
indicate a view on the potential severity of any economic downturn
and post recovery environment, which from a commercial, regulatory
and risk perspective could be significantly different to past
crises and persist for a prolonged period. The COVID-19 pandemic
has led to a weakening in gross domestic product (GDP) in most
jurisdictions in which the Barclays Bank Group operates and an
expectation of higher unemployment in those same jurisdictions.
These factors all have a significant impact on the modelling of
expected credit losses (ECLs) by the Barclays Bank Group. As a
result, the Barclays Bank Group experienced higher ECLs in 2020
compared to prior periods and this trend may continue in 2021. The
economic environment remains uncertain and future impairment
charges may be subject to further volatility (including from
changes to macroeconomic variable forecasts) depending on the
longevity of the COVID-19 pandemic and related containment measures
and the efficacy of any COVID-19 vaccines, as well as the longer
term effectiveness of central bank, government and other support
measures. For further details on macroeconomic variables used in
the calculation of ECLs, refer to the credit risk performance
section. In addition, ECLs may be adversely impacted by increased
levels of default for single name exposures in certain sectors
directly impacted by the COVID-19 pandemic (such as the oil and
gas, retail, airline, and hospitality and leisure sectors).
Furthermore, the Barclays Bank Group relies on models to support
a broad range of business and risk management activities, including
informing business decisions and strategies, measuring and limiting
risk, valuing exposures (including the calculation of impairment),
conducting stress testing and assessing capital adequacy. 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
and/or misused. This may be exacerbated when dealing with
unprecedented scenarios, such as the COVID-19 pandemic, due to the
lack of reliable historical reference points and data. For further
details on model risk, refer to "(v) Model risk" below.
The disruption to economic activity globally caused by the
COVID-19 pandemic could adversely impact the Barclays Bank Group's
other assets such as goodwill and intangibles, and the value of
Barclays Bank PLC's investments in subsidiaries. It could also
impact the Barclays Bank Group's income due to lower lending and
transaction volumes due to volatility or weakness in the capital
markets. Other potential risks include credit rating migration
which could negatively impact the Barclays Bank Group's RWAs and
capital position, and potential liquidity stress due to (among
other things) increased customer drawdowns, notwithstanding the
significant initiatives that governments and central banks have put
in place to support funding and liquidity. Furthermore, a
significant increase in the utilisation of credit cards by
customers could have a negative impact on the Barclays Bank Group's
RWAs and capital position.
Furthermore, in order to support lending activity to promote
economic growth, governments and/or regulators may limit
management's flexibility in managing its business, require the
deployment of capital in particular business lines or otherwise
restrict or limit capital distributions and capital allocation.
Any and all such events mentioned above could have a material
adverse effect on the Barclays Bank Group's business, financial
condition, results of operations, prospects, liquidity, capital
position and credit ratings (including potential credit rating
agency changes of outlooks or ratings), as well as on the Barclays
Bank Group's customers, employees and suppliers.
ii) Business conditions, general economy and geopolitical issues
The Barclays Bank Group's operations are subject to potentially
unfavourable global and local economic and market conditions, as
well as geopolitical developments, which may have a material effect
on the Barclays Bank Group's business, results of operations,
financial condition and prospects.
A deterioration in global or local economic and market
conditions may lead to (among other things): (i) deteriorating
business, consumer or investor confidence and lower levels of fixed
asset investment and productivity growth, which in turn may lead to
lower client activity, including lower demand for borrowing from
creditworthy customers; (ii) higher default rates, delinquencies,
write-offs and impairment charges as borrowers struggle with the
burden of additional debt; (iii) subdued asset prices and payment
patterns, including the value of any collateral held by the
Barclays Bank 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 ECLs leading to increases in impairment
allowances. In addition, the Barclays Bank 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:
-- Global GDP growth weakened sharply in the first half of 2020 as
a result of the COVID-19 pandemic. Whilst a number of central banks
and governments implemented financial stimulus packages to counter
the economic impact of the pandemic, recovery has been slower than
anticipated and concerns remain as to whether (a) there will be
subsequent waves of the COVID-19 pandemic, (b) further financial
stimulus will be required and/or (c) governments will be required
to significantly increase taxation to fund these commitments. All
of these factors could adversely affect economic growth, affect
specific industries or countries or affect the Barclays Bank Group's
employees and business operations in affected countries. See "i)
Risks relating to the impact of COVID-19" above for further details.
-- 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 "(iii) The UK's withdrawal from the European Union" below
for further details.
-- A significant proportion of the Barclays Bank Group's portfolio
is located in the US, including a major credit card portfolio and
a range of corporate and investment banking exposures. The possibility
of significant continued changes in US policy in certain sectors
(including trade, healthcare and commodities) may have an impact
on the Barclays Bank 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 Barclays Bank Group's profitability.
-- An escalation in geopolitical tensions or increased use of protectionist
measures may negatively impact the Barclays Bank 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 boom.
Deterioration in emerging markets could affect the Barclays Bank
Group if it results in higher impairment charges via sovereign
or counterparty defaults.
iii) The UK's withdrawal from the European Union
There are a number of factors associated with the UK's
withdrawal from the EU, which could have a material adverse effect
on the Barclays Bank Group's business, results of operations,
financial condition and prospects.
Trade and economic activity between the EU and UK
The EU-UK Trade and Cooperation Agreement (TCA), which provides
a new economic and social partnership between the EU and UK
(including zero tariffs and zero quotas on all goods that comply
with the appropriate rules of origin) came into force provisionally
on 1 January 2021.
The TCA is a new, unprecedented arrangement between the EU and
the UK, and there is some uncertainty as to its operation and the
manner in which trading arrangements will be enforced by both the
EU and the UK. Furthermore, the EU and/or the UK can invoke trade
remedies (such as tariffs and non-tariff barriers) against each
other in certain circumstances under the TCA. Resultant trading
disruption may have a significant impact on economic activity in
the EU and the UK which (in turn) could have a material adverse
effect on the Barclays Bank Group's business, results of
operations, financial condition and prospects. Unstable economic
conditions could result in (among other things):
-- a recession in the UK and/or one or more member states of the EEA
in which it operates, with lower growth, higher unemployment and
falling property prices, which could lead to increased impairments
in relation to a number of the Barclays Bank Group's portfolios
(including, but not limited to, its UK mortgage portfolio, unsecured
lending portfolio (including credit cards) and commercial real
estate exposures);
-- increased market volatility (in particular in currencies and interest
rates), which could impact the Barclays Bank Group's trading book
positions and affect the underlying value of assets in the banking
book and securities held by the Barclays Bank Group for liquidity
purposes;
-- a credit rating downgrade for one or more members of the Barclays
Bank Group (either directly or indirectly as a result of a downgrade
in the UK sovereign credit ratings), which could significantly
increase the Barclays Bank Group's cost of and/or reduce its access
to funding, widen credit spreads and materially adversely affect
the Barclays Bank Group's interest margins and liquidity position;
and/or
-- a widening of credit spreads more generally or reduced investor
appetite for the Barclays Bank Group's debt securities, which could
negatively impact the Barclays Bank Group's cost of and/or access
to funding.
Current provision of financial services
The TCA does not cover financial services regulation.
Accordingly, UK-based entities within the Barclays Group (such as
Barclays Bank PLC and Barclays Bank UK PLC) are no longer able to
rely on the European passporting framework for financial services.
Barclays Bank PLC and Barclays Capital Securities Limited have put
in place new arrangements in the provision of cross-border banking
and investment services to customers and counterparties in the EEA
(including by servicing EEA clients through the Barclays Group's
EEA hub (Barclays Bank Ireland PLC), whilst Barclays Bank UK PLC
remains focused on UK customers.
The TCA was accompanied by a Joint Declaration on Financial
Services, requiring the parties to agree a Memorandum of
Understanding (MoU), by March 2021, establishing the framework for
cooperation in financial services. The MoU will also cover how to
move forward on equivalence determinations between the EU and the
UK.
There can be no assurance that the EU and the UK will reach
further agreement on equivalence decisions. As a result,
equivalence decisions which would enable UK firms to access EEA
clients on a cross border basis for certain markets products,
cannot be relied upon to allow UK-based entities within the
Barclays Bank Group to meet all of the needs of customers and
clients based in the EEA. However, there are certain other types of
equivalence decisions which are material to the operations of the
Barclays Bank Group. To date, the EU and the UK have only agreed a
temporary position on mutual equivalence in relation to clearing
and settlement (CCP equivalence). If the current mutual, temporary
equivalence decision in relation to CCP equivalence expires and is
not replaced, this could have a material adverse effect on the
Barclays Bank Group's business as well as its clients. In addition,
HM Treasury has made certain unilateral equivalence decisions,
(including under the Capital Requirements Regulation (CRR) and the
removal of such decisions could have a material impact on the
operations of the Barclays Bank Group.
The Barclays Bank Group provides the majority of its
cross-border banking and investment services to EEA clients via
Barclays Bank Ireland PLC. Additionally, in certain EEA Member
States, Barclays Bank PLC and Barclays Capital Securities Limited
(BCSL) have applied for and received cross border licences to
enable them to continue to conduct a limited range of activities,
including accessing EEA trading venues and interdealer trading. As
a result of the onshoring of EU legislation in the UK and the
exercise of the UK regulators' Temporary Transitional Powers,
UK-based entities within the Barclays Bank Group are currently
subject to substantially the same rules and regulations as prior to
the UK's withdrawal from the EU. It is the UK's intention
eventually to recast onshored EU legislation as part of UK
legislation and PRA and FCA rules, which could result in changes to
regulatory requirements in the UK.
If the regulatory regimes for EU and UK financial services
change further, or if temporary permissions and equivalence
decisions expire, and are not replaced, the provision of
cross-border banking and investment services across the Barclays
Bank Group may become more complex and costly which could have a
material adverse effect on the Barclays Bank Group's business and
results of operations and could result in the Barclays Bank Group
modifying its legal entity, capital and funding structures and
business mix, exiting certain business activities altogether or not
expanding in areas despite otherwise attractive potential returns.
This may also be exacerbated if, Barclays Bank Ireland PLC expands
further and, as a result of its growth and importance to the
Barclays Bank Group and the EEA banking system as a whole, Barclays
Bank Ireland PLC is made subject to higher capital requirements or
restrictions are imposed by regulators on capital allocation and
capital distributions by Barclays Bank Ireland PLC.
iv) The impact of interest rate changes on the Barclays Bank Group's
profitability
Changes to interest rates are significant for the Barclays Bank
Group, especially given the uncertainty as to the direction of
interest rates and the pace at which they may change particularly
in the Barclays Bank Group's main markets of the UK and the US.
A continued period of low interest rates and flat yield curves,
including any further rate cuts and/or negative interest rates, may
affect and continue to put pressure on the Barclays Bank Group's
net interest margins (the difference between its lending income and
borrowing costs) and could adversely affect the profitability and
prospects of the Barclays Bank Group.
Interest rate rises could positively impact the Barclays Bank
Group's profitability as retail and corporate business income
increases due to margin de-compression. However, 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. This, in turn, could cause
stress in the lending portfolio and underwriting activity of the
Barclays Bank Group with resultant higher credit losses driving an
increased impairment charge which would most notably impact retail
unsecured portfolios and wholesale non-investment grade lending and
could have a material effect on the Barclays Bank Group's business,
results of operations, financial condition and prospects.
In addition, changes in interest rates could have an adverse
impact on the value of the securities held in the Barclays Bank
Group's liquid asset portfolio. Consequently, this could create
more volatility than expected through the Barclays Bank Group's
Fair Value through Other Comprehensive Income (FVOCI) reserves.
v) Competition in the banking and financial services industry
The Barclays Bank Group operates in a highly competitive
environment (in particular, in the UK and US) in which it must
evolve and adapt to the significant changes as a result of
financial regulatory reform, technological advances, increased
public scrutiny and current economic conditions. The Barclays Bank
Group expects that competition in the financial services industry
will continue to be intense and may have a material adverse effect
on the Barclays Bank Group's future business, results of operations
and prospects.
New competitors in the financial services industry continue to
emerge. For example, technological advances and the growth of
e-commerce have made it possible for non-banks to offer products
and services that traditionally were banking products. This has
allowed financial institutions and other companies to provide
electronic and internet-based financial solutions, including
electronic securities trading, payments processing and online
automated algorithmic-based investment advice. Furthermore, both
financial institutions and their non-banking competitors face the
risk that payments processing and other services could be
significantly disrupted by technologies, such as cryptocurrencies,
that require no intermediation. New technologies have required and
could require the Barclays Bank Group to spend more to modify or
adapt its products or make additional capital investments in its
businesses to attract and retain clients and customers or to match
products and services offered by its competitors, including
technology companies.
Ongoing or increased competition may put pressure on the pricing
for the Barclays Bank Group's products and services, which could
reduce the Barclays Bank Group's revenues and profitability, or may
cause the Barclays Bank Group to lose market share, particularly
with respect to traditional banking products such as deposits, bank
accounts and mortgage lending. This competition may be on the basis
of quality and variety of products and services offered,
transaction execution, innovation, reputation and price. The
failure of any of the Barclays Bank Group's businesses to meet the
expectations of clients and customers, whether due to general
market conditions, under-performance, a decision not to offer a
particular product or service, changes in client and customer
expectations or other factors, could affect the Barclays Bank
Group's ability to attract or retain clients and customers. Any
such impact could, in turn, reduce the Barclays Bank Group's
revenues.
vi) Regulatory change agenda and impact on business model
The Barclays Bank Group remains subject to ongoing significant
levels of regulatory change and scrutiny in many of the countries
in which it operates (including, in particular, the UK and the US).
As a result, regulatory risk will remain a focus for senior
management. 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
Barclays Bank Group's business, capital and risk management
strategies and/or may result in the Barclays Bank Group deciding to
modify its legal entity, capital and funding structures and
business mix, or to exit certain business activities altogether or
not to expand in areas despite otherwise attractive potential.
There are several significant pieces of legislation and areas of
focus which will require significant management attention, cost and
resource, including:
-- Changes in prudential requirements may impact minimum requirements
for own funds and eligible liabilities (MREL) (including requirements
for internal MREL), leverage, liquidity or funding requirements,
applicable buffers and/or add-ons to such minimum requirements
and risk weighted assets calculation methodologies all as may be
set by international, EU or national authorities. Such or similar
changes to prudential requirements or additional supervisory and
prudential expectations, either individually or in aggregate, may
result in, among other things, a need for further management actions
to meet the changed requirements, such as:
- increasing capital, MREL or liquidity resources, reducing leverage
and risk weighted assets;
- restricting distributions on capital instruments;
- modifying the terms of outstanding capital instruments;
- modifying legal entity structure (including with regard to issuance
and deployment of capital, MREL and funding);
- changing the Barclays Bank Group's business mix or exiting other
businesses; and/or
- undertaking other actions to strengthen the Barclays Bank 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, in particular if there are areas of
overlapping or conflicting regulation. 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 Barclays Bank Group operates.
-- The Barclays Group and certain of its members (including Barclays
Bank PLC) are subject to supervisory stress testing exercises in
a number of jurisdictions. These exercises currently include the
programmes of the Bank of England, the European Banking Authority
(EBA), the Federal Deposit Insurance Corporation (FDIC) and the
Federal Reserve Board (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 Barclays Group,
could result in the Barclays Group or certain of its members (including
Barclays Bank PLC) being required to enhance their capital position,
limit capital distributions or position additional capital in specific
subsidiaries.
For further details on the regulatory supervision of, and
regulations applicable to, the Barclays Bank Group, see the
Supervision and regulation section.
vii) The impact of climate change on the Barclays Bank Group's business
The risks associated with climate change are subject to rapidly
increasing societal, regulatory and political focus, both in the UK
and internationally. Embedding climate risk into the Barclays Bank
Group's risk framework in line with regulatory expectations, and
adapting the Barclays Bank Group's operations and business strategy
to address the financial risks resulting from both: (i) the
physical risk of climate change; and (ii) the risk from the
transition to a low carbon economy, could have a significant impact
on the Barclays Bank Group's business.
Physical risks from climate change arise from a number of
factors and relate to specific weather events and longer-term
shifts in the climate. The nature and timing of extreme weather
events are uncertain but they are increasing in frequency and their
impact on the economy is predicted to be more acute in the future.
The potential impact on the economy includes, but is not limited
to, lower GDP growth, higher unemployment and significant changes
in asset prices and profitability of industries. Damage to the
properties and operations of borrowers could impair asset values
and the creditworthiness of customers leading to increased default
rates, delinquencies, write-offs and impairment charges in the
Barclays Bank Group's portfolios. In addition, the Barclays Bank
Group's premises and resilience may also suffer physical damage due
to weather events leading to increased costs for the Barclays Bank
Group.
As the economy transitions to a low-carbon economy, financial
institutions such as the Barclays Bank Group may face significant
and rapid developments in stakeholder expectations, policy, law and
regulation which could impact the lending activities the Barclays
Bank Group undertakes, as well as the risks associated with its
lending portfolios, and the value of the Barclays Bank Group's
financial assets. As sentiment towards climate change shifts and
societal preferences change, the Barclays Bank Group may face
greater scrutiny of the type of business it conducts, adverse media
coverage and reputational damage, which may in turn impact customer
demand for the Barclays Bank 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 Barclays Bank Group's retail and wholesale
portfolios. The impacts of climate change may increase losses for
those sectors sensitive to the effects of physical and transition
risks. Any subsequent increase in defaults and rising unemployment
could create recessionary pressures, which may lead to wider
deterioration in the creditworthiness of the Barclays Bank Group's
clients, higher ECLs, and increased charge-offs and defaults among
retail customers.
If the Barclays Bank Group does not adequately embed risks
associated with climate change into its risk framework to
appropriately measure, manage and disclose the various financial
and operational risks it faces as a result of climate change, or
fails to adapt its strategy and business model to the changing
regulatory requirements and market expectations on a timely basis,
it may have a material and adverse impact on the Barclays Bank
Group's level of business growth, competitiveness, profitability,
capital requirements, cost of funding, and financial condition.
For further details on the Barclays Bank Group's approach to
climate change, see the climate change risk management section.
viii) Impact of benchmark interest rate reforms on the Barclays Bank
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, including UK, EU and US legislative
proposals to deal with 'tough legacy' contracts that cannot convert
into or cannot add fall-back risk-free reference rates. The
consequences of reform are unpredictable and may have an adverse
impact on any financial instruments linked to, or referencing, any
of these benchmark interest rates.
Uncertainty as to the nature of such potential changes, the
availability and/or suitability of alternative "risk-free"
reference rates and other reforms may adversely affect a broad
range of transactions (including any securities, loans and
derivatives which use LIBOR to determine the amount of interest
payable that are included in the Barclays Bank Group's financial
assets and liabilities) that use these reference rates and indices
and introduce a number of risks for the Barclays Bank Group,
including, but not limited to:
-- Conduct risk: in undertaking actions to transition away from using
certain reference rates (such as LIBOR) to new alternative, risk-free
rates, the Barclays Bank Group faces conduct risks. These may lead
to customer complaints, regulatory sanctions or reputational impact
if the Barclays Bank Group is considered to be (among other things)
(i) undertaking market activities that are manipulative or create
a false or misleading impression, (ii) misusing sensitive information
or not identifying or appropriately managing or mitigating conflicts
of interest, (iii) providing customers with inadequate advice,
misleading information, unsuitable products or unacceptable service,
(iv) not taking a consistent approach to remediation for customers
in similar circumstances, (v) unduly delaying the communication
and migration activities in relation to client exposure, leaving
them insufficient time to prepare or (vi) colluding or inappropriately
sharing information with competitors;
-- Financial risks: the valuation of certain of the Barclays Bank
Group's financial assets and liabilities may change. Moreover,
transitioning to alternative "risk-free" reference rates may impact
the ability of members of the Barclays Bank 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 Barclays Bank 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 Barclays Bank Group 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 Barclays Bank Group's IT systems, trade reporting infrastructure,
operational processes, and controls. In addition, if any reference
rate or index (such as LIBOR) is no longer available to calculate
amounts payable, the Barclays Bank Group may incur additional expenses
in amending documentation for new and existing transactions and/or
effecting the transition from the original reference rate or index
to a new reference rate or index; and
-- Accounting risk: an inability to apply hedge accounting in accordance
with IFRS could lead to increased volatility in the Barclays Bank
Group's financial results and performance.
Any of these factors may have a material adverse effect on the
Barclays Bank Group's business, results of operations, financial
condition and prospects.
For further details on the impacts of benchmark interest rate
reforms on the Barclays Bank Group, see Note 40 to the financial
statements.
Material existing and emerging risks impacting individual
principal risks
i) Credit risk
Credit risk is the risk of loss to the Barclays Bank Group from
the failure of clients, customers or counterparties, including
sovereigns, to fully honour their obligations to members of the
Barclays Bank Group, including the whole and timely payment of
principal, interest, collateral and other receivables.
a) Impairment
The introduction of the impairment requirements of IFRS 9
Financial Instruments, resulted in impairment loss allowances that
are recognised earlier, on a more forward-looking basis and on a
broader scope of financial instruments, and may continue to have, a
material impact on the Barclays Bank Group's business, results of
operations, financial condition and prospects.
Measurement involves complex judgement and impairment charges
could be volatile, particularly under stressed conditions.
Unsecured products with longer expected lives, such as credit
cards, are the most impacted. Taking into account the transitional
regime, the capital treatment on the increased reserves has the
potential to adversely impact the Barclays Bank Group's regulatory
capital ratios.
In addition, the move from incurred losses to ECLs has the
potential to impact the Barclays Bank Group's performance under
stressed economic conditions or regulatory stress tests. For more
information, refer to Note 7 to the financial statements.
b) Specific sectors and concentrations
The Barclays Bank Group is subject to risks arising from changes
in credit quality and recovery rates of loans and advances due from
borrowers and counterparties in any specific portfolio. Any
deterioration in credit quality could lead to lower recoverability
and higher impairment in a specific sector. The following are areas
of uncertainties to the Barclays Bank Group's portfolio which could
have a material impact on performance:
-- UK retail, hospitality and 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 Barclays
Bank Group's UK corporate portfolio from the perspective of 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 both unsecured and secured products.
The Barclays Bank Group is exposed to the adverse credit performance
of unsecured products, particularly in the US through its US Cards
business.
-- UK real estate market. Barclays Bank Group's corporate credit
exposure is vulnerable to the impacts of the ongoing COVID-19 stress,
with particular weakness in retail property as a result of reduced
rent collections and residential development, and faces the risk
of increased impairment from a material fall in property prices.
-- Leverage finance underwriting . The Barclays Bank Group takes
on sub-investment grade underwriting exposure, including single
name risk, particularly in the US and Europe. The Barclays Bank
Group is exposed to credit events and market volatility during
the underwriting period. Any adverse events during this period
may potentially result in loss for the Barclays Bank Group, or
an increased capital requirement should there be a need to hold
the exposure for an extended period.
-- Italian mortgage and wholesale exposure. The Barclays Bank Group
is exposed to a decline in the Italian economic environment through
a mortgage portfolio in run-off and positions to wholesale customers.
The Italian economy was severely impacted by the COVID-19 pandemic
in 2020 and recovery has been slower than anticipated. Should the
Italian economy deteriorate further or any recovery take longer
to materialise, there could be a material adverse effect on the
Barclays Bank Group's results of operations including, but not
limited to, increased credit losses and higher impairment charges.
-- Oil & Gas sector. The Barclays Bank Group's corporate credit exposure
includes companies whose performance is dependent on the oil and
gas sector. Weaker demand for energy products, in particular as
a result of the COVID-19 pandemic, combined with a sustained period
of lower energy prices has led to the erosion of balance sheet
strength, particularly for higher cost producers and those businesses
who supply goods and services to the oil and gas sector. Any recovery
from the drop in demand is likely to remain volatile and energy
prices could remain subdued at low levels for the foreseeable future,
below the break-even point for some companies. Furthermore, in
the longer term, costs associated with the transition towards renewable
sources of energy may place great demands on companies that the
Barclays Bank Group has exposure to globally. These factors could
have a material adverse effect on the Barclays Bank Group's business,
results of operations and financial condition through increased
impairment charges.
The Barclays Bank Group also has large individual exposures to
single name counterparties, both in its lending activities and in
its financial services and trading activities, including
transactions in derivatives and transactions with brokers, central
clearing houses, dealers, other banks, mutual and hedge funds and
other institutional clients. The default of such counterparties
could have a significant impact on the carrying value of these
assets. In addition, where such counterparty risk has been
mitigated by taking collateral, credit risk may remain high if the
collateral held cannot be realised, or has to be liquidated at
prices which are insufficient to recover the full amount of the
loan or derivative exposure. Any such defaults could have a
material adverse effect on the Barclays Bank Group's results due
to, for example, increased credit losses and higher impairment
charges.
For further details on the Barclays Bank Group's approach to
credit risk, see the credit risk management and credit risk
performance sections.
ii) Market risk
Market risk is the risk of loss arising from potential adverse
change in the value of the Barclays Bank 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.
Economic and financial market uncertainties remain elevated, as
the path of the COVID-19 pandemic is inherently difficult to
predict. Further waves of the COVID-19 pandemic, deployment of
COVID-19 vaccines not being as successful as desired, intensifying
social unrest that weighs on market sentiment, and deteriorating
trade and geopolitical tensions are some of the factors that could
heighten market risks for the Barclays Bank Group's portfolios.
In addition, the Barclays Bank Group's trading business is
generally exposed to a prolonged period of elevated asset price
volatility, particularly if it negatively affects the depth of
marketplace liquidity. Such a scenario could impact the Barclays
Bank Group's ability to execute client trades and may also result
in lower client flow-driven income and/or market-based losses on
its existing portfolio of market risks. These can include having to
absorb higher hedging costs from rebalancing risks that need to be
managed dynamically as market levels and their associated
volatilities change.
It is difficult to predict changes in market conditions, and
such changes could have a material adverse effect on the Barclays
Bank Group's business, results of operations, financial condition
and prospects.
For further details on the Barclays Bank Group's approach to
market risk, see the market risk management and market risk
performance sections.
iii) Treasury and capital risk
There are three primary types of treasury and capital risk faced
by the Barclays Bank Group:
a) Liquidity risk
Liquidity risk is the risk that the Barclays Bank Group is
unable to meet its contractual or contingent obligations or that it
does not have the appropriate amount, tenor and composition of
funding and liquidity to support its assets. This could cause the
Barclays Bank Group to fail to meet regulatory liquidity standards
or be unable to support day-to-day banking activities. Key
liquidity risks that the Barclays Bank Group faces include:
-- The stability of the Barclays Bank Group's current funding profile:
In particular, that part which is based on accounts and deposits
payable on demand or at short notice, could be affected by the
Barclays Bank Group failing to preserve the current level of customer
and investor confidence. The Barclays Bank 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 Barclays Bank
Group, can affect the ability of the Barclays Bank Group to access
the capital markets and/or the cost and other terms upon which
the Barclays Bank Group is able to obtain market funding.
-- Credit rating changes and the impact on funding costs: Rating
agencies regularly review credit ratings given to Barclays Bank
PLC and certain members of the Barclays Bank Group. Credit ratings
are based on a number of factors, including some which are not
within the Barclays Bank Group's control (such as political and
regulatory developments, changes in rating methodologies, macroeconomic
conditions and the sovereign credit ratings of the countries in
which the Barclays Bank 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
Barclays Bank Group's access to the money or capital markets and/or
terms on which the Barclays Bank Group is able to obtain market
funding, increase costs of funding and credit spreads, reduce the
size of the Barclays Bank Group's deposit base, trigger additional
collateral or other requirements in derivative contracts and other
secured funding arrangements or limit the range of counterparties
who are willing to enter into transactions with the Barclays Bank
Group. Any of these factors could have a material adverse effect on
the Barclays Bank Group's business, results of operations,
financial condition and prospects.
b) Capital risk
Capital risk is the risk that the Barclays Bank Group has an
insufficient level or composition of capital to support its normal
business activities and to meet its regulatory capital requirements
under normal operating environments or stressed conditions (both
actual and as defined for internal planning or regulatory stress
testing purposes). This includes the risk from the Barclays Bank
Group's pension plans. Key capital risks that the Barclays Bank
Group faces include:
-- Failure to meet prudential capital requirements: This could lead
to the Barclays Bank Group being unable to support some or all
of its business activities, a failure to pass regulatory stress
tests, increased cost of funding due to deterioration in investor
appetite or credit ratings, restrictions on distributions including
the ability to meet dividend targets, and/or the need to take additional
measures to strengthen the Barclays Bank Group's capital or leverage
position.
-- Adverse changes in FX rates impacting capital ratios: The Barclays
Bank Group has capital resources, risk weighted assets and leverage
exposures denominated in foreign currencies. Changes in foreign
currency exchange rates may adversely impact the Sterling equivalent
value of these items. As a result, the Barclays Bank Group's regulatory
capital ratios are sensitive to foreign currency movements. Failure
to appropriately manage the Barclays Bank Group's balance sheet
to take account of foreign currency movements could result in an
adverse impact on the Barclays Bank Group's regulatory capital
and leverage ratios.
-- 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 Barclays Bank Group making substantial additional contributions
to its pension plans and/or a deterioration in its capital position.
Under IAS 19, the liabilities discount rate is derived from the
yields of high quality corporate bonds. Therefore, the valuation
of the Barclays Bank 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
Barclays Bank Group is exposed to capital or income volatility
because of a mismatch between the interest rate exposures of its
(non-traded) assets and liabilities. The Barclays Bank 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 Barclays Bank Group's liquid asset portfolio is
exposed to potential capital and/or income volatility due to
movements in market rates and prices.
For further details on the Barclays Bank Group's approach to
treasury and capital risk, see the treasury and capital risk
management and treasury and capital risk performance sections.
iv) Operational risk
Operational risk is the risk of loss to the Barclays Bank 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 Barclays Bank Group functions in a highly competitive
market, with market participants that expect consistent and smooth
business processes. The loss of or disruption to business
processing is a material inherent risk within the Barclays Bank
Group and across the financial services industry, whether arising
through impacts on the Barclays Bank Group's technology systems or
availability of personnel or services supplied by third parties.
Failure to build resilience and recovery capabilities into business
processes or into the services of technology, real estate or
suppliers on which the Barclays Bank Group's business processes
depend, may result in significant customer detriment, costs to
reimburse losses incurred by the Barclays Bank Group's customers,
and reputational damage.
b) Cyber-attacks
Cyber-attacks continue to be a global threat that is inherent
across all industries, with a spike in both number and severity of
attacks observed recently. The financial sector remains a primary
target for cyber criminals, hostile nation states, opportunists and
hacktivists. The Barclays Bank Group, like other financial
institutions, experiences numerous attempts to compromise its cyber
security.
The Barclays Bank Group dedicates significant resources to
reducing cyber security risks, but it cannot provide absolute
security against cyber-attacks. Malicious actors are increasingly
sophisticated in their methods, seeking to steal money, gain
unauthorised access to, destroy or manipulate data, and disrupt
operations, and some of their attacks may not be recognised until
launched, such as zero-day attacks that are launched before patches
and defences can be readied. Cyber-attacks can originate from a
wide variety of sources and target the Barclays Bank Group in
numerous ways, including attacks on networks, systems, or devices
used by the Barclays Bank Group or parties such as service
providers and other suppliers, counterparties, employees,
contractors, customers or clients, presenting the Barclays Bank
Group with a vast and complex defence perimeter. Moreover, the
Barclays Bank Group does not have direct control over the cyber
security of the systems of its clients, customers, counterparties
and third-party service providers and suppliers, limiting the
Barclays Bank Group's ability to effectively defend against certain
threats.
A failure in the Barclays Bank Group's adherence to its cyber
security policies, procedures or controls, employee malfeasance,
and human, governance or technological error could also compromise
the Barclays Bank Group's ability to successfully defend against
cyber-attacks. Furthermore, certain legacy technologies that are at
or approaching end-of-life may not be able to be able to maintained
to acceptable levels of security. The Barclays Bank Group has
experienced cyber security incidents and near-misses in the past,
and it is inevitable that additional incidents will occur in the
future. Cyber security risks will continue to increase, due to
factors such as the increasing demand across the industry and
customer expectations for continued expansion of services delivered
over the Internet; increasing reliance on Internet-based products,
applications and data storage; and changes in ways of working by
the Barclays Bank Group's employees, contractors, and third party
service providers and suppliers and their sub-contractors in
response to the COVID-19 pandemic. Bad actors have taken advantage
of remote working practices and modified customer behaviours during
the COVID-19 pandemic, exploiting the situation in novel ways that
may elude defences.
Common types of cyber-attacks include deployment of malware,
including destructive ransomware; denial of service and distributed
denial of service (DDoS) attacks; infiltration via business email
compromise, including phishing, or via social engineering,
including vishing and smishing; automated attacks using botnets;
and credential validation or stuffing attacks using login and
password pairs from unrelated breaches. A successful cyber-attack
of any type has the potential to cause serious harm to the Barclays
Bank Group or its clients and customers, including exposure to
potential contractual liability, litigation, regulatory or other
government action, loss of existing or potential customers, damage
to the Barclays Bank Group's brand and reputation, and other
financial loss. The impact of a successful cyber-attack also is
likely to include operational consequences (such as unavailability
of services, networks, systems, devices or data) remediation of
which could come at significant cost.
Regulators worldwide 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 to cyber-attacks. A
successful cyber-attack may, therefore, result in significant
regulatory fines on the Barclays Bank Group.
For further details on the Barclays Bank Group's approach to
cyber-attacks, see the operational risk performance section.
c) New and emergent technology
Technology is fundamental to the Barclays Bank Group's business
and the financial services industry. Technological advancements
present opportunities to develop new and innovative ways of doing
business across the Barclays Bank Group, with new solutions being
developed both in-house and in association with third-party
companies. For example, payment services and securities, futures
and options trading are increasingly occurring electronically, both
on the Barclays Bank Group's own systems and through other
alternative systems, and becoming automated. Whilst increased use
of electronic payment and trading systems and direct electronic
access to trading markets could significantly reduce the Barclays
Bank Group's cost base, it may, conversely, reduce the commissions,
fees and margins made by the Barclays Bank Group on these
transactions which could have a material adverse effect on the
Barclays Bank Group's business, results of operations, financial
condition and prospects.
Introducing new forms of technology, however, has the potential
to increase inherent risk. Failure to evaluate, actively manage and
closely monitor risk exposure during all phases of business
development could introduce new vulnerabilities and security flaws
and have a material adverse effect on the Barclays Bank Group's
business, results of operations, financial condition and
prospects.
d) External fraud
The nature of fraud is wide-ranging and continues to evolve, as
criminals continually seek opportunities to target the Barclays
Bank Group's business activities and exploit changes to customer
behaviour and product and channel use (such as the increased use of
digital products and enhanced online services). Fraud attacks can
be very sophisticated and are often orchestrated by highly
organised crime groups who use ever more sophisticated techniques
to target customers and clients directly to obtain confidential or
personal information that can be used to commit fraud. The impact
from fraud can lead to customer detriment, financial losses
(including the reimbursement of losses incurred by customers), loss
of business, missed business opportunities and reputational damage,
all of which could have a material adverse impact on the Barclays
Bank Group's business, results of operations, financial condition
and prospects.
e) Data management and information protection
The Barclays Bank Group holds and processes large volumes of
data, including personally identifiable information, intellectual
property, and financial data and the Barclays Bank Group's
businesses are subject to complex and evolving laws and regulations
governing the privacy and protection of personal information of
individuals, including Regulation (EU) 2016/679 (General Data
Protection Regulation (GDPR)). The protected parties can include:
(i) the Barclays Bank Group's clients and customers, and
prospective clients and customers; (ii) clients and customers of
the Barclays Bank Group's clients and customers; (iii) employees
and prospective employees; and (iv) employees of the Barclays Bank
Group's suppliers, counterparties and other external parties.
The international nature of both the Barclays Bank Group's
business and its IT infrastructure also means that personal
information may be available in countries other than those from
where it originated. Accordingly, the Barclays Bank Group needs to
ensure that its collection, use, transfer and storage of personal
information complies with all applicable laws and regulations in
all relevant jurisdictions, which could: (i) increase the Barclays
Bank Group's compliance and operating costs; (ii) impact the
development of new products or services, impact the offering of
existing products or services, or affect how products and services
are offered to clients and customers; (iii) demand significant
oversight by the Barclays Bank Group's management; and (iv) require
the Barclays Bank Group to review some elements of the structure of
its businesses, operations and systems in less efficient ways.
Concerns regarding the effectiveness of the Barclays Bank
Group's measures to safeguard personal information, or even the
perception that those measures are inadequate, could expose the
Barclays Bank Group to the risk of loss or unavailability of data
or data integrity issues and/or cause the Barclays Bank Group to
lose existing or potential clients and customers, and thereby
reduce the Barclays Bank Group's revenues. Furthermore, any failure
or perceived failure by the Barclays Bank Group to comply with
applicable privacy or data protection laws and regulations may
subject it to potential contractual liability, litigation,
regulatory or other government action (including significant
regulatory fines) and require changes to certain operations or
practices which could also inhibit the Barclays Bank Group's
development or marketing of certain products or services, or
increase the costs of offering them to customers. Any of these
events could damage the Barclays Bank Group's reputation and
otherwise materially adversely affect its 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 Barclays
Bank Group's pricing abilities, which could have a material adverse
effect on the Barclays Bank Group's business, results of
operations, financial condition and prospects and reputation.
g) Processing error
The Barclays Bank Group's businesses are highly dependent on its
ability to process and monitor, on a daily basis, a very large
number of transactions, many of which are highly complex and occur
at high volumes and frequencies, across numerous and diverse
markets in many currencies. As the Barclays Bank Group's customer
base and geographical reach expand and the volume, speed, frequency
and complexity of transactions, especially electronic transactions
(as well as the requirements to report such transactions on a
real-time basis to clients, regulators and exchanges) increase,
developing, maintaining and upgrading operational systems and
infrastructure becomes more challenging, and the risk of systems or
human error in connection with such transactions increases, as well
as the potential consequences of such errors due to the speed and
volume of transactions involved and the potential difficulty
associated with discovering errors quickly enough to limit the
resulting consequences. Furthermore, events that are wholly or
partially beyond the Barclays Bank Group's control, such as a spike
in transaction volume, could adversely affect the Barclays Bank
Group's ability to process transactions or provide banking and
payment services.
Processing errors could result in the Barclays Bank Group, among
other things, (i) failing to provide information, services and
liquidity to clients and counterparties in a timely manner; (ii)
failing to settle and/or confirm transactions; (iii) causing funds
transfers, capital markets trades and/or other transactions to be
executed erroneously, illegally or with unintended consequences;
and (iv) adversely affecting financial, trading or currency
markets. Any of these events could materially disadvantage the
Barclays Bank Group's customers, clients and counterparties
(including them suffering financial loss) and/or result in a loss
of confidence in the Barclays Bank Group which, in turn, could have
a material adverse effect on the Barclays Bank Group's business,
results of operations, financial condition and prospects.
h) Supplier exposure
The Barclays Bank Group depends on suppliers for the provision
of many of its services and the development of technology. Whilst
the Barclays Bank Group depends on suppliers, it remains fully
accountable for any risk arising from the actions of suppliers. The
dependency on suppliers and sub-contracting of outsourced services
introduces concentration risk where the failure of specific
suppliers could have an impact on the Barclays Bank Group's ability
to continue to provide material services to its customers. Failure
to adequately manage supplier risk could have a material adverse
effect on the Barclays Bank Group's business, results of
operations, financial condition and prospects.
i) Estimates and judgements relating to critical accounting policies
and capital disclosures
The preparation of financial statements requires the application
of accounting policies and judgements to be made in accordance with
IFRS. Regulatory returns and capital disclosures are prepared in
accordance with the relevant capital reporting requirements and
also require assumptions and estimates to be made. The key areas
involving a higher degree of judgement or complexity, or areas
where assumptions are significant to the consolidated and
individual financial statements, include credit impairment charges,
taxes, fair value of financial instruments, pensions and
post-retirement benefits, and provisions including conduct and
legal, competition and regulatory matters (see the notes to the
audited financial statements for further details). There is a risk
that if the judgement exercised, or the estimates or assumptions
used, subsequently turn out to be incorrect, this could result in
material losses to the Barclays Bank Group, beyond what was
anticipated or provided for. Further development of accounting
standards and capital interpretations could also materially impact
the Barclays Bank Group's results of operations, financial
condition and prospects.
j) Tax risk
The Barclays Bank Group is required to comply with the domestic
and international tax laws and practice of all countries in which
it has business operations. There is a risk that the Barclays Bank
Group could suffer losses due to additional tax charges, other
financial costs or reputational damage as a result of failing to
comply with such laws and practice, or by failing to manage its tax
affairs in an appropriate manner, with much of this risk
attributable to the international structure of the Barclays Bank
Group. In addition, increasing reporting and disclosure
requirements around the world and the digitisation of the
administration of tax has potential to increase the Barclays Bank
Group's tax compliance obligations further.
k) Ability to hire and retain appropriately qualified employees
As a regulated financial institution, the Barclays Bank Group
requires diversified and specialist skilled colleagues. The
Barclays Bank Group's ability to attract, develop and retain a
diverse mix of talent is key to the delivery of its core business
activity and strategy. This is impacted by a range of external and
internal factors, such as the UK's decision to leave the EU and the
enhanced individual accountability applicable to the banking
industry. Failure to attract or prevent the departure of
appropriately qualified and skilled employees could have a material
adverse effect on the Barclays Bank Group's business, results of
operations, financial condition and prospects. Additionally, this
may result in disruption to service which could in turn lead to
disenfranchising certain customer groups, customer detriment and
reputational damage.
For further details on the Barclays Bank Group's approach to
operational risk, see the operational risk management and
operational risk performance sections.
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 Barclays Bank Group relies on models
to support a broad range of business and risk management
activities, including informing business decisions and strategies,
measuring and limiting risk, valuing exposures (including the
calculation of impairment), conducting stress testing, assessing
capital adequacy, supporting new business acceptance and risk and
reward evaluation, managing client assets, and meeting reporting
requirements.
Models are, by their nature, imperfect and incomplete
representations of reality because they rely on assumptions and
inputs, and so they may be subject to errors affecting the accuracy
of their outputs and/or misused. This may be exacerbated when
dealing with unprecedented scenarios, such as the COVID-19
pandemic, due to the lack of reliable historical reference points
and data. For instance, the quality of the data used in models
across the Barclays Bank Group has a material impact on the
accuracy and completeness of its risk and financial metrics. Model
errors or misuse may result in (among other things) the Barclays
Bank Group making inappropriate business decisions and/or
inaccuracies or errors being identified in the Barclays Bank
Group's risk management and regulatory reporting processes. This
could result in significant financial loss, imposition of
additional capital requirements, enhanced regulatory supervision
and reputational damage, all of which could have a material adverse
effect on the Barclays Bank Group's business, results of
operations, financial condition and prospects.
For further details on the Barclays Bank Group's approach to
model risk, see the model risk management and model risk
performance sections.
vi) Conduct risk
Conduct risk is the risk of detriment to customers, clients,
market integrity, effective competition or the Barclays Bank Group
from the inappropriate supply of financial services, including
instances of wilful or negligent misconduct. This risk could
manifest itself in a variety of ways:
a) Employee misconduct
The Barclays Bank Group's businesses are exposed to risk from
potential non-compliance with its policies and standards and
instances of wilful and negligent misconduct by employees, all of
which could result in potential customer and client detriment,
enforcement action (including regulatory fines and/or sanctions),
increased operation and compliance costs, redress or remediation or
reputational damage which in turn could have a material adverse
effect on the Barclays Bank Group's business, results of
operations, financial condition and prospects. Examples of employee
misconduct which could have a material adverse effect on the
Barclays Bank Group's business include (i) employees improperly
selling or marketing the Barclays Bank Group's products and
services; (ii) employees engaging in insider trading, market
manipulation or unauthorised trading; or (iii) employees
misappropriating confidential or proprietary information belonging
to the Barclays Bank Group, its customers or third parties. These
risks may be exacerbated in circumstances where the Barclays Bank
Group is unable to rely on physical oversight and supervision of
employees (such as during the COVID-19 pandemic where employees
have worked remotely).
b) Customer engagement
The Barclays Bank Group must ensure that its customers,
particularly those that are vulnerable, are able to make
well-informed decisions on how best to use the Barclays Bank
Group's financial services and understand that they are
appropriately protected if something goes wrong. Poor customer
outcomes can result from the failure to: (i) communicate fairly and
clearly with customers; (ii) provide services in a timely and fair
manner; and (iii) undertake appropriate activity to address
customer detriment, including the adherence to regulatory and legal
requirements on complaint handling. The Barclays Bank Group is at
risk of financial loss and reputational damage as a result.
c) Product design and review risk
Products and services must meet the needs of clients, customers,
markets and the Barclays Bank Group throughout their lifecycle,
However, there is a risk that the design and review of the Barclays
Bank Group products and services fail to reasonably consider and
address potential or actual negative outcomes, which may result in
customer detriment, enforcement action (including regulatory fines
and/or sanctions), redress and remediation and reputational damage.
Both the design and review of products and services are a key area
of focus for regulators and the Barclays Bank Group, and this focus
is set to continue in 2021.
d) Financial crime
The Barclays Bank Group may be adversely affected if it fails to
effectively mitigate the risk that third parties or its employees
facilitate, or that its products and services are used to
facilitate, financial crime (money laundering, terrorist financing,
breaches of economic and financial sanctions, bribery and
corruption, and the facilitation of tax evasion). UK and US
regulations covering financial institutions continue to focus on
combating financial crime. Failure to comply may lead to
enforcement action by the Barclays Bank Group's regulators,
including severe penalties, which may have a material adverse
effect on the Barclays Bank Group's business, financial condition
and prospects.
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 reinforced additional accountabilities for
individuals across the Barclays Bank Group with an increased focus
on governance and rigour. Failure to meet these requirements and
expectations may lead to regulatory sanctions, both for the
individuals and the Barclays Bank Group.
For further details on the Barclays Bank Group's approach to
conduct risk, see the conduct risk management and conduct risk
performance sections.
vii) Reputation risk
Reputation risk is the risk that an action, transaction,
investment, event, decision or business relationship will reduce
trust in the Barclays Bank Group's integrity and competence.
Any material lapse in standards of integrity, compliance,
customer service or operating efficiency may represent a potential
reputation risk. Stakeholder expectations constantly evolve, and so
reputation risk is dynamic and varies between geographical regions,
groups and individuals. A risk arising in one business area can
have an adverse effect upon the Barclays Bank Group's overall
reputation and any one transaction, investment or event (in the
perception of key stakeholders) can reduce trust in the Barclays
Bank Group's integrity and competence. The Barclays Bank Group's
association with sensitive topics and sectors has been, and in some
instances continues to be, an area of concern for stakeholders,
including (i) the financing of, and investments in, businesses
which operate in sectors that are sensitive because of their
relative carbon intensity or local environmental impact; (ii)
potential association with human rights violations (including
combating modern slavery) in the Barclays Bank Group's operations
or supply chain and by clients and customers; and (iii) the
financing of businesses which manufacture and export military and
riot control goods and services.
Reputation risk could also arise from negative public opinion
about the actual, or perceived, manner in which the Barclays Bank
Group conducts its business activities, or the Barclays Bank
Group's financial performance, as well as actual or perceived
practices in banking and the financial services industry generally.
Modern technologies, in particular online social media channels and
other broadcast tools that facilitate communication with large
audiences in short time frames and with minimal costs, may
significantly enhance and accelerate the distribution and effect of
damaging information and allegations. Negative public opinion may
adversely affect the Barclays Bank Group's ability to retain and
attract customers, in particular, corporate and retail depositors,
and to retain and motivate staff, and could have a material adverse
effect on the Barclays Bank Group's business, results of
operations, financial condition and prospects.
In addition to the above, reputation risk has the potential to
arise from operational issues or conduct matters which cause
detriment to customers, clients, market integrity, effective
competition or the Barclays Bank Group (see "iv) Operational risk"
above).
For further details on the Barclays Bank Group's approach to
reputation risk, see reputation risk management and reputation risk
performance sections.
viii) Legal risk and legal, competition and regulatory matters
The Barclays Bank Group conducts activities in a highly
regulated market which exposes it and its employees to legal risk
arising from (i) the multitude of laws and regulations that apply
to the businesses it operates, which are highly dynamic, may vary
between jurisdictions, and are often unclear in their application
to particular circumstances especially in new and emerging areas;
and (ii) the diversified and evolving nature of the Barclays Bank
Group's businesses and business practices. In each case, this
exposes the Barclays Bank Group and its employees to the risk of
loss or the imposition of penalties, damages or fines from the
failure of members of the Barclays Bank Group to meet their
respective legal obligations, including legal or contractual
requirements. Legal risk may arise in relation to any number of the
risk material existing and emerging risks identified above.
A breach of applicable legislation and/or regulations by the
Barclays Bank Group or its employees could result in criminal
prosecution, regulatory censure, potentially significant fines and
other sanctions. Where clients, customers or other third parties
are harmed by the Barclays Bank Group's conduct, this may also give
rise to civil legal proceedings, including class actions. Other
legal disputes may also arise between the Barclays Bank Group and
third parties relating to matters such as breaches or enforcement
of legal rights or obligations arising under contracts, statutes or
common law. Adverse findings in any such matters may result in the
Barclays Bank Group being liable to third parties or may result in
the Barclays Bank Group's rights not being enforced as
intended.
Details of legal, competition and regulatory matters to which
the Barclays Bank Group is currently exposed are set out in Note
25. In addition to matters specifically described in Note 25, the
Barclays Bank Group is engaged in various other legal proceedings
which arise in the ordinary course of business. The Barclays Bank
Group is also subject to requests for information, investigations
and other reviews by regulators, governmental and other public
bodies in connection with business activities in which the Barclays
Bank Group is, or has been, engaged.
The outcome of legal, competition and regulatory matters, both
those to which the Barclays Bank Group is currently exposed and any
others which may arise in the future, is difficult to predict. In
connection with such matters, the Barclays Bank Group may incur
significant expense, regardless of the ultimate outcome, and any
such matters could expose the Barclays Bank Group to any of the
following outcomes: substantial monetary damages, settlements
and/or fines; remediation of affected customers and clients; other
penalties and injunctive relief; additional litigation; criminal
prosecution; the loss of any existing agreed protection from
prosecution; regulatory restrictions on the Barclays Bank Group's
business operations including the withdrawal of authorisations;
increased regulatory compliance requirements or changes to laws or
regulations; suspension of operations; public reprimands; loss of
significant assets or business; a negative effect on the Barclays
Bank 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
(including formerly active matters or those arising after the date
of this Annual Report) will not have a material adverse effect on
the Barclays Bank Group's business, results of operations,
financial condition and prospects.
Consolidated financial statements
Consolidated income statement
2020 2019 2018
For the year ended 31 December Notes GBPm GBPm GBPm
----------------------------------------------- ----- ------- ------- --------
Continuing operations
Interest and similar income 3 6,006 8,085 7,459
Interest and similar expense 3 (2,846) (4,178) (4,329)
----------------------------------------------- ----- ------- ------- --------
Net interest income 3,160 3,907 3,130
----------------------------------------------- ----- ------- ------- --------
Fee and commission income 4 7,417 7,664 7,392
Fee and commission expense 4 (1,758) (1,992) (1,785)
----------------------------------------------- ----- ------- ------- --------
Net fee and commission income 5,659 5,672 5,607
----------------------------------------------- ----- ------- ------- --------
Net trading income 5 7,076 4,073 4,364
Net investment (expense)/income 6 (121) 420 394
Other income 4 79 105
----------------------------------------------- ----- ------- ------- --------
Total income 15,778 14,151 13,600
Credit impairment charges 7 (3,377) (1,202) (643)
----------------------------------------------- ----- ------- ------- --------
Net operating income 12,401 12,949 12,957
----------------------------------------------- ----- ------- ------- --------
Staff costs 29 (4,365) (4,565) (4,874)
Infrastructure costs 8 (816) (835) (935)
Administration and general expenses 8 (4,202) (4,318) (4,224)
Litigation and conduct 8 (76) (264) (1,706)
----------------------------------------------- ----- ------- ------- --------
Operating expenses 8 (9,459) (9,982) (11,739)
----------------------------------------------- ----- ------- ------- --------
Share of post-tax results of associates
and joint ventures 7 57 68
Profit on disposal of subsidiaries, associates
and joint ventures 126 88 -
----------------------------------------------- ----- ------- ------- --------
Profit before tax 3,075 3,112 1,286
Taxation 9 (624) (332) (229)
----------------------------------------------- ----- ------- ------- --------
Profit after tax in respect of continuing
operations 2,451 2,780 1,057
Loss after tax in respect of discontinued
operations 38 - - (47)
----------------------------------------------- ----- ------- ------- --------
Profit after tax 2,451 2,780 1,010
----------------------------------------------- ----- ------- ------- --------
`
Attributable to:
----------------------------------------------- ----- ------- ------- --------
Equity holders of the parent 1,774 2,120 363
Other equity instrument holders 677 660 647
----------------------------------------------- ----- ------- ------- --------
Total equity holders of the parent 2,451 2,780 1,010
----------------------------------------------- ----- ------- ------- --------
Profit after tax 2,451 2,780 1,010
----------------------------------------------- ----- ------- ------- --------
Consolidated financial statements
Consolidated statement of comprehensive income
2020 2019 2018
For the year ended 31 December GBPm GBPm GBPm
-------------------------------------------------------- ------- ------- -----
Profit after tax 2,451 2,780 1,010
Profit after tax in respect of continuing operations 2,451 2,780 1,057
Loss after tax in respect of discontinuing operations - - (47)
-------------------------------------------------------- ------- ------- -----
Other comprehensive income/(loss) that may be recycled
to profit or loss from continuing operations:
Currency translation reserve
Currency translation differences(a) (647) (544) 844
Fair value through other comprehensive income
reserve movement relating to debt securities
Net gains/(losses) from changes in fair value 2,402 2,465 (475)
Net (gains)/losses transferred to net profit
on disposal (251) (454) 74
Net losses transferred to net profit due to impairment 1 1 4
Net (losses)/gains due to fair value hedging (1,640) (1,782) 165
Other movements - (8) (25)
Tax (130) (63) 53
Cash flow hedging reserve
Net gains/(losses) from changes in fair value 1,366 823 (197)
Net gains transferred to net profit (282) (141) (213)
Tax (291) (171) 103
Other 3 16 27
-------------------------------------------------------- ------- ------- -----
Other comprehensive income that may be recycled
to profit or loss from continuing operations 531 142 360
Other comprehensive (loss)/income not recycled
to profit or loss from continuing operations:
-------------------------------------------------------- ------- ------- -----
Retirement benefit remeasurements (77) (280) 412
Fair value through other comprehensive income
reserve movements relating to equity instruments 1 - (141)
Own credit (810) (316) 77
Tax 198 150 (118)
-------------------------------------------------------- ------- ------- -----
Other comprehensive (loss)/income not recycled
to profit or loss from continuing operations (688) (446) 230
-------------------------------------------------------- ------- ------- -----
Other comprehensive (loss)/income for the year
from continuing operations (157) (304) 590
-------------------------------------------------------- ------- ------- -----
Other comprehensive loss for the year from discontinued
operation - - (3)
-------------------------------------------------------- ------- ------- -----
Total comprehensive income/(loss) for the year
-------------------------------------------------------- ------- ------- -----
Total comprehensive income for the year, net
of tax from continuing operations 2,294 2,476 1,647
Total comprehensive loss for the year, net of
tax from discontinued operation - - (50)
-------------------------------------------------------- ------- ------- -----
Total comprehensive income for the year 2,294 2,476 1,597
-------------------------------------------------------- ------- ------- -----
Attributable to:
Equity holders of the parent 2,294 2,476 1,597
-------------------------------------------------------- ------- ------- -----
Total comprehensive income for the year 2,294 2,476 1,597
-------------------------------------------------------- ------- ------- -----
Note
a Includes GBP8m loss (2019: GBP15m profit; 2018: GBP41m loss) on
recycling of currency translation differences.
Consolidated financial statements
Consolidated balance sheet
2020 2019
As at 31 December Notes GBPm GBPm
------------------------------------------------ ----- --------- -------
Assets
Cash and balances at central banks 155,902 125,940
Cash collateral and settlement balances 97,616 79,486
Loans and advances at amortised cost 18 134,267 141,636
Reverse repurchase agreements and other similar
secured lending 8,981 1,731
Trading portfolio assets 11 127,664 113,337
Financial assets at fair value through the
income statement 12 171,761 129,470
Derivative financial instruments 13 302,693 229,641
Financial assets at fair value through other
comprehensive income 14 51,902 45,406
Investments in associates and joint ventures 34 24 295
Goodwill and intangible assets 21 1,154 1,212
Property, plant and equipment 19 1,537 1,631
Current tax assets 424 898
Deferred tax assets 9 2,552 2,460
Retirement benefit assets 31 1,814 2,108
Other assets 1,440 1,421
------------------------------------------------ ----- --------- -------
Total assets 1,059,731 876,672
------------------------------------------------ ----- --------- -------
Liabilities
Deposits at amortised cost 18 244,696 213,881
Cash collateral and settlement balances 85,549 67,682
Repurchase agreements and other similar secured
borrowing 10,443 2,032
Debt securities in issue 29,423 33,536
Subordinated liabilities 26 32,005 33,425
Trading portfolio liabilities 11 46,139 35,212
Financial liabilities designated at fair value 15 249,626 204,446
Derivative financial instruments 13 300,580 228,940
Current tax liabilities 644 320
Deferred tax liabilities 9 225 80
Retirement benefit liabilities 31 232 313
Other liabilities 22 5,251 5,239
Provisions 23 1,208 951
------------------------------------------------ ----- --------- -------
Total liabilities 1,006,021 826,057
------------------------------------------------ ----- --------- -------
Equity
Called up share capital and share premium 27 2,348 2,348
Other equity instruments 27 8,621 8,323
Other reserves 28 3,183 3,235
Retained earnings 39,558 36,709
------------------------------------------------ ----- --------- -------
Total equity 53,710 50,615
------------------------------------------------ ----- --------- -------
Total liabilities and equity 1,059,731 876,672
------------------------------------------------ ----- --------- -------
The Board of Directors approved the financial statements on
pages 148 to 268 on 17 February 2021
James E Staley
Barclays Bank Group - Chief Executive Officer
Steven Ewart
Barclays Bank Group - Chief Financial Officer
Consolidated financial statements
Consolidated statement of changes in equity
Called
up Total
share equity
capital Other excluding Non-
and share equity Other Retained non-controlling controlling Total
premium(a) instruments(a) reserves(b) earnings interests interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- ----------- --------------- ------------ --------- ---------------- ------------ -------
Balance as at 1
January
2020 2,348 8,323 3,235 36,709 50,615 - 50,615
Profit after tax - 677 - 1,774 2,451 - 2,451
Currency translation
movements - - (647) - (647) - (647)
Fair value through
other comprehensive
income reserve - - 383 - 383 - 383
Cash flow hedges - - 793 - 793 - 793
Retirement benefit
remeasurement - - - (108) (108) - (108)
Own credit reserve - - (581) - (581) - (581)
Other - - - 3 3 - 3
---------------------- ----------- --------------- ------------ --------- ---------------- ------------ -------
Total comprehensive
income for the year - 677 (52) 1,669 2,294 - 2,294
Issue and exchange
of other equity
instruments - 298 - (53) 245 - 245
Other equity
instruments
coupons paid - (677) - - (677) - (677)
Equity settled share
schemes - - - 349 349 - 349
Vesting of Barclays
PLC shares under
share-based
payment schemes - - - (300) (300) - (300)
Dividends on ordinary
shares - - - (263) (263) - (263)
Dividends on
preference
shares and other
shareholders
equity - - - (42) (42) - (42)
Capital contribution
from Barclays Plc - - - 1,500 1,500 - 1,500
Other reserve
movements - - - (11) (11) - (11)
---------------------- ----------- --------------- ------------ --------- ---------------- ------------ -------
Balance as at 31
December
2020 2,348 8,621 3,183 39,558 53,710 - 53,710
---------------------- ----------- --------------- ------------ --------- ---------------- ------------ -------
Called up
share Total equity
capital Other excluding Non-
and share equity Retained non-controlling controlling Total
premium(a) instruments(a) Other reserves(b) earnings interests interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ----------- --------------- ----------------- --------- ---------------- ------------ -------
Balance as at 1
January 2019 2,348 7,595 3,361 34,405 47,709 2 47,711
Profit after tax - 660 - 2,120 2,780 - 2,780
Currency
translation
movements - - (544) - (544) - (544)
Fair value
through other
comprehensive
income reserve - - 159 - 159 - 159
Cash flow hedges - - 511 - 511 - 511
Retirement
benefit
remeasurement - - - (194) (194) - (194)
Own credit
reserve - - (252) - (252) - (252)
Other - - - 16 16 - 16
----------------- ----------- --------------- ----------------- --------- ---------------- ------------ -------
Total
comprehensive
income for the
year - 660 (126) 1,942 2,476 - 2,476
Issue and
exchange of
other equity
instruments - 728 - (406) 322 - 322
Other equity
instruments
coupons paid - (660) - - (660) - (660)
Equity settled
share schemes - - - 392 392 - 392
Vesting of
Barclays PLC
shares under
share-based
payment schemes - - - (349) (349) - (349)
Dividends on
ordinary shares - - - (233) (233) - (233)
Dividends on
preference
shares and other
shareholders
equity - - - (41) (41) - (41)
Capital
contribution
from Barclays
Plc - - - 995 995 - 995
Other reserve
movements - - - 4 4 (2) 2
----------------- ----------- --------------- ----------------- --------- ---------------- ------------ -------
Balance as at 31
December 2019 2,348 8,323 3,235 36,709 50,615 - 50,615
----------------- ----------- --------------- ----------------- --------- ---------------- ------------ -------
Notes
a For further details refer to Note 27.
b For further details refer to Note 28.
Consolidated financial statements
Consolidated cash flow statement
2020 2019(a) 2018(a)
For the year ended 31 December Notes GBPm GBPm GBPm
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Continuing operations
Reconciliation of profit before tax to net cash flows from operating activities:
Profit before tax 3,075 3,112 1,286
Adjustment for non-cash items:
Credit impairment charges 3,377 1,202 643
Depreciation, amortisation and impairment of property, plant and equipment and
intangibles 441 459 397
Other provisions, including pensions 634 417 2,274
Net profit on disposal of investments and property, plant and equipment (119) (84) -
Other non-cash movements including exchange rate movements(c) (2,362) (742) (4,097)
Changes in operating assets and liabilities
Net decrease/(increase) in cash collateral and settlement balances (b) 4,098 (5,762) (4,862)
Net decrease/(increase) in loans and advances at amortised cost (c) 7,142 3,937 (7,215)
Net increase in reverse repurchase agreements and other similar secured lending (7,250) (118) (434)
Net increase in deposits 31,148 14,544 16,316
Net (decrease)/ increase debt securities in issue (4,113) (5,762) 14
Net increase/(decrease) in repurchase agreements and other similar secured
borrowing 8,411 (5,346) 2
Net (increase)/decrease in derivative financial instruments (1,604) 2,390 (6,419)
Net (increase)/decrease in trading assets (14,327) (9,299) 10,102
Net increase/(decrease) in trading liabilities 10,927 (1,402) 1,688
Net decrease/(increase) in financial assets and liabilities designated at fair
value 2,889 2,485 (6,284)
Net (increase)/decrease in other assets (93) (44) 949
Net increase/(decrease) in other liabilities 13 (991) (6,099)
Corporate income tax (paid)/received (12) 894 (409)
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Net cash from operating activities 42,275 (110) (2,148)
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Purchase of debt securities at amortised cost (c) (7,890) (8,565) (1,564)
Proceeds from sale or redemption of debt securities at amortised cost (c) 3,527 1,305 5,109
Purchase of financial assets at fair value through other comprehensive income (57,640) (67,056) (106,330)
Proceeds from sale or redemption of financial assets at fair value through other
comprehensive
income 53,367 67,743 108,038
Purchase of property, plant and equipment and intangibles (303) (610) (422)
Proceeds from sale of property, plant and equipment and intangibles - - 35
Disposal of discontinued operation, net of cash disposed - - (39,703)
Disposal of subsidiaries and associates, net of cash disposed 736 617 -
Other cash flows associated with investing activities 11 95 1,191
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Net cash from investing activities (8,192) (6,471) (33,646)
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Dividends paid and coupon payments on other equity instruments (982) (934) (1,142)
Issuance of subordinated debt 26 3,856 6,785 221
Redemption of subordinated debt (4,746) (6,574) (3,246)
Issue of shares and other equity instruments 1,134 2,292 1,925
Redemption of shares and other equity instruments (903) (1,970) (3,588)
Capital contribution from Barclays PLC - - 2,000
Vesting of shares under employee share schemes (300) (349) (418)
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Net cash from financing activities (1,941) (750) (4,248)
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Effect of exchange rates on cash and cash equivalents 1,669 (3,345) 4,159
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Net increase/(decrease) in cash and cash equivalents from continuing operations 33,811 (10,676) (35,883)
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Net cash from discontinued operation 38 - - (468)
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Net increase/(decrease) in cash and cash equivalents 33,811 (10,676) (36,351)
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Cash and cash equivalents at beginning of year 139,314 149,990 186,341
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Cash and cash equivalents at end of year 173,125 139,314 149,990
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Cash and cash equivalents comprise:
Cash and balances at central banks 155,902 125,940 136,359
Loans and advances to banks with original maturity less than three months 7,281 8,158 7,404
Cash collateral balances with central banks with original maturity less than
three months(b) 9,086 4,736 5,310
Treasury and other eligible bills with original maturity less than three months 856 480 917
-------------------------------------------------------------------------------- ----- -------- -------- ---------
173,125 139,314 149,990
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Notes
a 2019 and 2018 comparative figures have been restated to make the
cash flow statement more relevant following a review of the disclosure
and the accounting policies applied. Amendments have been made
to the classification of cash collateral reported within cash and
cash equivalents and to the presentation of items within net cash
flows from operating and investing activities. Footnotes b and
c below quantify the impact of the changes to the respective cash
flow categories in prior periods and provide further detail.
b 'Cash collateral balances with central banks with original maturity
less than three months' was previously labelled 'Cash collateral
and settlement balances with banks with original maturity less
than three months'. This line item has been restated to include
only balances that the Barclays Bank Group holds at central banks
related to payment schemes. Previously, cash collateral and settlement
balances with non-central bank counterparties were also classified
as cash equivalents and included within this balance. Comparatives
have been restated. The effect of this change decreased cash and
cash equivalents by GBP16,702m as at 31 December 2019, GBP17,367m
as at 31 December 2018 and GBP18,111m as at 31 December 2017. As
a result, net cash from operating activities increased by GBP665m
in 2019 and GBP744m in 2018 representing the net decrease/(increase)
in the cash collateral and settlement balances line item in those
periods.
c Movements in cash and cash equivalents relating to debt securities
at amortised cost were previously shown within loans and advances
to banks and customers in operating activities. These debt securities
holdings are now considered to be part of the investing activity
performed by the Barclays Bank Group following a change in accounting
policy and have been presented within investing activities in 2020.
Comparatives have been restated. The effect of this change was
to reclassify GBP7,260m of net cash outflows from operating activities
to investing activities in 2019 and inflows of GBP3,544m in 2018.
Interest received by the Barclays Bank Group was GBP12,860m
(2019: GBP26,637m) and interest paid by the Barclays Bank Group was
GBP8,653m (2019: GBP21,314m).
The Barclays Bank Group is required to maintain balances with
central banks and other regulatory authorities and these amounted
to GBP3,119m ( 2019 : GBP4,505m).
For the purposes of the cash flow statement, cash comprises cash
on hand and demand deposits and cash equivalents comprise highly
liquid investments that are convertible into cash with an
insignificant risk of changes in value with original maturities of
three months or less. Repurchase and reverse repurchase agreements
are not considered to be part of cash equivalents.
Financial statements of Barclays Bank PLC
Parent company accounts
Balance sheet
------------------------------------------------ ----- ------------------
2020 2019
As at 31 December Notes GBPm GBPm
------------------------------------------------ ----- --------- -------
Assets
Cash and balances at central banks 133,386 112,287
Cash collateral and settlement balances 87,723 75,822
Loans and advances at amortised cost 18 191,538 161,663
Reverse repurchase agreements and other similar
secured lending 11,535 4,939
Trading portfolio assets 11 84,089 79,079
Financial assets at fair value through the
income statement 12 203,073 162,500
Derivative financial instruments 13 297,129 229,338
Financial assets at fair value through other
comprehensive income 14 50,308 43,760
Investments in associates and joint ventures 34 13 119
Investment in subsidiaries 17,780 16,105
Goodwill and intangible assets 21 112 115
Property, plant and equipment 19 425 426
Current tax assets 545 946
Deferred tax assets 9 1,171 1,115
Retirement benefit assets 31 1,812 2,062
Other assets 913 845
------------------------------------------------ ----- --------- -------
Total assets 1,081,552 891,121
------------------------------------------------ ----- --------- -------
Liabilities
Deposits at amortised cost 18 272,190 240,631
Cash collateral and settlement balances 68,862 59,448
Repurchase agreements and other similar secured
borrowing 27,722 9,185
Debt securities in issue 17,221 19,883
Subordinated liabilities 26 31,852 33,205
Trading portfolio liabilities 11 48,093 45,130
Financial liabilities designated at fair value 15 267,137 207,765
Derivative financial instruments 13 292,538 225,607
Current tax liabilities 336 221
Deferred tax liabilities 9 225 80
Retirement benefit liabilities 31 104 104
Other liabilities 22 3,145 2,807
Provisions 23 984 630
------------------------------------------------ ----- --------- -------
Total liabilities 1,030,409 844,696
------------------------------------------------ ----- --------- -------
Equity
Called up share capital and share premium 27 2,348 2,348
Other equity instruments 13,328 11,089
Other reserves 28 776 678
Retained earnings 34,691 32,310
------------------------------------------------ ----- --------- -------
Total equity 51,143 46,425
------------------------------------------------ ----- --------- -------
Total liabilities and equity 1,081,552 891,121
------------------------------------------------ ----- --------- -------
Note
a As permitted by section 408 of the Companies Act 2006 an income
statement for the parent company has not been presented. Included
in shareholders' equity for Barclays Bank plc is a profit after
tax for the year ended 31 December 2020 of GBP2,134m (2019: GBP2,409m).
The Board of Directors approved the financial statements on
pages 148 to 268 on 17 February 2021.
James E Staley
Barclays Bank Group - Chief Executive Officer
Steven Ewart
Barclays Bank Group - Chief Financial Officer
Statement of changes in equity
--------------------------------------------------------------- ----------------- --------- ------------
Called up
share
capital Other
and share equity Retained
premium(a) instruments(a) Other reserves(b) earnings Total equity
GBPm GBPm GBPm GBPm GBPm
--------------------------------- ----------- --------------- ----------------- --------- ------------
Balance as at 1 January
2020 2,348 11,089 678 32,310 46,425
Profit after tax - 829 - 1,305 2,134
Currency translation
movements - - (519) - (519)
Fair value through other
comprehensive income
reserve - - 389 - 389
Cash flow hedges - - 788 - 788
Retirement benefit remeasurement - - - (113) (113)
Own credit reserve - - (560) - (560)
Other - - - 2 2
--------------------------------- ----------- --------------- ----------------- --------- ------------
Total comprehensive income
for the year - 829 98 1,194 2,121
Issue and exchange of
other equity instruments - 2,239 - (53) 2,186
Other equity instruments
coupons paid(c) - (829) - - (829)
Equity settled share
schemes - - - 349 349
Vesting of Barclays PLC
shares under share-based
payment schemes - - - (300) (300)
Dividends paid on ordinary
shares - - - (263) (263)
Dividends paid on preference
shares and other shareholders'
equity - - - (42) (42)
Capital contribution
from Barclays PLC - - - 1,500 1,500
Other reserve movements - - - (4) (4)
--------------------------------- ----------- --------------- ----------------- --------- ------------
Balance as at 31 December
2020 2,348 13,328 776 34,691 51,143
--------------------------------- ----------- --------------- ----------------- --------- ------------
Notes
a For further details refer to Note 27.
b For further details refer to Note 28.
c Other equity instruments includes AT1 securities issued by Barclays
Bank PLC and borrowings of $6bn from a wholly-owned, indirect subsidiary
of Barclays Bank PLC. The borrowings have been recorded as equity
since, under their terms, interest payments are non cumulative
and discretionary whilst repayment of principal is perpetually
deferrable by Barclays Bank PLC. Should Barclays Bank PLC make
a discretionary dividend payment on its ordinary shares in the
six months preceding the date of an interest payment, it will be
obliged to make that interest payment. In 2020, interest paid on
these borrowings was GBP152m.
Statement of changes in equity
--------------------------------------------------------------- ----------------- --------- ------------
Called up
share
capital Other
and share equity Retained
premium(a) instruments(a) Other reserves(b) earnings Total equity
GBPm GBPm GBPm GBPm GBPm
--------------------------------- ----------- --------------- ----------------- --------- ------------
Balance as at 1 January
2019 2,348 10,361 383 30,545 43,637
Profit after tax - 839 - 1,570 2,409
Currency translation
movements - - (198) - (198)
Fair value through other
comprehensive income
reserve - - 161 - 161
Cash flow hedges - - 526 - 526
Retirement benefit remeasurement - - - (184) (184)
Own credit reserve - - (213) - (213)
Other - - - 9 9
--------------------------------- ----------- --------------- ----------------- --------- ------------
Total comprehensive income
for the year - 839 276 1,395 2,510
Issue and exchange of
other equity instruments - 728 - (406) 322
Other equity instruments
coupons paid(c) - (839) - - (839)
Equity settled share
schemes - 392 392
Vesting of Barclays PLC
shares under share-based
payment schemes - - - (349) (349)
Dividends paid on ordinary
shares - - - (233) (233)
Dividends paid on preference
shares and other shareholders'
equity - - - (41) (41)
Capital contribution
from Barclays PLC - - - 995 995
Net equity impact of
intra-group transfers - - 19 (19) -
Other reserve movements - - - 31 31
--------------------------------- ----------- --------------- ----------------- --------- ------------
Balance as at 31 December
2019 2,348 11,089 678 32,310 46,425
--------------------------------- ----------- --------------- ----------------- --------- ------------
Notes
a For further details refer to Note 27.
b For further details refer to Note 28.
c Other equity instruments includes AT1 securities issued by Barclays
Bank PLC and borrowings of $3.5bn from a wholly-owned, indirect
subsidiary of Barclays Bank PLC. The borrowings have been recorded
as equity since, under their terms, interest payments are non cumulative
and discretionary whilst repayment of principal is perpetually
deferrable by Barclays Bank PLC. Should Barclays Bank PLC make
a discretionary dividend payment on its ordinary shares in the
six months preceding the date of an interest payment, it will be
obliged to make that interest payment. In 2019, interest paid on
these borrowings was GBP179m.
Cash flow statement
-------------------------------------------------------------------------------- ----- -----------------------------
2020 2019(a) 2018(a)
For the year ended 31 December Notes GBPm GBPm GBPm
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Continuing operations
Reconciliation of profit before tax to net cash flows from operating activities:
Profit before tax 2,155 2,018 697
Adjustment for non-cash items:
Credit impairment charges 1,577 235 (123)
Depreciation, amortisation and impairment of property, plant and equipment and
intangibles 66 67 41
Other provisions, including pensions 505 268 1,312
Net profit on disposal of investments and property, plant and equipment (397) (128) -
Other non-cash movements including exchange rate movements(c) (2,045) 1,203 (4,113)
Changes in operating assets and liabilities
Net decrease/(increase) in cash collateral and settlement balances(b) 1,863 (7,110) (8,447)
Net (increase)/decrease in loans and advances at amotised cost(c) (29,049) 5,483 4,903
Net (increase)/decrease in reverse repurchase agreements and other similar
lending (6,596) 1,551 2,870
Net increase in deposits 32,059 9,614 17,998
Net (decrease)/increase in debt securities in issue (2,662) (12,454) 102
Net increase/(decrease) in repurchase agreements and other similar borrowing 18,537 899 (6,034)
Net (increase)/decrease in derivative financial instruments (860) (3,863) 9,242
Net (increase)/decrease in trading assets (5,010) (5,599) 6,751
Net increase/(decrease) in trading liabilities 2,963 (1,496) 7,509
Net decrease/(increase) in financial assets and liabilities at fair value through
income statement 18,799 7,290 (30,019)
Net (increase)/decrease in other assets (83) (349) 2,444
Net increase/(decrease) in other liabilities 380 (1,006) (6,463)
Corporate income tax received/(paid) 354 919 (150)
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Net cash from operating activities 32,556 (2,458) (1,480)
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Purchase of debt securities at amortised cost(c) (7,129) (7,688) (1,764)
Proceeds from sale or redemption of debt securities at amortised cost(c) 3,054 232 5,109
Purchase of financial assets at fair value through other comprehensive income (51,368) (61,877) (101,046)
Proceeds from sale or redemption of financial assets at fair value through other
comprehensive
income 47,254 62,915 101,683
Purchase of property, plant and equipment and intangibles (27) (139) (235)
Proceeds from sale of property, plant and equipment and intangibles - - 63
Disposal of discontinued operation, net of cash disposed - - (39,679)
Disposal of subsidiaries and/or branches and/or associates, net of cash disposed 736 587 (2,189)
Net increase in investment in subsidiaries (1,907) (1,494) (859)
Other cash flows associated with investing activities 8 - -
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Net cash from investing activities (9,379) (7,464) (38,917)
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Dividends paid and coupon payments on other equity instruments (1,134) (1,113) (1,142)
Issuance of subordinated debt 26 3,700 6,627 -
Redemption of subordinated debt (4,580) (6,402) (3,246)
Issue of shares and other equity instruments 3,075 2,292 4,691
Redemption of shares and other equity instruments (903) (1,970) (3,588)
Capital contribution from Barclays PLC - - 2,000
Vesting of shares under employee share schemes (300) (349) (418)
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Net cash from financing activities (142) (915) (1,703)
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Effect of exchange rates on cash and cash equivalents 1,169 (2,753) 3,580
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Net increase/(decrease) in cash and cash equivalents from continuing operations 24,204 (13,590) (38,520)
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Net cash from discontinued operation - - (528)
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Net increase/(decrease) in cash and cash equivalents 24,204 (13,590) (39,048)
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Cash and cash equivalents at beginning of year 129,287 142,877 181,925
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Cash and cash equivalents at end of year 153,491 129,287 142,877
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Cash and cash equivalents comprise:
Cash and balances at central banks 133,386 112,287 126,002
Loans and advances to banks with original maturity less than three months 10,174 11,823 10,648
Cash collateral with central banks with original maturity less than three
months(b) 9,086 4,736 5,310
Treasury and other eligible bills with original maturity less than three months 845 441 917
-------------------------------------------------------------------------------- ----- -------- -------- ---------
153,491 129,287 142,877
-------------------------------------------------------------------------------- ----- -------- -------- ---------
Notes
a 2019 and 2018 comparative figures have been restated to make the
cash flow statement more relevant following a review of the disclosure
and the accounting policies applied. Amendments have been made
to the classification of cash collateral reported within cash and
cash equivalents and to the presentation of items within net cash
flows from operating and investing activities. Footnotes b and
c below quantify the impact of the changes to the respective cash
flow categories in prior periods and provide further detail.
b 'Cash collateral balances with central banks with original maturity
less than three months' was previously labelled 'Cash collateral
and settlement balances with banks with original maturity less
than three months'. This line item has been restated to include
only balances that Barclays Bank PLC holds at central banks related
to payment schemes. Previously, cash collateral and settlement
balances with non-central bank counterparties were also classified
as cash equivalents and included within this balance. Comparatives
have been restated. The effect of this change decreased cash and
cash equivalents by GBP14,045m as at 31 December 2019, GBP16,166m
as at 31 December 2018 and GBP11,768m as at 31 December 2017. As
a result, net cash from operating activities increased by GBP2,121m
in 2019 and decreased by GBP4,398m in 2018 representing the net
decrease/(increase) in the cash collateral and settlement balances
line item in those periods.
c Movements in cash and cash equivalents relating to debt securities
at amortised cost were previously shown within loans and advances
to banks and customers in operating activities. These debt securities
holdings are now considered to be part of the investing activity
performed by Barclays Bank PLC following a change in accounting
policy and have been presented within investing activities in 2020.
Comparatives have been restated. The effect of this change was
to reclassify GBP7,465m of net cash outflows from operating activities
to investing activities in 2019 and inflows of GBP3,344m in 2018.
Interest received by Barclays Bank PLC was GBP7,921m (2019:
GBP18,322m) and interest paid by Barclays Bank PLC was GBP6,441m
(2019: GBP16,320m). In relation to 2018, GBP4,039m income
previously reported as interest received and paid has been
reclassified to non-interest income.
Barclays Bank PLC was required to maintain balances with central
banks and other regulatory authorities of GBP1,353m (2019:
GBP2,457m).
For the purposes of the cash flow statement, cash comprises cash
on hand and demand deposits and cash equivalents comprise highly
liquid investments that are convertible into cash with an
insignificant risk of changes in value with original maturities of
three months or less. Repurchase and reverse repurchase agreements
are not considered to be part of cash equivalents.
Notes to the financial statements
For the year ended 31 December 2020
This section describes Barclays Bank Group's significant
policies and critical accounting estimates that relate to the
financial statements and notes as a whole. If an accounting policy
or a critical accounting estimate relates to a particular note, the
accounting policy and/or critical accounting estimate is contained
with the relevant note.
1 Significant accounting policies
1. Reporting entity
Barclays Bank PLC is a public limited company, registered in
England under company number 1026167.
These financial statements are prepared for Barclays Bank PLC
and its subsidiaries (the Barclays Bank Group) under Section 399 of
the Companies Act 2006. The Barclays Bank Group is a major global
financial services provider engaged in credit cards, wholesale
banking, investment banking, wealth management and investment
management services. In addition, separate financial statements
have been presented for the holding company.
2. Compliance with International Financial Reporting Standards
The consolidated financial statements of the Barclays Bank
Group, and the separate financial statements of Barclays Bank PLC,
have been prepared in accordance with international accounting
standards in conformity with the requirements of the Company Act
2006 and in accordance with International Financial Reporting
Standards (IFRS) and interpretations (IFRICs) as issued by the IASB
and adopted pursuant to Regulation (EC) No 1606/2002 as it applies
in the European Union. These standards have also been endorsed by
the UK. The principal accounting policies applied in the
preparation of the consolidated and separate financial statements
are set out below, and in the relevant notes to the financial
statements. These policies have been consistently applied with the
exception of the early adoption of Interest Rate Benchmark Reform -
Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
which was applied from 1 January 2020.
3. Basis of preparation
The consolidated and separate financial statements have been
prepared under the historical cost convention modified to include
the fair valuation of investment property, and particular financial
instruments, to the extent required or permitted under IFRS as set
out in the relevant accounting policies. They are stated in
millions of pounds Sterling (GBPm), the functional currency of
Barclays Bank PLC.
The financial statements have been prepared on a going concern
basis, in accordance with the Companies Act 2006 as applicable to
companies using IFRS. The financial statements are prepared on a
going concern basis, as the Board is satisfied that the Barclays
Bank Group and parent company have the resources to continue in
business for a period of at least 12 months from approval of the
financial statements. In making this assessment, the Board has
considered a wide range of information relating to present and
future conditions.
This involved a review of a working capital report (WCR) for the
Barclays Bank Group. The WCR is used by the Barclays Bank Group and
the Board to assess the future performance of the business and that
it has the resources in place that are required to meet its ongoing
regulatory requirements. The assessment is based upon business
plans which contain future forecasts of profitability taken from
the Barclays Bank Group's three-year medium term plan as well as
projections of future regulatory capital requirements and business
funding needs. The WCR also includes details of the impact of
internally generated stress testing scenarios on the liquidity and
capital requirement forecasts. The stress tests used were based an
assessment of reasonably possible downside economic scenarios that
the Barclays Bank Group could experience.
The WCR showed that the Barclays Bank Group had sufficient
capital in place to support its future business requirements and
remained above its regulatory minimum requirements in the stress
scenarios. It also showed that the Barclays Bank Group has an
expectation that it can continue to meet its funding requirements
during the scenarios. Accordingly, the Board concluded that there
was a reasonable expectation that the Barclays Bank Group has
adequate resources to continue as a going concern for a period of
at least 12 months from the date of approval of the financial
statements.
4. Accounting policies
The Barclays Bank Group prepares financial statements in
accordance with IFRS. The Barclays Bank Group 's significant
accounting policies relating to specific financial statement items,
together with a description of the accounting estimates and
judgements that were critical to preparing them, are set out under
the relevant notes. Accounting policies that affect the financial
statements as a whole are set out below.
(i) Consolidation
The Barclays Bank Group applies IFRS 10 Consolidated financial
statements.
The consolidated financial statements combine the financial
statements of Barclays Bank PLC and all its subsidiaries.
Subsidiaries are entities over which Barclays Bank PLC has control.
The Barclays Bank Group has control over another entity when the
Barclays Bank Group has all of the following:
1) power over the relevant activities of the investee, for example
through voting or other rights
2) exposure to, or rights to, variable returns from its involvement
with the investee and
3) the ability to affect those returns through its power over the
investee.
The assessment of control is based on the consideration of all
facts and circumstances. The Barclays Bank Group reassesses whether
it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of
control.
Intra-group transactions and balances are eliminated on
consolidation. Consistent accounting policies are used throughout
the Barclays Bank Group for the purposes of the consolidation.
Changes in ownership interests in subsidiaries are accounted for
as equity transactions if they occur after control has already been
obtained and they do not result in loss of control.
As the consolidated financial statements include partnerships
where the Barclays Bank Group member is a partner, advantage has
been taken of the exemption under Regulation 7 of the Partnership
(Accounts) Regulations 2008 with regard to preparing and filing of
individual partnership financial statements.
Details of the principal subsidiaries are given in Note 32.
(ii) Foreign currency translation
The Barclays Bank Group applies IAS 21 The Effects of Changes in
Foreign Exchange Rates. Transactions in foreign currencies are
translated into Sterling at the rate ruling on the date of the
transaction. Foreign currency monetary balances are translated into
Sterling at the period end exchange rates. Exchange gains and
losses on such balances are taken to the income statement.
Non-monetary foreign currency balances in relation to items
measured in terms of historical cost are carried at historical
transaction date exchange rates. Non-monetary foreign currency
balances in relation to items measured at fair value are translated
using the exchange rate at the date when the fair value was
measured.
The Barclays Bank Group 's foreign operations (including
subsidiaries, joint ventures, associates and branches) based mainly
outside the UK may have different functional currencies. The
functional currency of an operation is the currency of the main
economy to which it is exposed.
Prior to consolidation (or equity accounting) the assets and
liabilities of non-Sterling operations are translated at the period
end exchange rate and items of income, expense and other
comprehensive income are translated into Sterling at the rate on
the date of the transactions. Exchange differences arising on the
translation of foreign operations are included in currency
translation reserves within equity. These are transferred to the
income statement when the Barclays Bank Group disposes of the
entire interest in a foreign operation, when partial disposal
results in the loss of control of an interest in a subsidiary, when
an investment previously accounted for using the equity method is
accounted for as a financial asset, or on the disposal of an
autonomous foreign operation within a branch.
(iii) Financial assets and liabilities
The Barclays Bank Group applies IFRS 9 Financial Instruments to
the recognition, classification and measurement, and derecognition
of financial assets and financial liabilities and the impairment of
financial assets. The Barclays Bank Group applies the requirements
of IAS 39 Financial Instruments: Recognition and Measurement for
hedge accounting purposes.
Recognition
The Barclays Bank Group recognises financial assets and
liabilities when it becomes a party to the terms of the contract.
Trade date or settlement date accounting is applied depending on
the classification of the financial asset.
Classification and measurement
Financial assets are classified on the basis of two
criteria:
i) the business model within which financial assets are managed;
and
ii) their contractual cash flow characteristics (whether the
cash flows represent 'solely payments of principal and interest'
(SPPI)).
The Barclays Bank Group assesses the business model criteria at
a portfolio level. Information that is considered in determining
the applicable business model includes (i) policies and objectives
for the relevant portfolio, (ii) how the performance and risks of
the portfolio are managed, evaluated and reported to management,
and (iii) the frequency, volume and timing of sales in prior
periods, sales expectation for future periods, and the reasons for
such sales.
The contractual cash flow characteristics of financial assets
are assessed with reference to whether the cash flows represent
SPPI. In assessing whether contractual cash flows are SPPI
compliant, interest is defined as consideration primarily for the
time value of money and the credit risk of the principal
outstanding. The time value of money is defined as the element of
interest that provides consideration only for the passage of time
and not consideration for other risks or costs associated with
holding the financial asset. Terms that could change the
contractual cash flows so that it would not meet the condition for
SPPI are considered, including: (i) contingent and leverage
features, (ii) non-recourse arrangements and (iii) features that
could modify the time value of money.
Financial assets are measured at amortised cost if they are held
within a business model whose objective is to hold financial assets
in order to collect contractual cash flows, and their contractual
cash flows represent SPPI.
Financial assets are measured at fair value through other
comprehensive income if they are held within a business model whose
objective is achieved by both collecting contractual cash flows and
selling financial assets, and their contractual cash flows
represent SPPI.
Other financial assets are measured at fair value through profit
and loss. There is an option to make an irrevocable election on
initial recognition for non traded equity investments to be
measured at fair value through other comprehensive income, in which
case dividends are recognised in profit or loss, but gains or
losses are not reclassified to profit or loss upon derecognition,
and the impairment requirements of IFRS 9 do not apply.
The accounting policy for each type of financial asset or
liability is included within the relevant note for the item. The
Barclays Bank Group's policies for determining the fair values of
the assets and liabilities are set out in Note 16.
Derecognition
The Barclays Bank Group derecognises a financial asset, or a
portion of a financial asset, from its balance sheet where the
contractual rights to cash flows from the asset have expired, or
have been transferred, usually by sale, and with them either
substantially all the risks and rewards of the asset or significant
risks and rewards, along with the unconditional ability to sell or
pledge the asset.
Financial liabilities are de-recognised when the liability has
been settled, has expired or has been extinguished. An exchange of
an existing financial liability for a new liability with the same
lender on substantially different terms - generally a difference of
10% or more in the present value of the cash flows or a substantive
qualitative amendment - is accounted for as an extinguishment of
the original financial liability and the recognition of a new
financial liability.
Transactions in which the Barclays Bank Group transfers assets
and liabilities, portions of them, or financial risks associated
with them can be complex and it may not be obvious whether
substantially all of the risks and rewards have been transferred.
It is often necessary to perform a quantitative analysis. Such an
analysis compares the Barclays Bank Group's exposure to variability
in asset cash flows before the transfer with its retained exposure
after the transfer.
A cash flow analysis of this nature may require judgement. In
particular, it is necessary to estimate the asset's expected future
cash flows as well as potential variability around this
expectation. The method of estimating expected future cash flows
depends on the nature of the asset, with market and market-implied
data used to the greatest extent possible. The potential
variability around this expectation is typically determined by
stressing underlying parameters to create reasonable alternative
upside and downside scenarios. Probabilities are then assigned to
each scenario. Stressed parameters may include default rates, loss
severity, or prepayment rates.
Accounting for reverse repurchase and repurchase agreements
including other similar lending and borrowing
Reverse repurchase agreements (and stock borrowing or similar
transaction) are a form of secured lending whereby the Barclays
Bank Group provides a loan or cash collateral in exchange for the
transfer of collateral, generally in the form of marketable
securities subject to an agreement to transfer the securities back
at a fixed price in the future. Repurchase agreements are where the
Barclays Bank Group obtains such loans or cash collateral, in
exchange for the transfer of collateral.
The Barclays Bank Group purchases (a reverse repurchase
agreement) or borrows securities subject to a commitment to resell
or return them. The securities are not included in the balance
sheet as the Barclays Bank Group does not acquire the risks and
rewards of ownership. Consideration paid (or cash collateral
provided) is accounted for as a loan asset at amortised cost,
unless it is designated or mandatorily at fair value through profit
and loss.
The Barclays Bank Group may also sell (a repurchase agreement)
or lend securities subject to a commitment to repurchase or redeem
them. The securities are retained on the balance sheet as the
Barclays Bank Group retains substantially all the risks and rewards
of ownership. Consideration received (or cash collateral provided)
is accounted for as a financial liability at amortised cost, unless
it is designated at fair value through profit and loss.
(iv) Issued debt and equity instruments
The Barclays Bank Group applies IAS 32, Financial Instruments:
Presentation, to determine whether funding is either a financial
liability (debt) or equity.
Issued financial instruments or their components are classified
as liabilities if the contractual arrangement results in the
Barclays Bank Group having an obligation to either deliver cash or
another financial asset, or a variable number of equity shares, to
the holder of the instrument. If this is not the case, the
instrument is generally an equity instrument and the proceeds
included in equity, net of transaction costs. Dividends and other
returns to equity holders are recognised when paid or declared by
the members at the AGM and treated as a deduction from equity.
Where issued financial instruments contain both liability and
equity components, these are accounted for separately. The fair
value of the debt is estimated first and the balance of the
proceeds is included within equity.
5. New and amended standards and interpretations
The accounting policies adopted are consistent with those of the
previous financial year, with the exception of the early adoption
of Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9,
IAS 39, IFRS 7, IFRS 4 and IFRS 16) which was applied from 1
January 2020.
IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 - Amendments relating
to Interest Rate Benchmark Reform (Phase 2 amendments)
IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 were amended in
August 2020, which are effective for periods beginning on or after
1 January 2021 with earlier adoption permitted. The Barclays Bank
Group elected to early adopt the amendments with effect from 1
January 2020. The amendments have been endorsed by the EU and by
the UK.
IFRS 9 allows companies when they first apply IFRS 9, to make an
accounting policy choice to continue to apply the hedge accounting
requirements of IAS 39. The Barclays Bank Group made the election
to continue to apply the IAS 39 hedge accounting requirements, and
consequently, the amendments to IAS 39 in respect of hedge
accounting have been adopted by the Barclays Bank Group.
The objective of the amendments is to provide certain reliefs to
companies when changes are made to the contractual cash flows or
hedging relationships resulting from interest rate benchmark
reform. The reliefs adopted by the Barclays Bank Group have been
described below.
Changes in the basis for determining contractual cash flows
A change in the basis of determining the contractual cash flows
of a financial instrument that are required by the reform is
accounted for by updating the effective interest rate, without the
recognition of an immediate gain or loss. This practical expedient
is only applied where (1) the change to the contractual cash flows
is necessary as a direct consequence of the reform and (2) the new
basis for determining the contractual cash flows is economically
equivalent to the previous basis. For changes made in addition to
those required by the reform, the practical expedient is applied
first, after which the normal IFRS 9 requirements for modifications
of financial instruments is applied.
Hedge accounting
The IAS 39 requirements in respect of hedge accounting have been
amended in two phases. The Phase 1 amendments, which were adopted
by the Barclays Bank Group in 2019, provide relief to the hedge
accounting requirements prior to changing a hedge relationship due
to the interest rate benchmark reform (refer to Note 13). The Phase
2 amendments provide relief when changes are made to hedge
relationships as a result of the interest rate benchmark reform.
The Phase 2 amendments adopted by the Barclays Bank Group are
described below.
-- Under a temporary exception, changes to the hedge designation and
hedge documentation due to the interest rate benchmark reform would
not constitute the discontinuation of the hedge relationship nor
the designation of a new hedging relationship.
-- In respect of the retrospective hedge effectiveness assessment,
the Barclays Bank Group may elect on a hedge-by-hedge basis to
reset the cumulative fair value changes to zero when the exception
to the retrospective assessment ends (Phase 1 relief). Any hedge
ineffectiveness will continue to be measured and recognised in
full in profit or loss.
-- Amounts accumulated in the cash flow hedge reserve would be deemed
to be based on the alternative benchmark rate (on which the hedge
future cash flows are determined) when there is a change in basis
for determining the contractual cash flows.
-- For hedges of groups of items (such as those forming part of a
macro cash flow hedging strategy), the amendments provide relief
for items within a designated group of items that are amended for
changes directly required by the reform.
-- In respect of whether a risk component of a hedged item is separately
identifiable, the amendments provide temporary relief to entities
to meet this requirement when an alternative risk free rate (RFR)
financial instrument is designated as a risk component. These amendments
allow entities upon designation of the hedge to assume that the
separately identifiable requirement is met if the entity reasonably
expects the RFR risk will become separately identifiable within
the next 24 months. This relief applies to each RFR on a rate-by-rate
basis and starts when the entity first designates the RFR as a
non-contractually specified risk component.
The amendments to IFRS 7 require certain disclosures to be made
to enable users of financial statements to understand the effect of
interest rate benchmark reform on an entity's financial instruments
and risk management strategy. Refer to Note 40 where these
disclosures have been included.
Future accounting developments
The following accounting standards have been issued by the IASB
but are not yet effective:
IFRS 17 - Insurance contracts
In May 2017, the IASB issued IFRS 17 Insurance Contracts, a
comprehensive new accounting standard for insurance contracts
covering recognition and measurement, presentation and disclosure.
Once effective, IFRS 17 will replace IFRS 4 Insurance Contracts
that was issued in 2005.
IFRS 17 applies to all types of insurance contracts (i.e. life,
non-life, direct insurance and re-insurance), regardless of the
type of entities that issue them, as well as to certain guarantees
and financial instruments with discretionary participation
features. A few scope exceptions will apply.
In June 2020, the IASB published amendments to IFRS 17. The
amendments that are relevant to the Barclays Bank Group are the
scope exclusion for credit card contracts and similar contracts
that provide insurance coverage, the optional scope exclusion for
loan contracts that transfer significant insurance risk, and
clarification that only financial guarantees issued are in scope of
IFRS 9.
The amendments also defer the effective date of IFRS 17,
including the above amendments, to annual reporting periods
beginning on or after 1 January 2023.
IFRS 17, including the amendments to IFRS 17, has not yet been
endorsed by the EU as of the date that the financial statements are
authorised for issue.
Following the UK's withdrawal from the EU on 31 December 2020,
the UK-adopted international accounting standards will be
applicable. IFRS 17, including the amendments to IFRS 17, has not
yet been endorsed by the UK. The Barclays Bank Group is currently
assessing the expected impact of adopting this standard.
6. Critical accounting estimates and judgements
The preparation of financial statements in accordance with IFRS
requires the use of estimates. It also requires management to
exercise judgement in applying the accounting policies. The key
areas involving a higher degree of judgement or complexity or areas
where assumptions are significant to the consolidated and
individual financial statements are highlighted under the relevant
note. Critical accounting estimates and judgements are disclosed
in:
-- Credit impairment charges on page 169 to 173
-- Tax on page 174 to 178
-- Fair value of financial instruments on page 195 to 209
-- Pensions and post-retirement benefits - obligations on page 238
to 246
-- Provisions including conduct and legal, competition and regulatory
matters on page 220 to 226.
7. Other disclosures
To improve transparency and ease of reference, by concentrating
related information in one place, certain disclosures required
under IFRS have been included within the Risk review section as
follows:
-- Credit risk on pages 52 to 53 and on pages 60 to 98
-- Market risk on page 53 and on pages 99 to 101
-- Treasury and capital risk - capital on page 54 to 55 and on pages
112 to 113
-- Treasury and capital risk - liquidity on page 54 and on pages 103
to 111.
These disclosures are covered by the Audit opinion (included on
pages 132 to 147) where referenced as audited. The notes included
in this section focus on the results and performance of the
Barclays Bank Group. Information on the segmental performance,
income generated, expenditure incurred, tax, and dividends are
included here.
2 Segmental reporting
Presentation of segmental reporting
The Barclays Bank Group's segmental reporting is in accordance
with IFRS 8 Operating Segments. Operating segments are reported in
a manner consistent with the internal reporting provided to the
Executive Committee, which is responsible for allocating resources
and assessing performance of the operating segments, and has been
identified as the chief operating decision maker. All transactions
between business segments are conducted on an arm's-length basis,
with intra-segment revenue and costs being eliminated in Head
Office. Income and expenses directly associated with each segment
are included in determining business segment performance.
The Barclays Bank Group divisions have been for segmental
reporting purposes defined as Corporate and Investment Bank and
Consumer, Cards and Payments.
-- Corporate and Investment Bank which includes Investment Banking,
Corporate Banking and global Markets businesses.
-- Consumer, Cards and Payments which includes Barclays US Consumer
Bank, Barclays Payments, Barclaycard Germany and Private Bank.
The below table also includes Head Office which comprises head
office and certain central support functions including the Barclays
Bank Group service company full time equivalent employees.
Analysis of results by business
-------------------------------------------------------------------------------------- ------- -------------
Corporate and Consumer, Cards Head Barclays Bank
Investment Bank and Payments Office Group
GBPm GBPm GBPm GBPm
--------------------------------------------------- ---------------- --------------- ------- -------------
For the year ended 31 December 2020
Total income 12,607 3,490 (319) 15,778
Credit impairment charges (1,565) (1,720) (92) (3,377)
--------------------------------------------------- ---------------- --------------- ------- -------------
Net operating income/(expenses) 11,042 1,770 (411) 12,401
Operating expenses (7,125) (2,132) (126) (9,383)
Litigation and conduct (4) (44) (28) (76)
--------------------------------------------------- ---------------- --------------- ------- -------------
Total operating expenses (7,129) (2,176) (154) (9,459)
Other net income/(expenses)(a) 16 114 3 133
--------------------------------------------------- ---------------- --------------- ------- -------------
Profit/(loss) before tax 3,929 (292) (562) 3,075
--------------------------------------------------- ---------------- --------------- ------- -------------
Total assets (GBPbn) 990.9 57.8 11.0 1,059.7
--------------------------------------------------- ---------------- --------------- ------- -------------
Number of employees (full time equivalent) 7,800 3,000 10,100 20,900
--------------------------------------------------- ---------------- --------------- ------- -------------
Average number of employees (full time equivalent) 20,145
--------------------------------------------------- ---------------- --------------- ------- -------------
Consumer, Cards Head Barclays Bank
Corporate and Investment Bank and Payments Office Group
GBPm GBPm GBPm GBPm
---------------------------------------------- ----------------------------- --------------- ------- -------------
For the year ended 31 December 2019
Total income 10,009 4,462 (320) 14,151
Credit impairment charges (157) (1,016) (29) (1,202)
---------------------------------------------- ----------------------------- --------------- ------- -------------
Net operating income/(expenses) 9,852 3,446 (349) 12,949
Operating expenses (7,267) (2,359) (92) (9,718)
Litigation and conduct (108) (7) (149) (264)
---------------------------------------------- ----------------------------- --------------- ------- -------------
Total operating expenses (7,375) (2,366) (241) (9,982)
Other net income/(expenses)(a) 113 40 (8) 145
---------------------------------------------- ----------------------------- --------------- ------- -------------
Profit/(loss) before tax 2,590 1,120 (598) 3,112
---------------------------------------------- ----------------------------- --------------- ------- -------------
Total assets (GBPbn) 799.6 65.7 11.4 876.7
---------------------------------------------- ----------------------------- --------------- ------- -------------
Number of employees (full time equivalent) 8,100 3,100 9,300 20,500
---------------------------------------------- ----------------------------- --------------- ------- -------------
Average number of employees (full time
equivalent) 21,700
---------------------------------------------- ----------------------------- --------------- ------- -------------
Note
a Other net income/(expenses) represents the share of post-tax results
of associates and joint ventures, profit (or loss) on disposal
of subsidiaries, associates and joint ventures, and gains on acquisitions.
Corporate and Consumer, Cards Head
Investment Bank and Payments Office Barclays Bank Group
GBPm GBPm GBPm GBPm
------------------------------------------- ---------------- --------------- ------- -------------------
For the year ended 31 December 2018
Total income 9,741 4,267 (408) 13,600
Credit impairment releases/(charges) 152 (808) 13 (643)
------------------------------------------- ---------------- --------------- ------- -------------------
Net operating income/(expenses) 9,893 3,459 (395) 12,957
Operating expenses (7,459) (2,304) (130) (9,893)
GMP charge - - (140) (140)
Litigation and conduct (68) (59) (1,579) (1,706)
------------------------------------------- ---------------- --------------- ------- -------------------
Total operating expenses (7,527) (2,363) (1,849) (11,739)
Other net income/(expenses)(a) 28 41 (1) 68
------------------------------------------- ---------------- --------------- ------- -------------------
Profit/(loss) before tax 2,394 1,137 (2,245) 1,286
------------------------------------------- ---------------- --------------- ------- -------------------
Total assets (GBPbn) 792.5 71.6 13.6 877.7
------------------------------------------- ---------------- --------------- ------- -------------------
Number of employees (full time equivalent) 9,100 3,300 10,000 22,400
------------------------------------------- ---------------- --------------- ------- -------------------
Note
a Other net income/(expenses) represents the share of post-tax results
of associates and joint ventures, profit (or loss) on disposal
of subsidiaries, associates and joint ventures, and gains on acquisitions.
Income by geographic region(a)
--------------------------------------------------------------------------------- ------ ------ ------
2020 2019 2018
For the year ended 31 December GBPm GBPm GBPm
--------------------------------------------------------------------------------- ------ ------ ------
United Kingdom 4,954 4,084 4,007
Europe 2,119 1,752 1,615
Americas 7,590 7,251 7,048
Africa and Middle East 37 62 44
Asia 1,078 1,002 886
--------------------------------------------------------------------------------- ------ ------ ------
Total 15,778 14,151 13,600
--------------------------------------------------------------------------------- ------ ------ ------
Income from individual countries which represent more than 5% of total income(a)
--------------------------------------------------------------------------------- ------ ------ ------
2020 2019 2018
For the year ended 31 December GBPm GBPm GBPm
--------------------------------------------------------------------------------- ------ ------ ------
United Kingdom 4,954 4,084 4,007
United States 7,471 7,121 6,916
--------------------------------------------------------------------------------- ------ ------ ------
Note
a The geographical analysis is based on the location of the office
where the transactions are recorded.
4 Net fee and commission income
Accounting for net fee and commission income
The Barclays Bank Group applies IFRS 15 Revenue from Contracts
with Customers. IFRS 15 establishes a five-step model governing
revenue recognition. The five-step model requires the Barclays Bank
Group to (i) identify the contract with the customer, (ii) identify
each of the performance obligations included in the contract, (iii)
determine the amount of consideration in the contract, (iv)
allocate the consideration to each of the identified performance
obligations and (v) recognise revenue as each performance
obligation is satisfied.
The Barclays Bank Group recognises fee and commission income
charged for services provided by the Barclays Bank Group as the
services are provided, for example, on completion of the underlying
transaction. Where the contractual arrangements also result in the
Barclays Bank Group recognising financial instruments in scope of
IFRS 9, such financial instruments are initially recognised at fair
value in accordance with IFRS 9 before applying the provisions of
IFRS 15.
Fee and commission income is disaggregated below by fee types
that reflect the nature of the services offered across the Barclays
Bank Group and operating segments, in accordance with IFRS 15. The
below table includes a total for fees in scope of IFRS 15. Refer to
Note 2 for more detailed information about operating segments.
2020
---------------------------------------------------------------------------------
Corporate and Investment Bank Consumer, Cards and Payments Head Office Total
GBPm GBPm GBPm GBPm
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Fee type
Transactional 357 1,973 - 2,330
Advisory 593 100 - 693
Brokerage and execution 1,116 57 - 1,173
Underwriting and syndication 2,867 - - 2,867
Other 54 152 29 235
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Total revenue from contracts with
customers 4,987 2,282 29 7,298
Other non-contract fee income 114 5 - 119
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Fee and commission income 5,101 2,287 29 7,417
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Fee and commission expense (768) (988) (2) (1,758)
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Net fee and commission income 4,333 1,299 27 5,659
----------------------------------- ----------------------------- ---------------------------- ----------- -------
2019
---------------------------------------------------------------------------------
Corporate and Investment Bank Consumer, Cards and Payments Head Office Total
GBPm GBPm GBPm GBPm
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Fee type
Transactional 391 2,418 - 2,809
Advisory 821 83 - 904
Brokerage and execution 1,082 49 - 1,131
Underwriting and syndication 2,358 - - 2,358
Other 90 227 30 347
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Total revenue from contracts with
customers 4,742 2,777 30 7,549
Other non-contract fee income 110 5 - 115
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Fee and commission income 4,852 2,782 30 7,664
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Fee and commission expense (743) (1,249) - (1,992)
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Net fee and commission income 4,109 1,533 30 5,672
----------------------------------- ----------------------------- ---------------------------- ----------- -------
2018
---------------------------------------------------------------------------------
Corporate and Investment Bank Consumer, Cards and Payments Head Office Total
GBPm GBPm GBPm GBPm
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Fee type
Transactional 366 2,248 - 2,614
Advisory 772 78 - 850
Brokerage and execution 1,002 71 - 1,073
Underwriting and syndication 2,462 - - 2,462
Other 24 222 29 275
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Total revenue from contracts with
customers 4,626 2,619 29 7,274
Other non-contract fee income 114 4 - 118
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Fee and commission income 4,740 2,623 29 7,392
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Fee and commission expense (657) (1,128) - (1,785)
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Net fee and commission income 4,083 1,495 29 5,607
----------------------------------- ----------------------------- ---------------------------- ----------- -------
Fee types
Transactional
Transactional fees are service charges on deposit accounts, cash
management services and transactional processing fees. These
include interchange and merchant fee income generated from credit
and bank card usage. Transaction and processing fees are recognised
at the point in time the transaction occurs or service is
performed. Interchange and merchant fees are recognised upon
settlement of the card transaction payment.
The Barclays Bank Group incurs certain card related costs
including those related to cardholder reward programmes and
payments to co-brand partners. Cardholder reward programmes costs
related to customers that settle their outstanding balance each
period (transactors) are expensed when incurred and presented in
fee and commission expense while costs related to customers that
continuously carry an outstanding balance (revolvers) are included
in the effective interest rate of the receivable (refer to Note 3).
Payments to partners for new cardholder account originations
related to transactor accounts are deferred as costs to obtain a
contract under IFRS 15, while costs related to revolver accounts
are included in the effective interest rate of the receivable
(refer to Note 3). Those costs deferred under IFRS 15 are
capitalised and amortised over the estimated life of the customer
relationship. Payments to co-brand partners based on revenue
sharing are presented as a reduction of fee and commission income
while payments based on profitability are presented in fee and
commission expense.
Advisory
Advisory fees are generated from wealth management services and
investment banking advisory services related to mergers,
acquisitions and financial restructurings. Wealth management
advisory fees are earned over the period the services are provided
and are generally recognised quarterly when the market value of
client assets is determined. Investment banking advisory fees are
recognised at the point in time when the services related to the
transaction have been completed under the terms of the engagement.
Investment banking advisory costs are recognised as incurred in fee
and commission expense if direct and incremental to the advisory
services or are otherwise recognised in operating expenses.
Brokerage and execution
Brokerage and execution fees are earned for executing client
transactions with various exchanges and over-the-counter markets
and assisting clients in clearing transactions. Brokerage and
execution fees are recognised at the point in time the associated
service has been completed which is generally the trade date of the
transaction.
Underwriting and syndication
Underwriting and syndication fees are earned for the
distribution of client equity or debt securities and the
arrangement and administration of a loan syndication. This includes
commitment fees to provide loan financing. Underwriting fees are
generally recognised on trade date if there is no remaining
contingency, such as the transaction being conditional on the
closing of an acquisition or another transaction. Underwriting
costs are deferred and recognised in fee and commission expense
when the associated underwriting fees are recorded. Syndication
fees are earned for arranging and administering a loan syndication;
however, the associated fee may be subject to variability until the
loan has been syndicated to other syndicate members or until other
contingencies have been resolved and therefore the fee revenue is
deferred until the uncertainty is resolved.
Included in underwriting and syndication fees are loan
commitment fees which are not presented as part of the carrying
value of the loan in accordance with IFRS 9. Such commitment fees
are recognised over time through to the contractual maturity of the
commitment.
Contract assets and contract liabilities
The Barclays Bank Group had no material contract assets or
contract liabilities as at 31 December 2020 (2019: nil; 2018:
nil).
Impairment of fee receivables and contract assets
During 2020, there have been no material impairments recognised
in relation to fees receivable and contract assets (2019: nil;
2018: nil). Fees in relation to transactional business can be added
to outstanding customer balances. These amounts may be subsequently
impaired as part of the overall loans and advances balance.
Remaining performance obligations
The Barclays Bank Group applies the practical expedient of IFRS
15 and does not disclose information about remaining performance
obligations that have original expected durations of one year or
less or because the Barclays Bank Group has a right to
consideration that corresponds directly with the value of the
service provided to the client or customer.
Costs incurred in obtaining or fulfilling a contract
The Barclays Bank Group expects that incremental costs of
obtaining a contract such as success fee and commission fees paid
are recoverable and therefore capitalised such contract costs in
the amount of GBP135m at 31 December 2020 (2019: GBP153m; 2018:
GBP125m).
Capitalised contract costs are amortised based on the transfer
of services to which the asset relates which typically ranges over
the expected life of the relationship. In 2020, the amount of
amortisation was GBP35m (2019: GBP29m; 2018: GBP30m) and there was
no impairment loss recognised in connection with the capitalised
contract costs (2019: nil; 2018: nil).
9 Tax
Accounting for income taxes
The Barclays Bank Group applies IAS 12 Income Taxes in
accounting for taxes on income. Income tax payable on taxable
profits (current tax) is recognised as an expense in the periods in
which the profits arise. Withholding taxes are also treated as
income taxes. Income tax recoverable on tax allowable losses is
recognised as a current tax asset only to the extent that it is
regarded as recoverable by offsetting against taxable profits
arising in the current or prior periods. Current tax is measured
using tax rates and tax laws that have been enacted or
substantively enacted at the balance sheet date.
Deferred tax assets are recognised to the extent that it is
probable that taxable profit will be available against which the
deductible temporary differences, and the carry forward of unused
tax credits and unused tax losses can be utilised, except in
certain circumstances where the deferred tax asset relating to the
deductible temporary difference arises from the initial recognition
of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss. Deferred tax is
determined using tax rates and legislation enacted or substantively
enacted by the balance sheet date which are expected to apply when
the deferred tax asset is realised or the deferred tax liability is
settled. Deferred tax assets and liabilities are only offset when
there is both a legal right to set-off and an intention to settle
on a net basis.
The Barclays Bank Group considers an uncertain tax position to
exist when it considers that ultimately, in the future, the amount
of profit subject to tax may be greater than the amount initially
reflected in the Barclays Bank Group's tax returns. The Barclays
Bank Group accounts for provisions in respect of uncertain tax
positions in two different ways.
A current tax provision is recognised when it is considered
probable that the outcome of a review by a tax authority of an
uncertain tax position will alter the amount of cash tax due to, or
from, a tax authority in the future. From recognition, the current
tax provision is then measured at the amount the Barclays Bank
Group ultimately expects to pay the tax authority to resolve the
position. Effective from 1 January 2019, the Barclays Bank Group
changed its accounting policy on the accrual of interest and
penalty amounts in respect of uncertain income tax positions and
now recognises such amounts as an expense within profit before tax
and will continue to do so in future periods. The prior periods'
tax charges have not been restated because the accrual for interest
and penalties in those periods in respect of uncertain tax
positions was not material.
Deferred tax provisions are adjustments made to the carrying
value of deferred tax assets in respect of uncertain tax positions.
A deferred tax provision is recognised when it is considered
probable that the outcome of a review by a tax authority of an
uncertain tax position will result in a reduction in the carrying
value of the deferred tax asset. From recognition of a provision,
measurement of the underlying deferred tax asset is adjusted to
take into account the expected impact of resolving the uncertain
tax position on the loss or temporary difference giving rise to the
deferred tax asset.
The approach taken to measurement takes account of whether the
uncertain tax position is a discrete position that will be reviewed
by the tax authority in isolation from any other position, or one
of a number of issues which are expected to be reviewed together
concurrently and resolved simultaneously with a tax authority. The
Barclays Bank Group's measurement of provisions is based upon its
best estimate of the additional profit that will become subject to
tax. For a discrete position, consideration is given only to the
merits of that position. Where a number of issues are expected to
be reviewed and resolved together, the Barclays Bank Group will
take into account not only the merits of its position in respect of
each particular issue but also the overall level of provision
relative to the aggregate of the uncertain tax positions across all
the issues that are expected to be resolved at the same time. In
addition, in assessing provision levels, it is assumed that tax
authorities will review uncertain tax positions and that all facts
will be fully and transparently disclosed.
Critical accounting estimates and judgements
There are two key areas of judgement that impact the reported
tax position. Firstly, the level of provisioning for uncertain tax
positions; and secondly, the recognition and measurement of
deferred tax assets .
The Barclays Bank Group does not consider there to be a
significant risk of a material adjustment to the carrying amount of
current and deferred tax balances, including provisions for
uncertain tax positions in the next financial year. The provisions
for uncertain tax positions cover a diverse range of issues and
reflect advice from external counsel where relevant. It should be
noted that only a proportion of the total uncertain tax positions
will be under audit at any point in time, and could therefore be
subject to challenge by a tax authority over the next year.
Deferred tax assets have been recognised based on business
profit forecasts. Details on the recognition of deferred tax assets
are provided in this note.
2020 2019 2018
GBPm GBPm GBPm
-------------------------------------- ----- ----- -----
Current tax charge/(credit)
Current year 993 327 94
Adjustments in respect of prior years 3 (50) (200)
-------------------------------------- ----- ----- -----
996 277 (106)
-------------------------------------- ----- ----- -----
Deferred tax charge/(credit)
Current year (563) 157 372
Adjustments in respect of prior years 191 (102) (37)
-------------------------------------- ----- ----- -----
(372) 55 335
-------------------------------------- ----- ----- -----
Tax charge 624 332 229
-------------------------------------- ----- ----- -----
The table below shows the reconciliation between the actual tax
charge and the tax charge that would result from applying the
standard UK corporation tax rate to the Barclays Bank Group's
profit before tax.
2020 2020 2019 2019 2018 2018
GBPm % GBPm % GBPm %
------------------------------------------------------------------------ ----- ------ ----- ------ ----- -------
Profit before tax from continuing operations 3,075 3,112 1,286
------------------------------------------------------------------------ ----- ------ ----- ------ ----- -------
Tax charge based on the standard UK corporation tax rate of 19% (2019:
19%, 2018: 19%) 584 19.0% 593 19.0% 244 19.0%
Impact of profits/losses earned in territories with different statutory
rates to the UK (weighted
average tax rate is 25.0% (2019: 26.0%, 2018: 27.1%)) 183 6.0% 217 7.0% 104 8.1%
Recurring items:
Adjustments in respect of prior years 194 6.3% (152) (4.9%) (237) (18.4%)
Non-creditable taxes including withholding taxes 107 3.4% 146 4.7% 156 12.1%
Impact of UK bank levy being non-deductible 48 1.6% 35 1.1% 42 3.3%
Non-deductible expenses 28 0.9% 34 1.1% 67 5.2%
Impact of Barclays Bank PLC's overseas branches being taxed both locally
and in the UK 25 0.8% 15 0.5% 16 1.2%
Tax adjustments in respect of share-based payments 14 0.5% (7) (0.2%) 11 0.9%
Banking surcharge and other items (70) (2.3%) (103) (3.3%) (69) (5.4%)
Changes in recognition of deferred tax and effect of unrecognised tax
losses (123) (4.0%) (85) (2.7%) (104) (8.1%)
AT1 tax credit (124) (4.0%) (121) (3.9%) (123) (9.6%)
Non-taxable gains and income (200) (6.5%) (240) (7.7%) (232) (18.0%)
Non-recurring items:
One off re-measurement of UK deferred tax assets due to cancellation of
rate change (43) (1.4%) - - - -
Non-deductible provisions for UK customer redress 7 0.2% - - 8 0.6%
Non-deductible provisions for investigations and litigation (6) (0.2%) - - 346 26.9%
------------------------------------------------------------------------ ----- ------ ----- ------ ----- -------
Total tax charge 624 20.3% 332 10.7% 229 17.8%
------------------------------------------------------------------------ ----- ------ ----- ------ ----- -------
Factors driving the effective tax rate
The effective tax rate of 20.3% is higher than the UK
corporation tax rate of 19% primarily due to profits earned outside
the UK being taxed at local statutory tax rates that are higher
than the UK tax rate, adjustments in respect of prior years,
non-creditable taxes and non-deductible expenses including UK bank
levy. These factors, which have each increased the effective tax
rate, are largely offset by the impact of non-taxable gains and
income, the use of unrecognised tax losses in the period and tax
relief on payments made under AT1 instruments.
Barclays Bank Group's future tax charge will be sensitive to the
geographic mix of profits earned, the tax rates in force and
changes to the tax rules in the jurisdictions that the Group
operates in.
Tax in the consolidated statement of comprehensive income
Tax relating to each component of other comprehensive income on
page 149 can be found in the consolidated statement of
comprehensive income which includes within Other a tax credit of
GBP3m (2019: GBP16m) on other items including share-based
payments.
Deferred tax assets and liabilities
The deferred tax amounts on the balance sheet were as
follows:
Barclays Bank
Group
---------------
2020 2019
GBPm GBPm
---------------------------------------------------- ------- ------
US Intermediate Holding Company Tax Group ("IHC Tax
Group") 1,001 1,037
US Branch Tax Group 1,048 1,015
Other (outside the UK and US tax groups) 503 408
---------------------------------------------------- ------- ------
Deferred tax asset 2,552 2,460
Deferred tax liability - UK Tax Group (225) (80)
---------------------------------------------------- ------- ------
Net deferred tax 2,327 2,380
---------------------------------------------------- ------- ------
Barclays Bank
PLC
---------------
2020 2019
GBPm GBPm
----------------------------------------- ------- ------
US Branch Tax Group 1,048 1,015
Other (outside the UK and US tax groups) 123 100
----------------------------------------- ------- ------
Deferred tax asset 1,171 1,115
Deferred tax liability - UK Tax Group (225) (80)
----------------------------------------- ------- ------
Net deferred tax 946 1,035
----------------------------------------- ------- ------
US deferred tax assets in the IHC and the US Branch
The deferred tax asset in the IHC Tax Group of GBP1,001m (2019:
GBP1,037m) relates entirely to temporary differences and includes
GBPnil (2019: GBP54m) relating to tax losses and the deferred tax
asset in Barclays Bank PLC's US Branch Tax Group of GBP1,048m
(2019: GBP1,015m) also relates entirely to temporary differences
and includes GBPnil (2019: GBP84m) relating to tax losses.
The deferred tax asset in the IHC Tax Group of GBP1,001m (2019:
GBP1,037m) also includes GBP330m (2019: GBP359m) arising from prior
net operating loss conversion. Under New York State and City tax
rules the amounts can be carried forward and will expire in 2034.
Business profit forecasts indicate these amounts will be fully
recovered before expiry. They are included within the other
category in the table below.
UK Tax Group deferred tax assets/liabilities
The deferred tax liability in the UK Tax Group of GBP225m (2019:
GBP80m) includes a deferred tax asset of GBP541m (2019: GBP268m)
relating to tax losses which is offset by a deferred tax liability
of GBP766m (2019: GBP348m) relating to temporary differences. There
is no time limit on utilisation of UK tax losses and business
profit forecasts indicate these will be fully recovered.
Other deferred tax assets (outside the UK and US tax groups)
The deferred tax asset of GBP503m (2019: GBP408m) in other
entities within the Barclays Bank Group includes GBP170m (2019:
GBP117m) relating to tax losses. These deferred tax assets relate
to a number of different territories and their recognition is based
on profit forecasts or local country law which indicate that it is
probable that those deferred tax assets will be fully
recovered.
Of the deferred tax asset of GBP503m (2019: GBP408m), an amount
of GBP8m (2019: GBP8m) relates to entities which have suffered a
loss in either the current or prior year and the utilisation of
which is dependent upon future taxable profits. This has been taken
into account in reaching the above conclusion that these deferred
tax assets will be fully recovered in the future.
The table below shows movements on deferred tax assets and
liabilities during the year. The amounts are different from those
disclosed on the balance sheet and in the preceding table as they
are presented before offsetting asset and liability balances where
there is a legal right to set-off and an intention to settle on a
net basis.
Barclays Bank Fair value Share based Tax
Group Fixed asset through other Cash Retirement Loan payments and Other losses
timing comprehensive flow benefit impairment Other deferred temporary carried
differences income hedges obligations allowance provisions compensation differences forward Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
Assets 719 110 - 31 284 127 305 1,329 523 3,428
Liabilities (29) (18) (139) (640) - - - (222) - (1,048)
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
At 1 January
2020 690 92 (139) (609) 284 127 305 1,107 523 2,380
Income
statement (39) - - - 164 18 15 23 191 372
Other
comprehensive
income and
reserves - (112) (291) (191) - - 3 238 - (353)
Other
movements (25) (1) (11) 4 7 (6) (6) (31) (3) (72)
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
626 (21) (441) (796) 455 139 317 1,337 711 2,327
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
Assets 659 - - 30 455 139 317 1,377 711 3,688
Liabilities (33) (21) (441) (826) - - - (40) - (1,361)
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
At 31 December
2020 626 (21) (441) (796) 455 139 317 1,337 711 2,327
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
Assets 758 175 38 39 359 112 309 1,336 529 3,655
Liabilities (16) (35) (2) (434) - - - (198) - (685)
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
At 1 January
2019 742 140 36 (395) 359 112 309 1,138 529 2,970
Income
statement 66 - - (5) (55) 23 (7) (94) 17 (55)
Other
comprehensive
income and
reserves - (46) (175) (205) (10) 2 8 71 - (355)
Other
movements (118) (2) - (4) (10) (10) (5) (8) (23) (180)
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
690 92 (139) (609) 284 127 305 1,107 523 2,380
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
Assets 719 110 - 31 284 127 305 1,329 523 3,428
Liabilities (29) (18) (139) (640) - - - (222) - (1,048)
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
At 31 December
2019 690 92 (139) (609) 284 127 305 1,107 523 2,380
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
Barclays Bank Fair value Share based Tax
PLC Fixed asset through other Cash Retirement Loan payments and Other losses
timing comprehensive flow benefit impairment Other deferred temporary carried
differences income hedges obligations allowance provisions compensation differences forward Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
Assets 602 108 - - 172 71 90 618 352 2,013
Liabilities (12) (18) (139) (638) - - - (171) - (978)
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
At 1 January
2020 590 90 (139) (638) 172 71 90 447 352 1,035
Income
statement (34) (1) - - 87 15 13 42 193 315
Other
comprehensive
income and
reserves - (114) (291) (186) - - 2 225 - (364)
Other
movements (25) - (11) (1) 4 (4) 1 (2) (2) (40)
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
531 (25) (441) (825) 263 82 106 712 543 946
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
Assets 538 - - - 263 82 106 712 543 2,244
Liabilities (7) (25) (441) (825) - - - - - (1,298)
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
At 31 December
2020 531 (25) (441) (825) 263 82 106 712 543 946
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
Assets 651 171 38 20 182 61 79 475 167 1,844
Liabilities - (35) (2) (433) - - - (125) - (595)
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
At 1 January
2019 651 136 36 (413) 182 61 79 350 167 1,249
Income
statement 54 - - (7) 3 23 9 67 200 349
Other
comprehensive
income and
reserves - (47) (175) (206) (9) 2 2 71 - (362)
Other
movements (115) 1 - (12) (4) (15) - (41) (15) (201)
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
590 90 (139) (638) 172 71 90 447 352 1,035
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
Assets 602 108 - - 172 71 90 618 352 2,013
Liabilities (12) (18) (139) (638) - - - (171) - (978)
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
At 31 December
2019 590 90 (139) (638) 172 71 90 447 352 1,035
-------------- ----------- ------------- ------ ----------- ---------- ---------- ------------ ----------- ------- -------
Other movements include the impact of changes in foreign
exchange rates as well as deferred tax amounts relating to
acquisitions and disposals.
The amount of deferred tax asset expected to be recovered after
more than 12 months for the Barclays Bank Group is GBP3,356m (2019:
GBP2,958m) and for Barclays Bank PLC is GBP2,147m (2019:
GBP1,794m). The amount of deferred tax liability expected to be
settled after more than 12 months for the Barclays Bank Group is
GBP1,359m (2019: GBP1,050m) and for Barclays Bank PLC is GBP1,298m
(2019: GBP973m). These amounts are before offsetting asset and
liability balances where there is a legal right to set-off and an
intention to settle on a net basis.
Unrecognised deferred tax
Tax losses and temporary differences
The Barclays Bank Group has deferred tax assets not recognised
in respect of gross deductible temporary differences of GBP123m
(2019: GBP208m), unused tax credits of GBP236m (2019: GBP247m), and
gross tax losses of GBP19,953m (2019: GBP18,582m). The tax losses
include capital losses of GBP2,987m (2019: GBP2,980m). Of these tax
losses, GBP139m (2019: GBP41m) expire within five years, GBP236m
(2019: GBP239m) expire within six to ten years, GBP7,271m (2019:
GBP5,178m) expire within 11 to 20 years and GBP12,307m (2019:
GBP13,124m) can be carried forward indefinitely. Deferred tax
assets have not been recognised in respect of these items because
it is not probable that future taxable profits and gains will be
available against which they can be utilised.
For Barclays Bank PLC, deferred tax assets have not been
recognised in respect of gross deductible temporary differences of
GBP22m (2019: GBP36m), unused tax credits of GBP205m (2019:
GBP210m), and gross tax losses of GBP4,161m (2019: GBP3,845m) which
includes capital losses of GBP2,643m (2019: GBP2,637m). Of these
tax losses, GBP133m (2019: GBPnil) expire within five years, GBPnil
(2019: GBPnil) expire within six to ten years, GBPnil (2019:
GBPnil) expire within 11 to 20 years and GBP4,028m (2019:
GBP3,845m) can be carried forward indefinitely. Deferred tax assets
have not been recognised in respect of these items because it is
not probable that future taxable profits and gains will be
available against which they can be utilised.
Barclays Bank Group investments in subsidiaries, branches and
associates
Deferred tax is not recognised in respect of the value of
Barclays Bank Group's investments in subsidiaries, branches and
associates where the Barclays Bank Group is able to control the
timing of the reversal of the temporary differences and it is
probable that such differences will not reverse in the foreseeable
future. The aggregate amount of these temporary differences for
which deferred tax liabilities have not been recognised was
GBP0.8bn (2019: GBP0.7bn).
10 Dividends on ordinary shares and other equity instruments
The 2020 financial statements include GBP263m (2019: GBP233m) of
dividend paid. This includes the final dividend declared in
relation to the prior year of GBP263m (2019: GBPnil) and half year
dividends of GBPnil (2019: GBP233m). This results in a total
dividend for the year of 0.11p (2019: GBP0.10p) per ordinary share.
A dividend of GBP263m was paid on 25 March 2020 by Barclays Bank
PLC to its parent Barclays PLC. This was prior to the announcement
made by the PRA on 31 March 2020 that capital be preserved for use
in serving Barclays customers and clients through the extraordinary
challenges presented by the COVID-19 pandemic. As part of a
response to this announcement, Barclays PLC took steps to provide
additional capital to Barclays Bank PLC as part of the GBP1.5bn of
capital contributions made during H120.
Dividends paid on preference shares amounted to GBP42m (2019:
GBP41m). Dividends paid on the 4.75% EUR100 preference shares
amounted to GBP439.21 per share (2019: GBP409.44). Dividends paid
on the 6.278% US$100 preference shares amounted to GBP485.75 per
share (2019: GBP485.94).
Dividends paid on other equity instruments amounted to GBP677m
(2019: GBP660m). For further detail on other equity instruments,
please refer to Note 27.
The Directors have approved a full year dividend in respect of
2020 of GBP174m. In addition, the Company will pay a GBP520m
dividend to Barclays PLC in order to partially fund a share
buy-back. The aggregate dividend of GBP694m will be paid on 9 March
2021. The financial statements for the year ended 31 December 2020
do not reflect this aggregate dividend, which will be accounted for
in shareholders' equity as an appropriation of retained profits in
the year ending 31 December 2021. Dividends are funded out of
distributable reserves.
16 Fair value of financial instruments
Accounting for financial assets and liabilities - fair
values
Financial instruments that are held for trading are recognised
at fair value through profit or loss. In addition, financial assets
are held at fair value through profit or loss if they do not
contain contractual terms that give rise on specified dates to cash
flows that are SPPI, or if the financial asset is not held in a
business model that is either (i) a business model to collect the
contractual cash flows or (ii) a business model that is achieved by
both collecting contractual cash flows and selling. Subsequent
changes in fair value for these instruments are recognised in the
income statement in net investment income, except if reporting it
in trading income reduces an accounting mismatch.
All financial instruments are initially recognised at fair value
on the date of initial recognition (including transaction costs,
other than financial instruments held at fair value through profit
or loss) and depending on the subsequent classification of the
financial asset or liability, may continue to be held at fair value
either through profit or loss or other comprehensive income. The
fair value of a financial instrument is the price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement
date.
Wherever possible, fair value is determined by reference to a
quoted market price for that instrument. For many of the Barclays
Bank Group's financial assets and liabilities, especially
derivatives, quoted prices are not available and valuation models
are used to estimate fair value. The models calculate the expected
cash flows under the terms of each specific contract and then
discount these values back to a present value. These models use as
their basis independently sourced market inputs including, for
example, interest rate yield curves, equities and commodities
prices, option volatilities and currency rates .
For financial liabilities measured at fair value, the carrying
amount reflects the effect on fair value of changes in own credit
spreads derived from observable market data such as in primary
issuance and redemption activity for structured notes.
On initial recognition, it is presumed that the transaction
price is the fair value unless there is observable information
available in an active market to the contrary. The best evidence of
an instrument's fair value on initial recognition is typically the
transaction price. However, if fair value can be evidenced by
comparison with other observable current market transactions in the
same instrument, or is based on a valuation technique whose inputs
include only data from observable markets, then the instrument
should be recognised at the fair value derived from such observable
market data.
For valuations that have made use of unobservable inputs, the
difference between the model valuation and the initial transaction
price (Day One profit) is recognised in profit or loss either: on a
straight-line basis over the term of the transaction; or over the
period until all model inputs will become observable where
appropriate; or released in full when previously unobservable
inputs become observable.
Various factors influence the availability of observable inputs
and these may vary from product to product and change over time.
Factors include the depth of activity in the relevant market, the
type of product, whether the product is new and not widely traded
in the marketplace, the maturity of market modelling and the nature
of the transaction (bespoke or generic). To the extent that
valuation is based on models or inputs that are not observable in
the market, the determination of fair value can be more subjective,
dependent on the significance of the unobservable input to the
overall valuation. Unobservable inputs are determined based on the
best information available, for example by reference to similar
assets, similar maturities or other analytical techniques.
The sensitivity of valuations used in the financial statements
to possible changes in significant unobservable inputs is shown on
page 206.
Critical accounting estimates and judgements
The valuation of financial instruments often involves a
significant degree of judgement and complexity, in particular where
valuation models make use of unobservable inputs ('Level 3' assets
and liabilities). This note provides information on these
instruments, including the related unrealised gains and losses
recognised in the period, a description of significant valuation
techniques and unobservable inputs, and a sensitivity analysis.
Valuation
IFRS 13 Fair value measurement requires an entity to classify
its assets and liabilities according to a hierarchy that reflects
the observability of significant market inputs. The three levels of
the fair value hierarchy are defined below.
Quoted market prices - Level 1
Assets and liabilities are classified as Level 1 if their value
is observable in an active market. Such instruments are valued by
reference to unadjusted quoted prices for identical assets or
liabilities in active markets where the quoted price is readily
available, and the price represents actual and regularly occurring
market transactions. An active market is one in which transactions
occur with sufficient volume and frequency to provide pricing
information on an ongoing basis.
Valuation technique using observable inputs - Level 2
Assets and liabilities classified as Level 2 have been valued
using models whose inputs are observable either directly or
indirectly. Valuations based on observable inputs include assets
and liabilities such as swaps and forwards which are valued using
market standard pricing techniques, and options that are commonly
traded in markets where all the inputs to the market standard
pricing models are observable.
Valuation technique using significant unobservable inputs -
Level 3
Assets and liabilities are classified as Level 3 if their
valuation incorporates significant inputs that are not based on
observable market data (unobservable inputs). A valuation input is
considered observable if it can be directly observed from
transactions in an active market, or if there is compelling
external evidence demonstrating an executable exit price.
Unobservable input levels are generally determined via reference to
observable inputs, historical observations or using other
analytical techniques.
The following table shows Barclays Bank Group's assets and
liabilities that are held at fair value disaggregated by valuation
technique (fair value hierarchy) and balance sheet
classification:
Assets and liabilities
held at fair value
------------------------------ --------------------------------------- ---------------------------------------
2020 2019
--------------------------------------- ---------------------------------------
Valuation technique using Valuation technique using
--------------------------------------- ---------------------------------------
Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total
Barclays Bank Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
Trading portfolio assets 60,619 65,182 1,863 127,664 59,968 51,105 2,264 113,337
Financial assets at
fair value through
the income statement 4,439 162,930 4,392 171,761 10,300 115,008 4,162 129,470
Derivative financial
assets 9,154 289,071 4,468 302,693 5,439 221,048 3,154 229,641
Financial assets at
fair value through
other comprehensive
income 12,150 39,599 153 51,902 11,577 33,400 429 45,406
Investment property - - 10 10 - - 13 13
------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
Total assets 86,362 556,782 10,886 654,030 87,284 420,561 10,022 517,867
------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
Trading portfolio liabilities (23,331) (22,780) (28) (46,139) (19,645) (15,567) - (35,212)
Financial liabilities
designated at fair
value (159) (249,126) (341) (249,626) (82) (204,021) (343) (204,446)
Derivative financial
liabilities (8,762) (285,579) (6,239) (300,580) (5,305) (219,646) (3,989) (228,940)
------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
Total liabilities (32,252) (557,485) (6,608) (596,345) (25,032) (439,234) (4,332) (468,598)
------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
The following table shows Barclays Bank PLC's assets and
liabilities that are held at fair value disaggregated by valuation
technique (fair value hierarchy) and balance sheet
classification:
Assets and liabilities
held at fair value
------------------------------ --------------------------------------- ---------------------------------------
2020 2019
--------------------------------------- ---------------------------------------
Valuation technique using Valuation technique using
--------------------------------------- ---------------------------------------
Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total
Barclays Bank PLC GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
Trading portfolio assets 37,915 44,782 1,392 84,089 43,897 33,283 1,899 79,079
Financial assets at
fair value through
the income statement 30 199,557 3,486 203,073 3,877 155,714 2,909 162,500
Derivative financial
assets - 292,773 4,356 297,129 - 226,195 3,143 229,338
Financial assets at
fair value through
other comprehensive
income 10,596 39,559 153 50,308 9,991 33,340 429 43,760
Investment property - - 5 5 - - 5 5
------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
Total assets 48,541 576,671 9,392 634,604 57,765 448,532 8,385 514,682
------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
Trading portfolio liabilities (32,210) (15,855) (28) (48,093) (36,851) (8,279) - (45,130)
Financial liabilities
designated at fair
value (22) (266,794) (321) (267,137) - (207,444) (321) (207,765)
Derivative financial
liabilities - (286,568) (5,970) (292,538) - (221,758) (3,849) (225,607)
------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
Total liabilities (32,232) (569,217) (6,319) (607,768) (36,851) (437,481) (4,170) (478,502)
------------------------------ -------- --------- ------- --------- -------- --------- ------- ---------
The following table shows Barclays Bank Group's Level 3 assets
and liabilities that are held at fair value disaggregated by
product type:
Level 3 Assets and liabilities held at fair value by product type
----------------------------------------------------------------------------
2020 2019
------------------- -------------------
Assets Liabilities Assets Liabilities
Barclays Bank Group GBPm GBPm GBPm GBPm
---------------------------------- ------ ----------- ------ -----------
Interest rate derivatives 1,613 (1,615) 605 (812)
Foreign exchange derivatives 144 (143) 291 (298)
Credit derivatives 196 (351) 539 (342)
Equity derivatives 2,497 (4,112) 1,710 (2,528)
Commodity derivatives 18 (18) 9 (9)
Corporate debt 698 (3) 521 -
Reverse repurchase and repurchase
agreements - (174) - (167)
Non-asset backed loans 3,093 - 3,280 -
Asset backed securities 767 (24) 756 -
Equity cash products 542 - 1,228 -
Private equity investments 84 - 112 -
Other(a) 1,234 (168) 971 (176)
---------------------------------- ------ ----------- ------ -----------
Total 10,886 (6,608) 10,022 (4,332)
---------------------------------- ------ ----------- ------ -----------
Note
a Other includes commercial real estate loans, funds and fund-linked
products, issued debt, government sponsored debt and investment
property.
Valuation techniques and sensitivity analysis
Sensitivity analysis is performed on products with significant
unobservable inputs (Level 3) to generate a range of reasonably
possible alternative valuations. The sensitivity methodologies
applied take account of the nature of the valuation techniques
used, as well as the availability and reliability of observable
proxy and historical data and the impact of using alternative
models.
Sensitivities are dynamically calculated on a monthly basis. The
calculation is based on range or spread data of a reliable
reference source or a scenario based on relevant market analysis
alongside the impact of using alternative models. Sensitivities are
calculated without reflecting the impact of any diversification in
the portfolio.
The valuation techniques used, observability and sensitivity
analysis for material products within Level 3, are described
below.
Interest rate derivatives
Description: Derivatives linked to interest rates or inflation
indices. The category includes futures, interest rate and inflation
swaps, swaptions, caps, floors, inflation options, balance
guaranteed swaps and other exotic interest rate derivatives.
Valuation: Interest rate and inflation derivatives are generally
valued using curves of forward rates constructed from market data
to project and discount the expected future cash flows of trades.
Instruments with optionality are valued using volatilities implied
from market inputs, and use industry standard or bespoke models
depending on the product type.
Observability: In general, inputs are considered observable up
to liquid maturities which are determined separately for each input
and underlying. Unobservable inputs are generally set by
referencing liquid market instruments and applying extrapolation
techniques or inferred via another reasonable method.
Foreign exchange derivatives
Description: Derivatives linked to the foreign exchange (FX)
market. The category includes FX forward contracts, FX swaps and FX
options. The majority are traded as over the counter (OTC)
derivatives.
Valuation: FX derivatives are valued using industry standard and
bespoke models depending on the product type. Valuation inputs
include FX rates, interest rates, FX volatilities, interest rate
volatilities, FX interest rate correlations and others as
appropriate.
Observability: FX correlations, forwards and volatilities are
generally observable up to liquid maturities which are determined
separately for each input and underlying. Unobservable inputs are
set by referencing liquid market instruments and applying
extrapolation techniques, or inferred via another reasonable
method.
Credit derivatives
Description: Derivatives linked to the credit spread of a
referenced entity, index or basket of referenced entities or a pool
of referenced assets (e.g. a securitised product). The category
includes single name and index credit default swaps (CDS) and total
return swaps (TRS).
Valuation: CDS are valued on industry standard models using
curves of credit spreads as the principal input. Credit spreads are
observed directly from broker data, third party vendors or priced
to proxies.
Observability: CDS contracts referencing entities that are
actively traded are generally considered observable. Other
valuation inputs are considered observable if products with
significant sensitivity to the inputs are actively traded in a
liquid market. Unobservable valuation inputs are generally
determined with reference to recent transactions or inferred from
observable trades of the same issuer or similar entities.
Equity derivatives
Description : Exchange traded or OTC derivatives linked to
equity indices and single names. The category includes vanilla and
exotic equity products.
Valuation: Equity derivatives are valued using industry standard
models. Valuation inputs include stock prices, dividends,
volatilities, interest rates, equity repurchase curves and, for
multi-asset products, correlations.
Observability: In general, valuation inputs are observable up to
liquid maturities which are determined separately for each input
and underlying. Unobservable inputs are set by referencing liquid
market instruments and applying extrapolation techniques, or
inferred via another reasonable method.
Commodity derivatives
Description: Exchange traded and OTC derivatives based on
underlying commodities such as metals, crude oil and refined
products, agricultural, power and natural gas.
Valuation: Commodity swaps and options are valued using models
incorporating discounting of cash flows and other industry standard
modelling techniques. Valuation inputs include forward curves,
volatilities implied from market observable inputs and
correlations.
Observability: Commodity correlations, forwards and volatilities
are generally observable up to liquid maturities which are
determined separately for each input and underlying. Unobservable
inputs are set with reference to similar observable products, or by
applying extrapolation techniques to observable inputs.
Corporate debt
Description: Primarily corporate bonds.
Valuation: Corporate bonds are valued using observable market
prices sourced from broker quotes, inter-dealer prices or other
reliable pricing sources.
Observability: Prices for actively traded bonds are considered
observable. Unobservable bonds prices are generally determined by
reference to bond yields or CDS spreads for actively traded
instruments issued by or referencing the same (or a similar)
issuer.
Level 3 sensitivity: Sensitivity is generally determined by
applying a shift to bond yields using the average ranges of
external levels observed in the market for similar bonds.
Reverse repurchase and repurchase agreements
Description: Includes securities purchased under resale
agreements, securities sold under repurchase agreements, and other
similar secured lending agreements. The agreements are primarily
short-term in nature.
Valuation: Repurchase and reverse repurchase agreements are
generally valued by discounting the expected future cash flows
using industry standard models that incorporate market interest
rates and repurchase rates, based on the specific details of the
transaction.
Observability: Inputs are deemed observable up to liquid
maturities, and are determined based on the specific features of
the transaction. Unobservable inputs are generally set by
referencing liquid market instruments and applying extrapolation
techniques, or inferred via another reasonable method.
Non-asset backed loans
Description: Largely made up of fixed rate loans.
Valuation: Fixed rate loans are valued using models that
discount expected future cash flows based on interest rates and
loan spreads.
Observability: Within this loan population, the loan spread is
generally unobservable. Unobservable loan spreads are determined by
incorporating funding costs, the level of comparable assets such as
gilts, issuer credit quality and other factors.
Asset backed securities
Description: S ecurities that are linked to the cash flows of a
pool of referenced assets via securitisation. The category includes
residential mortgage backed securities, commercial mortgage backed
securities, CDOs, collateralised loan obligations (CLOs) and other
asset backed securities.
Valuation: Where available, valuations are based on observable
market prices sourced from broker quotes and inter-dealer prices.
Otherwise, valuations are determined using industry standard
discounted cash flow analysis that calculates the fair value based
on valuation inputs such as constant default rate, conditional
prepayment rate, loss given default and yield. These inputs are
determined by reference to a number of sources including proxying
to observed transactions, market indices or market research, and by
assessing underlying collateral performance.
Proxying to observed transactions, indices or research requires
an assessment and comparison of the relevant securities' underlying
attributes including collateral, tranche, vintage, underlying asset
composition (historical losses, borrower characteristics and loan
attributes such as loan to value ratio and geographic
concentration) and credit ratings (original and current).
Observability: Where an asset backed product does not have an
observable market price and the valuation is determined using a
discounted cash flow analysis, the instrument is considered
unobservable.
Equity cash products
Description: Includes listed equities, Exchange Traded Funds
(ETF) and preference shares.
Valuation: Valuation of equity cash products is primarily
determined through market observable prices.
Observability: P rices for actively traded equity cash products
are considered observable. Unobservable equity prices are generally
determined by reference to actively traded instruments that are
similar in nature, or inferred via another reasonable method.
Private equity investments
Description: Includes investments in equity holdings in
operating companies not quoted on a public exchange.
Valuation: Private equity investments are valued in accordance
with the 'International Private Equity and Venture Capital
Valuation Guidelines' which require the use of a number of
individual pricing benchmarks such as the prices of recent
transactions in the same or similar entities, discounted cash flow
analysis and comparison with the earnings multiples of listed
companies. While the valuation of unquoted equity instruments is
subjective by nature, the relevant methodologies are commonly
applied by other market participants and have been consistently
applied over time.
Observability: Inputs are considered observable if there is
active trading in a liquid market of products with significant
sensitivity to the inputs. Unobservable inputs include earnings
estimates, multiples of comparative companies, marketability
discounts and discount rates.
Other
Description: Other includes commercial real estate loans, funds
and fund-linked products, asset backed loans, physical commodities
and investment property.
Assets and liabilities reclassified between Level 1 and Level
2
During the period, there were no material transfers between
Level 1 to Level 2. (2019: there were no material transfers between
Level 1 and Level 2).
Level 3 movement analysis
The following table summarises the movements in the Level 3
balances during the period. Transfers have been reflected as if
they had taken place at the beginning of the year.
Assets and liabilities included in disposal groups classified as
held for sale and measured at fair value less cost to sell are not
included as these are measured at fair value on a non-recurring
basis.
Asset and liability transfers between Level 2 and Level 3 are
primarily due to 1) an increase or decrease in observable market
activity related to an input or 2) a change in the significance of
the unobservable input, with assets and liabilities classified as
Level 3 if an unobservable input is deemed significant.
Analysis of movements in Level 3 assets
and liabilities
----------------------------------------------------------------- ------- ------- ---------- ---- ----- --------
Total gains
and losses
in the period
recognised
in the income
statement Transfers
---------------- -----------
Total
As at gains As at
1 or losses 31
January Trading Other recognised December
2020 Purchases Sales Issues Settlements income income in OCI In Out 2020
Barclays Bank
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------- --------- ------- ------ ----------- ------- ------- ---------- ---- ----- --------
Corporate debt 120 77 (6) - - (35) - - 12 (17) 151
Non-asset
backed
loans 974 1,955 (2,182) - (12) (10) - - 39 (55) 709
Asset backed
securities 656 458 (428) - (40) (25) - - 99 (34) 686
Equity cash
products 392 5 (149) - - (41) - - 11 (4) 214
Other 122 - - - - (21) - - 2 - 103
--------------- ------- --------- ------- ------ ----------- ------- ------- ---------- ---- ----- --------
Trading
portfolio
assets 2,264 2,495 (2,765) - (52) (132) - - 163 (110) 1,863
Non-asset
backed
loans 1,964 1,102 (283) - (293) 142 - - - (352) 2,280
Equity cash
products 835 9 (404) - - (93) (36) - 9 - 320
Private equity
investments 113 2 (20) - (1) - (9) - 15 (12) 88
Other 1,250 3,716 (3,606) - (26) 32 (48) - 386 - 1,704
--------------- ------- --------- ------- ------ ----------- ------- ------- ---------- ---- ----- --------
Financial
assets
at fair value
through
the income
statement 4,162 4,829 (4,313) - (320) 81 (93) - 410 (364) 4,392
Non-asset
backed
loans 343 - - - (237) - - - - - 106
Asset backed
securities 86 - (35) - - - - (4) - - 47
--------------- ------- --------- ------- ------ ----------- ------- ------- ---------- ---- ----- --------
Financial
assets
at fair value
through
other
comprehensive
income 429 - (35) - (237) - - (4) - - 153
Investment
property 13 - (2) - - - (1) - - - 10
Trading
portfolio
liabilities - (27) - - - (1) - - - - (28)
Financial
liabilities
designated at
fair
value (343) - 1 (21) 1 21 - - (38) 38 (341)
Interest rate
derivatives (206) 17 (12) - 85 109 - - (18) 23 (2)
Foreign
exchange
derivatives (7) - - - 21 (16) - - (19) 22 1
Credit
derivatives 198 (125) 24 - (371) 24 - - (21) 116 (155)
Equity
derivatives (820) (699) (43) - 105 (101) - - (13) (44) (1,615)
--------------- ------- --------- ------- ------ ----------- ------- ------- ---------- ---- ----- --------
Net derivative
financial
instruments(a) (835) (807) (31) - (160) 16 - - (71) 117 (1,771)
Total 5,690 6,490 (7,145) (21) (768) (15) (94) (4) 464 (319) 4,278
--------------- ------- --------- ------- ------ ----------- ------- ------- ---------- ---- ----- --------
Analysis of movements in Level 3 assets and
liabilities
---------------------------------------------------- ----------- ------- ------ ---------- ----- ------- --------
Total gains and
losses in the
period
recognised in
the income
statement Transfers
--------------- --------------
Total
gains or
As at 1 losses As at 31
January Trading Other recognised December
2019 Purchases Sales Issues Settlements income income in OCI In Out 2019
Barclays Bank
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------- --------- ------- ------ ----------- ------- ------ ---------- ----- ------- --------
Corporate debt 388 126 (52) - (311) 1 - - 45 (77) 120
Non-asset
backed loans 2,263 1,844 (2,799) - (134) 24 - - 200 (424) 974
Asset backed
securities 664 202 (166) - - (30) - - 16 (30) 656
Equity cash
products 136 62 (40) - - (31) - - 293 (28) 392
Other 162 - - - (1) (24) - - - (15) 122
--------------- ------- --------- ------- ------ ----------- ------- ------ ---------- ----- ------- --------
Trading
portfolio
assets 3,613 2,234 (3,057) - (446) (60) - - 554 (574) 2,264
Non-asset
backed loans 1,836 235 - - (204) 99 (1) - - (1) 1,964
Equity cash
products 559 66 - - (2) 3 209 - - - 835
Private equity
investments 191 5 (9) - (2) - (17) - - (55) 113
Other 2,064 5,716 (5,720) - (9) 12 (33) - 24 (804) 1,250
--------------- ------- --------- ------- ------- ------
Financial
assets at fair
value through
the income
statement 4,650 6,022 (5,729) - (217) 114 158 - 24 (860) 4,162
Non-asset
backed loans - 283 - - - - - 60 - - 343
Asset backed
securities - 116 (30) - - - - - - - 86
Equity cash
products 2 - (1) - - - - (1) - - -
Other 353 - - - (135) - - - - (218) -
--------------- ------- --------- ------- ------ ----------- ------- ------ ---------- ----- ------- --------
Financial
assets at fair
value through
other
comprehensive
income 355 399 (31) - (135) - - 59 - (218) 429
Investment
property 9 5 - - - - (1) - - - 13
Trading
portfolio
liabilities (3) - - - - - - - - 3 -
Financial
liabilities
designated at
fair value (261) (179) 10 (42) 41 67 (2) - (27) 50 (343)
Interest rate
derivatives 22 (9) - - 88 (92) - - (177) (38) (206)
Foreign
exchange
derivatives 7 - - - 25 (12) - - (32) 5 (7)
Credit
derivatives 1,050 (59) 3 - (866) 76 - - (9) 3 198
Equity
derivatives (607) (296) (35) - (2) (296) - - (37) 453 (820)
--------------- ------- --------- ------- ------ ----------- ------- ------ ---------- ----- ------- --------
Net derivative
financial
instruments(a) 472 (364) (32) - (755) (324) - - (255) 423 (835)
Total 8,835 8,117 (8,839) (42) (1,512) (203) 155 59 296 (1,176) 5,690
--------------- ------- --------- ------- ------ ----------- ------- ------ ---------- ----- ------- --------
Note
a The derivative financial instruments are represented on a net basis.
On a gross basis, derivative financial assets are GBP4,468m (2019:
GBP3,154m) and derivative financial liabilities are GBP6,239m (2019:
GBP3,989m).
Analysis of movements in Level 3 assets and liabilities
Total gains and
losses in the
period
recognised in
the income
statement Transfers
Total
gains or
As at 1 losses As at 31
January Trading Other recognised December
2020 Purchases Sales Issues Settlements income income in OCI In Out 2020
Barclays Bank
PLC GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Trading
portfolio
assets 1,899 2,009 (2,294) - (54) (157) - - 63 (74) 1,392
Financial
assets at fair
value through
the income
statement 2,909 4,696 (3,870) - (292) 68 (52) - 28 (1) 3,486
Fair value
through other
comprehensive
income 429 - (35) - (237) - - (4) - - 153
Investment
property 5 - - - - - - - - - 5
Trading
portfolio
liabilities - (27) - - - (1) - - - - (28)
Financial
liabilities
designated at
fair value (321) - 3 (21) 1 21 - - (32) 28 (321)
Net derivative
financial
instruments(a) (706) (807) (30) - (37) (88) - - (44) 98 (1,614)
Total 4,215 5,871 (6,226) (21) (619) (157) (52) (4) 15 51 3,073
Analysis of movements in Level 3 assets and liabilities
Total gains and
losses in the
period
recognised in
the income
statement Transfers
Total
gains or
As at 1 losses As at 31
January Trading Other recognised December
2019 Purchases Sales Issues Settlements income income in OCI In Out 2019
Barclays Bank
PLC GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Trading
portfolio
assets 3,462 2,098 (2,939) - (445) (80) - - 364 (561) 1,899
Financial
assets at fair
value through
the income
statement 4,013 5,903 (6,125) - (174) 109 (35) - 23 (805) 2,909
Fair value
through other
comprehensive
income 355 398 (30) - (135) 60 (1) - - (218) 429
Investment
property - 5 - - - - - - - - 5
Financial
liabilities
designated at
fair value (251) (221) 10 - 38 66 - - (13) 50 (321)
Net derivative
financial
instruments(a) 416 (363) 97 - (785) (296) - - (127) 352 (706)
Total 7,995 7,820 (8,987) - (1,501) (141) (36) - 247 (1,182) 4,215
Note
a The derivative financial instruments are represented on a net basis.
On a gross basis, derivative financial assets are GBP4,356m (2019:
GBP3,143m) and derivative financial liabilities are GBP5,970m (2019:
GBP3,849m).
Unrealised gains and losses on Level 3 financial assets and
liabilities
The following tables disclose the unrealised gains and losses
recognised in the year arising on Level 3 financial assets and
liabilities held at year end.
Unrealised gains and losses recognised during the period on Level 3 assets and liabilities
held at year end
2020 2019
Income statement Income statement
Other
Other compre- compre-
Barclays Bank hensive hensive
Group Trading income Other income income Total Trading income Other income income Total
As at 31
December GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Trading
portfolio
assets (114) - - (114) (57) - - (57)
Financial
assets at
fair value
through the
income
statement 115 (89) - 26 101 199 - 300
Fair value
through other
comprehensive
income - - (1) (1) - - 60 60
Investment
property - (1) - (1) - (1) - (1)
Trading
portfolio
liabilities - - - - - - - -
Financial
liabilities
designated at
fair value 20 (1) - 19 64 - - 64
Net derivative
financial
instruments (91) - - (91) (459) - - (459)
Total (70) (91) (1) (162) (351) 198 60 (93)
Unrealised gains and losses recognised during the period on Level 3
assets and liabilities held at year end
----------------------------------------------------------------------------------------------------------------------
2020 2019
Income statement Income statement
Other Other
Trading Other compre-hensive Trading Other compre-hensive
Barclays Bank PLC income income income Total income income income Total
As at 31 December GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------- -------- --------------- ----- -------- -------- --------------- -----
Trading portfolio assets (153) - - (153) (100) - - (100)
Financial assets at fair
value through the income
statement 103 (50) - 53 99 212 - 311
Fair value through other
comprehensive income - - (1) (1) - - 60 60
Financial liabilities
designated
at fair value 21 - - 21 66 - - 66
Net derivative financial
instruments (72) - - (72) (430) - - (430)
Total (101) (50) (1) (152) (365) 212 60 (93)
Significant unobservable inputs
The following table discloses the valuation techniques and
significant unobservable inputs for assets and liabilities
recognised at fair value and classified as Level 3 along with the
range of values used for those significant unobservable inputs:
2020 2019
Range Range
Valuation technique(s) Significant unobservable
(a) inputs Min Max Min Max Units(b)
Derivative financial
instruments(c)
Interest rate Discounted cash
derivatives flows Inflation forwards 1 3 1 3%
Credit spread 17 1,831 41 1,620 bps
Comparable pricing Price - 84 - 37 points
bps
Option model Inflation volatility 31 227 47 190 vol
Interest rate bps
volatility 6 489 8 431 vol
FX - IR correlation (30) 78 (30) 78%
IR - IR correlation (20) 99 (30) 100%
Discounted cash
Credit derivatives flows Credit spread 5 480 72 200 bps
Comparable pricing Price - 100 - 155 points
Equity derivatives Option model Equity volatility 1 110 1 200%
Equity - equity
correlation (45) 100 (20) 100%
Discounted cash
flow Discounted margin (225) 3,000 (500) 1,100 bps
Non-derivative
financial instruments
Non-asset backed Discounted cash
loans flows Loan spread 32 477 31 624 bps
Credit spread 200 300 180 1,223 bps
Price - 104 - 133 points
Yield 5 8 6 12%
Comparable pricing Price - 137 - 123 points
Asset backed
securities Comparable pricing Price - 112 - 99 points
Corporate debt Comparable pricing Price - 127 - 100 points
Discounted cash
Other(d) flows Credit spread 146 483 126 649 bps
Notes
a A range has not been provided for Net Asset Value as there would
be a wide range reflecting the diverse nature of the positions.
b The units used to disclose ranges for significant unobservable
inputs are percentages, points and basis points. Points are a percentage
of par; for example, 100 points equals 100% of par. A basis point
equals 1/100th of 1%; for example, 150 basis points equals 1.5%.
c Certain derivative instruments are classified as Level 3 due to
a significant unobservable credit spread input into the calculation
of the Credit Valuation Adjustment for the instruments. The range
of significant unobservable credit spreads is between 17-1,831bps
(2019: 41-1,620bps).
d Other includes commercial real estate loans.
The following section describes the significant unobservable
inputs identified in the table above, and the sensitivity of fair
value measurement of the instruments categorised as Level 3 assets
or liabilities to increases in significant unobservable inputs.
Where sensitivities are described, the inverse relationship will
also generally apply.
Where reliable interrelationships can be identified between
significant unobservable inputs used in fair value measurement, a
description of those interrelationships is included below.
Forwards
A price or rate that is applicable to a financial transaction
that will take place in the future.
In general, a significant increase in a forward in isolation
will result in a fair value increase for the contracted receiver of
the underlying (currency, bond, commodity, etc.), but the
sensitivity is dependent on the specific terms of the
instrument.
Credit spread
Credit spreads typically represent the difference in yield
between an instrument and a benchmark security or reference rate.
Credit spreads reflect the additional yield that a market
participant demands for taking on exposure to the credit risk of an
instrument and form part of the yield used in a discounted cash
flow calculation.
In general, a significant increase in credit spread in isolation
will result in a movement in a fair value decrease for a cash
asset.
For a derivative instrument, a significant increase in credit
spread in isolation can result in a fair value increase or decrease
depending on the specific terms of the instrument.
Volatility
Volatility is a measure of the variability or uncertainty in
return for a given derivative underlying. It is an estimate of how
much a particular underlying instrument input or index will change
in value over time. In general, volatilities are implied from
observed option prices. For unobservable options the implied
volatility may reflect additional assumptions about the nature of
the underlying risk, and the strike/maturity profile of a specific
contract.
In general a significant increase in volatility in isolation
will result in a fair value increase for the holder of a simple
option, but the sensitivity is dependent on the specific terms of
the instrument.
There may be interrelationships between unobservable
volatilities and other unobservable inputs (e.g. when equity prices
fall, implied equity volatilities generally rise) but these are
generally specific to individual markets and may vary over
time.
Correlation
Correlation is a measure of the relationship between the
movements of two variables. Correlation can be a significant input
into valuation of derivative contracts with more than one
underlying instrument. Credit correlation generally refers to the
correlation between default processes for the separate names that
make up the reference pool of a CDO structure.
A significant increase in correlation in isolation can result in
a fair value increase or decrease depending on the specific terms
of the instrument.
Comparable price
Comparable instrument prices are used in valuation by
calculating an implied yield (or spread over a liquid benchmark)
from the price of a comparable observable instrument, then
adjusting that yield (or spread) to account for relevant
differences such as maturity or credit quality. Alternatively, a
price-to-price basis can be assumed between the comparable and
unobservable instruments in order to establish a value.
In general, a significant increase in comparable price in
isolation will result in an increase in the price of the
unobservable instrument. For derivatives, a change in the
comparable price in isolation can result in a fair value increase
or decrease depending on the specific terms of the instrument.
Loan spread
Loan spreads typically represent the difference in yield between
an instrument and a benchmark security or reference rate. Loan
spreads typically reflect credit quality, the level of comparable
assets such as gilts and other factors, and form part of the yield
used in a discounted cash flow calculation.
The ESHLA portfolio primarily consists of long-dated fixed rate
loans extended to counterparties in the UK Education, Social
Housing and Local Authority sectors. The loans are categorised as
Level 3 in the fair value hierarchy due to their illiquid nature
and the significance of unobservable loan spreads to the valuation.
Valuation uncertainty arises from the long-dated nature of the
portfolio, the lack of secondary market in the loans and the lack
of observable loan spreads. The majority of ESHLA loans are to
borrowers in heavily regulated sectors that are considered
extremely low credit risk, and have a history of near zero defaults
since inception. While the overall loan spread range is from 32bps
to 477bps (2019: 31bps to 624bps), the vast majority of spreads are
concentrated towards the bottom end of this range, with 98% of the
loan notional being valued with spreads less than 200bps
consistently for both years.
In general, a significant increase in loan spreads in isolation
will result in a fair value decrease for a loan.
Sensitivity analysis of valuations using unobservable inputs
-------------------------------------------------------------------------------------------------------------
2020 2019
Favourable Unfavourable Favourable Unfavourable
changes changes changes changes
Income Income Income Income
statement Equity statement Equity statement Equity statement Equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Interest rate derivatives 82 - (123) - 44 - (127) -
Foreign exchange derivatives 6 - (11) - 5 - (7) -
Credit derivatives 55 - (44) - 73 - (47) -
Equity derivatives 174 - (179) - 114 - (119) -
Commodity derivatives 2 - (2) - - - - -
Corporate debt 16 - (14) - 11 - (16) -
Non asset backed loans 104 3 (190) (3) 125 8 (228) (8)
Equity cash products 158 - (141) - 123 - (175) -
Private equity investments 15 - (15) - 16 - (25) -
Other(a) 21 - (21) - 1 - (1) -
Total 633 3 (740) (3) 512 8 (745) (8)
Note
a Other includes commercial real estate loans, funds and fund-linked
products, issued debt, government sponsored debt and investment
property.
The effect of stressing unobservable inputs to a range of
reasonably possible alternatives, alongside considering the impact
of using alternative models, would be to increase fair values by up
to GBP636m (2019: GBP520m) or to decrease fair values by up to
GBP743m (2019: GBP753m) with substantially all the potential effect
impacting profit and loss rather than reserves.
Fair value adjustments
Key balance sheet valuation adjustments are quantified
below:
2020 2019
GBPm GBPm
Exit price adjustments derived from market bid-offer spreads (483) (420)
Uncollateralised derivative funding (115) (57)
Derivative credit valuation adjustments (268) (135)
Derivative debit valuation adjustments 113 155
Exit price adjustments derived from market bid-offer spreads
Barclays Bank Group uses mid-market pricing where it is a market
maker and has the ability to transact at, or better than, mid price
(which is the case for certain equity, bond and vanilla derivative
markets). For other financial assets and liabilities, bid-offer
adjustments are recorded to reflect the exit level for the expected
close out strategy. The methodology for determining the bid-offer
adjustment for a derivative portfolio involves calculating the net
risk exposure by offsetting long and short positions by strike and
term in accordance with the risk management and hedging
strategy.
Bid-offer levels are generally derived from market quotes such
as broker data. Less liquid instruments may not have a directly
observable bid-offer level. In such instances, an exit price
adjustment may be derived from an observable bid-offer level for a
comparable liquid instrument, or determined by calibrating to
derivative prices, or by scenario or historical analysis.
Exit price adjustments derived from market bid-offer spreads
have increased by GBP63m to GBP483m as a result of movements in
market bid offer spreads.
Discounting approaches for derivative instruments
Collateralised
In line with market practice, the methodology for discounting
collateralised derivatives takes into account the nature and
currency of the collateral that can be posted within the relevant
credit support annex (CSA). The CSA aware discounting approach
recognises the 'cheapest to deliver' option that reflects the
ability of the party posting collateral to change the currency of
the collateral.
Uncollateralised
A fair value adjustment of GBP115m is applied to account for the
impact of incorporating the cost of funding into the valuation of
uncollateralised and partially collateralised derivative portfolios
and collateralised derivatives where the terms of the agreement do
not allow the rehypothecation of collateral received. This
adjustment is referred to as the Funding Fair Value Adjustment
(FFVA). FFVA has increased by GBP58m to GBP115m as a result of
moves in input funding spreads and an update to methodology.
FFVA incorporates a scaling factor which is an estimate of the
extent to which the cost of funding is incorporated into observed
traded levels. On calibrating the scaling factor, it is with the
assumption that Credit Valuation Adjustments (CVA) and Debit
Valuation Adjustments (DVA) are retained as valuation components
incorporated into such levels. The effect of incorporating this
scaling factor at 31 December 2020 was to reduce FFVA by GBP115m
(2019: GBP170m).
Derivative credit and debit valuation adjustments
CVA and DVA are incorporated into derivative valuations to
reflect the impact on fair value of counterparty credit risk and
Barclays Bank Group's own credit quality respectively. These
adjustments are calculated for uncollateralised and partially
collateralised derivatives across all asset classes. CVA and DVA
are calculated using estimates of exposure at default, probability
of default and recovery rates, at a counterparty level.
Counterparties include (but are not limited to) corporates,
sovereigns and sovereign agencies and supranationals.
Exposure at default is generally estimated through the
simulation of underlying risk factors through approximating with a
more vanilla structure, or by using current or scenario-based mark
to market as an estimate of future exposure.
Probability of default and recovery rate information is
generally sourced from the CDS markets. Where this information is
not available, or considered unreliable, alternative approaches are
taken based on mapping internal counterparty ratings onto
historical or market-based default and recovery information. In
particular, this applies to sovereign related names where the
effect of using the recovery assumptions implied in CDS levels
would imply a GBP32m (2019: GBP36m) increase in CVA.
CVA increased by GBP133m to GBP268m as a result of an increased
uncollateralised and partially collateralised derivative asset and
widening input counterparty credit spreads. DVA decreased by GBP42m
to GBP113m, as a result of an update to methodology partially
offset by widening input own credit spreads.
Correlation between counterparty credit and underlying
derivative risk factors, termed 'wrong-way,' or 'right-way' risk,
is not systematically
incorporated into the CVA calculation but is adjusted where the
underlying exposure is directly related to the counterparty.
Barclays continues to monitor market practices and activity to
ensure the approach to uncollateralised derivative valuation
remains appropriate.
Portfolio exemptions
Barclays Bank Group uses the portfolio exemption in IFRS 13 Fair
Value Measurement to measure the fair value of groups of financial
assets and liabilities. Instruments are measured using the price
that would be received to sell a net long position (i.e. an asset)
for a particular risk exposure or to transfer a net short position
(i.e. a liability) for a particular risk exposure in an orderly
transaction between market participants at the balance sheet date
under current market conditions. Accordingly, Barclays Bank Group
measures the fair value of the group of financial assets and
liabilities consistently with how market participants would price
the net risk exposure at the measurement date.
Unrecognised gains as a result of the use of valuation models
using unobservable inputs
The amount that has yet to be recognised in income that relates
to the difference between the transaction price (the fair value at
initial recognition) and the amount that would have arisen had
valuation models using unobservable inputs been used on initial
recognition, less amounts subsequently recognised, is GBP103m
(2019: GBP100m) for financial instruments measured at fair value
and GBP30m (2019: GBP31m) for financial instruments carried at
amortised cost. The increase in financial instruments measured at
fair value of GBP3m (2019: GBP27m decrease) was driven by additions
of GBP26m (2019: GBP40m) and GBP23m (2019: GBP67m) of amortisation
and releases. The decrease of GBP1m (2019: GBPnil) in financial
instruments carried at amortised cost was driven by GBP2m (2019:
GBP2m) of amortisation and releases offset by additions of GBP1m
(2019: GBP2m).
Third party credit enhancements
Structured and brokered certificates of deposit issued by
Barclays Bank Group are insured up to $250,000 per depositor by the
Federal Deposit Insurance Corporation (FDIC) in the US. The FDIC is
funded by premiums that Barclays Bank Group and other banks pay for
deposit insurance coverage. The carrying value of these issued
certificates of deposit that are designated under the IFRS 9 fair
value option includes this third party credit enhancement. The
on-balance sheet value of these brokered certificates of deposit
amounted to GBP1,494m (2019: GBP3,218m).
Comparison of carrying amounts and fair values
The following tables summarises the fair value of financial
assets and liabilities measured at amortised cost on Barclays Bank
Group's and Barclays Bank PLC's balance sheet:
Barclays Bank
Group 2020 2019
Carrying Fair Level Level Level Carrying Fair Level Level Level
amount value 1 2 3 amount value 1 2 3
As at 31
December GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Financial
assets
Loans and
advances
at amortised
cost 134,267 134,537 8,824 65,267 60,446 141,636 141,251 6,827 69,289 63,133
Reverse
repurchase
agreements
and
other similar
secured
lending 8,981 8,981 - 8,981 - 1,731 1,731 - 1,731 -
Financial
liabilities
Deposits at
amortised
cost (244,696) (244,738) (165,909) (78,769) (60) (213,881) (213,897) (135,398) (78,494) (5)
Repurchase
agreements
and other
similar
secured
borrowing (10,443) (10,443) - (10,443) - (2,032) (2,032) - (2,032) -
Debt
securities
in issue (29,423) (29,486) - (27,630) (1,856) (33,536) (33,529) - (31,652) (1,877)
Subordinated
liabilities (32,005) (33,356) - (33,356) - (33,425) (34,861) - (34,861) -
Barclays Bank
PLC 2020 2019
Carrying Fair Level Level Level Carrying Fair Level Level Level
amount value 1 2 3 amount value 1 2 3
As at 31
December GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Financial
assets
Loans and
advances
at amortised
cost 191,538 190,811 8,832 146,142 35,837 161,663 161,007 6,827 124,665 29,515
Reverse
repurchase
agreements
and
other similar
secured
lending 11,535 11,535 - 11,535 - 4,939 4,939 - 4,939 -
Financial
liabilities
Deposits at
amortised
cost (272,190) (272,189) (139,051) (133,078) (60) (240,631) (240,630) (111,940) (128,685) (5)
Repurchase
agreements
and other
similar
secured
borrowing (27,722) (27,720) - (27,720) - (9,185) (9,185) - (9,185) -
Debt
securities
in issue (17,221) (17,272) - (17,272) - (19,883) (19,899) - (19,899) -
Subordinated
liabilities (31,852) (33,205) - (33,205) - (33,205) (34,616) - (34,616) -
The fair value is an estimate of the price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement
date. As a wide range of valuation techniques are available, it may
not be appropriate to directly compare this fair value information
to independent market sources or other financial institutions.
Different valuation methodologies and assumptions can have a
significant impact on fair values which are based on unobservable
inputs.
Financial assets
The carrying value of financial assets held at amortised cost
(including loans and advances to banks and customers, and other
lending such as reverse repurchase agreements and cash collateral
on securities borrowed) is determined in accordance with the
relevant accounting policy in Note 18.
Loans and advances at amortised cost
The fair value of loans and advances, for the purpose of this
disclosure, is derived from discounting expected cash flows in a
way that reflects the current market price for lending to issuers
of similar credit quality. Where market data or credit information
on the underlying borrowers is unavailable, a number of
proxy/extrapolation techniques are employed to determine the
appropriate discount rates.
Reverse repurchase agreements and other similar secured
lending
The fair value of reverse repurchase agreements approximates
carrying amount as these balances are generally short dated and
fully collateralised.
Financial liabilities
The carrying value of financial liabilities held at amortised
cost (including customer accounts, other deposits, repurchase
agreements and cash collateral on securities lent, debt securities
in issue and subordinated liabilities) is determined in accordance
with the accounting policy in Note 1.
Deposits at amortised cost
In many cases, the fair value disclosed approximates carrying
value because the instruments are short term in nature or have
interest rates that reprice frequently, such as customer accounts
and other deposits and short-term debt securities.
The fair value for deposits with longer-term maturities, mainly
time deposits, are estimated using discounted cash flows applying
either market rates or current rates for deposits of similar
remaining maturities. Consequently the fair value discount is
minimal.
Repurchase agreements and other similar secured borrowing
The fair value of repurchase agreements approximates carrying
amounts as these balances are generally short dated.
Debt securities in issue
Fair values of other debt securities in issue are based on
quoted prices where available, or where the instruments are short
dated, carrying amount approximates fair value.
Subordinated liabilities
Fair values for dated and undated convertible and
non-convertible loan capital are based on quoted market rates for
the issuer concerned or issuers with similar terms and
conditions.
23 Provisions
Accounting for provisions
The Barclays Bank Group applies IAS 37 Provisions, Contingent
Liabilities and Contingent Assets in accounting for non-financial
liabilities.
Provisions are recognised for present obligations arising as
consequences of past events where it is more likely than not that a
transfer of economic benefit will be necessary to settle the
obligation, which can be reliably estimated. Provision is made for
the anticipated cost of restructuring, including redundancy costs,
when an obligation exists; for example, when the Barclays Bank
Group has a detailed formal plan for restructuring a business and
has raised valid expectations in those affected by the
restructuring by announcing its main features or starting to
implement the plan.
Critical accounting estimates and judgements
The financial reporting of provisions involves a significant
degree of judgement and is complex. Identifying whether a present
obligation exists and estimating the probability, timing, nature
and quantum of the outflows that may arise from past events
requires judgements to be made based on the specific facts and
circumstances relating to individual events and often requires
specialist professional advice. When matters are at an early stage,
accounting judgements and estimates can be difficult because of the
high degree of uncertainty involved. Management continues to
monitor matters as they develop to re-evaluate on an ongoing basis
whether provisions should be recognised, however there can remain a
wide range of possible outcomes and uncertainties, particularly in
relation to legal, competition and regulatory matters, and as a
result it is often not practicable to make meaningful estimates
even when matters are at a more advanced stage.
The complexity of such matters often requires the input of
specialist professional advice in making assessments to produce
estimates. Customer redress and legal, competition and regulatory
matters are areas where a higher degree of professional judgement
is required. The amount that is recognised as a provision can also
be very sensitive to the assumptions made in calculating it. This
gives rise to a large range of potential outcomes which require
judgement in determining an appropriate provision level. See below
for information on payment protection redress and Note 25 for more
detail of legal, competition and regulatory matters.
Undrawn
contractually
committed Legal,
facilities competition
Onerous Redundancy and guarantees Customer and regulatory Sundry
contracts and restructuring provided(a) redress matters provisions Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Barclays Bank Group
As at 1 January 2020 20 63 252 71 374 171 951
Additions 3 66 575 29 63 57 793
Amounts utilised (4) (54) - (16) (162) (53) (289)
Unused amounts
reversed (13) (26) (28) (10) (45) (46) (168)
Exchange and other
movements - (5) (30) (30) (8) (6) (79)
As at 31 December 2020 6 44 769 44 222 123 1,208
Undrawn
contractually
committed Legal,
facilities competition
Onerous Redundancy and guarantees Customer and regulatory Sundry
contracts and restructuring provided(a) redress matters provisions Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Barclays Bank PLC
As at 1 January 2020 4 23 214 48 228 113 630
Additions 1 26 496 28 41 50 642
Amounts utilised (1) (22) - (12) (27) (51) (113)
Unused amounts
reversed (2) (9) (27) (10) (42) (44) (134)
Exchange and other
movements - (2) (29) (10) - - (41)
As at 31 December 2020 2 16 654 44 200 68 984
Note
a Undrawn contractually committed facilities and guarantees provisions
are accounted for under IFRS 9.
Provisions expected to be recovered or settled within no more
than 12 months after 31 December 2020 for Barclays Bank Group were
GBP787m (2019: GBP739m) and for Barclays Bank PLC were GBP609m
(2019: GBP491).
Onerous contracts
Onerous contract provisions comprise an estimate of the costs
involved with fulfilling the terms and conditions of contracts net
of any expected benefits to be received.
Redundancy and restructuring
These provisions comprise the estimated cost of restructuring,
including redundancy costs where an obligation exists. Additions
made during the year relate to formal restructuring plans and have
either been utilised, or reversed, where total costs are now
expected to be lower than the original provision amount.
Undrawn contractually committed facilities and guarantees
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. For further
information, refer to Credit Risk section for loan commitments and
financial guarantees on pages 68 and 70.
Customer redress
Customer redress provisions comprise the estimated cost of
making redress payments to customers, clients and counterparties
for losses or damages associated with inappropriate judgement in
the execution of the Barclays Bank Group's business activities.
There are no significant individual customer redress provisions at
31 December 2020.
Legal, competition and regulatory matters
The Barclays Bank Group is engaged in various legal proceedings,
both in the UK and a number of other overseas jurisdictions,
including the US. For further information in relation to legal
proceedings and discussion of the associated uncertainties, please
refer to Note 25.
Sundry provisions
This category includes provisions that do not fit into any of
the other categories, such as fraud losses and dilapidation
provisions.
24 Contingent liabilities and commitments
Accounting for contingent liabilities
Contingent liabilities are possible obligations whose existence
will be confirmed only by uncertain future events, and present
obligations where the transfer of economic resources is uncertain
or cannot be reliably measured. Contingent liabilities are not
recognised on the balance sheet but are disclosed unless the
likelihood of an outflow of economic resources is remote.
The following table summarises the nominal principal amount of
contingent liabilities and commitments which are not recorded
on-balance sheet:
Barclays Bank
Group
2020 2019
GBPm GBPm
------------------------------------------------------- ------- -------
Guarantees and letters of credit pledged as collateral
security 15,138 17,006
Performance guarantees, acceptances and endorsements 5,794 6,771
Total contingent liabilities 20,932 23,777
Of which: Financial guarantees carried at fair value 229 43
Documentary credits and other short-term trade related
transactions 1,086 1,291
Standby facilities, credit lines and other commitments 263,936 268,736
Total commitments 265,022 270,027
Of which: Loan commitments carried at fair value 9,248 17,660
Barclays Bank
PLC
2020 2019
GBPm GBPm
------------------------------------------------------- -------
Guarantees and letters of credit pledged as collateral
security 24,038 21,818
Performance guarantees, acceptances and endorsements 4,520 5,525
Total contingent liabilities 28,558 27,343
Of which: Financial guarantees carried at fair value 229 43
Documentary credits and other short-term trade related
transactions 1,029 1,216
Standby facilities, credit lines and other commitments 182,733 189,634
Total commitments 183,762 190,850
Of which: Loan commitments carried at fair value 8,733 17,023
Expected credit losses held against contingent liabilities and
commitments equal GBP769m (2019: GBP252m) for Barclays Bank Group
and GBP654m (2019: GBP214m) for Barclays Bank PLC and are reported
in Note 23.
Further details on contingent liabilities relating to legal and
competition and regulatory matters can be found in Note 25.
25 Legal, competition and regulatory matters
Barclays Bank Group faces legal, competition and regulatory
challenges, many of which are beyond our control. The extent of the
impact of these matters cannot always be predicted but may
materially impact our operations, financial results, condition and
prospects. Matters arising from a set of similar circumstances can
give rise to either a contingent liability or a provision, or both,
depending on the relevant facts and circumstances.
The recognition of provisions in relation to such matters
involves critical accounting estimates and judgments in accordance
with the relevant accounting policies as described in Note 23,
Provisions. We have not disclosed an estimate of the potential
financial impact or effect on the Barclays Bank Group of contingent
liabilities where it is not currently practicable to do so. Various
matters detailed in this note seek damages of an unspecified
amount. While certain matters specify the damages claimed, such
claimed amounts do not necessarily reflect the Barclays Bank
Group's potential financial exposure in respect of those
matters.
Investigations into c ertain advisory services a greements and
related civil action
FCA proceedings
In 2008, Barclays Bank PLC and Qatar Holdings LLC entered into
two advisory service agreements (the Agreements). The Financial
Conduct Authority (FCA) conducted an investigation into whether the
Agreements may have related to Barclays PLC's capital raisings in
June and November 2008 (the Capital Raisings) and therefore should
have been disclosed in the announcements or public documents
relating to the Capital Raisings. In 2013, the FCA issued warning
notices (the Notices) finding that Barclays PLC and Barclays Bank
PLC acted recklessly and in breach of certain disclosure-related
listing rules, and that Barclays PLC was also in breach of Listing
Principle 3. The financial penalty provided in the Notices is
GBP50m. Barclays PLC and Barclays Bank PLC continue to contest the
findings. Following the conclusion of the Serious Fraud Office
(SFO) proceedings against certain former Barclays executives
resulting in their acquittals, the FCA proceedings, which were
stayed, have resumed. All charges brought by the SFO against
Barclays PLC and Barclays Bank PLC in relation to the Agreements
were dismissed in 2018.
Civil action
PCP Capital Partners LLP and PCP International Finance Limited
(PCP) are seeking damages of up to approximately GBP819m from
Barclays Bank PLC for fraudulent misrepresentation and deceit,
arising from alleged statements made by Barclays Bank PLC to PCP in
relation to the terms on which securities were to be issued to
potential investors, allegedly including PCP, in the November 2008
capital raising. The trial took place in 2020 and the High Court
has indicated that judgment is imminent. The outcome of the
judgment, and any financial impact on the Barclays Bank Group, is
unknown. Barclays Bank PLC is defending the claim.
Investigations into LIBOR and other b enchmarks and related
civil actions
Regulators and law enforcement agencies, including certain
competition authorities, from a number of governments have
conducted investigations relating to Barclays Bank PLC's
involvement in allegedly manipulating certain financial benchmarks,
such as LIBOR. The SFO closed its investigation with no action to
be taken against the Barclays Group. Various individuals and
corporates in a range of jurisdictions have threatened or brought
civil actions against the Barclays Group and other banks in
relation to the alleged manipulation of LIBOR and/or other
benchmarks.
USD LIBOR civil actions
The majority of the USD LIBOR cases, which have been filed in
various US jurisdictions, have been consolidated for pre-trial
purposes in the US District Court in the Southern District of New
York (SDNY). The complaints are substantially similar and allege,
among other things, that Barclays PLC, Barclays Bank PLC, Barclays
Capital Inc. (BCI) and other financial institutions individually
and collectively violated provisions of the US Sherman Antitrust
Act (Antitrust Act), the US Commodity Exchange Act (CEA), the US
Racketeer Influenced and Corrupt Organizations Act (RICO), the
Securities Exchange Act of 1934 and various state laws by
manipulating USD LIBOR rates.
Putative class actions and individual actions seek unspecified
damages with the exception of three lawsuits, in which the
plaintiffs are seeking a combined total of approximately $900m in
actual damages and additional punitive damages against all
defendants, including Barclays Bank PLC. Some of the lawsuits also
seek trebling of damages under the Antitrust Act and RICO. Barclays
Bank PLC has previously settled certain claims. Two class action
settlements where Barclays Bank PLC has respectively paid $7.1m and
$20m have received final court approval.
Sterling LIBOR civil actions
In 2016, two putative class actions filed in the SDNY against
Barclays Bank PLC, BCI and other Sterling LIBOR panel banks
alleging, among other things, that the defendants manipulated the
Sterling LIBOR rate in violation of the Antitrust Act, CEA and
RICO, were consolidated. The defendants' motion to dismiss the
claims was granted in 2018. The plaintiffs have appealed the
dismissal.
Japanese Yen LIBOR civil actions
In 2012, a putative class action was filed in the SDNY against
Barclays Bank PLC and other Japanese Yen LIBOR panel banks by a
lead plaintiff involved in exchange-traded derivatives and members
of the Japanese Bankers Association's Euroyen Tokyo Interbank
Offered Rate (Euroyen TIBOR) panel. The complaint alleges, among
other things, manipulation of the Euroyen TIBOR and Yen LIBOR rates
and breaches of the CEA and the Antitrust Act. In 2014, the court
dismissed the plaintiff's antitrust claims, and, in 2020, the court
dismissed the plaintiff's remaining CEA claims. The plaintiff has
appealed the lower court's dismissal of such claims.
In 2015, a second putative class action, making similar
allegations to the above class action, was filed in the SDNY
against Barclays PLC, Barclays Bank PLC and BCI. The plaintiffs
filed an amended complaint in 2020, and the defendants have filed a
motion to dismiss.
SIBOR/SOR civil action
In 2016, a putative class action was filed in the SDNY against
Barclays PLC, Barclays Bank PLC, BCI and other defendants, alleging
manipulation of the Singapore Interbank Offered Rate (SIBOR) and
Singapore Swap Offer Rate (SOR). In 2018, the court dismissed all
claims against Barclays PLC, Barclays Bank PLC and BCI. The
plaintiffs have appealed the dismissal.
ICE LIBOR civil actions
In 2019, several putative class actions were filed in the SDNY
against Barclays PLC, Barclays Bank PLC, BCI, other financial
institution defendants and Intercontinental Exchange Inc. and
certain of its affiliates (ICE), asserting antitrust claims that
defendants manipulated USD LIBOR through defendants' submissions to
ICE. These actions have been consolidated. The defendants' motion
to dismiss was granted in 2020. The plaintiffs have appealed the
dismissal. In August 2020, an ICE LIBOR-related action was filed in
the US District Court for the Northern District of California on
behalf of individual borrowers and consumers of loans and credit
cards with variable interest rates linked to USD ICE LIBOR.
Non-US benchmarks civil actions
Legal proceedings (which include the claims referred to below in
'Local authority civil actions concerning LIBOR') have been brought
or threatened against Barclays Bank PLC (and, in certain cases,
Barclays Bank UK PLC) in the UK in connection with alleged
manipulation of LIBOR, EURIBOR and other benchmarks. Proceedings
have also been brought in a number of other jurisdictions in Europe
and Israel. Additional proceedings in other jurisdictions may be
brought in the future.
F oreign E xchange i nvestigations and related civil actions
In 2015, the Barclays Group reached settlements totalling
approximately $2.38bn with various US federal and state authorities
and the FCA in relation to investigations into certain sales and
trading practices in the Foreign Exchange market. Under the related
plea agreement with the US Department of Justice (DoJ), which
received final court approval in January 2017, the Barclays Group
agreed to a term of probation of three years, which expired in
January 2020. The Barclays Group also continues to provide relevant
information to certain authorities.
The European Commission is one of a number of authorities still
conducting an investigation into certain trading practices in
Foreign Exchange markets. The European Commission announced two
settlements in May 2019 and the Barclays Group paid penalties
totalling approximately EUR210m. In June 2019, the Swiss
Competition Commission announced two settlements and the Barclays
Group paid penalties totalling approximately CHF 27m. The financial
impact of the ongoing matters is not expected to be material to the
Barclays Bank Group's operating results, cash flows or financial
position.
Various individuals and corporates in a range of jurisdictions
have threatened or brought civil actions against the Barclays Group
and other banks in relation to alleged manipulation of Foreign
Exchange markets.
FX opt out civil action
In 2018, Barclays Bank PLC and BCI settled a consolidated action
filed in the SDNY, alleging manipulation of Foreign Exchange
markets (Consolidated FX Action), for a total amount of $384m. Also
in 2018, a group of plaintiffs who opted out of the Consolidated FX
Action filed a complaint in the SDNY against Barclays PLC, Barclays
Bank PLC, BCI and other defendants. Some of the plaintiff's claims
were dismissed in 2020.
Retail basis civil action
In 2015, a putative class action was filed against several
international banks, including Barclays PLC and BCI, on behalf of a
proposed class of individuals who exchanged currencies on a retail
basis at bank branches (Retail Basis Claims). The SDNY has ruled
that the Retail Basis Claims are not covered by the settlement
agreement in the Consolidated FX Action. The Court subsequently
dismissed all Retail Basis Claims against the Barclays Group and
all other defendants. The plaintiffs have filed an amended
complaint.
State law FX civil action
In 2017, the SDNY dismissed consolidated putative class actions
brought under federal and various state laws on behalf of proposed
classes of (i) stockholders of Exchange Traded Funds and others who
purportedly were indirect investors in FX instruments, and (ii)
investors who traded FX instruments through FX dealers or brokers
not alleged to have manipulated Foreign Exchange Rates. Barclays
Bank PLC and BCI have settled the claim, which has received final
court approval. The financial impact of the settlement is not
material to the Barclays Bank Group's operating results, cash flows
or financial position.
Non-US FX civil actions
Legal proceedings have been brought or are threatened against
Barclays PLC, Barclays Bank PLC, BCI and Barclays Execution
Services Limited (BX) in connection with alleged manipulation of
Foreign Exchange in the UK, a number of other jurisdictions in
Europe, Israel and Australia and additional proceedings may be
brought in the future.
These include two purported class actions filed against Barclays
PLC, Barclays Bank PLC, BX, BCI and other financial institutions in
the UK Competition Appeal Tribunal in 2019 following the
settlements with the European Commission described above. Also in
2019, a separate claim was filed in the UK in the High Court of
Justice by various banks and asset management firms against
Barclays Bank PLC and other financial institutions alleging
breaches of European and UK competition laws related to FX
trading.
Metals investigations and related civil actions
Barclays Bank PLC previously provided information to the DoJ,
the US Commodity Futures Trading Commission and other authorities
in connection with investigations into metals and metals-based
financial instruments.
A number of US civil complaints, each on behalf of a proposed
class of plaintiffs, have been consolidated and transferred to the
SDNY. The complaints allege that Barclays Bank PLC and other
members of The London Gold Market Fixing Ltd. manipulated the
prices of gold and gold derivative contracts in violation of the
Antitrust Act and other federal laws. This consolidated putative
class action remains pending. A separate US civil complaint by a
proposed class of plaintiffs against a number of banks, including
Barclays Bank PLC, BCI and BX, alleging manipulation of the price
of silver in violation of the CEA, the Antitrust Act and state
antitrust and consumer protection laws, has been dismissed as
against the Barclays entities. The plaintiffs have the option to
seek the court's permission to appeal.
Civil actions have also been filed in Canadian courts against
Barclays PLC, Barclays Bank PLC, Barclays Capital Canada Inc. and
BCI on behalf of proposed classes of plaintiffs alleging
manipulation of gold and silver prices.
US residential mortgage related civil actions
There are various pending civil actions relating to US
Residential Mortgage-Backed Securities (RMBS), including four
actions arising from unresolved repurchase requests submitted by
Trustees for certain RMBS, alleging breaches of various loan-level
representations and warranties (R&Ws) made by Barclays Bank PLC
and/or a subsidiary acquired in 2007 (the Acquired Subsidiary). The
unresolved repurchase requests had an original principal balance of
approximately $2.1bn. The Trustees have also alleged that the
relevant R&Ws may have been breached with respect to a greater
(but unspecified) amount of loans than previously stated in the
unresolved repurchase requests.
These repurchase actions are ongoing. In one repurchase action,
the New York Court of Appeals held that claims related to certain
R&Ws are time-barred. Barclays Bank PLC has reached a
settlement to resolve two of the repurchase actions, which is
subject to final court approval. The financial impact of the
settlement is not expected to be material to the Barclays Bank
Group's operating results, cash flows or financial position. The
remaining two repurchase actions are pending.
In 2020, a civil litigation claim was filed in the New Mexico
First Judicial District Court by the State of New Mexico against
seven banks, including BCI, on behalf of two New Mexico state
pension funds and the New Mexico State Investment Council relating
to legacy RMBS purchases. As to BCI, the complaint alleges that the
funds purchased approximately $22m in RMBS underwritten by BCI. The
plaintiffs have asserted claims under New Mexico state law, which
provides for the ability to claim treble damages and civil
penalties.
Government and agency securities civil actions and related
matters
Certain governmental authorities have conducted investigations
into activities relating to the trading of certain government and
agency securities in various markets. The Barclays Group provided
information in cooperation with such investigations. In January
2021, the Mexican Competition Authority concluded its investigation
into activities relating to the trading of Mexican government bonds
and granted Barclays Bank Mexico S.A. immunity from fines.
Civil actions have also been filed on the basis of similar
allegations, as described below.
Treasury auction securities civil actions
Consolidated putative class action complaints filed in US
federal court against Barclays Bank PLC, BCI and other financial
institutions under the Antitrust Act and state common law allege
that the defendants (i) conspired to manipulate the US Treasury
securities market and/or (ii) conspired to prevent the creation of
certain platforms by boycotting or threatening to boycott such
trading platforms. The defendants have filed a motion to
dismiss.
In addition, certain plaintiffs have filed a related, direct
action against BCI and certain other financial institutions,
alleging that defendants conspired to fix and manipulate the US
Treasury securities market in violation of the Antitrust Act, the
CEA and state common law.
Supranational, Sovereign and Agency bonds civil actions
Civil antitrust actions have been filed in the SDNY and Federal
Court of Canada in Toronto against Barclays Bank PLC, BCI, BX,
Barclays Capital Securities Limited and, with respect to the civil
action filed in Canada only, Barclays Capital Canada, Inc. and
other financial institutions alleging that the defendants conspired
to fix prices and restrain competition in the market for US
dollar-denominated Supranational, Sovereign and Agency bonds.
In one of the actions filed in the SDNY, the court granted the
defendants' motion to dismiss the plaintiffs' complaint, which the
plaintiffs have appealed. The plaintiffs have voluntarily dismissed
the other SDNY action.
Variable Rate Demand Obligations civil actions
Civil actions have been filed against Barclays Bank PLC and BCI
and other financial institutions alleging the defendants conspired
or colluded to artificially inflate interest rates set for Variable
Rate Demand Obligations (VRDOs). VRDOs are municipal bonds with
interest rates that reset on a periodic basis, most commonly
weekly. Two actions in state court have been filed by private
plaintiffs on behalf of the states of Illinois and California. Two
putative class action complaints, which have been consolidated,
have been filed in the SDNY. In the SDNY class action, certain of
the plaintiff's claims were dismissed in November 2020.
Government bond civil actions
In a putative class action filed in the SDNY in 2019, plaintiffs
alleged that BCI and certain other bond dealers conspired to fix
the prices of US government sponsored entity bonds in violation of
US antitrust law. BCI agreed to a settlement of $87m, which
received final court approval in 2020. Separately, various entities
in Louisiana, including the Louisiana Attorney General and the City
of Baton Rouge, have commenced litigation against Barclays Bank PLC
and other financial institutions making similar allegations as the
SDNY class action plaintiffs.
In 2018, a separate putative class action against various
financial institutions including Barclays PLC, Barclays Bank PLC,
BCI, Barclays Bank Mexico, S.A., and certain other subsidiaries of
the Barclays Bank Group was consolidated in the SDNY. The
plaintiffs asserted antitrust and state law claims arising out of
an alleged conspiracy to fix the prices of Mexican Government
bonds. Barclays PLC has settled the claim for $5.7m, which is
subject to final court approval.
Odd-lot corporate bonds antitrust class action
In 2020, BCI, together with other financial institutions, were
named as defendants in a putative class action. The complaint
alleges a conspiracy to boycott developing electronic trading
platforms for odd-lots and price fixing. Plaintiffs demand
unspecified money damages. The defendants have filed a motion to
dismiss.
Interest rate swap and credit default swap US civil actions
Barclays PLC, Barclays Bank PLC and BCI, together with other
financial institutions that act as market makers for interest rate
swaps (IRS) are named as defendants in several antitrust class
actions which were consolidated in the SDNY in 2016. The complaints
allege the defendants conspired to prevent the development of
exchanges for IRS and demand unspecified money damages.
In 2018, trueEX LLC filed an antitrust class action in the SDNY
against a number of financial institutions including Barclays PLC,
Barclays Bank PLC and BCI based on similar allegations with respect
to trueEX LLC's development of an IRS platform. In 2017, Tera Group
Inc. filed a separate civil antitrust action in the SDNY claiming
that certain conduct alleged in the IRS cases also caused the
plaintiff to suffer harm with respect to the Credit Default Swaps
market. In 2018 and 2019, respectively, the court dismissed certain
claims in both cases for unjust enrichment and tortious
interference but denied motions to dismiss the federal and state
antitrust claims, which remain pending.
BDC Finance L.L.C.
In 2008, BDC Finance L.L.C. (BDC) filed a complaint in the NY
Supreme Court, demanding damages of $298m, alleging that Barclays
Bank PLC had breached a contract in connection with a portfolio of
total return swaps governed by an ISDA Master Agreement
(collectively, the Agreement). Following a trial, the court ruled
in 2018 that Barclays Bank PLC was not a defaulting party, which
was affirmed on appeal. In October 2020, the trial court granted
Barclays Bank PLC's motion for summary judgment on its
counterclaims against BDC. BDC has appealed .
In 2011, BDC's investment advisor, BDCM Fund Adviser, L.L.C. and
its parent company, Black Diamond Capital Holdings, L.L.C. also
sued Barclays Bank PLC and BCI in Connecticut State Court for
unspecified damages allegedly resulting from Barclays Bank PLC's
conduct relating to the Agreement, asserting claims for violation
of the Connecticut Unfair Trade Practices Act and tortious
interference with business and prospective business relations. This
case is currently stayed.
Civil a ctions in r espect of the US Anti-Terrorism Act
There are a number of civil actions, on behalf of more than
4,000 plaintiffs, filed in US federal courts in the US District
Court in the Eastern District of New York (EDNY) and SDNY against
Barclays Bank PLC and a number of other banks. The complaints
generally allege that Barclays Bank PLC and those banks engaged in
a conspiracy to facilitate US dollar-denominated transactions for
the Government of Iran and various Iranian banks, which in turn
funded acts of terrorism that injured or killed plaintiffs or
plaintiffs' family members. The plaintiffs seek to recover damages
for pain, suffering and mental anguish under the provisions of the
US Anti-Terrorism Act, which allow for the trebling of any proven
damages.
The court granted the defendants' motion to dismiss three
actions in the EDNY. Plaintiffs have appealed in one action. The
court also granted the defendants' motion to dismiss another action
in the SDNY. The remaining actions are stayed pending decisions in
these cases.
Shareholder derivative action
A purported Barclays shareholder filed a putative derivative
action in New York state court against BCI and a number of current
and former members of the Board of Directors of Barclays PLC and
senior executives or employees of the Barclays Group. The
shareholder filed the claim on behalf of Barclays PLC, alleging
that the individual defendants harmed the company through breaches
of their duties under the Companies Act 2006. The plaintiff seeks
damages for the losses that Barclays PLC allegedly suffered.
Investigation into collections and recoveries relating to
unsecured lending
Since 2018, the FCA has been investigating whether the Barclays
Group implemented effective systems and controls with respect to
collections and recoveries and whether it paid due consideration to
the interests of customers in default and arrears. In December
2020, Barclays Bank UK PLC and Barclays Bank PLC settled with the
FCA and agreed to pay a total penalty of GBP26m.
Investigation into UK cards' affordability
The FCA is investigating certain aspects of the affordability
assessment processes used by Barclays Bank UK PLC and Barclays Bank
PLC for credit card applications made to Barclays' UK credit card
business. Barclays is providing information in cooperation with the
investigation.
HM Revenue & Customs (HMRC) assessments concerning UK Value
Added Tax
In 2018, HMRC issued notices that have the effect of removing
certain overseas subsidiaries that have operations in the UK from
Barclays' UK VAT group, in which group supplies between members are
generally free from VAT. The notices have retrospective effect and
correspond to assessments of GBP181m (inclusive of interest), of
which Barclays would expect to attribute an amount of approximately
GBP128m to Barclays Bank UK PLC and GBP53m to Barclays Bank PLC.
HMRC's decision has been appealed to the First Tier Tribunal (Tax
Chamber).
Local authority civil actions concerning LIBOR
Following settlement by Barclays Bank PLC of various
governmental investigations concerning certain benchmark interest
rate submissions referred to above in 'Investigations into LIBOR
and other benchmarks and related civil actions', in the UK, certain
local authorities have brought claims against Barclays Bank PLC and
Barclays Bank UK PLC asserting that they entered into loans in
reliance on misrepresentations made by Barclays Bank PLC in respect
of its conduct in relation to LIBOR. Barclays Bank PLC and Barclays
Bank UK PLC have applied to strike out the claims.
General
The Barclays Bank Group is engaged in various other legal,
competition and regulatory matters in the UK, the US and a number
of other overseas jurisdictions. It is subject to legal proceedings
brought by and against the Barclays Bank Group which arise in the
ordinary course of business from time to time, including (but not
limited to) disputes in relation to contracts, securities, debt
collection, consumer credit, fraud, trusts, client assets,
competition, data management and protection, intellectual property,
money laundering, financial crime, employment, environmental and
other statutory and common law issues.
The Barclays Bank Group is also subject to enquiries and
examinations, requests for information, audits, investigations and
legal and other proceedings by regulators, governmental and other
public bodies in connection with (but not limited to) consumer
protection measures, compliance with legislation and regulation,
wholesale trading activity and other areas of banking and business
activities in which the Barclays Bank Group is or has been engaged.
The Barclays Bank Group is cooperating with the relevant
authorities and keeping all relevant agencies briefed as
appropriate in relation to these matters and others described in
this note on an ongoing basis.
At the present time, Barclays Bank PLC does not expect the
ultimate resolution of any of these other matters to have a
material adverse effect on its financial position. However, in
light of the uncertainties involved in such matters and the matters
specifically described in this note, there can be no assurance that
the outcome of a particular matter or matters (including formerly
active matters or those matters arising after the date of this
note) will not be material to Barclays Bank PLC's results,
operations or cash flow for a particular period, depending on,
among other things, the amount of the loss resulting from the
matter(s) and the amount of profit otherwise reported for the
reporting period.
26 Subordinated liabilities
Accounting for subordinated liabilities
Subordinated liabilities are measured at amortised cost using
the effective interest method under IFRS 9, unless they are
irrevocably designated at fair value through profit or loss at
initial recognition because such designation eliminates or
significantly reduces an accounting mismatch. Refer to Note 15 for
details about accounting for liabilities designated at fair value
through profit or loss.
Barclays Bank Group
2020 2019
GBPm GBPm
As at 1 January 33,425 35,327
Issuances 3,856 6,785
Redemptions (5,954) (7,804)
Other 678 (883)
As at 31 December 32,005 33,425
Barclays Bank PLC
2020 2019
GBPm GBPm
As at 1 January 33,205 35,085
Issuances 3,700 6,627
Redemptions (5,582) (7,632)
Other 529 (875)
As at 31 December 31,852 33,205
Issuances of GBP3,856m comprise GBP3,700m intra-group loans from
Barclays PLC and GBP156m USD Floating Rate Notes issued externally
by a Barclays Bank PLC subsidiary.
Redemptions of GBP5,954m comprise GBP3,456m intra-group loans
from Barclays PLC and GBP2,498m externally issued notes comprising
a GBP1,126m partial redemption of USD 7.625% Contingent Capital
Notes and the redemption of GBP842m USD 5.14% Lower Tier 2 Notes
and GBP158m 7.125% Undated Subordinated Notes. Barclays Bank PLC
subsidiaries redeemed GBP342m USD Floating Rate Notes and GBP30m
USD Fixed Rate Notes.
Other movements predominantly include fair value hedge
adjustments, partially offset by amortisation and foreign exchange
movements.
Subordinated liabilities include accrued interest and comprise
undated and dated subordinated liabilities as follows:
Barclays Bank Group
2020 2019
GBPm GBPm
Undated subordinated liabilities 905 1,073
Dated subordinated liabilities 31,100 32,352
Total subordinated liabilities 32,005 33,425
Barclays Bank PLC
2020 2019
GBPm GBPm
Undated subordinated liabilities 906 1,211
Dated subordinated liabilities 30,946 31,994
Total subordinated liabilities 31,852 33,205
None of the Barclays Bank Group's subordinated liabilities are
secured.
Undated subordinated liabilities (a) Barclays Bank Group
2020 2019
Initial call date GBPm GBPm
Barclays Bank PLC externally issued subordinated liabilities
Tier One Notes (TONs)
6% Callable Perpetual Core Tier One Notes 2032 17 16
6.86% Callable Perpetual Core Tier One Notes (USD 179m) 2032 205 203
Reserve Capital Instruments (RCIs)
5.3304% Step-up Callable Perpetual Reserve Capital Instruments 2036 56 53
Undated Notes
7.125% Undated Subordinated Notes 2020 - 165
6.125% Undated Subordinated Notes 2027 43 42
Junior Undated Floating Rate Notes (USD 38m) Any interest payment date 28 29
Undated Floating Rate Primary Capital Notes Series 1 (USD 167m) Any interest payment date 89 92
Undated Floating Rate Primary Capital Notes Series 2 (USD 295m) Any interest payment date 186 191
Undated Floating Rate Primary Capital Notes Series 3 Any interest payment date 21 21
Bonds
9.25% Perpetual Subordinated Bonds (ex-Woolwich Plc) 2021 78 81
9% Permanent Interest Bearing Capital Bonds(GBP 40m) At any time 44 44
Loans
5.03% Reverse Dual Currency Undated Subordinated Loan (JPY 8,000m) 2028 57 55
5% Reverse Dual Currency Undated Subordinated Loan (JPY 12,000m) 2028 83 81
Total undated subordinated liabilities 905 1,073
Undated subordinated liabilities (a) Barclays Bank PLC
2020 2019
Initial call date GBPm GBPm
Barclays Bank PLC externally issued subordinated liabilities
Tier One Notes (TONs)
6% Callable Perpetual Core Tier One Notes 2032 17 16
6.86% Callable Perpetual Core Tier One Notes (USD 179m) 2032 205 203
Reserve Capital Instruments (RCIs)
5.3304% Step-up Callable Perpetual Reserve Capital Instruments 2036 56 53
Undated Notes
7.125% Undated Subordinated Notes 2020 - 165
6.125% Undated Subordinated Notes 2027 44 42
Junior Undated Floating Rate Notes (USD 38m) Any interest payment date 28 100
Undated Floating Rate Primary Capital Notes Series 1 (USD 167m) Any interest payment date 89 126
Undated Floating Rate Primary Capital Notes Series 2 (USD 295m) Any interest payment date 186 224
Undated Floating Rate Primary Capital Notes Series 3 Any interest payment date 21 21
Bonds
9.25% Perpetual Subordinated Bonds (ex-Woolwich Plc) 2021 78 81
9% Permanent Interest Bearing Capital Bonds At any time 44 44
Loans
5.03% Reverse Dual Currency Undated Subordinated Loan (JPY 8,000m) 2028 57 55
5% Reverse Dual Currency Undated Subordinated Loan (JPY 12,000m) 2028 83 81
Total undated subordinated liabilities 906 1,211
Note
a Instrument values are disclosed to the nearest million
Undated subordinated liabilities
Undated subordinated liabilities are issued by Barclays Bank PLC
and its subsidiaries for the development and expansion of their
business and to strengthen their capital bases. The principal terms
of the undated subordinated liabilities are described below:
Subordination
All undated subordinated liabilities rank behind the claims
against the bank of depositors and other unsecured unsubordinated
creditors and holders of dated subordinated liabilities in the
following order: Junior Undated Floating Rate Notes; other issues
of Undated Notes, Bonds and Loans ranking pari passu with each
other; followed by TONs and RCIs ranking pari passu with each
other.
Interest
All undated subordinated liabilities bear a fixed rate of
interest until the initial call date, with the exception of the 9%
Bonds which are fixed for the life of the issue, and the Junior and
Series 1, Series 2 and Series 3 Undated Notes which are floating
rate at rates fixed periodically in advance based on the related
market rate.
After the initial call date, in the event that they are not
redeemed, the 6.125% Undated Notes, and the 9.25% Bonds will bear
interest at rates fixed periodically in advance for five-year
periods based on market rates. All other undated subordinated
liabilities will bear interest at rates fixed periodically in
advance based on market rates.
Payment of interest
Apart from the Junior Undated Floating Rate Notes, Barclays Bank
PLC is not obliged to make a payment of interest on its Undated
Notes, Bonds and Loans excluding the 9.25% Bonds if, in the
preceding six months, a dividend has not been declared or paid on
any class of shares of Barclays PLC or, in certain cases, any class
of preference shares of Barclays Bank PLC. Barclays Bank PLC is not
obliged to make a payment of interest on its 9.25% Perpetual
Subordinated Bonds if, in the immediately preceding 12 month
interest period, a dividend has not been paid on any class of its
share capital. Interest not paid becomes payable in each case if
such a dividend is subsequently paid or in certain other
circumstances. During the year, During the year, Barclays Bank PLC
paid interest on each of its Undated Notes, Bonds and Loans.
No payment of principal or any interest may be made unless
Barclays Bank PLC satisfies a specified solvency test.
Barclays Bank PLC may elect to defer any payment of interest on
the RCIs. Any such deferred payment of interest must be paid on the
earlier of: (i) the date of redemption of the RCIs, and (ii) the
coupon payment date falling on or nearest to the tenth anniversary
of the date of deferral of such payment. Whilst such deferral is
continuing, (i) neither Barclays Bank PLC nor Barclays PLC may
declare or pay a dividend, subject to certain exceptions, on any of
its ordinary shares or preference shares and (ii) certain
restrictions on the redemption, purchase or reduction of their
respective share capital and certain other securities also
apply.
Barclays Bank PLC may elect to defer any payment of interest on
the TONs if it determines that it is, or such payment would result
in it being, in non-compliance with capital adequacy requirements
and policies of the PRA. Any such deferred payment of interest will
only be payable on a redemption of the TONs. Until such time as
Barclays Bank PLC next makes a payment of interest on the TONs, (i)
neither Barclays Bank PLC nor Barclays PLC may declare or pay a
dividend, subject to certain exceptions, on any of their respective
ordinary shares or preference shares, or make payments of interest
in respect of Barclays Bank PLC's Reserve Capital Instruments and
(ii) certain restrictions on the redemption, purchase or reduction
of their respective share capital and certain other securities also
apply.
Repayment
All undated subordinated liabilities are repayable, at the
option of Barclays Bank PLC generally in whole at the initial call
date and on any subsequent coupon or interest payment date or in
the case of the 6.125% Undated Notes and the 9.25% Bonds on any
fifth anniversary after the initial call date. In addition, each
issue of undated subordinated liabilities is repayable, at the
option of Barclays Bank PLC, in whole for certain tax reasons,
either at any time, or on an interest payment date. There are no
events of default except non-payment of principal or mandatory
interest. Any repayments require the prior consent of the PRA.
Other
All issues of undated subordinated liabilities are
non-convertible.
Dated subordinated liabilities(a) Barclays Bank Group
2020 2019
Initial call date Maturity date GBPm GBPm
Barclays Bank PLC externally issued subordinated
liabilities
5.14% Lower Tier 2 Notes (USD 1,094m) 2020 - 832
6% Fixed Rate Subordinated Notes (EUR 1,500m) 2021 1,427 1,375
9.5% Subordinated Bonds (ex-Woolwich Plc) 2021 221 239
Subordinated Floating Rate Notes (EUR 100m) 2021 90 85
10% Fixed Rate Subordinated Notes 2021 2,108 2,157
10.179% Fixed Rate Subordinated Notes (USD 1,521m) 2021 1,101 1,123
Subordinated Floating Rate Notes (EUR 50m) 2022 45 43
6.625% Fixed Rate Subordinated Notes (EUR 1,000m) 2022 982 957
7.625% Contingent Capital Notes (USD 3,000m) 2022 1,189 2,453
Subordinated Floating Rate Notes (EUR 50m) 2023 45 42
5.75% Fixed Rate Subordinated Notes 2026 351 350
5.4% Reverse Dual Currency Subordinated Loan (JPY 15,000m) 2027 108 105
6.33% Subordinated Notes 2032 64 62
Subordinated Floating Rate Notes (EUR 68m) 2040 61 58
External issuances by other subsidiaries 2025 146 358
Barclays Bank PLC notes issued intra-group to Barclays
PLC
2% Fixed Rate Subordinated Callable Notes (EUR 1,500m) 2023 2028 1,388 1,309
3.75% Fixed Rate Resetting Subordinated Callable Notes
(SGD 200m) 2025 2030 119 116
5.20% Fixed Rate Subordinated Notes (USD 1,367m) 2026 1,069 1,036
4.836% Fixed Rate Subordinated Callable Notes (USD
1,200m) 2027 2028 973 944
5.088% Fixed-to-Floating Rate Subordinated Callable Notes
(USD 1,300m) 2029 2030 1,049 994
5.25% Fixed Rate Subordinated Notes (USD 827m) 2045 660 651
4.95% Fixed Rate Subordinated Notes (USD 1,250m) 2047 960 849
Floating Rate Subordinated Notes (USD 456m) 2047 337 350
Barclays Bank PLC intra-group loans from Barclays PLC
Various Fixed Rate Subordinated Loans 9,563 7,548
Various Subordinated Floating Rate Loans 489 1,094
Various Fixed Rate Subordinated Callable Loans 5,838 5,225
Various Subordinated Floating Rate Callable Loans 500 1,997
Zero Coupon Callable Loans 2050 221 -
Total dated subordinated liabilities 31,100 32,352
Notes
a Instrument values are disclosed to the nearest million
Dated subordinated liabilities(a) Barclays Bank PLC
2020 2019
Initial
call Maturity
date date GBPm GBPm
Barclays Bank PLC externally issued subordinated
liabilities
5.14% Lower Tier 2 Notes (USD 1,094m) 2020 - 832
6% Fixed Rate Subordinated Notes (EUR
1,500m) 2021 1,427 1,375
9.5% Subordinated Bonds (ex-Woolwich
Plc) 2021 221 239
Subordinated Floating Rate Notes (EUR
100m) 2021 90 85
10% Fixed Rate Subordinated Notes 2021 2,108 2,157
10.179% Fixed Rate Subordinated Notes
(USD 1,521m) 2021 1,101 1,123
Subordinated Floating Rate Notes (EUR
50m) 2022 45 43
6.625% Fixed Rate Subordinated Notes
(EUR 1,000m) 2022 982 957
7.625% Contingent Capital Notes (USD
3,000m) 2022 1,187 2,453
Subordinated Floating Rate Notes (EUR
50m) 2023 45 42
5.75% Fixed Rate Subordinated Notes 2026 351 350
5.4% Reverse Dual Currency Subordinated
Loan (JPY 15,000m) 2027 108 105
6.33% Subordinated Notes(GBP 50m) 2032 64 62
Subordinated Floating Rate Notes (EUR
68m) 2040 61 58
Barclays Bank PLC notes issued intra-group
to Barclays PLC
2% Fixed Rate Subordinated Callable Notes
(EUR 1,500m) 2023 2028 1,388 1,309
3.75% Fixed Rate Resetting Subordinated
Callable Notes (SGD 200m) 2025 2030 119 116
5.20% Fixed Rate Subordinated Notes (USD
1,367m) 2026 1,069 1,036
4.836% Fixed Rate Subordinated Callable
Notes (USD 1,200m) 2027 2028 973 944
5.088% Fixed-to-Floating Rate Subordinated
Callable Notes (USD 1,300m) 2029 2030 1,049 994
5.25% Fixed Rate Subordinated Notes (USD
827m) 2045 660 651
4.95% Fixed Rate Subordinated Notes (USD
1,250m) 2047 960 849
Floating Rate Subordinated Notes (USD
456m) 2047 337 350
Barclays Bank PLC intra-group loans from
Barclays PLC
Various Fixed Rate Subordinated Loans 9,563 7,548
Various Subordinated Floating Rate Loans 489 1,094
Various Fixed Rate Subordinated Callable
Loans 5,834 5,225
Various Subordinated Floating Rate Callable
Loans 500 1,997
Zero Coupon Callable Notes 2050 221 -
Total dated subordinated liabilities 30,946 31,994
Notes
a Instrument values are disclosed to the nearest million
Dated subordinated liabilities
Dated subordinated liabilities are issued by Barclays Bank PLC
and its subsidiaries for the development and expansion of their
business and to strengthen their respective capital bases. The
principal terms of the dated subordinated liabilities are described
below:
Currency and maturity
In addition to the individual dated subordinated liabilities
listed in the table, the GBP16,607m (2019: GBP15,864m) of
intra-group loans is made up of various fixed, fixed to floating,
floating rate and zero coupon loans from Barclays PLC with notional
amounts denominated in USD 14,409m, EUR 5,024m, GBP 1,250m, JPY
233,600m, AUD 1,715m, SEK 500m, NOK 970m and CHF 175m, with
maturities ranging from 2021to 2050. Certain intra-group loans have
a call date one year prior to their maturity.
Subordination
All dated subordinated liabilities, both externally issued and
issued intra-group to Barclays PLC, rank behind the claims against
the bank of depositors and other unsecured unsubordinated creditors
but before the claims of the undated subordinated liabilities and
the holders of Barclays Bank PLC equity. The Barclays Bank PLC
intra-group loans from Barclays PLC rank pari passu amongst
themselves but ahead of the Barclays Bank PLC notes issued
intra-group to Barclays PLC and the Barclays Bank PLC externally
issued subordinated liabilities. The external dated subordinated
liabilities issued by subsidiaries are similarly subordinated as
the external subordinated liabilities issued by Barclays Bank
PLC.
Interest
Interest on floating rate notes and loans is set by reference to
market rates at the time of issuance and fixed periodically in
advance, based on the related market rates.
Interest on fixed rate notes and loans is set by reference to
market rates at the time of issuance and fixed until maturity.
Interest on fixed rate callable notes and loans is set by
reference to market rates at the time of issuance and fixed until
the call date. After the call date, in the event that the notes or
loans are not redeemed, the interest rate will be re-set to either
a fixed or floating rate until maturity based on market rates.
No interest is paid on zero coupon notes.
Repayment
Those subordinated liabilities with a call date are repayable at
the option of the issuer, on conditions governing the respective
debt obligations, some in whole or in part, and some only in whole.
The remaining dated subordinated liabilities outstanding at 31
December 2020 are redeemable only on maturity, subject in
particular cases, to provisions allowing an early redemption in the
event of certain changes in tax law or, to certain changes in
legislation or regulations.
Any repayments prior to maturity may require, in the case of
Barclays Bank PLC, the prior consent of the PRA or BoE, or in the
case of the overseas issues, the consent of the local regulator for
that jurisdiction and of the PRA in certain circumstances.
There are no committed facilities in existence at the balance
sheet date which permit the refinancing of debt beyond the date of
maturity.
Other
The 7.625% Contingent Capital Notes will be automatically
transferred from investors to Barclays PLC (or another entity
within the Barclays Group) for nil consideration in the event the
Barclays PLC transitional CET1 ratio falls below 7.0%.
27 Ordinary shares, preference shares and other equity
Called up share capital, allotted
and fully paid and other equity instruments
Ordinary Preference Total share Other equity
share capital share capital capital instruments
GBPm GBPm GBPm GBPm
As at 1 January 2020 2,342 6 2,348 8,323
AT1 securities issuance - - - 1,134
AT1 securities redemption - - - (836)
As at 31 December 2020 2,342 6 2,348 8,621
As at 1 January 2019 2,342 6 2,348 7,595
AT1 securities issuance - - - 2,302
AT1 securities redemption - - - (1,574)
As at 31 December 2019 2,342 6 2,348 8,323
Capital reorganisation
The share premium account of Barclays Bank PLC was cancelled in
2018, following the confirmation of the High Court of Justice in
England and Wales. The balance of GBP12,092m was credited to
retained earnings.
Ordinary shares
The issued ordinary share capital of Barclays Bank PLC, as at 31
December 2020, comprised 2,342m (2019: 2,342m) ordinary shares of
GBP1 each.
Preference shares
The issued preference share capital of Barclays Bank PLC, as at
31 December 2020, comprised 1,000 Sterling Preference Shares of
GBP1 each (2019: 1,000); 31,856 Euro Preference Shares of EUR100
each (2019: 31,856); and 58,133 US Dollar Preference Shares of $100
each (2019: 58,133).
Ordinary share capital and preference share capital constitutes
100% (2019: 100%) of total share capital issued.
Sterling GBP1 Preference Shares
1,000 Sterling cumulative callable preference shares of GBP1
each (the GBP1 Preference Shares) were issued on 31 December 2004
at nil premium.
The GBP1 Preference Shares entitle the holders thereof to
receive Sterling cumulative cash dividends out of distributable
profits of Barclays Bank PLC, semi-annually at a rate reset
semi-annually equal to the Sterling interbank offered rate for
six-month sterling deposits.
Barclays Bank PLC shall be obliged to pay such dividends if: (1)
it has profits available for the purpose of distribution under the
Companies Act 2006 as at each dividend payment date; and (2) it is
solvent on the relevant dividend payment date, provided that a
capital regulations condition is satisfied on such dividend payment
date. The dividends shall not be due and payable on the relevant
dividend payment date except to the extent that Barclays Bank PLC
could make such payment and still be solvent immediately
thereafter. Barclays Bank PLC shall be considered solvent on any
date if: (1) it is able to pay its debts to senior creditors as
they fall due; and (2) its auditors have reported within the
previous six months that its assets exceed its liabilities. If
Barclays Bank PLC shall not pay, or shall pay only in part, a
dividend for a period of seven days or more after the due date for
payment, the holders of the GBP1 Preference Shares may institute
proceedings for the winding-up of Barclays Bank PLC. No remedy
against Barclays Bank PLC shall be available to the holder of any
GBP1 Preference Shares for the recovery of amounts owing in respect
of GBP1 Preference Shares other than the institution of proceedings
for the winding-up of Barclays Bank PLC and/or proving in such
winding-up.
On a winding-up or other return of capital (other than a
redemption or purchase by Barclays Bank PLC of any of its issued
shares, or a reduction of share capital, permitted by the Articles
of Barclays Bank PLC and under applicable law), the assets of
Barclays Bank PLC available to shareholders shall be applied in
priority to any payment to the holders of ordinary shares and any
other class of shares in the capital of Barclays Bank PLC then in
issue ranking junior to the GBP1 Preference Shares on such a return
of capital and pari passu on such a return of capital with the
holders of any other class of shares in the capital of Barclays
Bank PLC then in issue (other than any class of shares in the
capital of Barclays Bank PLC then in issue ranking in priority to
the GBP1 Preference Shares on a winding-up or other such return of
capital), in payment to the holders of the GBP1 Preference Shares
of a sum equal to the aggregate of: (1) an amount equal to the
dividends accrued thereon for the then current dividend period (and
any accumulated arrears thereof) to the date of the commencement of
the winding-up or other such return of capital; and (2) an amount
equal to GBP1 per GBP1 Preference Share. After payment of the full
amount of the liquidating distributions to which they are entitled,
the holders of the GBP1 Preference Shares will have no right or
claim to any of the remaining assets of Barclays Bank PLC and will
not be entitled to any further participation in such return of
capital.
The GBP1 Preference Shares are redeemable at the option of
Barclays Bank PLC, in whole but not in part only, subject to the
Companies Act 2006 and its Articles. Holders of the GBP1 Preference
Shares are not entitled to receive notice of, or to attend, or vote
at, any general meeting of Barclays Bank PLC.
Euro Preference Shares
140,000 Euro non-cumulative callable preference shares of EUR100
each (the Euro Preference Shares) were issued on 15 March 2005 for
a consideration of EUR1,383.3m (GBP966.7m), of which the nominal
value was EUR14m and the balance was share premium. The Euro
Preference Shares entitled the holders thereof to receive Euro
non-cumulative cash dividends out of distributable profits of
Barclays Bank PLC, annually at a fixed rate of 4.75% per annum on
the amount of EUR10,000 per preference share until 15 March 2020,
and since 15 March 2020 quarterly at a rate reset quarterly equal
to 0.71% per annum above the Euro interbank offered rate for
three-month Euro deposits. The board of directors of Barclays Bank
PLC may resolve, in its absolute discretion, not to pay in full, or
at all, the dividend on the Euro Preference Shares in respect of a
particular dividend period.
The Euro Preference Shares are redeemable at the option of
Barclays Bank PLC, in whole but not in part only, on each dividend
payment date at EUR10,000 per share plus any dividends accrued for
the then current dividend period to the date fixed for
redemption.
US Dollar Preference Shares
100,000 US Dollar non-cumulative callable preference shares of
$100 each (the US Dollar Preference Shares), represented by 100,000
American Depositary Shares, Series 1, were issued on 8 June 2005
for a consideration of $995.4m (GBP548.1m), of which the nominal
value was $10m and the balance was share premium. The US Dollar
Preference Shares entitle the holders thereof to receive US Dollar
non-cumulative cash dividends out of distributable profits of
Barclays Bank PLC, semi-annually at a fixed rate of 6.278% per
annum on the amount of $10,000 per preference share until 15
December 2034, and thereafter quarterly at a rate reset quarterly
equal to 1.55% per annum above the London interbank offered rate
for three-month US Dollar deposits. The board of directors of
Barclays Bank PLC may resolve, for any reason and in its absolute
discretion, not to declare or pay in full or in part any dividends
on the US Dollar Preference Shares in respect of a particular
dividend period.
The US Dollar Preference Shares are redeemable at the option of
Barclays Bank PLC, in whole but not in part only, on 15 December
2034, and on each dividend payment date thereafter at $10,000 per
share plus any dividends accrued for the then current dividend
period to the date fixed for redemption.
No redemption or purchase of any Euro Preference Shares and US
Dollar Preference Shares (together, the Preference Shares) may be
made by Barclays Bank PLC without the prior consent of the PRA and
any such redemption will be subject to the Companies Act 2006 and
the Articles of Barclays Bank PLC.
On a winding-up of Barclays Bank PLC or other return of capital
(other than a redemption or purchase of shares of Barclays Bank
PLC, or a reduction of share capital), a holder of Preference
Shares will rank in the application of assets of Barclays Bank PLC
available to shareholders: (1) junior to the holder of any shares
of Barclays Bank PLC in issue ranking in priority to the Preference
Shares; (2) equally in all respects with holders of other
preference shares and any other shares of Barclays Bank PLC in
issue ranking pari passu with the Preference Shares; and (3) in
priority to the holders of ordinary shares and any other shares of
Barclays Bank PLC in issue ranking junior to the Preference
Shares.
The holders of the GBP13m 6% Callable Perpetual Core Tier One
Notes and the $179m 6.86% Callable Perpetual Core Tier One Notes of
Barclays Bank PLC (together, the TONs) and the holders of the
GBP35m 5.3304% Step-up Callable Perpetual Reserve Capital
Instruments of Barclays Bank PLC (the RCIs) would, for the purposes
only of calculating the amounts payable in respect of such
securities on a winding-up of Barclays Bank PLC, subject to limited
exceptions and to the extent that the TONs and the RCIs are then in
issue, rank pari passu with the holders of the most senior class or
classes of preference shares then in issue in the capital of
Barclays Bank PLC. Accordingly, the holders of the preference
shares would rank equally with the holders of such TONs and RCIs on
such a winding-up of Barclays Bank PLC (unless one or more classes
of shares of Barclays Bank PLC ranking in priority to the
preference shares are in issue at the time of such winding-up, in
which event the holders of such TONs and RCIs would rank equally
with the holders of such shares and in priority to the holders of
the preference shares).
Subject to such ranking, in such event, holders of the
preference shares will be entitled to receive out of assets of
Barclays Bank PLC available for distributions to shareholders,
liquidating distributions in the amount of EUR10,000 per Euro
Preference Share and $10,000 per US Dollar Preference Share, plus,
in each case, an amount equal to the accrued dividend for the then
current dividend period to the date of the commencement of the
winding-up or other such return of capital.
If a dividend is not paid in full on any preference shares on
any dividend payment date, then a dividend restriction shall apply.
This dividend restriction will mean that neither Barclays Bank PLC
nor Barclays PLC may (a) declare or pay a dividend (other than
payment by Barclays PLC of a final dividend declared by its
shareholders prior to the relevant dividend payment date, or a
dividend paid by Barclays Bank PLC to Barclays PLC) on any of their
respective ordinary shares, other preference shares or other share
capital or (b) redeem, purchase, reduce or otherwise acquire any of
their respective share capital, other than shares of Barclays Bank
PLC held by Barclays PLC or a wholly owned subsidiary, until the
earlier of: (1) the date on which Barclays Bank PLC next declares
and pays in full a preference share dividend; and (2) the date on
or by which all the preference shares are redeemed in full or
purchased by Barclays Bank PLC.
Holders of the preference shares are not entitled to receive
notice of, or to attend, or vote at, any general meeting of
Barclays Bank PLC. Barclays Bank PLC is not permitted to create a
class of shares ranking as regards participation in the profits or
assets of Barclays Bank PLC in priority to the preference shares,
save with the sanction of a special resolution of a separate
general meeting of the holders of the preference shares (requiring
a majority of not less than three-fourths of the holders of the
preference shares voting at the separate general meeting) or with
the consent in writing of the holders of three-fourths of the
preference shares.
Except as described above, the holders of the preference shares
have no right to participate in the surplus assets of Barclays Bank
PLC.
Other equity instruments
Other equity instruments of GBP8,621m (2019: GBP8,323m) include
AT1 securities issued to Barclays PLC. Barclays PLC uses funds from
its own market issuance of AT1 securities to purchase AT1
securities from the Barclays Bank Group. The AT1 securities are
perpetual securities with no fixed maturity and are structured to
qualify as AT1 instruments under prevailing capital rules
applicable as at the relevant issue date.
In 2020, there was one issuance of AT1 instruments, in the form
of Fixed Rate Resetting Perpetual Subordinated Contingent
Convertible Securities (2019: three issuances) totalling GBP1,134m
(2019: GBP2,302m). There was also one redemption in 2020 (2019: two
redemptions) totalling GBP836m (2019: GBP1,574m).
AT1 equity instruments
2020 2019
Initial
call date GBPm GBPm
----------- ----- -----
AT1 equity instruments - Barclays Bank Group
8.0% Perpetual Subordinated Contingent Convertible
Securities (EUR 1,000m) 2020 - 836
7.875% Perpetual Subordinated Contingent Convertible
Securities 2022 1,000 1,000
7.875% Perpetual Subordinated Contingent Convertible
Securities (USD 1,500m) 2022 1,136 1,136
7.25% Perpetual Subordinated Contingent Convertible
Securities 2023 500 500
7.75% Perpetual Subordinated Contingent Convertible
Securities (USD 2,500m) 2023 1,925 1,925
5.875% Perpetual Subordinated Contingent Convertible
Securities 2024 623 623
8% Perpetual Subordinated Contingent Convertible
Securities (USD 2,000m) 2024 1,509 1,509
7.125% Perpetual Subordinated Contingent Convertible
Securities 2025 299 299
6.375% Perpetual Subordinated Contingent Convertible
Securities 2025 495 495
6.125% Perpetual Subordinated Contingent Convertible
Securities (USD 1,500m) 2025 1,134 -
Total AT1 equity instruments 8,621 8,323
28 Reserves
Currency translation reserve
The currency translation reserve represents the cumulative gains
and losses on the retranslation of the Barclays Bank Group net
investment in foreign operations, net of the effects of
hedging.
Fair value through other comprehensive income reserve
The fair value through other comprehensive income reserve
represents the changes in the fair value of fair value through
other comprehensive income investments since initial
recognition.
Cash flow hedging reserve
The cash flow hedging reserve represents the cumulative gains
and losses on effective cash flow hedging instruments that will be
recycled to the income statement when the hedged transactions
affect profit or loss.
Own credit r eserve
The own credit reserve reflects the cumulative own credit gains
and losses on financial liabilities at fair value. Amounts in the
own credit reserve are not recycled to profit or loss in future
periods.
Other reserves and other shareholders' equity
Other reserves relate to redeemed ordinary and preference shares
issued by the Barclays Bank Group.
Included in other shareholders' equity are capital notes which
bear interest at rates fixed periodically in advance, based on
London interbank rates. These notes are repayable at the option of
the Barclays Bank PLC, in whole on any interest payment date.
Barclays Bank PLC is not obliged to make a payment of interest on
its capital notes if, in the preceding six months, a dividend has
not been declared or paid on any class of shares of Barclays
PLC.
Barclays Bank Group
2020 2019
GBPm GBPm
Currency translation reserve 2,736 3,383
Fair value through other comprehensive income reserve 244 (139)
Cash flow hedging reserve 1,181 388
Own credit reserve (954) (373)
Other reserves and other shareholders' equity (24) (24)
Total 3,183 3,235
Barclays Bank PLC
2020 2019
GBPm GBPm
Currency translation reserve 140 659
Fair value through other comprehensive income reserve 248 (141)
Cash flow hedging reserve 1,191 403
Own credit reserve (875) (315)
Other reserves and other shareholders' equity 72 72
Total 776 678
31 Pensions and post-retirement benefits
Accounting for pensions and post-retirement benefits
The Barclays Bank Group operates a number of pension schemes and
post-employment benefit schemes.
Defined contribution schemes - the Barclays Bank Group
recognises contributions due in respect of the accounting period in
the income statement. Any contributions unpaid at the balance sheet
date are included as a liability.
Defined benefit schemes - the Barclays Bank Group recognises its
obligations to members of each scheme at the period end, less the
fair value of the scheme assets after applying the asset ceiling
test.
Each scheme's obligations are calculated using the projected
unit credit method. Scheme assets are stated at fair value as at
the period end.
Changes in pension scheme liabilities or assets (remeasurements)
that do not arise from regular pension cost, net interest on net
defined benefit liabilities or assets, past service costs,
settlements or contributions to the scheme, are recognised in other
comprehensive income. Remeasurements comprise experience
adjustments (differences between previous actuarial assumptions and
what has actually occurred), the effects of changes in actuarial
assumptions, return on scheme assets (excluding amounts included in
the interest on the assets) and any changes in the effect of the
asset ceiling restriction (excluding amounts included in the
interest on the restriction).
Post-employment benefit schemes - the cost of providing
healthcare benefits to retired employees is accrued as a liability
in the financial statements over the period that the employees
provide services to the Barclays Bank Group, using a methodology
similar to that for defined benefit pension schemes.
Pension schemes
UK Retirement Fund (UKRF)
The UKRF is the Barclays Bank Group's main scheme, representing
97% of the Barclays Bank Group's total retirement benefit
obligations. Barclays Bank PLC is the principal employer of the
UKRF. The UKRF was closed to new entrants on 1 October 2012, and
comprises 10 sections, the two most significant of which are:
-- Afterwork, which comprises a contributory cash balance defined
benefit element, and a voluntary defined contribution element.
The cash balance element is accrued each year and revalued until
Normal Retirement Age in line with the increase in Retail Price
Index (RPI) (up to a maximum of 5% p.a.). An increase of up to
2% a year may also be added at Barclays Bank PLC's discretion.
The costs of ill-health retirements and death in service benefits
for Afterwork members are borne by the UKRF. The main risks that
the Barclays Bank Group runs in relation to Afterwork are limited
although additional contributions are required if pre-retirement
investment returns are not sufficient to provide for the benefits.
-- The 1964 Pension Scheme. Most employees recruited before July 1997
built up benefits in this non-contributory defined benefit scheme
in respect of service up to 31 March 2010. Pensions were calculated
by reference to service and pensionable salary. From 1 April 2010,
members became eligible to accrue future service benefits in either
Afterwork or the Pension Investment Plan (PIP), a historic defined
contribution section which is now closed to future contributions.
The risks that the Barclays Bank Group runs in relation to the
1964 section are typical of final salary pension schemes, principally
that investment returns fall short of expectations, that inflation
exceeds expectations, and that retirees live longer than expected.
Barclays Pension Savings Plan (BPSP)
The BPSP is a defined contribution scheme providing benefits for
all new UK hires from 1 October 2012, BPSP is not subject to the
same investment return, inflation or life expectancy risks for the
Barclays Bank Group that defined benefit schemes are. Members'
benefits reflect contributions paid and the level of investment
returns achieved.
Other
Apart from the UKRF and the BPSP, the Barclays Bank Group
operates a number of smaller pension and long-term employee
benefits and post-retirement health care plans globally, the
largest of which are the US defined benefit schemes. Many of the
schemes are funded, with assets backing the obligations held in
separate legal vehicles such as trusts. Others are operated on an
unfunded basis. The benefits provided, the approach to funding, and
the legal basis of the schemes, reflect local environments.
Governance
The UKRF operates under trust law and is managed and
administered on behalf of the members in accordance with the terms
of the Trust Deed and Rules and all relevant legislation. The
Corporate Trustee is Barclays Pension Funds Trustees Limited, a
private limited company and a wholly owned subsidiary of Barclays
Bank PLC. The Trustee is the legal owner of the assets of the UKRF
which are held separately from the assets of the Barclays Bank
Group.
The Trustee Board comprises six Management Directors selected by
Barclays Bank PLC, of whom three are independent Directors with no
relationship with the Barclays Bank Group (and who are not members
of the UKRF), plus three Member Nominated Directors selected from
eligible active members of the UKRF, deferred members or pensioner
members who apply for the role.
The BPSP is a Group Personal Pension arrangement which operates
as a collection of personal pension plans. Each personal pension
plan is a direct contract between the employee and the BPSP
provider (Legal & General Assurance Society Limited), and is
regulated by the FCA.
Similar principles of pension governance apply to the Barclays
Bank Group's other pension schemes, depending on local
legislation.
Amounts recognised
The following tables include amounts recognised in the income
statement and an analysis of benefit obligations and scheme assets
for all Barclays Bank Group defined benefit schemes. The net
position is reconciled to the assets and liabilities recognised on
the balance sheet. The tables include funded and unfunded
post-retirement benefits.
Income statement charge
2020 2019
GBPm GBPm
------------------------ ---- ----
Current service cost 53 58
Net finance cost (40) (48)
Past service cost (4) -
Other movements - 1
------------------------ ---- ----
Total 9 11
------------------------ ---- ----
The Barclays Bank PLC is the principal employer of the UKRF and
hence Scheme Assets and Defined Benefit Obligations relating to the
UKRF are recognised within the Barclays Bank Group. Barclays Bank
UK Plc and Barclays Execution Services Limited are participating
employers in the UKRF and their share of the UKRF service cost is
borne by them. Of the GBP232m current service cost in the table on
the next page, GBP93m relates to Barclays Bank UK Plc and GBP86m
relates to Barclays Execution Services Limited. While the entire
current service cost is accounted for in the Barclays Bank Group on
balance sheet, the income statement charge is accounted for across
all the participating employers.
Balance sheet reconciliation 2020 2019
Barclays Bank Of which relates Barclays Bank Of which relates
Group Total to UKRF Group Total to UKRF
GBPm GBPm GBPm GBPm
Benefit obligation at beginning
of the year (30,298) (29,304) (28,237) (27,301)
Current service cost (232) (217) (226) (210)
Interest costs on scheme
liabilities (573) (549) (747) (718)
Past service cost 4 - - -
Remeasurement (loss)/gain
- financial (3,439) (3,358) (3,087) (2,964)
Remeasurement (loss)/gain
- demographic (281) (286) 223 214
Remeasurement (loss)/gain
- experience 243 237 277 266
Employee contributions (5) (1) (5) (1)
Benefits paid 1,406 1,370 1,459 1,410
Exchange and other movements 44 - 45 -
Benefit obligation at end
of the year (33,131) (32,108) (30,298) (29,304)
Fair value of scheme assets
at beginning of the year 32,093 31,362 29,722 29,036
Interest income on scheme
assets 613 595 795 774
Employer contribution 265 248 755 731
Settlements - - (2) -
Remeasurement - return
on plan assets greater
than discount rate 3,411 3,328 2,312 2,230
Employee contributions 5 1 5 1
Benefits paid (1,406) (1,370) (1,459) (1,410)
Exchange and other movements (268) (249) (35) -
Fair value of scheme assets
at the end of the year 34,713 33,915 32,093 31,362
Net surplus/(deficit) 1,582 1,807 1,795 2,058
Retirement benefit assets 1,814 1,807 2,108 2,058
Retirement benefit liabilities (232) - (313) -
Net retirement benefit
assets/(liabilities) 1,582 1,807 1,795 2,058
Balance sheet
reconciliation
2020 2019
Barclays Bank PLC Of which relates to Barclays Bank PLC Of which relates to
Total UKRF Total UKRF
GBPm GBPm GBPm GBPm
Benefit obligation at
beginning of the year (29,462) (29,304) (27,635) (27,301)
Current service cost (220) (217) (212) (210)
Interest costs on
scheme liabilities (552) (549) (721) (718)
Remeasurement
(loss)/gain -
financial (3,367) (3,358) (2,987) (2,964)
Remeasurement
(loss)/gain -
demographic (286) (286) 211 214
Remeasurement
(loss)/gain -
experience 240 237 275 266
Employee contributions (1) (1) (1) (1)
Benefits paid 1,373 1,370 1,427 1,410
Exchange and other
movements 5 - 181 -
Benefit obligation at
end of the year (32,270) (32,108) (29,462) (29,304)
Fair value of scheme
assets at beginning
of the year 31,420 31,362 29,259 29,036
Interest income on
scheme assets 596 595 774 774
Employer contribution 251 248 740 731
Remeasurement - return
on plan assets
greater than discount
rate 3,329 3,328 2,228 2,230
Employee contributions 1 1 1 1
Benefits paid (1,373) (1,370) (1,427) (1,410)
Exchange and other
movements (246) (249) (155) -
Fair value of scheme
assets at the end of
the year 33,978 33,915 31,420 31,362
Net surplus/(deficit) 1,708 1,807 1,958 2,058
Retirement benefit
assets 1,812 1,807 2,062 2,058
Retirement benefit
liabilities (104) - (104) -
Net retirement benefit
assets/(liabilities) 1,708 1,807 1,958 2,058
Included within the Barclays Bank Group's benefit obligation was
GBP866m (2019: GBP760m) relating to overseas pensions and GBP 157 m
(2019: GBP166m) relating to other post-employment benefits.
As at 31 December 2020, the UKRF's scheme assets were in surplus
versus IAS 19 obligations by GBP1,807m (2019: GBP2,058m). The
movement for the UKRF was driven by a net decrease in the discount
rate and changes to pension increase assumptions, offset partially
by higher than assumed asset returns. During the year the UKRF
invested in GBP250m of non-transferable listed senior gilt-backed
notes for GBP750m, partially financed by GBP500m deficit
contributions (the "Heron 2" transaction). The net impact of
GBP250m on plan assets is shown as an outflow under "Exchange and
other movements"; further details of Heron 2 can be found on page
245.
The weighted average duration of the benefit payments reflected
in the defined benefit obligation for the UKRF is 17 years. The
UKRF expected benefits are projected to be paid out for in excess
of 50 years, although 25% of the total benefits are expected to be
paid in the next 10 years; 30% in years 11 to 20 and 25% in years
20 to 30. The remainder of the benefits are expected to be paid
beyond 30 years.
Of the GBP1,370m (2019: GBP1,410m) UKRF benefits paid out,
GBP520m (2019: GBP580m) related to transfers out of the fund.
Where a scheme's assets exceed its obligation, an asset is
recognised to the extent that it does not exceed the present value
of future contribution holidays or refunds of contributions (the
asset ceiling). In the case of the UKRF the asset ceiling is not
applied as, in certain specified circumstances such as wind-up, the
Barclays Bank Group expects to be able to recover any surplus.
Similarly, a liability in respect of future minimum funding
requirements is not recognised. The UKRF Trustee does not have a
substantive right to augment benefits, nor does it have the right
to wind up the plan except in the dissolution of Barclays Bank PLC
or termination of contributions by Barclays Bank PLC. The
application of the asset ceiling to other plans and recognition of
additional liabilities in respect of future minimum funding
requirements are considered on an individual plan basis.
Critical accounting estimates and judgements
Actuarial valuation of the schemes' obligation is dependent upon
a series of assumptions. Below is a summary of the main financial
and demographic assumptions adopted for the UKRF.
Key UKRF financial assumptions 2020 2019
% p.a. % p.a.
Discount rate 1.29 1.92
Inflation rate (RPI) 2.99 3.02
The UKRF discount rate assumption for 2020 was based on a
standard Willis Towers Watson RATE Link model. The UKRF discount
rate assumption for 2019 was based on a variant of the standard
Willis Towers Watson RATE Link model that included all bonds rated
AA by at least one of the four major ratings agencies, and assumed
that forward rates after year 30 were flat. The change in discount
rate methodology as at 31 December 2020 led to a remeasurement gain
of GBP1.2bn. The RPI inflation assumption for 2020 was set by
reference to the Bank of England's implied inflation curve. The
inflation assumption incorporates a deduction of 20 basis points as
an allowance for an inflation risk premium. The methodology used to
derive the inflation assumptions is consistent with that used at
the prior year end.
The UKRF's post-retirement mortality assumptions are based on a
best estimate assumption derived from an analysis in 2019 of the
UKRF's own post-retirement mortality experience, and taking account
of recent evidence from published mortality surveys. An allowance
has been made for future mortality improvements based on the 2019
core projection model published by the Continuous Mortality
Investigation Bureau subject to a long-term trend of 1.5% per annum
in future improvements. The methodology used is consistent with the
prior year end, except that the 2018 core projection model was used
at 2019. The table below shows how the assumed life expectancy at
60, for members of the UKRF, has varied over the past three
years.
Assumed life expectancy 2020 2019 2018
Life expectancy at 60 for current pensioners (years)
- Males 27.2 27.1 27.7
- Females 29.4 29.3 29.4
Life expectancy at 60 for future pensioners currently aged 40 (years)
- Males 29.0 28.9 29.2
- Females 31.2 31.1 31.0
On 11 December 2020, the UKRF entered into a GBP5bn longevity
swap to hedge around a quarter of current pensioner liabilities
against unexpected increases in life expectancy. The swap will form
part of the UKRF's investment portfolio and provide income in the
event that pensions are paid out for longer than expected. The UKRF
Trustee established a Guernsey based captive insurer (Barclays UKRF
No.1 IC Limited) to act as an insurance intermediary between the
UKRF and swap provider. The swap is not included directly within
the balance sheet of Barclays Bank Group as it is an asset of the
UKRF. At 31 December 2020, the swap is valued at nil fair value as
it is considered to remain at fair market value for both parties
over the very limited period from 11 December 2020 to 31 December
2020.
Sensitivity analysis on actuarial assumptions
The sensitivity analysis has been calculated by valuing the UKRF
liabilities using the amended assumptions shown in the table below
and keeping the remaining assumptions the same as disclosed in the
table above, except in the case of the inflation sensitivity where
other assumptions that depend on assumed inflation have also been
amended correspondingly. The difference between the recalculated
liability figure and that stated in the balance sheet
reconciliation table above is the figure shown. The selection of
these movements to illustrate the sensitivity of the defined
benefit obligation to key assumptions should not be interpreted as
Barclays Bank Group expressing any specific view of the probability
of such movements happening.
Change in key assumptions
2020 2019
(Decrease)/Increase in UKRF defined benefit (Decrease)/Increase in UKRF defined benefit
obligation obligation
GBPbn GBPbn
Discount rate
0.50% p.a. increase (2.5) (2.3)
0.25% p.a. increase (1.3) (1.2)
0.25% p.a. decrease 1.4 1.2
0.50% p.a. decrease 2.9 2.6
Assumed RPI
0.50% p.a. increase 1.8 1.5
0.25% p.a. increase 0.9 0.8
0.25% p.a. decrease (0.9) (0.7)
0.50% p.a. decrease (1.8) (1.4)
Life expectancy at 60
One year increase 1.2 1.0
One year decrease (1.2) (1.0)
Assets
A long-term investment strategy has been set for the UKRF, with
its asset allocation comprising a mixture of equities, bonds,
property and other appropriate assets. This recognises that
different asset classes are likely to produce different long-term
returns and some asset classes may be more volatile than others.
The long-term investment strategy ensures, among other aims, that
investments are adequately diversified.
The UKRF also employs derivative instruments, where appropriate,
to achieve a desired exposure or return, or to match assets more
closely to liabilities. The value of assets shown reflects the
assets held by the schemes, with any derivative holdings reflected
on a fair value basis.
The value of the assets of the schemes and their percentage in
relation to total scheme assets were as follows:
Analysis of scheme
assets
Barclays Bank Group Total Of which relates to UKRF
% of total % of total
fair value of fair value of
scheme scheme
Quoted(a) Unquoted(a) Value assets Quoted(a) Unquoted(a) Value assets
GBPm GBPm GBPm % GBPm GBPm GBPm %
As at 31 December 2020
Equities 567 1,498 2,065 6.0 378 1,498 1,876 5.5
Private equities - 2,233 2,233 6.4 - 2,233 2,233 6.6
Bonds - fixed
government 4,205 110 4,315 12.4 3,932 110 4,042 11.9
Bonds - index-linked
government 10,706 1,014 11,720 33.8 10,697 1,014 11,711 34.5
Bonds - corporate and
other 7,439 1,678 9,117 26.3 7,214 1,678 8,892 26.2
Property 10 1,416 1,426 4.1 - 1,416 1,416 4.2
Infrastructure - 1,812 1,812 5.2 - 1,812 1,812 5.3
Cash and liquid assets 64 1,830 1,894 5.5 46 1,830 1,876 5.5
Mixed investment funds 9 - 9 - - - - -
Other 14 108 122 0.4 - 57 57 0.2
Fair value of scheme
assets 23,014 11,699 34,713 100.0 22,267 11,648 33,915 100.0
As at 31 December
2019(b)
Equities 942 1,568 2,510 7.8 768 1,568 2,336 7.4
Private equities - 2,083 2,083 6.5 - 2,083 2,083 6.6
Bonds - fixed
government 3,574 300 3,874 12.1 3,303 299 3,602 11.5
Bonds - index-linked
government 10,355 681 11,036 34.4 10,345 682 11,027 35.2
Bonds - corporate and
other 6,260 2,297 8,557 26.7 6,069 2,295 8,364 26.7
Property 11 1,633 1,644 5.1 - 1,633 1,633 5.2
Infrastructure - 1,558 1,558 4.9 - 1,558 1,558 5.0
Cash and liquid assets 596 170 766 2.4 576 169 745 2.4
Other - 65 65 0.2 - 14 14 -
Fair value of scheme
assets 21,738 10,355 32,093 100.0 21,061 10,301 31,362 100.0
Analysis of scheme
assets
Barclays Bank PLC Total Of which relates to UKRF
% of total % of total
fair value of fair value of
scheme scheme
Value assets Value assets
Quoted(a) Unquoted(a) GBPm % Quoted(a) Unquoted(a) GBPm %
As at 31 December 2020
Equities 390 1,498 1,888 5.6 378 1,498 1,876 5.5
Private equities - 2,233 2,233 6.6 - 2,233 2,233 6.6
Bonds - fixed
government 3,950 110 4,060 12.0 3,932 110 4,042 11.9
Bonds - index-linked
government 10,698 1,014 11,712 34.5 10,697 1,014 11,711 34.5
Bonds - corporate and
other 7,230 1,678 8,908 26.2 7,214 1,678 8,892 26.2
Property - 1,416 1,416 4.2 - 1,416 1,416 4.2
Infrastructure - 1,812 1,812 5.3 - 1,812 1,812 5.3
Cash and liquid assets 48 1,830 1,878 5.5 46 1,830 1,876 5.5
Mixed Investment Funds - - - - - - - -
Other - 71 71 0.2 - 57 57 0.2
Fair value of scheme
assets 22,316 11,662 33,978 100.0 22,267 11,648 33,915 100.0
As at 31 December
2019(b)
Equities 778 1,568 2,346 7.5 768 1,568 2,336 7.4
Private equities - 2,083 2,083 6.6 - 2,083 2,083 6.6
Bonds - fixed
government 3,321 299 3,620 11.5 3,303 299 3,602 11.5
Bonds - index-linked
government 10,346 682 11,028 35.1 10,345 682 11,027 35.2
Bonds - corporate and
other 6,084 2,295 8,379 26.7 6,069 2,295 8,364 26.7
Property - 1,633 1,633 5.2 - 1,633 1,633 5.2
Infrastructure - 1,558 1,558 5.0 - 1,558 1,558 5.0
Cash and liquid assets 579 170 749 2.4 576 169 745 2.4
Other - 24 24 0.1 - 14 14 -
Fair value of scheme
assets 21,108 10,312 31,420 100.0 21,061 10,301 31,362 100.0
a Valuations on unquoted assets are provided by the underlying managers
or qualified independent valuers. Valuations on complex instruments
are based on UKRF custodian valuations. All valuations are determined
in accordance with relevant industry guidance.
b Analysis of scheme assets for 2019 is restated with a quoted/unquoted
split.
Included within the fair value of scheme assets were nil (2019:
nil) relating to shares in Barclays PLC and nil (2019: nil)
relating to bonds issued by Barclays PLC or Barclays Bank Group.
The UKRF also invests in pooled investment vehicles which may hold
shares or debt issued by Barclays PLC.
The UKRF assets above do not include the Senior Notes asset
referred to in the section below on Triennial Valuation, as these
are non-transferable instruments and not recognised under
IAS19.
Approximately 45% of the UKRF assets are invested in
liability-driven investment strategies; primarily UK gilts as well
as interest rate and inflation swaps. These are used to better
match the assets to its liabilities. The swaps are used to reduce
the scheme's inflation and duration risks against its
liabilities.
Triennial Valuation
The latest annual update as at 30 September 2020 showed the
funding deficit had improved to GBP0.9bn from the GBP2.3bn shown at
the 30 September 2019 triennial valuation. The improvement was
mainly due to GBP1.0bn of deficit contributions paid over the
year.
The main differences between the funding and accounting
assumptions are a different approach to setting the discount rate
and a more conservative longevity assumption for funding.
The deficit reduction contributions agreed with the UKRF Trustee
as part of the 30 September 2019 triennial valuation recovery plan
are shown in the table below.
Deficit reduction contributions under the
30 September 2019 valuation
Year GBPm
Cash paid:
2020 500
Future commitments:
2021 700
2022 294
2023 286
2024 - 2026 -
On 12 June 2020, Barclays Bank PLC paid the GBP500m deficit
reduction contribution agreed for 2020 and at the same time the
UKRF subscribed for non-transferrable listed senior fixed rate
notes for GBP750m, backed by UK gilts (the Senior Notes). These
Senior Notes entitle the UKRF to semi-annual coupon payments for
five years, and full repayment in cash in three equal tranches in
2023, 2024, and at final maturity in 2025. The Senior Notes were
issued by Heron Issuer Number 2 Limited (Heron 2), an entity that
is consolidated within the Barclays Bank Group under IFRS 10. As a
result of the investment in Senior Notes, the regulatory capital
impact of the GBP500m deficit reduction contribution paid on 12
June 2020 takes effect in 2023, 2024 and 2025 on maturity of the
notes. As the UKRF's investment in the Senior Notes does not
qualify as a plan asset under IAS 19, the GBP500m deficit reduction
contribution does not appear in the IAS19 plan assets nor as an
employer contribution as at 31 December 2020, and the additional
GBP250m scheme investment appears as an outflow in the balance
sheet reconciliation under 'Exchange and other movements'. The
GBP250m additional investment by the UKRF in the Senior Notes has a
positive capital impact in 2020 which is reduced equally in 2023,
2024 and 2025 on the maturity of the notes. Heron 2 acquired a
total of GBP750m of gilts from Barclays Bank PLC for cash to
support payments on the senior notes. A transaction with a similar
structure was agreed as part of the 2019 triennial actuarial
valuation. On 11 December 2019, Barclays Bank PLC paid the GBP500m
deficit reduction contribution agreed for 2019 and at the same time
the UKRF subscribed for non-transferrable listed senior fixed rate
notes for GBP500m, backed by UK gilts (the Senior Notes). These
Senior Notes entitle the UKRF to semi-annual coupon payments for
five years, and full repayment in cash at maturity in 2024. As the
UKRF's investment in these Senior Notes does not qualify as a plan
asset under IAS 19, the 2019 GBP500m deficit reduction contribution
also does not appear in the IAS19 plan assets. No liability is
recognised under IAS19 for the obligation to make deficit reduction
contributions or to repay the Senior Notes, as settlement gives
rise to both a reduction in cash and a corresponding increase in
net defined benefit assets.
The deficit reduction contributions are in addition to the
regular contributions to meet the Barclays Bank Group's share of
the cost of benefits accruing over each year. The next funding
valuation of the UKRF is due to be completed in 2023 with an
effective date of 30 September 2022.
Other support measures agreed which remain in place
Collateral - The UKRF Trustee and Barclays Bank PLC have entered
into an arrangement whereby a collateral pool has been put in place
to provide security for the UKRF funding deficit as it increases or
decreases over time. The collateral pool is currently made up of
government securities, and agreement was made with the Trustee to
cover at least 100% of the funding deficit with an overall cap of
GBP9bn. The arrangement provides the UKRF Trustee with dedicated
access to the pool of assets in the event of Barclays Bank PLC not
paying a deficit reduction contribution to the UKRF or in the event
of Barclays Bank PLC's insolvency. These assets are included within
Note 36 Assets pledged, collateral received and assets
transferred.
Support from Barclays PLC - In the event of Barclays Bank PLC
not paying a deficit reduction contribution payment required by a
specified pre-payment date, Barclays PLC has entered into an
arrangement whereby it will be required to use, in first priority,
dividends received from Barclays Bank UK PLC (if any) to invest the
proceeds in Barclays Bank PLC (up to the maximum amount of the
deficit reduction contribution unpaid by Barclays Bank PLC). The
proceeds of the investment will be used to discharge Barclays Bank
PLC's unpaid deficit reduction contribution.
Participation - As permitted under the Financial Services and
Markets Act 2000 (Banking Reform) (Pensions) Regulations 2015,
Barclays Bank UK PLC is a participating employer in the UKRF and
will remain so during a transitional phase until September 2025 as
set out in a deed of participation. Barclays Bank UK PLC will make
contributions for the future service of its employees who are
currently Afterwork members and, in the event of Barclays Bank
PLC's insolvency during this period provision has been made to
require Barclays Bank UK PLC to become the principal employer of
the UKRF. Barclays Bank PLC's Section 75 debt would be triggered by
the insolvency (the debt would be calculated after allowing for the
payment to the UKRF of the collateral above).
Defined benefit contributions paid with respect to the UKRF were
as follows:
Contributions paid
GBPm
2020 748
2019 1,231
2018 741
There were nil (2019: nil) Section 75 contributions included
within the Barclays Bank Group's contributions paid as no
participating employers left the UKRF in 2020.
The Barclays Bank Group's expected contribution to the UKRF in
respect of defined benefits in 2021 is GBP783m (2020: GBP560m). In
addition, the expected contributions to UK defined contribution
schemes in 2021 is GBP9m (2020: GBP7m) to the UKRF and GBP47m
(2020: GBP41m) to the BPSP.
37 Related party transactions and Directors' remuneration
Related party transactions
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the other party in making financial or operational
decisions, or one other party controls both.
Parent company
The parent company, which is also the ultimate parent company,
is Barclays PLC, which holds 100% of the issued ordinary shares of
Barclays Bank PLC.
Subsidiaries
Transactions between Barclays Bank PLC and its subsidiaries also
meet the definition of related party transactions. Where these are
eliminated on consolidation, they are not disclosed in the Barclays
Bank Group's financial statements. A list of the Barclays Bank
Group's principal subsidiaries is shown in Note 32.
Fellow subsidiaries
Transactions between the Barclays Bank Group and other
subsidiaries of the parent company also meet the definition of
related party transactions.
Associates, joint ventures and other entities
The Barclays Bank Group provides banking services to its
associates, joint ventures and the Barclays Bank Group pension
funds (principally the UK Retirement Fund), providing loans,
overdrafts, interest and non-interest bearing deposits and current
accounts to these entities as well as other services. Barclays Bank
Group companies also provide investment management and custodian
services to the Barclays Bank Group pension schemes. All of these
transactions are conducted on the same terms as third party
transactions. Summarised financial information for the Barclays
Bank Group's investments in associates and joint ventures is set
out in Note 34.
Amounts included in the Barclays Bank Group's financial
statements, in aggregate, by category of related party entity are
as follows:
Fellow Pension
Parent subsidiaries Associates Joint ventures funds
GBPm GBPm GBPm GBPm GBPm
------ ------------- ---------- -------------- -------
For the year ended and as at 31
December 2020
Total income (606) 41 - - 3
Credit impairment charges - - - - -
Operating expenses (62) (2,937) - - (1)
Total assets 6,803 1,917 - - 4
Total liabilities 25,819 3,954 66 - 69
For the year ended and as at 31
December 2019
Total income (717) 53 - 12 3
Credit impairment charges - - - - -
Operating expenses (90) (3,023) (5) - -
Total assets 2,097 2,165 - 1,303 3
Total liabilities 24,876 1,600 - - 75
Total liabilities includes derivatives transacted on behalf of
the pensions funds of GBP13m ( 2019: GBP6m).
Amounts included in Barclays Bank PLC's financial statements, in
aggregate, by category of related party entity are as follows:
Parent Subsidiaries Fellow subsidiaries Associates Joint ventures Pension funds
GBPm GBPm GBPm GBPm GBPm GBPm
------ ------------ ------------------- ---------- --------------
As at 31 December 2020
Total assets 4,317 272,845 1,899 - - -
Total liabilities 25,368 196,405 3,892 66 - 63
As at 31 December 2019
Total assets 2,096 209,910 2,155 - 1,303 -
Total liabilities 24,876 147,472 1,480 - - 72
It is the normal practice of Barclays Bank PLC to provide its
subsidiaries with support and assistance by way of guarantees,
indemnities, letters of comfort and commitments, as may be
appropriate, with a view to enabling them to meet their obligations
and to maintain their good standing, including commitment of
capital and facilities. For dividends paid to Barclays PLC see Note
10.
Key Management Personnel
Key Management Personnel are defined as those persons having
authority and responsibility for planning, directing and
controlling the activities of Barclays Bank PLC (directly or
indirectly) and comprise the Directors and Officers of Barclays
Bank PLC, certain direct reports of the Chief Executive Officer and
the heads of major business units and functions.
The Barclays Bank Group provides banking services to Key
Management Personnel and persons connected to them. Transactions
during the year and the balances outstanding were as follows:
Loans outstanding
2020 2019
GBPm GBPm
As at 1 January - 14.6
Loans issued during the year(a) - 0.1
Loan repayments during the year(b) - (14.7)
As at 31 December - -
Notes
a Includes loans issued to existing Key Management Personnel and
new or existing loans issued to newly appointed Key Management
Personnel.
b Includes loan repayments by existing Key Management Personnel and
loans to former Key Management Personnel.
No allowances for impairment were recognised in respect of loans
to Key Management Personnel (or any connected person).
Deposits outstanding
2020 2019
GBPm GBPm
As at 1 January 4.2 2.9
Deposits received during the year(a) 13.3 11.5
Deposits repaid during the year(b) (14.1) (10.2)
As at 31 December 3.4 4.2
Notes
a Includes deposits received from existing Key Management Personnel
and new or existing deposits received from newly appointed Key
Management Personnel.
b Includes deposits repaid by existing Key Management Personnel and
deposits of former Key Management Personnel.
Total commitments outstanding
Total commitments outstanding refer to the total of any undrawn
amounts on credit card and/or overdraft facilities provided to Key
Management Personnel. Total commitments outstanding as at 31
December 2020 were GBP0.2m (2019: GBP0.1m).
All loans to Key Management Personnel (and persons connected to
them) were made in the ordinary course of business; were made on
substantially the same terms, including interest rates and
collateral, as those prevailing at the same time for comparable
transactions with other persons; and did not involve more than a
normal risk of collectability or present other unfavourable
features.
Remuneration of Key Management Personnel
Total remuneration awarded to Key Management Personnel below
represents the awards made to individuals that have been approved
by the Board Remuneration Committee as part of the latest
remuneration decisions. Costs recognised in the income statement
reflect the accounting charge for the year included within
operating expenses. The difference between the values awarded and
the recognised income statement charge principally relates to the
recognition of deferred costs for prior year awards. Figures are
provided for the period that individuals met the definition of Key
Management Personnel.
2020 2019
GBPm GBPm
--------------------------------------------------------- ----- -----
Salaries and other short-term benefits 37.5 37.6
Pension costs 0.1 0.2
Other long-term benefits 7.2 9.1
Share-based payments 12.4 14.2
Employer social security charges on emoluments 6.0 6.0
--------------------------------------------------------- ----- -----
Costs recognised for accounting purposes 63.2 67.1
Employer social security charges on emoluments (6.0) (6.0)
Other long-term benefits - difference between awards
granted and costs recognised 0.4 (1.0)
Share-based payments - difference between awards granted
and costs recognised 1.3 (0.7)
--------------------------------------------------------- ----- -----
Total remuneration awarded 58.9 59.4
--------------------------------------------------------- ----- -----
Disclosure required by the Companies Act 2006
The following information regarding the Barclays Bank PLC Board
of Directors is presented in accordance with the Companies Act
2006:
2020 2019
GBPm GBPm
---------------------------- ---- ----
Aggregate emoluments(a) 6.4 7.6
Amounts paid under LTIPs(b) - 0.2
---------------------------- ---- ----
6.4 7.8
---- ----
Notes
a The aggregate emoluments include amounts paid for the 2020 year.
In addition, deferred cash and share awards for 2020 with a total
value at grant of GBP0.6m (2019: GBP1.9m) will be made to Directors
which will only vest subject to meeting certain conditions.
b No LTIP amounts were received by the Executive Directors in 2020
as the release of the first tranche of the 2017-2019 LTIP was delayed
from June 2020 to March 2021.
There were no pension contributions paid to defined contribution
schemes on behalf of Directors (2019: GBP11,932). There were no
notional pension contributions to defined contribution schemes.
As at 31 December 2020, there were no Directors accruing
benefits under a defined benefit scheme (2019: nil).
The aggregate amount of compensation payable to departing
officers in respect of loss of office was GBP1,850,713.
Of the figures in the table above, the amounts attributable to
the highest paid Director in respect of qualifying services are as
follows:
2020 2019
GBPm GBPm
------------------------- ---- ----
Aggregate emoluments(a) 3.0 3.2
Amounts paid under LTIPs - -
3.0 3.2
Note
a The aggregate emoluments include amounts paid for the 2020 year.
In addition, a deferred share award for 2020 with a value at grant
of GBP0.4m (2019: GBP1.2m) will be made to the highest paid Director
which will only vest subject to meeting certain conditions.
There were no actual pension contributions to defined
contribution schemes on behalf of the highest paid Director (2019:
GBPnil). There were no notional pension contributions to defined
contribution schemes.
Advances and credit to Directors and guarantees on behalf of
Directors
In accordance with Section 413 of the Companies Act 2006, the
total amount of advances and credits made available in 2020 to
persons who served as Directors during the year was GBPnil (2019:
GBPnil). The total value of guarantees entered into on behalf of
Directors during 2020 was GBPnil (2019: GBPnil).
38 Discontinued operations and assets included in disposal groups
classified as held for sale and associated liabilities
Accounting for non-current assets held for sale and associated
liabilities
The Barclays Bank Group applies IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations.
Non-current assets (or disposal groups) are classified as held
for sale when their carrying amount is to be recovered principally
through a sale transaction rather than continuing use. In order to
be classified as held for sale, the asset must be available for
immediate sale in its present condition subject only to terms that
are usual and customary and the sale must be highly probable.
Non-current assets (or disposal groups) held for sale are measured
at the lower of carrying amount and fair value less cost to
sell.
A component of the Barclays Bank Group that has either been
disposed of or is classified as held for sale is presented as a
discontinued operation if it represents a separate major line of
business or geographical area of operations, is part of a single
coordinated plan to dispose of the separate major line or
geographical area of operations, or if it is a subsidiary acquired
exclusively with a view to re-sale.
Barclays Bank Group
During the year, Barclays Bank PLC sold its investments in
Barclaycard International Payments Limited, Entercard Group AB,
Carnegie Holdings Limited and Barclays Mercantile Business Finance
Limited to Barclays Principal Investments Limited, a fellow
Barclays PLC Group company, at their fair values of GBP102m,
GBP292m, GBP188m and GBP154m respectively. Barclays Bank PLC
recorded profit on disposal of GBP56m, GBP192m, GBP133m and GBP23m
in respect of these transactions. The Barclays Bank Group recorded
profit on disposal of GBP45m, GBP13m, GBP57m and GBP11m.
UK banking business
Following the court approval of the ring-fencing transfer scheme
on 9 March 2018, the UK banking business largely comprising
Personal Banking, Barclaycard Consumer UK and Business Banking
customers, and related assets and liabilities was transferred to
Barclays Bank UK PLC on 1 April 2018, to meet the regulatory
ring-fencing requirement under the Financial Services (Banking
Reform) Act 2013 and related legislation. Following the transfer of
the UK banking business, Barclays Bank PLC transferred the equity
ownership in Barclays Bank UK PLC to Barclays PLC through a
dividend in specie on the same day. Accordingly, Barclays Bank UK
PLC ceased to be a subsidiary of Barclays Bank PLC and became a
direct subsidiary of the ultimate parent, Barclays PLC.
The results of Barclays Bank UK PLC and its subsidiaries for the
three months ended 31 March 2018, the date prior to the transfer of
ownership to Barclays PLC, are included in the consolidated
financial statements of the Barclays Bank Group.
The transfer of the ownership of Barclays Bank UK PLC to
Barclays PLC resulted in a material change to the consolidated
financial position and results of the Barclays Bank Group in 2018,
in comparison to prior periods. The transfer had no impact on the
share capital and share premium of Barclays Bank PLC. Other equity
instruments reduced by GBP2,070m relating to additional tier 1
(AT1) securities transferred to Barclays Bank UK PLC. The fair
value through other comprehensive income reserve increased by
GBP16m and retained earnings reduced by GBP14,187m.
Upon disposal of the equity ownership of Barclays Bank UK PLC on
1 April 2018, the UK banking business met the requirements for
presentation as a discontinued operation. As such, the results,
which have been presented as the profit after tax in respect of
discontinued operations on the face of the Barclays Bank Group
income statement, are analysed in the income statement below. In
2018, discontinued operations relating to the UK banking business
incurred a loss after tax of GBP47m. The income statement and cash
flow statement below represent three months of results as a
discontinued operation to 31 March 2018.
UK banking business disposal group income statement
2020 2019 2018
For the year ended 31 December GBPm GBPm GBPm
Net interest income - - 1,449
Net fee and commission income - - 296
Net trading income - - (5)
Net investment income - - 6
Other income - - 2
---- -------
Total income - - 1,748
Credit impairment charges and other provisions - - (201)
---- -------
Net operating income - - 1,547
---- -------
Staff costs - - (321)
Administration and general expenses - - (1,135)
---- -------
Operating expenses - - (1,456)
---- -------
Profit before tax - - 91
Taxation - - (138)
---- -------
(Loss)/profit after tax - - (47)
---- -------
Attributable to:
Equity holders of the parent - - (47)
---- -------
(Loss)/profit after tax - - (47)
---- -------
The cash flows attributed to the UK banking business
discontinued operation are as follows:
2020 2019 2018
For the year ended 31 December GBPm GBPm GBPm
Net cash flows from operating activities - - (522)
Net cash flows from investing activities - - 54
Net (decrease)/increase in cash and cash equivalents - - (468)
Barclays Bank PLC
Following a decision to transfer Barclays PLC Group's European
businesses to Barclays Bank Ireland PLC, Barclays Bank PLC
transferred its German business in Q4 2018 and its branches in
France, Italy, Netherlands, Portugal, Spain and Sweden in Q1 2019.
Throughout 2019, Barclays Bank PLC also transferred positions
facing European clients to Barclays Bank Ireland PLC, at the
clients' request.
During 2020, Barclays Bank PLC transferred loans and advances at
amortised cost of GBP361m and trading portfolio assets of GBP76m to
Barclays Bank Ireland PLC, in exchange for cash consideration.
Barclays Bank PLC also transferred derivative financial instrument
assets of GBP9,692m and derivative financial instrument liabilities
of GBP12,337m to Barclays Bank Ireland PLC. Concurrently, Barclays
Bank PLC entered into new derivative positions with Barclays Bank
Ireland PLC to hedge the risk on the transferring positions.
Therefore, there was no net impact on the balance sheet of Barclays
Bank PLC.
Notes
The term Barclays Bank Group refers to Barclays Bank PLC
together with its subsidiaries. Unless otherwise stated, the income
statement analysis compares the year ended 31 December 2020 to the
corresponding twelve months of 2019 and balance sheet analysis as
at 31 December 2020 with comparatives relating to 31 December 2019.
The abbreviations 'GBPm' and 'GBPbn' represent millions and
thousands of millions of Pounds Sterling respectively; the
abbreviations '$m' and '$bn' represent millions and thousands of
millions of US Dollars respectively; and the abbreviations 'EURm'
and 'EURbn' represent millions and thousands of millions of Euros
respectively.
There are a number of key judgement areas, for example
impairment calculations, which are based on models and which are
subject to ongoing adjustment and modifications. Reported numbers
reflect best estimates and judgements at the given point in
time.
Relevant terms that are used in this document but are not
defined under applicable regulatory guidance or International
Financial Reporting Standards (IFRS) are explained in the results
glossary that can be accessed at
home.barclays/investor-relations/reports-and-events/latest-financial-results.
The information in this announcement, which was approved by the
Board of Directors on 17 February 2021, does not comprise statutory
accounts within the meaning of Section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2020, which
contain an unmodified audit report under Section 495 of the
Companies Act 2006 (which does not make any statements under
Section 498 of the Companies Act 2006), will be delivered to the
Registrar of Companies in accordance with Section 441 of the
Companies Act 2006.
These results will be filed on a Form 20-F to the US Securities
and Exchange Commission (SEC) as soon as practicable following
their publication. Once filed with the SEC, a copy of the Form 20-F
will be available from the Barclays Investor Relations website at
home.barclays annualreport and from the SEC's website at
www.sec.gov .
Barclays Bank Group is a frequent issuer in the debt capital
markets and regularly meets with investors via formal road-shows
and other ad hoc meetings. Consistent with its usual practice,
Barclays Bank Group expects that from time to time over the coming
half year it will meet with investors globally to discuss these
results and other matters relating to the Barclays Bank Group.
Forward-looking statements
This document contains certain forward-looking statements within
the meaning of Section 21E of the US Securities Exchange Act of
1934, as amended, and Section 27A of the US Securities Act of 1933,
as amended, with respect to the Barclays Bank Group. Barclays Bank
Group cautions readers that no forward-looking statement is a
guarantee of future performance and that actual results or other
financial condition or performance measures could differ materially
from those contained in the forward-looking statements. These
forward-looking statements can be identified by the fact that they
do not relate only to historical or current facts. Forward-looking
statements sometimes use words such as 'may', 'will', 'seek',
'continue', 'aim', 'anticipate', 'target', 'projected', 'expect',
'estimate', 'intend', 'plan', 'goal', 'believe', 'achieve' or other
words of similar meaning. Forward-looking statements can be made in
writing but also may be made verbally by members of the management
of the Barclays Bank Group (including, without limitation, during
management presentations to financial analysts) in connection with
this document. Examples of forward-looking statements include,
among others, statements or guidance regarding or relating to the
Barclays Bank Group's future financial position, income growth,
assets, impairment charges, provisions, business strategy, capital,
leverage and other regulatory ratios, capital distributions
(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.
Forward-looking 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;
the Barclays Bank Group's ability along with government and other
stakeholders to manage and mitigate the impacts of climate change
effectively; geopolitical risks; and the impact of competition. In
addition, factors including (but not limited to) the following may
have an effect: capital, leverage and other regulatory rules
applicable to past, current and future periods; UK, US, Eurozone
and global macroeconomic and business conditions; the effects of
any volatility in credit markets; market related risks such as
changes in interest rates and foreign exchange rates; effects of
changes in valuation of credit market exposures; changes in
valuation of issued securities; volatility in capital markets;
changes in credit ratings of any entity within the Barclays Bank
Group or any securities issued by such entities; direct and
indirect impacts of the coronavirus (COVID-19) pandemic;
instability as a result of the UK's exit from the European Union
(EU), the effects of the EU-UK Trade and Cooperation Agreement and
the disruption that may subsequently result in the UK and globally;
the risk of cyber-attacks, information or security breaches or
technology failures on the Group's business or operations; and the
success of future acquisitions, disposals and other strategic
transactions. A number of these influences and factors are beyond
the Barclays Bank Group's control. As a result, the Barclays Bank
Group's actual financial position, future results, capital
distributions, capital, leverage or other regulatory ratios or
other financial and non-financial metrics or performance measures
may differ materially from the statements or guidance set forth in
the Barclays Bank Group's forward-looking statements. Additional
risks and factors which may impact the Barclays Bank Group's future
financial condition and performance are identified in our filings
with the SEC (including, without limitation, our Annual Report on
Form 20-F for the fiscal year ended 31 December 2020), which are
available on the SEC's website at www.sec.gov .
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.
For further information, please contact:
Investor Relations Media Relations
Chris Manners Tom Hoskin
+44 (0) 20 7773 2136 +44 (0) 20 7116 4755
About Barclays
Barclays is a British universal bank. We are diversified by
business, by different types of customer and client, and geography.
Our businesses include consumer banking and payments operations
around the world, as well as a top-tier, full service, global
corporate and investment bank, all of which are supported by our
service company which provides technology, operations and
functional services across the Group.
For further information about Barclays, please visit our website
www.barclays.com
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END
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