bar cap 2011 investor seminar

8/6/2019 Bar Cap 2011 Investor Seminar

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15 June 2011

Barclays PLC2011 Investor Seminar

Corporate and Investment Banking

Wealth

Achieving our targets


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Corporate and Investment Bankin

Jerry del Missier and Rich Ricci

Co-Chief Executives of Corporate and Investment Banking


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Session structure

Introduction

Barclays Capital

Barclays Corporate

Synergies

Conclusion


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Introduction

Barclays Capital

Barclays Corporate

Synergies

Conclusion

Session structure


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Barclays Capital 2010 results

Top lineIncome (bn)

Fixed Income, Currenciesand Commodities

8.8

Equities and Prime Services 2.0

Investment Banking 2.2

Principal Investments 0.3

Total 13.3

Cost: Net Income(ex-own credit)

Risk Weighted Assets

Return on Equity(1)

(1) Equity calculated as 9% of average risk weighted assets


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We have a market leading client franchise in

Source: Oliver Wyman, Coalition

APACAmericasEMEA

7%

11%

9%

Banks HedFun

Insurers

11%

9% 9%

Barclays Capital market share

Rank 1 3-4 4-5

By region

Rank 1 1-2

By client type

3-4


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We will continue to strengthen leadership positbalanced FICC businessFICC market share by business area (2010)

Source: Oliver Wyman, Coalition

Build on market leading positions Flow MonsterMaintain and develop

positioningM

ca

SecurProd

MunisEMCommoditiesFXFlow CreditFlow Rates

8%

6%

4%

10%

7%

10%9%

3-5Top 3 Outside Top 5Market Share Ranking


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Securitisedproducts

Structuredcredit

products

Controlled risk-reward position in residential business

Focused on quality to generate higher returns than

peers

Retained recognition as a leading quality player

Securitization house of the Year in the Americas

#1 bookrunner of Global Securitised Products

Actively managed down the size of our bespokeexposures by 60% since 2009

Fully exited out of the most esoteric exposures

Reduced VaR by approximate 85% since 2008

Value at Risk

Relative retuSecuritisatio

BarclaysCapital

2008

We have positioned businesses that will be impacte2.5/3 in a way that limits future downside

Source: IFR, Dealogic, Oliver Wyman


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We are seeing strong momentum in Investment BanEquities

Source: Dealogic, Bloomberg

Americas Equities market share Investment Banking global cas

2008Primary Secondary

1.5%3.6%3.8%

7.1%

9.6%

8.6%Lehmanshare in2007

Q1 2011

2009


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20102008 20102008 20102008

Mergers & Acquisitions Equity Capital Markets Leveraged Finance De

Proportion of Barclays Capital IBD revenues

2008 11% 7% 18%

2010 18% 17% 21%

Debt businessesM&A and ECM: 18% to 35%Change incontribution

In Investment Banking we have posted impressive wthe boardCash revenue by business area

CAGR 92% CAGR 130%

CAGR 60%


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Equities broker votes ranking - Europe

UK equity and equity-linked issuance as bookrunner

May 2011 (last twelve months)

0

6%

CSJPMMS CitiBoAML U

12%Barclays Capital

Q1 201120102009

#16

#10 #9

In Equities, we are seeing client momentum build antrack to monetise this further

Source: Dealogic, Broker Votes

May 2010 (last twelve months)

22%

11%

0GSRBSDBCitiBoAMLMSUBSCSJPM

Barclays Capital


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In Prime Services, we are leaders in fixed income anmaterial upside in equity finance

Source: Coalition, CCPs, Global Custodian, Risk magazine, IFR

Client Balances(Total)

Equity Finance competitor revenues(Q4 2010, m)

0

120

240

20102008

#1 Ranked OTC Derivatives Clearing Provider Notional value of IRS portfolio cleared fo

130 Best in Class Awards(out of a possible 144 Awards)

Interest Rate and Credit DerivativesHouse of the Year Awards

First to clear client trades at LCH and CME

200

Barclays Capital Re

200%


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Goal: Top 5 Equity fr Build local presence

(live as of May), KoreTaiwan (H2 11)

Develop research co(already covering 17120+ stocks for ex-Ja

Equities

InvestmentBanking

Continue coverage b Increase focus on Ch

Build Equity Capital Mwith Equities rollout

Reinforce M&A throu

Maintain strengths

Continuing to strengthen our Asian presence is keyestablishing a truly global franchiseRevenue contribution of regions (2010) Asia Pacific build out plans

Source: Coalition

48% 51%

9% 15%

Americas

EMEA

Asia Pacific

34%43%

Top 10competitor average

BarclaysCapital


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In summary, we have realistic plans to deliver our regrowth targetsProjected Revenue Growth (bn)

Equities

Americas EMEA AP

0.5-0.6

0.1

0.3-0.4

Investment Banking

Americas EMEA APAC Total

0.3-0.4

0.4-0.5

0.2-0.3 0.9-1.2


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We will continue to manage capital on a proactive bhave done in the pastRisk weighted assets (bn)

0

100

200

300

Mar-11Dec-10Dec-09Dec-08Dec-07

Growth in top-line incom

Growth in PBT ex own cre

For same period (2007-20

Growth in RWAs


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This includes the continued sell-down of leg

Accelerated sell-down of assets following recent re

Targeted reductions in illiqassets

Continued divestment of real estate portfolio

Further reductions in leveportfolio

12 months 5 months

2724

18

Dec-09 Dec-10 May-11

Credit market exposures (bn) Activities in Plan


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Which will further reduce legacy asset RWAs

9

Sell-downand other

managementactions

Basel 3impact

Basel 2.5(no impact)

RWAsDec 10

29

Equivalents

Published

Expected legacy asset RWAs (bn)

29

5


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Introduction

Barclays Capital

Barclays Corporate

Synergies

Conclusion

Session structure


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The global corporate brepresents a significantBarclays

We established Barclaydistinct entity in 2010 trequired focus to bette

corporate clients

The key objective is to strengths to achieve to

We re-positioned Barclays Corporate to capture theopportunity

Source: Annual results, McKinsey Global Banking Profit Pools

Banking revenue pools (2009, bn)

BarclaysEuropeWorld

33% 36%

11%

67% 64%

89%

CorporateBanking

Retail Banking

InvestmentBanking

Other


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While the UK franchise remains strong, Europe and World generated high impairment and cost

(1) Rest of the World includes India, Pakistan, the UAE, Russia (selling Barclays Bank Russia), Indonesia (exited)(2) Includes VocaLink associate

Barclays Corporate results (2010, m)

Revenues driven largely byUK franchise

Costs up due to good-wilin Russia and restructurinacross rest of the world

Impairments high primari

UK

Europe

Rest of World (1)

77%52%

27%

14%

11% 63%

9%

37%

10%

1,6961,9092,974

ImpairmentCost (2)Revenue


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Low cost client servicinusing joined-up client co-location with Barcla

579 550420 415

2013201220112010

2015 Target

25%

2010

12%

2010

Our international strategy is to utilise existing Barclacapabilities to drive revenue while optimising costsPenetration of subsidiaries of BarclaysCapital relationships

Revenues from existing Brelationships

2x

Europe and Rest of World cost basem, ex-goodwill and impairment


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Spain impairments (

0

300

2008

Biggest corporate franchise outside UK forBarclays

Well established ground coverage (220 FTEs)

Fundamentally strong relationships withbiggest clients in most attractive segments

Core to pan-European strategy

-900

-450

0

20092008

Spain revenues (m)

Actively managing underperforming portfoliovia dedicated team of over 100 risk specialists

in Madrid Proactively selling off biggest exposures in

portfolio

Reduced exposure to property lending by0.9bn since H1 2010

De-riskedthe

portfolio

Still anattractivemarket

Spain is an attractive market and we have taken dec


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UK market share of primary bankingrelationships (%, 2010)

0

5

10

15

20

25

30

Others2nd1st 3rd 4th

BarclaysCorporate

Source: FAME

UK PBT (m)

Consolidating our strong position in the UK is centrastrategy going forward

2008 2009

1,062

734

14


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Estimated revenue u

Building on existing strengths to capture

market leadership in UK and become a top5 global trade provider

Leveraging Barclays Groups geographicreach to expand client base

Broadening product suite

Ensuring disciplined use of capital

Estimated revenue u

Developing market leading capabilitiesand addressing gaps

Building Barclays.net to consolidateelectronic channel proposition

New product offerings include liquidity(deposits) and payments (domestic andinternational)

CashManage-

ment

TradeFinance

We are investing in capabilities to support our UK aninternational strategies

202010

+100%

202010

+70%


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We are actively managing capital

Disciplined RWA utilisation

Freed up capital to deploy towards

businesses

Improved the quality and maintaineoverall loan book

Closed the UK funding gap

Significant growth in customer acca result of 21% increase in current

Deposit growth of c. 6bn achievedproduct innovation (e.g. Flexible incurrent accounts)

0

40

80

20102009

Barclays Corporate RWAs (bn)

-8%

-6-4-202

UK funding balance (bn)

+8bn

20102009


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Introduction

Barclays Capital

Barclays Corporate

Synergies

Conclusion

Session structure

W ll l d l


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We are well placed to capitalise on revenue synergiebetween Barclays Capital and Barclays CorporateCross-sales between Barclays Capitaland Barclays Corporate

Revenues from ECM and Dwith Barclays Corporate cl

20102005

BarclaysCorporateproducts toBarclays Capitalclients

16%CAGR

Barclays Capital

products toBarclays Corporateclients

2009

>200%

Wi h i l l b li


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0

3,000

6,000

H22010

H12010

H22009

H12009

H12008

H22008

Barclays Capital

Barclays Corporate

With our investments nearly complete, we believe tcost base has now stabilisedTotal Cost Base (m)

C t i b t th b i ill bl


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Cost synergies between the businesses will enable udeliver 250-300m in run-rate efficienciesTarget cost savings (m)

Targsa

Costmanagement

Off-shoringSharedinfrastructure,

spans and layers

25

0

150

300

S i t t


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Session structure

Introduction

Barclays Capital

Barclays Corporate

Synergies

Conclusion

O C d


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Barclays Corporate Barclays Capital

Returns

11% global RoE

14% UK RoE

Income

Strong growth in cash management,

trade finance and cross-sales

Cost management

~50% overall cost: income ratio

Returns

15% RoE on Basel 3 basis

Income

Gaining market share in Eq

Investment Banking Maintaining FICC

Cost management

60-65% cost: net income r

Our commitments - Corporate and Investmen

RoE commitments based on a 10% CT1 capital allocation


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Barclays Wealth

Thomas L. Kalaris, Chief Executive

A hi hl tt ti t it


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Source: BCG World Wealth Report 2011

Industry Trends

A highly attractive opportunity

Revenue and PBT (bn)

2008 2009 2010 2015

North AmericaEuropeAsia Pacific

JapanME & AfricaLatin America

CAGR10 15

9.3%

1.5%

11.4%

4.2%

5.0%

8.2%

161.9

121.8112.8

102.3

Demographically driven grow

Fragmented competitive lan

Industry in flux

High quality revenue streamefficiency

A d f d li


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A record of delivery

Established in 2005 from lbusinesses

Transformation from banto full service wealth mana

Significant expansion in fo

Grew from 27th largest weglobally to cusp of Top 10

(1) Excludes Life business

Net income and PBT (m)

PBTNet income

78

911

143

1,271

CAGR +16%

CAGR +9%

2005(1) 2009

98bn 151bn

690 1,596

Client Assets

Client FacingProfessionals

A biti t b ild t ti lth


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An ambition to build a top tier wealth man

Objectives

Market leading reputation for performance and serv

Material increase in scale

Meaningful contribution of Wealth to Barclays PB

A focused definition of top tier


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Segmentation

/ Scale

Proposition

GeographicAlignment

A focused definition of top tier

HNW private client orientation

Significant scale in target segment

Large boutique player

Leading edge behavioural finance techniques

Focus on intelligent performance

Technologically-enabled approach to client servic

One bank approach

Compelling footprint aligned to large and high gro

Targeted approach to investment and growth US UK Global HNW

A differentiated proposition


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A differentiated proposition

Institutionalcalibre client

advisors

Leadingedgeinvestmentapproach

Seamlessclient

processes

Robust andscalable

execution

1. A step change in the client experience

2. A significant increase in productive capacity

What

How

The strategy delivers a one firm approach


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The strategy delivers a one firm approach

Seamless integration

1. Infrastructure and platforms

Banking and payments utility

Cards engine Shared services construct

Common infrastructureplatforms

2. Referrals and coverage 3. Expertis

Retail network referrals

Bilateral arrangements withinvestment banking andBarclays Corporate

Joint coverage approach tokey clients

Research

Distributio Risk mana

capital ma

Investmenengine

Total integration of service and approach

Seamless view of financial and business assets

Single point of relationship management

Project Gamma is a programme of investment to de


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1.5

Project Gamma is a programme of investment to deagainst the ambitionInvestment profile (m) Net income and return tra

2010 2011 2012 2013 Total2014

InfrastructureClient facing professionals

350

CAGR+15%

9%RoE

2010

Investment is focused on growing the HNW segmen


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Deposits bn 45

AuM bn 119

Margin ~90bps

Investment is focused on growing the HNW segmenand propositionNet income bridge (bn)

OtherGlobalMarkets

USUK2010

HNW Businesses

1.5

The first 15 months of delivery are on track ve


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Hiring and Productivity Platform

15 Month Hiring Record

US 82

UK 84

Global HNW 119

Total 285

2009-10 YoY Productivity Uplift

RM 19%

HNW RM 31%

Extensive data remediati

New client on-boarding t

Roll-out of CRM platform

Deployment of portfolio

system

End-to-end upgrade of cand margin process

The first 15 months of delivery are on track ve

Financial performance has been strong


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Financial Performance (m) HNW Business Performance

PBTNet income

143

1,271

163

1,512

2009 2010

- 112mGamma spend

YoY

Net income +19%

PBT +14%

Client assets +8%

HNW RMs +8%

Client Assets

UK

U

GlobHNW

Financial performance has been strong

Execution and growth in new markets has be


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Execution and growth in new markets has be

JAPAN

CHINA

INDIA

Mumbai

Singapore

Hong Kong

Tokyo

JAPAN

Secondmarket

Historihave be

Launchwith SM

INDIA

One of the fastest growingnew markets

Broad-based Barclaysfootprint

Launched Wealth onshorebusiness in 2008

Expected to enter Top 5 by2012

APAC 44% YoY revenue growth

High profile senior recruitment

Major platform upgrades

Strong partnership with Barclays Capital

Our commitments


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Our commitments

17-18% RoE


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Achieving our targets

Chris Lucas, Barclays Finance Director

Income growth initiatives


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Income growth initiatives

4.3-6.4bnadditional income target

RBB

1.5-2.0bn additional incomeby 2013

BarCap

1.8-2.4bn additional incfrom Equities and IB by 20

BarCorp

0.5-1.0bn additional income

by 2013

Wealth

0.5-1.0bn additional inco

by 2013

Maintain focus on risk-adjusted income


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Maintain focus on risk adjusted income

0

2,000

4,000

6,000

8,000 7,719 7,5997,040 6,765

8,065

8,516

6,291

8,568

2,309 2,247 1,658 1,857 1,508 1,572 1,218 1,374

Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410

Total impairment (m)

Total income (m) Averag

Key operating expenses initiatives


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Key operating expenses initiatives

Cost reduction principles

One Barclays Reducing complexity

Synergies and economies of scale

Up to 2bn of potential savings identified by 2013 relative to

run rate plan At least 1bn to be delivered by 2013

Operating expenses


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Operating expenses

Non performance costspro-forma

16.5bn

2010 2013

Cost savings target

1bnInvestment/underlying

growth

Target

16.8bn

Risk Weighted Assets pro forma under Base


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Risk Weighted Assets pro forma under Base

Basel 2 2010 Market risk Basel 2.5 Basel 2.5 2011 Basel 3 add-ons

including equivalents

Further manageme

actions

RWAs (bn)

40

398

(46)

97

438

Capital path


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Basel 2 2010 Basel 3 2013

Outstandingwarrants

0.2%Net RWA

effect fromBasel 2.5/3

(2.1%)

10.8%

Consensus retained

earnings2.8%

11.2%

Unrecognisedpensionliability

(0.5%)

p p

Pro forma Core Tier 1 ratios under Basel 3 at 31 December 2013

Roadmap to 13% RoE by business


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p y

(1) Published RoE adjusted for 10% CT1 capital allocation

2010 RoE (1) by business 2013 targets at 10% C

13% Target

BarCap

BarCorp

RBB - Africa

RBB - UK

RBB - Barclaycard

RBB - Europe

Wealth

15

10-11%

13-14

14-

1

4-5%

9%

0%

13%

11%

12%

(-7%)

15%


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Citizenship

Bob Diamond, Barclays Chief Executive


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Appendix

Chris Lucas, Barclays Finance Director

Notes


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SlideRisk Weighted Assets pro forma under Basel 3

2013 pro forma RWAs are presented for illustrative purposes only.

The Basel 3 RWA add-ons are estimates based on current interpretation of Basel 3 proposals and include RWAs for coun

securitisation deductions and 250% risk weighting for Deferred Tax Assets, Material Holdings and Mortgage Servicing Rof Core Tier 1 threshold).

SlideCapital path

2013 pro forma Core Tier 1 ratios are presented for illustrative purposes only.

Consensus estimates for retained earnings are from 24 sell-side analysts as at 10 June 2011, reflecting consensus dividenneither endorses nor verifies the estimates used.

The combined impact of Basel 3 and possible changes to pensions accounting will be to recognise the IFRS pension deficAs at 31/12/10, Barclays unrecognised IFRS pension deficit was 2.7bn.

The net RWA increase from Basel 2.5 and Basel 3 is calculated after allowing for amortisation / maturity of securitisationof securitisation deductions to Core Tier 1 capital, and management actions to reduce RWAs by 46bn.

The pro forma ratios do not include Basel 3 deductions from Core Tier 1 capital for excess Minority Interests, Deferred TaMaterial Holdings and Mortgage Servicing Rights which take effect from 1 January 2014 and transition at 20% per annum

Economic assumptions


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p

2011 Interest Rates (%) Inflation (CPI) (YoY %) GDP

UK 0.75 4.5

US 0.25 3.2

Eurozone 1.75 2.8

South Africa 6.00 4.9


UK 1.25 2.5 US 1.00 2.1

Eurozone 2.25 1.9


Economic assumptions


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UK 2.25 2.0

US 2.00 2.5

Eurozone 2.75 1.8



UK 3.00 2.0 US 2.75 2.5

Eurozone 3.00 1.8


bar cap 2011 investor seminar

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