Slide 1: Barclays PLC Investment Bank
Barclays PLC Investment Bank 28 June 2013
Slide 2: Agenda
Agenda 1. Building on strong foundations to become the „Go-To‟ bank 2. Transforming our business for the new environment 3. Realistic plans to deliver on commitments 2 | Investment Bank Investor Presentation | 28 June 2013
Slide 3: Financial commitments
Financial commitments Group Investment Bank 2012 Restated Results 2015 Targets 2015 Targets Return on Fully loaded RoE 11-12% 9.0% > Group CoE Equity Includes impact of: Operating £16.8bn • Head office cost and minority interest (190 bps) £18.6bn Expenses • Bank levy (120 bps) • Residual legacy asse
Slide 4: Our current market position
Section 1: Building on strong foundations to become the „Go-To‟ investment bank Our current market position 1. Global reach with unique strengths in the largest markets 2. Leading Fixed Income, Currencies, Commodities (FICC) franchise 3. Significant progress in Banking and Equities 4. A business mod
Slide 5: Barclays is a global investment bank with leading franchises in the US and UK
Section 1: Building on strong foundations to become the „Go-To‟ investment bank Barclays is a global investment bank with leading franchises in the US and UK Home markets represent near 60% of Global presence Dual home markets in the US and UK the industry fee pool Global investment banking revenue
Slide 6: FICC represents over half of the global industry revenue pools
Section 1: Building on strong foundations to become the „Go-To‟ investment bank FICC represents over half of the global industry revenue pools… Global revenue pools up from 2011 ...of which FICC is the largest portion but below historical highs... Global revenue pools (2012, £bn) Global investment b
Slide 7: Barclays is a leader in FICC flow products
Section 1: Building on strong foundations to become the „Go-To‟ investment bank …and Barclays is a leader in FICC flow products Top 3 across key flow products Selective approach to other products Barclays FICC revenue rankings Barclays FICC revenue rankings 2011 2012 2011 2012 Flow Credit Distressed
Slide 8: Our efficient build-out in Banking has resulted in share growth
Section 1: Building on strong foundations to become the „Go-To‟ investment bank Our efficient build-out in Banking has resulted in share growth… Market share growth since …driven by a growing but still …resulting in higher revenue the acquisition… relatively small team… productivity Barclays market
Slide 9: The build-out has focused on high-margin businesses
Section 1: Building on strong foundations to become the „Go-To‟ investment bank …in particular, the build-out has focused on high-margin businesses Progress in Advisory … …and in Equity Capital Markets Advisory market share1 (volume) Equity Origination market share (volume) Net Corporate Broking cli
Slide 10: We have strong momentum in Equities sales and trading
Section 1: Building on strong foundations to become the „Go-To‟ investment bank We have strong momentum in Equities sales and trading Market share growth across all regions in a shrinking revenue …driven by strong content and client focus environment... Barclays market share in Equities sales and tr
Slide 11: Our business model has delivered stable earnings despite market volatility
Section 1: Building on strong foundations to become the „Go-To‟ investment bank Our business model has delivered stable earnings despite market volatility Conservative approach to risk Stable earnings Revenue/VaR (FY12) Standard deviation of quarterly Investment Bank PBT excluding own credit (£bn, Q
Slide 12: We have actively managed our cost base
Section 1: Building on strong foundations to become the „Go-To‟ investment bank We have actively managed our cost base… Significant reduction in costs while absorbing … resulting in consistent top tier cost performance investments…. Operating expenses (£m, including bank levy) Cost: Net Income ratio
Slide 13: Successfully reduced RWAs while absorbing the impact of Basel 2.5
Section 1: Building on strong foundations to become the „Go-To‟ investment bank …and successfully reduced RWAs while absorbing the impact of Basel 2.5 … through various management Reduced Risk Weighted Assets by £91bn since Dec 2008… actions Risk Weighted Assets (£bn) -34% Legacy reduction and 12
Slide 14: Agenda
Section 2a. Transforming our business for the new environment: Banking Agenda 1. Building on strong foundations to become the „Go-To‟ bank 2. Transforming our business for the new environment a. Banking b. Markets 3. Realistic plans to deliver on commitments 14 | Investment Bank Investor Presentatio
Slide 15: Our Banking strategy is based on our fundamental strengths
Section 2a. Transforming our business for the new environment: Banking Our Banking strategy is based on our fundamental strengths Business environment Our priorities to become the ‘Go-To’ bank Subdued macro economy 1. Continue to grow well-established franchises in the Americas and UK 2. Serve globa
Slide 16: Banking overview
Section 2a. Transforming our business for the new environment: Banking Banking overview Products Regions 2012 Banking total revenues 2012 Banking total revenues 2012 Banking cash revenues (cash and risk solutions) (cash and risk solutions) 100% = £2.1bn 100% = £3.6bn 100% = £3.6bn 8% 15% 42% 47% 26%
Slide 17: Strengthening senior client relationships in our two home markets
Section 2a: Transforming our business for the new environment: Banking Our focus is on strengthening senior client relationships in our two home markets… With regional concentration shifting towards the … we have clear plans in place to continue to grow share by Americas and UK… building on our exis
Slide 18: Serving the largest clients with an efficient global footprint
Section 2a: Transforming our business for the new environment: Banking …and on serving the largest clients with an efficient global footprint Given the limited fee pool opportunity …we have streamlined our onshore …and will focus on serving in APAC and EMEA ex-UK… footprint… the largest clients glob
Slide 19: Risk management solutions enable broader strategic dialogue with clients
Section 2a: Transforming our business for the new environment: Banking Risk management solutions on the private side enable broader strategic dialogue with clients Private side structure of risk management Different opportunities globally driven by the maturity of the risk solutions drives best-in-c
Slide 20: Bringing clients expertise from across Barclays to generate revenues
Section 2a: Transforming our business for the new environment: Banking We are bringing clients expertise from across Barclays to generate revenues efficiently Corporate Banking Africa Banking clients by corporate product use (Top 1,000 clients) Opportunities with Africa Deepen relationship further •
Slide 21: Case Study: Go-To Investment Bank
Section 2a: Transforming our business for the new environment: Banking Case Study: „Go-To‟ Investment Bank Offering 'best in class’ advice and products across Corporate and Investment Banking through regional coverage from US and UK Corporate Finance Transaction Management Advisory and Equity Origin
Slide 22: Agenda
Section 2b. Transforming our business for the new environment: Markets Agenda 1. Building on strong foundations to become the „Go-To‟ bank 2. Transforming our business for the new environment a. Banking b. Markets 3. Realistic plans to deliver on commitments 22 | Investment Bank Investor Presentatio
Slide 23: Markets is a client-focused business diversified by products and regions
Section 2b. Transforming our business for the new environment: Markets Markets is a client-focused business diversified by products and regions Clients Products Regions 2012 Revenues by product1 2012 Revenues by region • 48% of clients active in more than three products 11% • 47% of clients active i
Slide 24: Our strategy is aligned to the changing business environment
Section 2b. Transforming our business for the new environment: Markets Our strategy is aligned to the changing business environment Business environment Our priorities to become the ‘Go-To’ bank 1. Evolving our business mix Subdued macro economy 2. Enhancing our award winning technology and scaled e
Slide 25: We are actively evolving our business mix
Section 2b. Transforming our business for the new environment: Markets We are actively evolving our business mix Business evolution Revenue split1 (2010 – 2012) Average DVaR (£m) Flow2 Structured3 Simpler products 2010 67% 2010 20.6 Rates Rates 2011 84% 2011 17.7 2012 88% 2012 12.7 Less inventory Cr
Slide 26: We will continue to innovate and invest in technology
Section 2b. Transforming our business for the new environment: Markets We will continue to innovate and invest in technology Over the last decade we have helped define the market standard in electronic trading via the BARX platform and we continue to innovate delivering award winning customer soluti
Slide 27: Case study: BARX GATOR
Section 2b. Transforming our business for the new environment: Markets Case study: BARX GATOR Completing a large FX trade before Completing a large FX trade with GATOR Venue Venue Venue Venue Venue 2 3 Venue Venue 2 3 4 Venue 4 1 Venue 1 Venue 5 5 BARX GATOR Client Experience Client Client • Time co
Slide 28: We have right-sized our businesses
Section 2b. Transforming our business for the new environment: Markets We have right-sized our businesses… Headcount reductions (Sales, Trading, Research April 13 vs. April 12) Steps taken Commodities 18% Exited businesses / segments that were not aligned with core strategy Equities 16% FX 11% R
Slide 29: In Commodities, we changed our business model
Section 2b. Transforming our business for the new environment: Markets … for example in Commodities, where we changed our business model … … to focus on areas where we can generate sustainable We have significantly adapted our business model … returns Total trading costs Average DVaR Strategy -21% -
Slide 30: In Equities, we are increasing productivity
Section 2b. Transforming our business for the new environment: Markets … and in Equities, where we are increasing productivity Building on our strong US and UK franchises Refocusing our businesses in APAC and EMEA (ex-UK) EMEA Revenue per dedicated front office employee • Top 5 by total sales & trad
Slide 31: Client solutions for the changing market structure
Section 2b. Transforming our business for the new environment: Markets We will continue to deliver client solutions for the changing market structure Our first mover advantage in the rapidly growing OTC …. positions us well to monetise future opportunities clearing space… OTC clearing industry notio
Slide 32: We are managing our business to be capital efficient
Section 2b. Transforming our business for the new environment: Markets We are managing our business to be capital efficient… We have clear plans to enhance how we deploy RWAs on … and have built a suite of applications to maximise the an ongoing basis … capital efficiency of new and existing busines
Slide 33: We will continue to reduce legacy assets
Section 2b. Transforming our business for the new environment: Markets …and will continue to reduce legacy assets Our track record in selling down CMEs … … gives us confidence in our ability to reduce our new revised legacy asset portfolio Historic Credit Market Exposures Revised legacy asset portfo
Slide 34: Options to comply with emerging structural reform
Section 2b. Transforming our business for the new environment: Markets We have a range of options to comply with emerging structural reform We are actively engaged with UK, US and European regulators and have undertaken a detailed analysis of different scenarios, which are reflected in our 2015 fina
Slide 35: Agenda
Section 3. Realistic plans to deliver on commitments Agenda 1. Building on strong foundations to become the „Go-To‟ bank 2. Transforming our business for the new environment 3. Realistic plans to deliver on commitments 35 | Investment Bank Investor Presentation | 28 June 2013
Slide 36: Becoming the Go-To Investment Bank
Section 3. Realistic plans to deliver on commitments Becoming the „Go-To‟ Investment Bank Client Conduct • Being a strategic partner for our clients by providing long term • Transforming control environment front to back through strategic advice and solutions enhanced supervision practices, improved
Slide 37: We are reducing our cost base
Section 3. Realistic plans to deliver on commitments We are reducing our cost base … Investment Bank non-performance costs (£bn, 2012-2015) Estimated total Cost to 5.9 0.9 – 1.2 Achieve of £0.6bn 0.4 5.1 – 5.4 2012 Gross cost reduction Additional regulatory costs 2015 target (ex. CTA) / investments
Slide 38: Making structural changes to the way we run our business
Section 3. Realistic plans to deliver on commitments …by making structural changes to the way we run our business… Estimated Initiatives gross saving Reducing • Re-focusing business and product mix: Refocused on those areas with the greatest return and ’Reposition’, reduced risk profile (e.g. Commod
Slide 39: Enhancing efficiency
Section 3. Realistic plans to deliver on commitments …and by enhancing efficiency Estimated Initiatives gross saving Trades processed per Ops FTE • Automation and simplification: Enhancing front- to-back processes by the use of technology +20% Enhancing • De-duplication: Increasing standardisation o
Slide 40: We will continue to reduce RWAs
Section 3. Realistic plans to deliver on commitments We will continue to reduce RWAs Investment Bank Basel 3 pro forma RWAs (£bn) 257 11 16 Organic growth and further 16 regulatory change 210 -230 19 79 36 178 174 Jan 13 May YTD Further Further Other Dec 15 legacy legacy derivative optimisation redu
Slide 41: Targeting an RoE of >14% by 2015 excluding legacy assets
Section 3. Realistic plans to deliver on commitments We are targeting an RoE of >14% by 2015 excluding legacy assets Transform cells: 2015 view 2 Reposition Invest and grow 1 FICC (6) Equities – Europe excl. APAC Equities – North America, UK Equities – APAC (2) Prime Services IBD – Europe excl. UK •
Slide 42: 2015 financial targets
Section 3. Realistic plans to deliver on commitments 2015 financial targets FY 12 2015 targets 12.7% Fully loaded RoE 11-12% Target includes impact of: • Head office cost and minority interest (190 bps) • Bank levy (120 bps) • Residual legacy assets (300 bps) 40% Comp: Income Mid 30s £257bn Pro form
Slide 43: Barclays Investment Bank
Section 3. Realistic plans to deliver on commitments Barclays Investment Bank 1. Scale player in FICC, clear plans for growth in Equities and Banking 2. Unique UK/US home market presence with ability to service global clients in EMEA /APAC 3. Plans to structurally reduce non-performance costs while
Slide 44: Legal disclaimers
Legal disclaimers Important Notice The information, statements and opinions contained in this document do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of any offer to buy any securities or financial instruments or any advice or recommendation wit