barclays plc · 2013. 2. 12. · single digit growth . £210-230bn mid 30s 14-15% . £11.7bn ....
TRANSCRIPT
Barclays PLC Becoming the ‘Go-To’ bank
12 February 2013
NEW IMAGE TO BE ADDED
2 | Barclays Strategic Review | 12 February 2013
Our goal
To make Barclays the ‘Go-To’ bank for all of our stakeholders
3 | Barclays Strategic Review | 12 February 2013
Our strategic plan
To make Barclays the ‘Go-To’ bank for all of our stakeholders
Transform programme
Turnaround Return
Acceptable Numbers
Sustain Forward
Momentum
Turnaround
Return Acceptable Numbers
Sustain FORward Momentum
Stabilise the organisation, provide context for the change to come, maintain short-term momentum
Improve business returns define and execute plan to deliver RoE above CoE
Become the ‘Go-To’ bank for our stakeholders – customers and clients, colleagues, investors and wider society
4 | Barclays Strategic Review | 12 February 2013
Transform overview
Turnaround
Return Acceptable Numbers
Sustain FORward Momentum
Stabilise the organisation, provide context for the change to come, maintain short-term momentum
Improve business returns define and execute plan to deliver RoE above CoE
Become the ‘Go-To’ bank for our stakeholders – customers and clients, colleagues, investors and wider society
0-9 MONTHS
0-3 YEARS
0-5 YEARS
5 | Barclays Strategic Review | 12 February 2013
Turnaround - our purpose
To help people achieve their ambitions – in the right way
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Turnaround - our values
Respect Integrity Service Excellence Stewardship
We respect and value those we work with, and the contribution that they make
We act fairly, ethically and openly in all we do
We put our clients and customers at the centre of what we do
We use our energy, skills and resources to deliver the best, sustainable results
We are passionate about leaving things better than we found them
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Turnaround
Delivering financial objectives for 2012
Demonstrating our resilience and strong franchise
Commitment of our staff
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Return Acceptable Numbers
…above… Return on
Equity Cost of Equity
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Business Performance Review - assumptions
• 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 not included in business metrics
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2 Reposition
15 Business units
1 Invest and grow
4 Exit
4 Business units
3 Transition
Current ability to generate sustainable RoE above CoE High Low
Mar
ket a
ttra
ctiv
enes
s
High
Low
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
Business Performance Review
39 Business units
17 Business units
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2 Reposition
15 Business units
1 Invest and grow
39 Business units
4 Exit
4 Business units
3 Transition
17 Business units
Key metrics 2012
Income (£bn) 4.5
PBT (£bn) 0.5
B3 RWA (£bn) 62
Key metrics 2012
Income (£bn) 22.0
PBT (£bn) 7.7
B3 RWA (£bn) 287
Key metrics 2012
Income (£bn) 0.4
PBT (£bn) (1.1)
B3 RWA (£bn) 92
Key metrics 2012
Income (£bn) 2.2
PBT (£bn) 1.0
B3 RWA (£bn) 21
18% RoE
Current ability to generate sustainable RoE above CoE High Low
Mar
ket a
ttra
ctiv
enes
s
High
Low
1All footnotes are listed in the appendix
BPR – financial output 1
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Investment Bank 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
• Client-orientated flow business model
Large US and UK franchises, complemented by global reach
• Consistent growth in Equities and IBD in both US and UK
Focus on returns generation under Basel 3
• Proactive RWA management in FICC
• Right-sizing across all divisions to reflect market opportunities
• Profitable growth in the front-book
• Reduce legacy asset drag on returns
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FICC 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 efficiencies
• State-of-the art trading platform e.g. BARX
• Ongoing technology investment programme to maintain competitive advantage
• Proactive RWA management – plans to reduce legacy book from £79bn to £36bn in 2015
Best Flow House European FICC House of the Year
Best Multi-Asset Class Platform
Euromoney Awards 2012
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
Rank
ing
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Equities and Investment Banking Division Monetise market share gains in key markets
• Good progress in build-outs in a tough market environment
• Material market share gains in US and UK, which represent half the global revenue pool
• Growth based on ability to provide global reach to clients
• Focus on generating sustainable returns
• Though lower capital intensity, continue to scrutinise RWAs
• Right-size our footprint in some markets to reflect current market opportunity
• Reassess market conditions for improvement or worsening
#2 in US ECM
#1 in overall UK (ECM, M&A and DCM)
Highest ever ranking demonstrating growth2
Moved from #5 to #1 of overall UK IBD fees
2008-2012 Best Debt House
2012 share of reported Equities revenues vs. competitors2
Progression since 2010 Euromoney
Awards 2012
£bn
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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
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Investment Banking The Investment Bank will remain a large and very important part of the Group going forward
Single digit growth
£210-230bn
Mid 30s
14-15%
£11.7bn
£257bn3
39%
13.7%
FY 15 FY 12
Income
Proforma B3 RWA
Comp:Income
RoE4
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Corporate Banking In 2010 the business was repositioned and turnaround is progressing well
Adjusted PBT
(314)
204
551
2010 2011 2012
• Deal decisively with legacy issues
• Exited Russia, Indonesia and India Retail
• Reduce legacy portfolios in Europe5
• Continue to strengthen our market leading UK franchise
• Leverage our home market in UK and increasingly in Africa
• Provide multinational clients with full suite of investment banking and corporate products
• Plan for modest income growth but significant RoE improvement to over 10% by 2015
£m
2010
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UK RBB 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 Business Banking and mortgages
• Sharpen focus on costs to drive reduction in Cost:Income ratio to mid-50s
• RoE target of high teens by 2015
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Barclaycard 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 (top ten) and gained or maintained market share two years in a row6
• Unique advantages of geographic diversification and scale on both the consumer issuing and merchant acquiring sides of payments
• Doubled PBT in the past three years and nearly 300% over the past six years
• Business model set up to drive growth through scale economics, diversification, world class analytics and innovation
• Plan for modest income growth while maintaining >20% RoE
Mobile
Card
Contactless
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Wealth & Investment Management 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
• PBT has more than doubled since 2009
• Further plans to improve high-return areas and reposition lower-return areas (HNW Asia)
• Gamma investment at an advanced stage and now have IT platforms and bankers on board to deliver significant growth
• Income growth to generate significant increase in RoE to high teens
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One Africa 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 our businesses across the continent
• Global, regional and local relationship banking model creating a compelling proposition for customers and clients
• Opportunities for growth by broadening our services in leading markets and investing in local geographies where local presence is essential
• Over £900m PBT generated across all African businesses in 2012
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Africa RBB 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 the most innovative, digital banking solutions in Africa, leveraging our global technology capabilities
• Achieve RoE above CoE by 2015
23 | Barclays Strategic Review | 12 February 2013
Europe RBB 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 halving of 2010 run-rate costs
• Run-off of £23bn low-performing legacy assets, to be accelerated through dedicated asset optimisation team
• Target profitable mass affluent segment
• Plans driven by right-sizing of cost base to appropriate level of income and risk tightly managed
• Deliver a low, but positive RoE in 2015
24 | Barclays Strategic Review | 12 February 2013
Costs – Strategic battleground Cost target of £16.8bn in 2015 excluding £0.7bn cost to achieve
19.7 19.2
18.5 16.8
0.7 (1.7)
148,000
141,000 139,000
4,600
4,300 4,200
2010 2011 2012 2015 2015 Cost to achieve Target Cost reduction
Adjusted Operating Expenses (£bn)
Full Time Equivalents
Distribution Points
25 | Barclays Strategic Review | 12 February 2013
Group RWA progression Significant management actions to reduce low-returning RWAs, providing a buffer for further regulatory headwinds and investment in high return RWAsa
387
468
440
Dec 12 CRD IV and IFRS 10 impact
(estimated)
Jan 13 CRD IV
pro forma
Legacy Asset reductions
Other reductions
/optimisations
Net organic growth/further
regulatory change
Dec 15 Target
£bn
47
(47) 81
(28)
(75)
26 | Barclays Strategic Review | 12 February 2013
Capital structure Our target capital structure is intended to support CRD IV and ICB regulations
Barclays Q4 2012 Capital Structure
(Basel 2.5)
17.1% Total Capital Ratio
10.9% CT1
2.4% T1 (traditional)
3.8% T2
Barclays target CRD IV/ICB
Capital Structure
17.0% Total Capital Ratio
10.5% CET1
1.5% AT1
5.0% T2/Senior unsecured
2% CCN
27 | Barclays Strategic Review | 12 February 2013
Capital ratios Transitional CET1 in 2015 is expected to be well above 10.5%
10.9% 10.6%
8.2%
>10.5%
Reported Basel 2.5
CT1
Transitional Basel 3 CET1
Fully Loaded Basel 3 CET1
Target Transitional CET1 Ratio
Dec 12 Jan 13 Pro forma Dec 15
Group loan to deposit ratio 118% 110% 103-107%
Customer deposits/total funding
(excl. Absa)
47% 53% 60-65%
WAM wholesale funding (excl. liquidity pool)
58 mths
61 mths
Mid-50s mths
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Superior funding and liquidity Funding outlook to 2015
2011 2012 2015 • Increased customer and client deposits
• Reduced reliance on wholesale unsecured funding
• Growing usage of secured funding, while maintaining reasonable encumbrance levels
• Dramatic improvement in wholesale funding costs since summer 2012, which has been sustained in 2013
• Overall funding costs expected to fall
• Liquidity buffer targeted to reduce to £125-150bn in 2015, with the projected annual cost expected to fall to £300m9
Reduce risk weighted assets by £75bn gross by 2015 and invest in higher return businesses
Reduce operating expenses by £1.7bn by 2015 through a new approach to strategically manage costs
Reposition the European and Asian equities and IBD businesses
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Key actions
Grow our UK, US and African franchises
Restructure the European retail and corporate businesses
Focus on activities which support our customers and clients
Close Structured Capital Markets tax-related business unit
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Sustain Forward Momentum 0-5 YEARS
Controls Cost
Culture Rewards
31 | Barclays Strategic Review | 12 February 2013
Sustain Forward Momentum 0-5 YEARS
Culture
Rewards
Controls
Cost
• Embed Goal, Purpose and Values
• Tone at the top
• Leadership framework
• Balanced scorecard
32 | Barclays Strategic Review | 12 February 2013
Sustain Forward Momentum 0-5 YEARS
Culture
Rewards
Controls
Cost
• Balanced scorecard
• Maintain principles – pay for performance and for best talent
• Continue to adjust income distribution
• Target Group compensation to net income ratio in mid 30s
33 | Barclays Strategic Review | 12 February 2013
Sustain Forward Momentum 0-5 YEARS
Culture
Rewards
Controls
Cost
• Starts with individual responsibility – culture
• Strong oversight from world-class compliance function
• Have made a start – more to do
• Getting balance right requires training, investment and integration
34 | Barclays Strategic Review | 12 February 2013
Sustain Forward Momentum 0-5 YEARS
Culture
Rewards
Controls
Cost
• Strategic battleground for the next decade
• Requires fundamentally different approach
• Technology key
• Have already started the journey
Turnaround
Return Acceptable Numbers
Sustain FORward Momentum
Stabilise the organisation, provide context for the change to come, maintain short-term momentum
Improve business returns define and execute plan to deliver RoE above CoE
Become the ‘Go-To’ bank for our stakeholders – customers and clients, colleagues, investors and wider society
35 | Barclays Strategic Review | 12 February 2013
Transform overview
Turnaround
Return Acceptable Numbers
Sustain FORward Momentum
Stabilise the organisation, provide context for the change to come, maintain short-term momentum
Improve business returns define and execute plan to deliver RoE above CoE
Become the ‘Go-To’ bank for our stakeholders – customers and clients, colleagues, investors and wider society
0-9 MONTHS
0-3 YEARS
0-5 YEARS
36 | Barclays Strategic Review | 12 February 2013
Risks
Legacy issues
Significant change in Regulation
Failure to Execute
Major Economic Downturn
37 | Barclays Strategic Review | 12 February 2013
Risks – UK regulation
Ring-fence based on minimum liabilities with appropriate asset mix
Will establish operating service company
Some uncertainty remains
Best current estimate is that ongoing cost lower than earlier estimates
Confident could adapt Group structure if required
Legacy issues
Significant change in Regulation
Failure to Execute
Major Economic Downturn
38 | Barclays Strategic Review | 12 February 2013
Risks – legacy issues
Legacy issues
Significant change in Regulation
Failure to Execute
Major Economic Downturn
39 | Barclays Strategic Review | 12 February 2013
Risks – failure to execute
Only risk under our control
Rests squarely with me and my team
Recognise you need to be able to monitor progress
Legacy issues
Significant change in Regulation
Failure to Execute
Major Economic Downturn
40 | Barclays Strategic Review | 12 February 2013
Clear 2015 financial targets
Dividend Payout Ratio 19% 30%
Core Capital Ratio 10.9% >10.5%
Cost:Income Ratio 64% mid-50s
Pro forma B3 RWAs £468bn3 £440bn
Operating Expenses £18.5bn £16.8bn
2012 Results 2015 Targets
Return on Equity 7.8% > Group
CoE
Balanced scorecard
• Embed purpose and values
• Assessing performance against
• Customers and clients, company, conduct, colleagues and citizenship
41 | Barclays Strategic Review | 12 February 2013
Commitments – non-financial
Financial reporting
• Provide greater disclosure and transparency
• Committed to industry-leading financial reporting
42 | Barclays Strategic Review | 12 February 2013
Our goal
To make Barclays the ‘Go-To’ bank for all of our stakeholders
Barclays PLC Becoming the ‘Go-To’ bank
12 February 2013
NEW IMAGE TO BE ADDED