Barclays Plc · LSE:BARC
Barclays — Investor Day (February 2013)
69 slides from Barclays's investor day presentation, Feb 12, 2013
Slide 1: Barclays PLC: Becoming the 'Go-To' bank
NEW IMAGE TO BE ADDED Barclays PLC Becoming the ‘Go-To’ bank 12 February 2013
Slide 2: Our goal
Our goal To make Barclays the ‘Go-To’ bank for all of our stakeholders 2 | Barclays Strategic Review | 12 February 2013
Slide 3: Our strategic plan
Our strategic plan To make Barclays the ‘Go-To’ bank for all of our stakeholders Transform programme Return Sustain Turnaround Acceptable Forward Numbers Momentum 3 | Barclays Strategic Review | 12 February 2013
Slide 4: Transform overview
Transform overview Stabilise the organisation, provide context for the change to come, maintain Improve business returns short-term momentum define and execute plan to deliver RoE above CoE Become the ‘Go-To’ bank 0-9 MONTHS for our stakeholders – customers and clients, Turnaround colleagues, invest
Slide 5: Turnaround - our purpose
Turnaround Turnaround - our purpose Return Acceptable Numbers Sustain FORward Momentum To help people achieve their ambitions – in the right way 5 | Barclays Strategic Review | 12 February 2013
Slide 6: Turnaround - our values
Turnaround Turnaround - our values Return Acceptable Numbers Sustain FORward Momentum Respect We respect and value those we work with, and the contribution that they make Integrity We act fairly, ethically and openly in all we do Service We put our clients and customers at the centre of what we do E
Slide 7: Turnaround
Turnaround Turnaround Return Acceptable Numbers Sustain FORward Momentum Delivering financial objectives for 2012 Demonstrating our resilience and strong franchise Commitment of our staff 7 | Barclays Strategic Review | 12 February 2013
Slide 8: Return: Acceptable Numbers
Turnaround Return Acceptable Numbers Return Acceptable Numbers Sustain FORward Momentum Return on Cost of …above… Equity Equity 8 | Barclays Strategic Review | 12 February 2013
Slide 9: Business Performance Review - assumptions
Turnaround Business Performance Review - assumptions Return Acceptable Numbers Sustain FORward Momentum • Muted economic outlook • Estimated costs for Basel 3 and other regulatory changes included • Reputational risks assessed through purpose and values lens • Head Office allocations considered, but
Slide 10: Business Performance Review
Turnaround Business Performance Review Return Acceptable Numbers Sustain FORward Momentum The Business Performance Review (BPR) underpinned the decisions to determine the shape of the Group based on a rigorous bottom-up analysis of 75 business units High 2 Reposition Invest and grow 1 Investment Ban
Slide 11: BPR – financial output
Turnaround BPR – financial output 1 Return Acceptable Numbers Sustain FORward Momentum High 2 Reposition Invest and grow 1 Key metrics 2012 Key metrics 2012 Income (£bn) 4.5 Income (£bn) 22.0 18% RoE PBT (£bn) 0.5 PBT (£bn) 7.7 15 B3 RWA (£bn) 62 B3 RWA (£bn) 287 39 Market attractiveness Business un
Slide 12: Investment Bank
Turnaround Investment Bank Return Acceptable Numbers Sustain FORward Momentum Largest business in the Group and well positioned to be one of the few full-service global investment banks, leveraging on our strong UK and US positions to serve our clients A leader in FICC • Mature, at scale platforms •
Slide 13: FICC
Turnaround FICC Return Acceptable Numbers Sustain FORward Momentum A leading scale player with top tier position across products • Strong and diversified business, well positioned to benefit from retrenchment of competitors • Leader in client-driven flow businesses • Scale player with operating effi
Slide 14: Equities and Investment Banking Division
Turnaround Equities and Investment Banking Division Return Acceptable Numbers Sustain FORward Momentum Monetise market share gains in key markets • Good progress in build-outs in a tough market environment 2012 share of reported Equities revenues vs. competitors2 • Material market share gains in US
Slide 15: Structured Capital Markets
Structured Capital Markets • Closing our Structured Capital Markets tax-related business unit • We will not engage in complex structures where the primary objective is accessing tax benefits • Incompatible with our purpose and the new tax principles we are publishing today 15 | Barclays Strategic Re
Slide 16: Investment Banking
Turnaround Investment Banking Return Acceptable Numbers Sustain FORward Momentum The Investment Bank will remain a large and very important part of the Group going forward FY 12 FY 15 £11.7bn Income Single digit growth £257bn3 Proforma B3 RWA £210-230bn 39% Comp:Income Mid 30s 13.7% RoE4 14-15% 16 |
Slide 17: Corporate Banking
Turnaround Corporate Banking Return Acceptable Numbers Sustain FORward Momentum In 2010 the business was repositioned and turnaround is progressing well • Deal decisively with legacy issues • Exited Russia, Indonesia and India Retail • Reduce legacy portfolios in Europe5 • Continue to strengthen our
Slide 18: UK RBB
Turnaround UK RBB Return Acceptable Numbers Sustain FORward Momentum A leading franchise in our UK home market • High performing despite macroeconomic environment • Focus on deepening customer engagement and enhancing customer satisfaction, with innovation and technology • Drive income growth in Bus
Slide 19: Barclaycard
Turnaround Barclaycard Return Acceptable Numbers Sustain FORward Momentum Business model set up to drive growth • Eighth largest consumer payments company in the world processing >£240bn annually • Top three in all markets and businesses except the US Card (top ten) and gained or maintained market s
Slide 20: Wealth & Investment Management
Turnaround Wealth & Investment Management Return Acceptable Numbers Sustain FORward Momentum Top ten wealth manager globally7 • Business entering high return phase • Fragmented global market represents significant opportunity • Strategic investment plan over last three years is yielding results • PB
Slide 21: One Africa
Turnaround One Africa Return Acceptable Numbers Sustain FORward Momentum Area of higher economic growth • One of the largest banks across Africa with a home market in South Africa and critical mass across most of our 12 African countries • One Africa strategy is to build the ‘Go-To’ bank integrating
Slide 22: Africa RBB
Turnaround Africa RBB Return Acceptable Numbers Sustain FORward Momentum Underlying fundamentals still strong • RBB is complemented by other African businesses, notably IB, Corporate and Cards • Some areas of variable performance but clear plans to improve returns in those units • Focus on building
Slide 23: Europe RBB
Turnaround Europe RBB Return Acceptable Numbers Sustain FORward Momentum Restructure business, manage risks tightly and reduce costs • Unsatisfactory returns, facing significant macro-economic challenges • Businesses need to be repositioned • Infrastructure and cost base to be reduced by 30%, near h
Slide 24: Costs – Strategic battleground
Turnaround Costs – Strategic battleground Return Acceptable Numbers Sustain FORward Momentum Cost target of £16.8bn in 2015 excluding £0.7bn cost to achieve Distribution 4,600 Points 4,300 4,200 Full Time 148,000 Equivalents 141,000 139,000 Adjusted Operating Expenses (£bn) (1.7) 0.7 19.7 19.2 18.5
Slide 25: Group RWA progression
Turnaround Group RWA progression Return Acceptable Numbers Sustain FORward Momentum Significant management actions to reduce low-returning RWAs, providing a buffer for further regulatory headwinds and investment in high return RWAsa £bn 81 (47) 468 47 (28) 440 387 (75) Dec 12 CRD IV and Jan 13 Legac
Slide 26: Capital structure
Turnaround Capital structure Return Acceptable Numbers Sustain FORward Momentum Our target capital structure is intended to support CRD IV and ICB regulations 17.1% 17.0% Total Capital Ratio Total Capital Ratio 3.8% £14.4bn 5.0% T2 T2/Senior unsecured 2.4% £9.5bn T1 (traditional) 1.5% 2% CCN AT1 1.5
Slide 27: Capital ratios
Turnaround Capital ratios Return Acceptable Numbers Sustain FORward Momentum Transitional CET1 in 2015 is expected to be well above 10.5% 10.9% 10.6% >10.5% 8.2% Reported Transitional Fully Loaded Target Transitional Basel 2.5 Basel 3 CET1 Basel 3 CET1 CET1 Ratio CT1 Dec 12 Jan 13 Pro forma Dec 15 2
Slide 28: Superior funding and liquidity
Turnaround Superior funding and liquidity Return Acceptable Numbers Sustain FORward Momentum Funding outlook to 2015 • Increased customer and client deposits 2011 2012 2015 • Reduced reliance on wholesale unsecured funding • Growing usage of secured funding, while maintaining reasonable Group loan t
Slide 29: Key actions
Turnaround Key actions Return Acceptable Numbers Sustain FORward Momentum Focus on activities which support our customers and clients Grow our UK, US and African franchises Restructure the European retail and corporate businesses Reposition the European and Asian equities and IBD businesses Close St
Slide 30: Sustain Forward Momentum
Turnaround Sustain Forward Momentum Return Acceptable Numbers Sustain FORward Momentum 0-5 YEARS Culture Rewards Controls Cost 30 | Barclays Strategic Review | 12 February 2013
Slide 31: Sustain Forward Momentum: Culture
Turnaround Sustain Forward Momentum Return Acceptable Numbers Sustain FORward Momentum 0-5 YEARS Culture • Embed Goal, Purpose and Values • Tone at the top Rewards • Leadership framework • Balanced scorecard Controls Cost 31 | Barclays Strategic Review | 12 February 2013
Slide 32: Sustain Forward Momentum: Rewards
Turnaround Sustain Forward Momentum Return Acceptable Numbers Sustain FORward Momentum 0-5 YEARS Culture • Balanced scorecard • Maintain principles – pay for performance Rewards and for best talent • Continue to adjust income distribution Controls • Target Group compensation to net income ratio in m
Slide 33: Sustain Forward Momentum: Controls
Turnaround Sustain Forward Momentum Return Acceptable Numbers Sustain FORward Momentum 0-5 YEARS Culture • Starts with individual responsibility – culture Rewards • Strong oversight from world-class compliance function Controls • Have made a start – more to do • Getting balance right requires Cost t
Slide 34: Sustain Forward Momentum: Cost
Turnaround Sustain Forward Momentum Return Acceptable Numbers Sustain FORward Momentum 0-5 YEARS Culture Rewards • Strategic battleground for the next decade • Requires fundamentally different approach Controls • Technology key • Have already started the journey Cost 34 | Barclays Strategic Review |
Slide 35: Risks
Turnaround Risks Return Acceptable Numbers Sustain FORward Momentum Major Economic Downturn Significant Failure to change in Execute Regulation Legacy issues 35 | Barclays Strategic Review | 12 February 2013
Slide 36: Risks – UK regulation
Turnaround Risks – UK regulation Return Acceptable Numbers Sustain FORward Momentum Ring-fence based on Major minimum liabilities with Economic appropriate asset mix Downturn Will establish operating service company Significant Failure to change in Some uncertainty remains Execute Regulation
Slide 37: Risks – legacy issues
Turnaround Risks – legacy issues Return Acceptable Numbers Sustain FORward Momentum Major Economic Downturn Significant Failure to change in Execute Regulation Legacy issues 37 | Barclays Strategic Review | 12 February 2013
Slide 38: Risks – failure to execute
Turnaround Risks – failure to execute Return Acceptable Numbers Sustain FORward Momentum Major Economic Only risk under Downturn our control Rests squarely Significant with me and my Failure to change in team Execute Regulation Recognise you need to be able to Legacy issues monitor progress 38
Slide 39: Clear 2015 financial targets
Turnaround Clear 2015 financial targets Return Acceptable Numbers Sustain FORward Momentum 2012 Results 2015 Targets Commentary Return on > Group Target sustainable returns in excess of cost of equity Equity 7.8% CoE Improve quality of income and predictability of earnings Operating Expenses £18
Slide 40: Commitments – non-financial
Commitments – non-financial • Embed purpose and values Balanced • Assessing performance against scorecard • Customers and clients, company, conduct, colleagues and citizenship Financial • Provide greater disclosure and transparency reporting • Committed to industry-leading financial reporting 40 | B
Slide 41: Our goal
Our goal To make Barclays the ‘Go-To’ bank for all of our stakeholders 41 | Barclays Strategic Review | 12 February 2013
Slide 42: Appendix
Appendix ( BARCLAYS
Slide 43: BPR – The Investment Bank
BPR – The Investment Bank Largest business cluster within Barclays, uniquely placed as global FICC player and a leader in the two largest investment banking markets 2 1 High Reposition Invest and grow Equities – Europe excl. UK FICC (6) Equities – Asia (2) Equities – North America, UK IBD – Europe e
Slide 44: The Investment Bank
The Investment Bank • One of a small group of global investment banks gaining share at low incremental cost • Full service model deployed in the UK and US with appropriately sized models for the rest of the world to reflect market opportunities • Further consolidate leading FICC franchise with top t
Slide 45: FICC
FICC • Strong client-based franchise, well diversified across asset classes and geographic regions, serving global client needs • Scale player well positioned to deliver returns in the new regulatory environment, and benefit from retrenchment of competitors Go-To: • Competitive advantage maintained
Slide 46: Equities and IBD
Equities and IBD • Larger market share and profitability trajectory in our US and UK franchises • Adaptable target model over various geographies, depending on core market and penetration Go-To: • Footprint and cost base realigned in Asia and Europe to reflect market environment • Low capital intens
Slide 47: BPR - Corporate Banking
BPR - Corporate Banking Strong overall UK franchise with broad, loyal client base. Globally, Corporate has access to international trade corridors, as well as local presence on the African continent 2 1 High Reposition Invest and grow UK – Education, Social Housing and Local Global Corporates Author
Slide 48: Corporate Banking
Corporate Banking • Core UK and Africa markets strengthened • Synergies across the Group maximised for referral and cross-sell Go-To: • New cash management platform fully deployed • Legacy assets wound down to improve returns • Maintain a franchise leading position in the UK Global Customer Balances
Slide 49: BPR – UK RBB
BPR – UK RBB UK RBB is a leading franchise in our UK home market where the majority of businesses are high performing despite challenging economic conditions 2 1 High Invest and grow Mortgages Retail Current Accounts Savings Insurance (2) Barclays Business Market attractiveness Consumer Loans 4 Tran
Slide 50: UK RBB
UK RBB • Unique and differentiated customer experience provided through seamless multichannel access, focused on digital channels (e.g. Barclays Mobile Banking, PingIt, Text alerts) • Simple products that are easily understood, putting the customer in control and building trust through transparency
Slide 51: BPR – Barclaycard
BPR – Barclaycard Barclaycard is a strong, diverse franchise with scale presence on both the consumer and merchant sides of payments with growth opportunities in multiple markets 2 1 High Invest and grow Business Payments Solutions Barclaycard US Entercard Germany Barclaycard UK Market attractivenes
Slide 52: Barclaycard
Barclaycard • Continue to surpass existing and new customers needs by developing new and innovative products • Attract over one million net new customers each year • Market leading net promoter scores and most trusted bank credit card brand in the UK Go-To: • Largest provider of mobile payments in E
Slide 53: BPR – Wealth & Investment Management
BPR – Wealth & Investment Management International mix of different businesses brought together through the ‗Gamma‘ strategic investment plan. Focus on growing High Net Worth businesses 2 1 High Reposition Invest and grow High Net Worth – Asia High Net Worth incl. Absa Wealth (3) International Inter
Slide 54: Wealth & Investment Management
Wealth & Investment Management • Relentless focus on improving the client experience • Delivery of best-in-class capabilities through Project Gamma Go-To: • Continued focus on building the High Net Worth (HNW) businesses into a top tier wealth manager • Integration of products and services across th
Slide 55: BPR – Africa RBB and One Africa
BPR – Africa RBB and One Africa Africa is the primary emerging market opportunity over the medium to long term for Barclays with strong GDP growth and our One Africa strategy will align businesses 2 1 High Reposition Invest and grow Absa Retail Absa Business Banking Africa – Retail Absa Financial Se
Slide 56: Africa RBB and One Africa
Africa RBB and One Africa • Global product knowledge combined with regional expertise and our extensive and well established local presence in 12 countries Go-To: • Through targeted innovation, improved customer and client service and experience • Expand in core markets and broaden footprint Africa
Slide 57: BPR – Europe RBB
BPR – Europe RBB Low return, mass consumer businesses utilising limited amounts of Group capital but facing significant challenges in macro economic and sovereign environment 2 1 High Reposition Invest and grow Mass Affluent – Spain Iberia Cards Mass Affluent – Portugal Market attractiveness 4 Legac
Slide 58: Europe RBB
Europe RBB • Downsized presence and run-off of mass consumer business • Legacy asset run-off through dedicated asset optimisation team Go-To: • Repositioned to focus on targeted growth in mass affluent segment • Business excluding legacy portfolio is expected to breakeven in 2014, with the whole bus
Slide 59: Group RWA progression, 2012-2015
Group RWA progression, 2012-2015 £bn CRD IV and IFRS 10 impact Management actions £81bn £75bn 27 (23) 468 (20) 25 47 (19) 440 29 (13) 393 387 Investment Bank (IB) £62bn Dec 12 CVA Securitisation Other Jan 13 Legacy Derivative Other IB Non-IB After Organic Dec 15 CRD IV asset credit risk Optimisation
Slide 60: Group RWA growth indications, 2012-2015
Group RWA growth indications, 2012-2015 ERBB • Growth in mass affluent offset by attrition in mass Corporate consumer • Growth in Global Corporates and Domestic Corporates in UK and Africa Investment Bank RWA • Growth in IBD and Equities in the US and UK Africa growth • Continued growth in FICC, • B
Slide 61: Group RWA – quadrant 4 legacy assets
Group RWAa – quadrant 4 legacy assets CRD IV add-ons IB Credit Market Exposures £44bn £9.5bn Additional IB legacy assets Corporate and Additional £9.5bn monoline IB legacy derivatives assets £7bn £7bn Legacy Corporate and monoline assets derivatives CRD IV add-ons IB CMEs £7bn RWAs £5bn £44bn £92bna
Slide 62: Funding and Liquidity
Funding and Liquidity Robust funding and liquidity position supported by diversified, low cost funding base Reduction in wholesale • Reduced wholesale funding requirement due to increase in customer deposits and further reduction of funding requirements legacy assets Reduction in term funding Barcla
Slide 63: Costs – Strategic battleground
Costs – Strategic battleground Over the next 3 years, results will be affected by ‗cost to achieve‘ charges, delivering further strategic cost reduction beyond 2015 £bn Adjusted operating expenses 18 Cost to achieve Operating Expenses 19.5 1.0 18.5 5% 1.0 17.5 4% 0.7 18.5 18.5 17.5 16.8 2012 2013 20
Slide 64: Cost to Achieve (P&L) breakdown 2013-2015
Cost to Achieve (P&L) breakdown 2013-2015 Executed and managed through active continuous feedback across the Balanced Scorecard Select examples Cost to achieve £bn Restructuring Restructuring • Europe Retail and Corporate restructuring (2013) – £0.4bn • IB restructuring (incl. Front Office, 2013) –
Slide 65: Examples of Strategic Cost Opportunities
Examples of Strategic Cost Opportunities Efficiency aspirations Execution Momentum Programme Select Initiatives Customer Experience Benefits • Deployed new customer on-boarding process in 800+ • Shortened home loan approval cycle from 13 to 4 days • 92% reduction in back office document validation I
Slide 66: Barclays tax principles
Barclays tax principles We believe that tax planning, for clients and on our Our tax professionals will be subject to clear own account, must… standards to ensure that they uphold these Support genuine commercial activity principles All tax planning must be subject to the robust Comply with ge
Slide 67: Economic assumptions
Economic assumptions Plan financials and RWAs based on the following assumptions and current market rates 7.00% Interest Rates 7.00 Inflation GDP Growth 5.00 6.00% 6.00 4.00 5.00% 5.00 3.00 4.00% 4.00 2.00 3.00% 3.00 1.00 2.00% 2.00 - 1.00% 1.00 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 (1.00) - - Dec 11 D
Slide 68: Footnotes
Footnotes Slide # Footnote 25.44,45.59,60,61 a RWA figures subject to FX, credit spreads and procyclicality Head Office income expense of £(0.1)bn, PBT of £(1.1)bn and RWAs of £6bn are not reflected in these figures 11,44.45.46.48.50.52.54.56.58 1 RWAs are shown B3 pro forma to include estimated CRD
Slide 69: 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