TIDM78MM
RNS Number : 6726G
Barclays Bank PLC
28 July 2021
Barclays Bank PLC
Interim Results Announcement
30 June 2021
Table of Contents
Results Announcement Page
Notes 1
Financial Review 2
Risk Management
* Risk Management and Principal Risks 4
* Credit Risk 6
* Market Risk 18
* Treasury and Capital Risk 19
Statement of Directors' Responsibilities 21
Independent Review Report to Barclays Bank PLC 22
Condensed Consolidated Financial Statements 23
Financial Statement Notes 29
Other Information 50
BARCLAYS BANK PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, UNITED
KINGDOM. TELEPHONE: +44 (0) 20 7116 1000. COMPANY NO. 102616
Notes
Barclays Bank PLC is a wholly-owned subsidiary of Barclays PLC.
The consolidation of Barclays Bank PLC and its subsidiaries is
referred to as the Barclays Bank Group. The consolidation of
Barclays PLC and its subsidiaries is referred to as the Barclays
Group or Barclays. Unless otherwise stated, the income statement
analysis compares the six months ended 30 June 2021 to the
corresponding six months of 2020 and the balance sheet analysis is
as at 30 June 2021 with comparatives relating to 31 December 2020.
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 27 July 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
contained an unmodified audit report under Section 495 of the
Companies Act 2006 (which did not make any statements under Section
498 of the Companies Act 2006) have been delivered to the Registrar
of Companies in accordance with Section 441 of the Companies Act
2006.
These results will be furnished as a Form 6-K to the US
Securities and Exchange Commission (SEC) as soon as practicable
following their publication. Once furnished with the SEC, a copy of
the Form 6-K will be available from the SEC's website at
www.sec.gov .
The 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, The
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
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 pay-out 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 governments and other
stakeholders to measure, 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 Barclays Bank Group's
reputation, 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 Barclays Bank PLC's
filings with the SEC (including, without limitation, Barclays Bank
PLC's Annual Report on Form 20-F for the fiscal year ended 31
December 2020 and Interim Results Announcement for the six months
ended 30 June 2021 filed on Form 6-K), which are available on the
SEC's website at www.sec.gov.
Subject to Barclays Bank PLC's 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.
Financial Review
Barclays Bank Group results
for the half year ended 30.06.21 30.06.20
GBPm GBPm % Change
============================================ ========= ========= ========
Total income 8,189 8,637 (5)
Credit impairment releases/(charges) 288 (2,674)
============================================ ========= ========= ========
Net operating income 8,477 5,963 42
Operating expenses (5,059) (4,548) (11)
Litigation and conduct (87) (19)
============================================ ========= ========= ========
Total operating expenses (5,146) (4,567) (13)
Other net income 3 127
============================================ ========= ========= ========
Profit before tax 3,334 1,523
Tax charge (611) (230)
============================================ ========= ========= ========
Profit after tax 2,723 1,293
Other equity instrument holders (303) (333) 9
============================================ ========= ========= ========
Attributable profit 2,420 960
As at As at
30.06.21 31.12.20
Balance sheet information GBPbn GBPbn
============================================ ========= ========= ========
Cash and balances at central banks 163.8 155.9
Cash collateral and settlement assets 108.5 97.6
Loans and advances at amortised cost 133.8 134.3
Trading portfolio assets 147.1 127.7
Financial assets at fair value through the
income statement 191.1 171.8
Derivative financial instrument assets 256.1 302.7
Other assets 63.9 69.7
============================================ ========= ========= ========
Total assets 1,064.3 1,059.7
Deposits at amortised cost 249.7 244.7
Cash collateral and settlement liabilities 101.0 85.5
Financial liabilities designated at fair
value 263.9 249.6
Derivative financial instrument liabilities 247.0 300.6
As at As at
30.06.21 31.12.20
Capital and liquidity metrics GBPbn GBPbn
============================================ ========= ========= ========
Common equity tier 1 (CET1) ratio(1,2) 13.9% 14.2%
Barclays Bank PLC DoLSub liquidity coverage
ratio 131% 145%
Barclays Bank Group liquidity pool 211 206
1 Barclays Bank PLC is currently regulated by the Prudential Regulation
Authority (PRA) on a solo-consolidated basis. The disclosure above
provides a capital metric for Barclays Bank PLC solo-consolidated.
For further information, refer to Treasury and Capital Risk on
page 20.
2 The CET1 ratio is calculated applying the IFRS 9 transitional arrangement
of the Capital Requirements Regulation (CRR) as amended by the
Capital Requirements Regulation II (CRR II) applicable as at the
reporting date. For further detail on the application of CRR and
CRR II in the UK, refer to Treasury and Capital Risk on page 20.
Barclays Bank Group Overview
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.
Barclays Bank Group performance
Income Statement - H121 compared to H120
The Barclays Bank Group's profit increased in H121, compared to
H120, reflecting an impairment release, which included an improved
macroeconomic outlook used in the Q221 scenario refresh. This was
partially offset by a decline in income and an increase in
operating expenses which included a structural cost action charge,
following a real estate review, and higher variable performance
costs that reflected an improvement in performance.
Profit before tax increased to GBP3,334m (H120: GBP1,523m)
driven by an increase in CIB to GBP3,276m (H120: GBP2,203m) and
CC&P to GBP463m (H120: GBP503m loss), partially offset by an
increased loss in Head Office of GBP405m (H120: GBP177m loss).
-- Total income decreased 5% to GBP8,189m
CIB income decreased 5% to GBP6,632m driven by a 17% decrease in
- Global Markets, reflecting tighter spreads and the non-recurrence
of H120 client activity levels, partially offset by a 29% increase
in Investment Banking fees as the fee pool and Barclays share improved(1)
. Corporate income increased 4% due to the non-recurrence of losses
on the mark-to-market of lending and related hedge positions partially
offset by a current year write-off on a single name
CC&P income decreased 5% to GBP1,649m reflecting lower cards balances,
- partially offset by the non-recurrence of 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 a net expense of GBP92m (H120: GBP78m net
- expense) which primarily reflected hedge accounting and funding
costs on legacy capital instruments
-- Credit impairment net release of GBP288m (H120: GBP2,674m charge)
was driven by an improved macroeconomic outlook used in the Q221
scenario refresh. Management judgements have been maintained and
refined in respect of customers and clients considered to be potentially
more vulnerable as government support scheme start to reduce
CIB credit impairment net release of GBP260m (H120: GBP1,320m charge),
- supported by benign credit risk environment and limited single
name wholesale loan charges
CC&P credit impairment net release of GBP22m (H120: GBP1,299m charge)
- partially driven by lower delinquencies and customer repayments
Head Office credit impairment release was GBP6m (H120: GBP55m charge)
-
-- Total operating expenses increased 13% to GBP5,146m
CIB total operating expenses increased 5% to GBP3,619m due to higher
- performance costs that reflected an improvement in performance
CC&P total operating expenses increased 14% to GBP1,208m driven
- by the impact of higher investment spend, including marketing,
and customer remediation costs related to a legacy portfolio
Head Office total operating expenses of GBP319m (H120: GBP44m)
- included a charge of GBP266m relating to a structural cost action
taken as part of a real estate review
-- Other net income decreased GBP124m to GBP3m due to the non-recurrence
of prior year gains on disposals from the sale of a number of subsidiaries
within the Barclays Group
-- The effective tax rate was 18.3% (H120: 15.1%). This reflects the
GBP137m tax benefit recognised for the re-measurement of the Barclays
Bank Group's UK deferred tax assets as a result of the UK corporation
tax rate increase from 19% to 25% from 1 April 2023
Balance sheet, capital and liquidity
30 June 2021 compared to 31 December 2020
-- Cash collateral and settlement assets and liabilities increased
GBP10.9bn to GBP108.5bn and GBP15.5bn to GBP101.0bn respectively
due to increased client activity
-- Trading portfolio assets increased GBP19.4bn to GBP147.1bn due
to increased activity
-- Financial assets at fair value through the income statement increased
GBP19.3bn to GBP191.1bn driven by increased secured lending
-- Derivative financial instrument assets and liabilities decreased
GBP46.6bn to GBP256.1bn and GBP53.6bn to GBP247.0bn respectively
driven by an increase in major interest rate curves
-- Deposits at amortised cost increased GBP5.0bn to GBP249.7bn due
to clients increasing liquidity
-- Financial liabilities designated at fair value increased GBP14.3bn
to GBP263.9bn driven by increased secured borrowing
-- The Barclays Bank PLC solo-consolidated CET1 ratio as at 30 June
2021 was 13.9%, which is above regulatory capital minimum requirements
-- The Barclays Bank Group liquidity pool increased to GBP211bn (December
2020: GBP206bn), driven by continued deposit growth and a seasonal
increase in short-term wholesale funding, which were partly offset
by an increase in business funding consumption. The Barclays Bank
PLC DoLSub liquidity coverage ratio (LCR) remained well above the
100% regulatory requirement at 131% (December 2020: 145%), and
reflects higher net stress outflows versus the year-end position.
1 Data source: Dealogic for the period covering 1 January to 30 June
2021
Risk Management
Risk management and principal risks
The roles and responsibilities of the business groups, Risk and
Compliance, in the management of risk in the Barclays Bank Group
are defined in the Enterprise Risk Management Framework. The
purpose of the framework is to identify the principal risks of the
Barclays Bank Group, the process by which the Barclays Bank Group
sets its appetite for these risks in its business activities, and
the consequent limits which it places on related risk taking.
The framework identifies eight principal risks: credit risk,
market risk, treasury and capital risk, operational risk, model
risk, conduct risk, reputation risk and legal risk. Further detail
on these risks and how they are managed is available in the
Barclays Bank PLC Annual Report 2020 (Risk Review, pages 35 to 57)
or online at home.barclays/annualreport.
Material existing and emerging risks
There have been no significant changes to these principal risks
or previously identified material existing and emerging risks in
the period other than an update to the risk relating to the impact
of benchmark interest rates on the Barclays Bank Group as a result
of developments relating to benchmark reform, as set out below.
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 (RFRs) 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 RFRs. 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 RFRs, the
participation of customers and third-party market participants in
the transition process and associated challenges with respect to
required documentation changes 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 RFRs,
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.
-- Litigation risk: members of the Barclays Bank Group may face legal
proceedings, regulatory investigations and/or other actions or
proceedings regarding (among other things) (i) the conduct risks
identified above, (ii) the interpretation and enforceability of
provisions in LIBOR-based contracts, and (iii) the Barclays Bank
Group's preparation and readiness for the replacement of LIBOR
with alternative RFRs.
-- Financial risk: the valuation of certain of the Barclays Bank
Group's" financial assets and liabilities may change. Moreover,
transitioning to alternative RFRs 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 RFRs (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
cash flows.
-- Pricing risk: changes to existing reference rates and indices,
discontinuation of any reference rate or indices and transition
to alternative RFRs 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 RFRs 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.
-- Accounting risk: an inability to apply hedge accounting in accordance
with IAS 39 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 Barclays Bank
PLC's audited financial statements for the year ended 31 December
2020 and Note 16.
Credit Risk
Loans and advances at amortised cost by product
The table below presents a breakdown of loans and advances at
amortised cost and the impairment allowance with stage allocation
by asset classification.
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 expected
credit loss (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.
Stage 2
============================
<=30 >30
Not days days
Stage past past past Stage
As at 30.06.21 1 due due due Total 3 Total(1)
Gross exposure GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============================== ======= ====== ===== ===== ====== ===== ========
Home loans 9,575 643 21 143 807 1,017 11,399
Credit cards, unsecured loans
and other retail lending 21,196 2,541 177 132 2,850 1,617 25,663
Wholesale loans 86,087 12,454 524 373 13,351 1,340 100,778
============================== ======= ====== ===== ===== ====== ===== ========
Total 116,858 15,638 722 648 17,008 3,974 137,840
Impairment allowance
============================== ======= ====== ===== ===== ====== ===== ========
Home loans 7 371 1 39 341 387
Credit cards, unsecured loans
and other retail lending 609 677 38 66 781 1,057 2,447
Wholesale loans 193 3165 10 331 667 1,191
============================== ======= ====== ==== ===== ====== ===== ========
Total 809 1,030 44 77 1,151 2,065 4,025
Net exposure
============================== ======= ====== ===== ===== ====== ===== ========
Home loans 9,568 606 20 142 768 676 11,012
Credit cards, unsecured loans
and other retail lending 20,587 1,864 139 66 2,069 560 23,216
Wholesale loans 85,894 12,138 519 363 13,020 673 99,587
============================== ======= ====== ===== ===== ====== ===== ========
Total 116,049 14,608 678 571 15,857 1,909 133,815
Coverage ratio %% %% %% %
============================== ======= ===== ==== ==== ===== ==== =======
Home loans 0.1 5.8 4.8 0.7 4.8 33.5 3.4
Credit cards, unsecured loans
and other retail lending 2.9 26.6 21.5 50.0 27.4 65.4 9.5
Wholesale loans 0.2 2.5 1.0 2.7 2.5 49.8 1.2
============================== ======= ====== ===== ===== ====== ===== ========
Total 0.7 6.6 6.1 11.9 6.8 52.0 2.9
As at 31.12.20
Gross exposure GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============================== ======= ====== ===== ===== ====== ===== ========
Home loans 9,627 761 53 87 901 1,099 11,627
Credit cards, unsecured loans
and other retail lending 18,923 4,987 393 191 5,571 1,853 26,347
Wholesale loans 83,254 14,184 1,066 688 15,938 2,167 101,359
============================== ======= ====== ===== ===== ====== ===== ========
Total 111,804 19,932 1,512 966 22,410 5,119 139,333
Impairment allowance
============================== ======= ====== ===== ===== ====== ===== ========
Home loans 6 406 6 52 376 434
Credit cards, unsecured loans
and other retail lending 399 1,092 111 124 1,327 1,253 2,979
Wholesale loans 280 475 499 533 840 1,653
============================== ======= ====== ===== ==== ====== ===== ========
Total 685 1,607 166 139 1,912 2,469 5,066
Net exposure
============================== ======= ====== ===== ===== ====== ===== ========
Home loans 9,621 721 47 81 849 723 11,193
Credit cards, unsecured loans
and other retail lending 18,524 3,895 282 67 4,244 600 23,368
Wholesale loans 82,974 13,709 1,017 679 15,405 1,327 99,706
============================== ======= ====== ===== ===== ====== ===== ========
Total 111,119 18,325 1,346 827 20,498 2,650 134,267
Coverage ratio %% %% %% %
============================== ======= ===== ==== ==== ===== ==== =======
Home loans 0.1 5.3 11.3 6.9 5.8 34.2 3.7
Credit cards, unsecured loans
and other retail lending 2.1 21.9 28.2 64.9 23.8 67.6 11.3
Wholesale loans 0.3 3.3 4.6 1.3 3.3 38.8 1.6
============================== ======= ====== ===== ===== ====== ===== ========
Total 0.6 8.1 11.0 14.4 8.5 48.2 3.6
1 Other financial assets subject to impairment excluded in the table
above include cash collateral and settlement balances, financial
assets at fair value through other comprehensive income, accrued
income and sundry debtors. These have a total gross exposure of
GBP159.9bn (December 2020: GBP150.3bn) and impairment allowance
of GBP102m (December 2020: GBP145m). This comprises GBP7m (December
2020: GBP7m) ECL on GBP159.8bn (December 2020: GBP146.3bn) Stage
1 assets, GBP1m(December 2020: GBP6m) on GBP34m (December 2020:
GBP3.8bn) Stage 2 fair value through other comprehensive income
assets, cash collateral and settlement balances and GBP94m (December
2020: GBP132m) on GBP94m (December 2020: GBP132m) Stage 3 other
assets. Loan commitments and financial guarantee contracts have
total ECL of GBP572m (December 2020:GBP769m).
Movement in gross exposures and impairment allowance including
provisions for loan commitments and financial guarantees
The following tables present a reconciliation of the opening to
the closing balance of the exposure and impairment allowance.
Explanation of the terms: 12-month ECL, lifetime ECL and
credit-impaired are included in the Barclays Bank PLC Annual Report
2020 on page 169. Transfers between stages in the tables have been
reflected as if they had taken place at the beginning of the year.
The movements are measured over a 6-month period.
Loans and advances at amortised cost
Stage 1 Stage 2 Stage 3 Total
Gross Gross Gross Gross
exposure ECL exposure ECL exposure ECL exposure ECL
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=========================== ========= ===== ========= ===== ========= ===== ========= =====
Home loans
=========================== ========= ===== ========= ===== ========= ===== ========= =====
As at 1 January 2021 9,627 6 901 52 1,099 376 11,627 434
-----
Transfers from Stage
1 to Stage 2 (282) - 282 - - - - -
Transfers from Stage
2 to Stage 1 248 15 (248) (15) - - - -
Transfers to Stage
3 (71) - (44) (4) 115 4 - -
Transfers from Stage
3 14 - 35 2 (49) (2) - -
Business activity
in the year 826 - - - - - 826 -
Changes to models
used for calculation(1) - - - (4) - 38 - 34
Net drawdowns, repayments,
net re-measurement
and movement due
to exposure and risk
parameter changes (484) (14) (48) 9 (55) (64) (587) (69)
Final repayments (303) - (71) (1) (83) (1) (457) (2)
-----
Disposals - - - - - - - -
Write-offs(2) - - - - (10) (10) (10) (10)
=========================== ========= ===== ========= ===== ========= ===== ========= =====
As at 30 June 2021(3) 9,575 7 807 39 1,017 341 11,399 387
Credit cards, unsecured loans and other retail lending
=====
As at 1 January 2021 18,923 399 5,571 1,327 1,853 1,253 26,347 2,979
-----
Transfers from Stage
1 to Stage 2 (539) (31) 539 31 - - - -
Transfers from Stage
2 to Stage 1 2,508 546 (2,508) (546) - - - -
Transfers to Stage
3 (130) (7) (280) (127) 410 134 - -
Transfers from Stage
3 14 18 20 6 (34) (24) - -
Business activity
in the year 2,330 30 20 4 20 4 2,370 38
Changes to models
used for calculation(1) - (3) - (27) - - - (30)
Net drawdowns, repayments,
net re-measurement
and movement due
to exposure and risk
parameter changes (752) (316) (463) 119 (84) 174 (1,299) (23)
Final repayments (1,158) (27) (49) (6) (61) (5) (1,268) (38)
-----
Disposals(4) - - - - (19) (11) (19) (11)
Write-offs(2) - - - - (468) (468) (468) (468)
=========================== ========= ===== ========= ===== ========= ===== ========= =====
As at 30 June 2021(3) 21,196 609 2,850 781 1,617 1,057 25,663 2,447
1 Changes to models used for calculation include a GBP34m movement
in Home Loans, GBP30m in Credit cards, unsecured loans and other
retail lending and GBP36m in Wholesale loans. These reflect methodology
changes made during the year. Barclays continually review the output
of models to determine accuracy of the ECL calculation including
review of model monitoring, external benchmarking and experience
of model operation over an extended period of time. This ensures
that the models used continue to reflect the risks inherent across
the businesses.
2 In H121, gross write-offs amounted to GBP606m (H120: GBP643m) and
post write-off recoveries amounted to GBP15m (H120: GBP1m). Net
write-offs represent gross write-offs less post write-off recoveries
and amounted to GBP591m (H120: GBP642m).
3 Other financial assets subject to impairment excluded in the tables
above include cash collateral and settlement balances, financial
assets at fair value through other comprehensive income and other
assets. These have a total gross exposure of GBP159.9bn (December
2020: GBP150.3bn) and impairment allowance of GBP102m (December
2020: GBP145m). This comprises GBP7m ECL (December 2020: GBP7m)
on GBP159.8bn Stage 1 assets (December 2020: GBP146.3bn), GBP1m
(December 2020: GBP6m) on GBP34m Stage 2 fair value through other
comprehensive income assets, cash collateral and settlement assets
(December 2020: GBP3.8bn) and GBP94m (December 2020: GBP132m) on
GBP94m Stage 3 other assets (December 2020: GBP132m).
4 The GBP19m of disposals reported within Credit cards, unsecured
loans and other retail lending portfolio relate to debt sales undertaken
during the year. The GBP101m of disposals reported within Wholesale
loans include the sale of Barclays Asset Finance and debt sales
.
Loans and advances at amortised cost
Stage 1 Stage 2 Stage 3 Total
Gross Gross Gross Gross
exposure ECL exposure ECL exposure ECL exposure ECL
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=========================== ========= ===== ========= ===== ========= ===== ========= =====
Wholesale loans
=========================== ========= ===== ========= ===== ========= ===== ========= =====
As at 1 January 2021 83,254 280 15,938 533 2,167 840 101,359 1,653
-----
Transfers from Stage
1 to Stage 2 (3,956) (10) 3,956 10 - - - -
Transfers from Stage
2 to Stage 1 5,093 104 (5,093) (104) - - - -
Transfers to Stage
3 (98) (1) (105) (11) 203 12 - -
Transfers from Stage
3 395 1 272 8 (667) (9) - -
Business activity
in the year 17,980 32 1,124 29 78 16 19,182 77
Changes to models
used for calculation(1) - (7) - (29) - - - (36)
Net drawdowns, repayments,
net re-measurement
and movement due to
exposure and risk
parameter changes 1,001 (167) 152 (14) (76) (4) 1,077 (185)
Final repayments (17,539) (38) (2,885) (91) (187) (32) (20,611) (161)
Disposals(2) (43) (1) (8) - (50) (28) (101) (29)
Write-offs(3) - - - - (128) (128) (128) (128)
=========================== ========= ===== ========= ===== ========= ===== ========= =====
As at 30 June 2021(4) 86,087 193 13,351 331 1,340 667 100,778 1,191
Reconciliation of ECL movement to impairment charge/(release)
for the period GBPm
============================================================================================ -----
Home loans (37)
Credit cards, unsecured loans and other retail lending (53)
Wholesale loans (305)
ECL movement excluding assets derecognised due to disposals
and write-offs (395)
Recoveries and reimbursements(5) 201
Exchange and other adjustments(6) 105
Impairment charge on loan commitments and other financial
guarantees (185)
Impairment charge on other financial assets(4) (14)
========= =====
Income statement release for the period (288)
1 Changes to models used for calculation include a GBP34m movement
in Home Loans, GBP30m in Credit cards, unsecured loans and other
retail lending and GBP36m in Wholesale loans. These reflect methodology
changes made during the year. Barclays continually review the output
of models to determine accuracy of the ECL calculation including
review of model monitoring, external benchmarking and experience
of model operation over an extended period of time. This ensures
that the models used continue to reflect the risks inherent across
the businesses
2 The GBP19m of disposals reported within Credit cards, unsecured
loans and other retail lending portfolio relate to debt sales undertaken
during the year. The GBP101m disposal reported within Wholesale
loans include sale of Barclays Asset Finance and debt sales.
3 In H121, gross write-offs amounted to GBP606m (H120: GBP643m) and
post write-off recoveries amounted to GBP15m (H120: GBP1m). Net
write-offs represent gross write-offs less post write-off recoveries
and amounted to GBP591m (H120: GBP642m).
4 Other financial assets subject to impairment excluded from the
tables above include cash collateral and settlement balances, financial
assets at fair value through other comprehensive income and other
assets. These have a total gross exposure of GBP159.9bn (December
2020: GBP150.3bn) and impairment allowance of GBP102m (December
2020: GBP145m). This comprises GBP7m ECL (December 2020: GBP7m)
on GBP159.8bn Stage 1 assets (December 2020: GBP146.3bn), GBP1m
(December 2020: GBP6m) on GBP34m Stage 2 fair value through other
comprehensive income assets, cash collateral and settlement assets
(December 2020: GBP3.8bn) and GBP94m (December 2020: GBP132m) on
GBP94m Stage 3 other assets (December 2020: GBP132m).
5 Recoveries and reimbursements includes a net loss in relation to
reimbursements from guarantee contracts held with third parties
of GBP216m and post write off recoveries of GBP15m.
6 Exchange and other adjustments includes foreign exchange and interest
and fees in suspense.
Loan commitments and financial guarantees
Stage 1 Stage 2 Stage 3 Total
Gross Gross Gross Gross
exposure ECL exposure ECL exposure ECL exposure ECL
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=========================== ========= ===== ========= ===== ========= ==== ========= =====
Home loans
=========================== ========= ===== ========= ===== ========= ==== ========= =====
As at 1 January 2021 125 - 2 - 4 - 131 -
Net transfers between - - - - - - - -
stages
Business activity
in the year 6 - 1 - - - 7 -
Net drawdowns, repayments,
net re-measurement
and movement due to
exposure and risk
parameter changes (6) - - - - - (6) -
Limit management and
final repayments (88) - - - (3) - (91) -
=========================== ========= ===== ========= ===== ========= ==== ========= =====
As at 30 June 2021 37 - 3 - 1 - 41 -
Credit cards, unsecured loans and other retail lending
As at 1 January 2021 68,211 34 6,244 33 30 23 74,485 90
Net transfers between
stages 3,555 8 (3,786) (3) 231 (5) - -
Business activity
in the year 3,135 1 23 - 1 1 3,159 2
Net drawdowns, repayments,
net re-measurement
and movement due to
exposure and risk
parameter changes 2,142 (9) 213 1 (232) 3 2,123 (5)
Limit management and
final repayments (4,476) - (353) - (3) (2) (4,832) (2)
=========================== ========= ===== ========= ===== ========= ==== ========= =====
As at 30 June 2021 72,567 34 2,341 31 27 20 74,935 85
Wholesale loans
=========================== ========= ===== ========= ===== ========= ==== ========= =====
As at 1 January 2021 160,404 205 39,426 446 2,031 28 201,861 679
Net transfers between
stages 96 115 1,087 (111) (1,183) (4) - -
Business activity
in the year 39,001 28 2,916 89 12 9 41,929 126
Net drawdowns, repayments,
net re-measurement
and movement due to
exposure and risk
parameter changes 1,912 (146) 688 (61) (28) 2 2,572 (205)
Limit management and
final repayments (32,861) (25) (4,843) (83) (455) (5) (38,159) (113)
=========================== ========= ===== ========= ===== ========= ==== ========= =====
As at 30 June 2021 168,552 177 39,274 280 377 30 208,203 487
Management adjustments to models for impairment
Management adjustments to impairment models are made in the
ordinary course of business in order to reflect changes in policy
or correct model performance issues identified through model
monitoring. These adjustments remain in place until they are
incorporated into future model development and are then retired. In
addition, they may also be made in response to circumstances or
uncertainty at the period end and this is particularly true of the
ongoing COVID-19 pandemic.
Total management adjustments to impairment allowance are
presented by product below.
Overview of management adjustments to models for impairment
allowance(1)
As at 30.06.21 As at 31.12.20
Management Proportion Management Proportion
adjustments of total adjustments of total
to impairment impairment to impairment impairment
allowances allowances allowances allowances
GBPm % GBPm %
======================== ============== =========== ============== ===========
Home loans 22 5.7 54 12.4
Credit cards, unsecured
loans and other retail
lending 550 21.7 960 31.3
Wholesale loans 479 28.5 (78) (3.3)
======================== ============== =========== ============== ===========
Total 1,051 22.9 936 16.0
Management adjustments to models for impairment allowance(1)
Impairment
allowance Economic Total
pre management uncertainty Other impairment
adjustments(2) adjustments adjustments allowance
As at 30.06.2021 GBPm GBPm GBPm GBPm
================================== =============== ============ ============ ===========
Home loans 365 22 0 387
Credit cards, unsecured loans and
other retail lending 1,982 778 (228) 2,532
Wholesale loans 1,199 615 (136) 1,678
================================== =============== ============ ============ ===========
Total 3,546 1,415 (364) 4,597
As at 31.12.20
================================== =============== ============ ============ ===========
Home loans 380 21 33 434
Credit cards, unsecured loans and
other retail lending 2,109 986 (26) 3,069
Wholesale loans 2,410 379 (457) 2,332
================================== =============== ============ ============ ===========
Total 4,899 1,386 (450) 5,835
1 Positive values reflect an increase in impairment allowance.
2 Includes GBP2.6bn (December 2020: GBP3.9bn) of modelled ECL, GBP0.7bn
(December 2020: GBP0.8bn) of individually assessed impairments
and GBP0.2bn (December 2020: GBP0.2bn) ECL from non-modelled exposures.
Economic uncertainty adjustments
The COVID-19 pandemic has impacted the global economy since
early 2020 and macroeconomic forecasts indicate longer-term impacts
that result in higher unemployment levels and customer and client
stress. However, to date, little real credit deterioration has
occurred, largely as a result of government and other support
measures. Observed 30-day arrears rates have reduced in US cards to
1.6% (December 2020: 2.5%; December 2019: 2.7%) due to payment
holidays granted to customers impacted by COVID-19 which reduced
the delinquency entrance rate and overall flow through delinquency.
However, uncertainty remains as government and other support
measures taper down as to whether these schemes have either averted
or delayed credit losses.
In order to address this uncertainty, adjustments to the
modelled provisions were made in 2020. COVID-19 related economic
uncertainty adjustments of GBP1.4bn (December 2020: GBP1.4bn)
continue to be recognised, specifically to address whether support
measures have averted or delayed credit losses. However, within
this, the approach has been refined and uncertainty is now captured
in two distinct ways: firstly, the identification of specific
customers and clients who may be more vulnerable to the withdrawal
of relief and secondly, macroeconomic and risk parameter
uncertainties which are applied at a portfolio level.
A summary of the adjustments is provided below:
-- A GBP0.8bn adjustment has been applied for customers and clients
considered potentially vulnerable to the withdrawal of government
and other support schemes. In US consumer card portfolios, the
populations identified are those who have higher potential risk
indicators. In wholesale portfolios these include those corporate
sectors deemed more vulnerable to the economic impacts of COVID-19.
This adjustment is split between credit cards and unsecured loans,
GBP0.6bn, and wholesale loans, GBP0.2bn.
-- Expert judgement has been used to adjust the probability of default
at portfolio level to pre-COVID-19 levels to reflect the impact
of temporary support measures on underlying customer and client
behaviour. This adjustment, of GBP0.2bn, has remained at a similar
level to December 2020 (GBP0.1bn).
-- Macroeconomic variables which may be temporarily influenced by
support measures have been adjusted at a portfolio level enabling
the model to consume the economic stress. This adjustment has been
reduced to GBP0.5bn from GBP1.0bn at December 2020 as management
judgement has been refined towards potentially vulnerable customers
and clients as the pandemic has evolved.
Other adjustments
Credit cards, unsecured loans and other retail lending:
Primarily relates to a net release in ECL of GBP0.2bn in
Barclaycard US to more accurately reflect Loss Given Default in
Stage 3.
Wholesale loans: Represents the net adjustments of GBP136m in
the Investment Bank for model inaccuracies informed by
back-testing. An adjustment to offset modelled ECL output in the
Investment Bank to limit excessive ECL sensitivity to the
macroeconomic variable for Federal Tax Receipts in place at
December 2020 is materially reduced due to the Q221 scenario
refresh.
Measurement uncertainty
The Barclays Bank Group uses a five-scenario model to calculate
ECL. An external consensus forecast is assembled from key sources,
including HM Treasury (short and medium-term forecasts), Bloomberg
(based on median of economic forecasts) and the Urban Land
Institute (for US House Prices), which forms the Baseline scenario.
In addition, two adverse scenarios (Downside 1 and Downside 2) and
two favourable scenarios (Upside 1 and Upside 2) are derived, with
associated probability weightings. The adverse scenarios are
calibrated to a broadly similar severity to Barclays' internal
stress tests and stress scenarios provided by regulators whilst
also considering IFRS 9 specific sensitivities and non-linearity.
Downside 2 is benchmarked to the Bank of England's stress scenarios
and to the most severe scenario from Moody's inventory, but is not
designed to be the same. The favourable scenarios are calibrated to
reflect upside risks to the Baseline scenario to the extent that is
broadly consistent with recent favourable benchmark scenarios. All
scenarios are regenerated at a minimum semi-annually. The scenarios
include eight economic variables (GDP, unemployment, House Price
Index (HPI) and base rates, in both the UK and US markets), and
expanded variables using statistical models based on historical
correlations. The upside and downside shocks are designed to evolve
over a five-year stress horizon, with all five scenarios converging
to a steady state after approximately eight years.
Macroeconomic indicators were refreshed in Q221, with key
drivers for the baseline scenario more optimistic than Q420,
resulting in a net ECL provision release. In the Baseline scenario,
UK GDP returns to the pre-pandemic level by mid-2022 with peak UK
unemployment of just over 6% in Q421. In the Upside 2 scenario,
effective fiscal stimulus measures, including public investments in
infrastructure and skills, provide a boost to demand and
confidence, which in turn leads to economic activity in almost all
advanced economies returning to the pre-COVID-19 pandemic levels by
the end of 2021. Unemployment levels decline back below 5% by H222
in the UK, and below 4% by early 2022 in the US. In the Downside 2
scenario supply and distribution issues slow the vaccination
process and the emergence of new virus variants that are not
susceptible to the existing vaccines fuels the outbreak again
resulting in full national lockdowns in Q321. This leads to
significant falls in GDP in Q321 and UK and US unemployment
reaching c.10% and 12% respectively.
Although the macroeconomic outlook has improved, the Barclays
Bank Group's view on uncertainty remains unchanged, believing
potential credit deterioration could be seen once government
support is removed, particularly in vulnerable areas of the
portfolio. In response, economic uncertainty PMAs remained
relatively stable at c.GBP1.4bn. For further details see page
10.
Limited defaults have been observed to date in response to the
COVID-19 pandemic, partly as a result of government and bank
support measures. However, such support measures are scheduled to
taper down from Q321 bringing with it uncertainty. Despite
improvement in macroeconomic variables in the period, unemployment
remains at elevated levels but portfolios are yet to respond, and
may not do so until support measures fall away.
The methodology for estimating probability weights for each of
the scenarios involves a comparison of the distribution of key
historical UK and US macroeconomic variables against the forecast
paths of the five scenarios. The range of forecast paths generated
in the calculation of the weights at 30 June 2021 is slightly
narrower than 31 December 2020 due to lower levels of uncertainty.
The Upside 2 and Downside 2 scenarios are therefore nearer the
tails of the distribution than previously resulting in lower
weights. See page 16 for probability weightings used H121.
The tables below show: (i) the key consensus macroeconomic
variables used in the scenarios (3-year annual paths); (ii) the
probability weights applied to each scenario; and (iii) the
macroeconomic variables by scenario using 'specific bases', i.e.
the most extreme position of each variable in the context of the
scenario, for example, the highest unemployment for downside
scenarios and the lowest unemployment for upside scenarios. The
5-year average table provides additional transparency.
Baseline average economic variables used in the calculation of ECL
2021 2022 2023
As at 30.06.2021 % % %
========================================= ========== ========= =======
UK GDP(1) 4.9 5.6 2.3
UK unemployment(2) 5.8 5.7 5.1
UK HPI(3) (0.5) 0.3 3.1
UK bank rate 0.1 0.2 0.4
US GDP(1) 5.7 3.9 1.6
US unemployment(4) 5.6 4.5 4.4
US HPI(5) 3.9 3.5 3.5
US federal funds rate 0.3 0.3 0.7
As at 31.12.20
========================================= ========== ========= =======
UK GDP(1) 6.3 3.3 2.6
UK unemployment(2) 6.7 6.4 5.8
UK HPI(3) 2.4 2.3 5.0
UK bank rate - (0.1) -
US GDP(1) 3.9 3.1 2.9
US unemployment(4) 6.9 5.7 5.6
US HPI(5) 2.8 4.7 4.7
US federal funds rate 0.3 0.3 0.3
1 Average Real GDP seasonally adjusted change in year.
2 Average UK unemployment rate 16-year+.
3 Change in average yearly UK HPI = Halifax All Houses, All Buyers
index, relative to prior year end.
4 Average US civilian unemployment rate 16-year+.
5 Change in average yearly US HPI = FHFA House Price Index, relative
to prior year end.
Downside 2 average economic variables used in the calculation of ECL
2021 2022 2023
As at 30.06.21 % % %
======================================= =========== =========== ========
UK GDP(1) (1.7) 2.0 5.2
UK unemployment(2) 7.3 8.2 6.6
UK HPI(3) (5.8) (5.8) 0.2
UK bank rate 0.1 - -
US GDP(1) 1.5 1.4 2.0
US unemployment(4) 8.7 11.0 9.3
US HPI(5) (4.9) (3.0) 1.1
US federal funds rate 0.3 0.3 0.3
As at 31.12.20
======================================= =========== =========== ========
UK GDP(1) (3.9) 6.5 2.6
UK unemployment(2) 8.0 9.3 7.8
UK HPI(3) (13.6) (10.8) 0.5
UK bank rate (0.2) (0.2) (0.1)
US GDP(1) (2.4) 3.6 2.1
US unemployment(4) 13.4 11.9 10.1
US HPI(5) (17.2) (0.7) 0.6
US federal funds rate 0.3 0.3 0.3
1 Average Real GDP seasonally adjusted change in year.
2 Average UK unemployment rate 16-year+.
3 Change in average yearly UK HPI = Halifax All Houses, All Buyers
index, relative to prior year end.
4 Average US civilian unemployment rate 16-year+.
5 Change in average yearly US HPI = FHFA House Price Index, relative
to prior year end.
Downside 1 average economic variables used in the calculation of ECL
2021 2022 2023
As at 30.06.21 % % %
========================================== ========== ========== =======
UK GDP(1) 0.6 4.4 4.2
UK unemployment(2) 6.4 6.6 5.6
UK HPI(3) (3.1) (2.7) 1.7
UK bank rate 0.1 0.1 0.2
US GDP(1) 3.4 2.5 1.6
US unemployment(4) 7.4 7.9 6.1
US HPI(5) (0.5) 0.2 2.3
US federal funds rate 0.3 0.3 0.3
As at 31.12.20
========================================== ========== ========== =======
UK GDP(1) 0.1 6.6 3.2
UK unemployment(2) 7.3 8.0 6.9
UK HPI(3) (6.7) (3.5) 1.7
UK bank rate (0.1) (0.1) -
US GDP(1) 0.4 3.6 2.3
US unemployment(4) 11.0 8.9 6.9
US HPI(5) (5.9) 1.8 2.6
US federal funds rate 0.3 0.3 0.3
1 Average Real GDP seasonally adjusted change in year.
2 Average UK unemployment rate 16-year+.
3 Change in average yearly UK HPI = Halifax All Houses, All Buyers
index, relative to prior year end.
4 Average US civilian unemployment rate 16-year+.
5 Change in average yearly US HPI = FHFA House Price Index, relative
to prior year end.
Upside 2 average economic variables used in the calculation of ECL
2021 2022 2023
As at 30.06.21 % % %
=========================================== ======== ======== ========
UK GDP(1) 6.8 9.4 4.0
UK unemployment(2) 5.5 4.9 4.4
UK HPI(3) 4.6 9.9 11.3
UK bank rate 0.1 0.4 0.6
US GDP(1) 6.5 8.2 3.4
US unemployment(4) 5.3 3.8 3.8
US HPI(5) 6.5 8.0 7.3
US federal funds rate 0.3 0.3 1.1
As at 31.12.20
=========================================== ======== ======== ========
UK GDP(1) 12.2 5.3 3.9
UK unemployment(2) 6.2 5.5 4.8
UK HPI(3) 6.6 10.4 10.8
UK bank rate 0.1 0.3 0.3
US GDP(1) 7.1 4.6 4.0
US unemployment(4) 5.5 4.3 4.1
US HPI(5) 8.8 9.1 8.9
US federal funds rate 0.3 0.4 0.6
1 Average Real GDP seasonally adjusted change in year.
2 Average UK unemployment rate 16-year+.
3 Change in average yearly UK HPI = Halifax All Houses, All Buyers
index, relative to prior year end.
4 Average US civilian unemployment rate 16-year+.
5 Change in average yearly US HPI = FHFA House Price Index, relative
to prior year end.
Upside 1 average economic variables used in the calculation of ECL
2021 2022 2023
As at 30.06.21 % % %
=========================================== ======== ======== ========
UK GDP(1) 5.9 7.3 3.0
UK unemployment(2) 5.6 5.2 4.7
UK HPI(3) 1.5 4.5 7.4
UK bank rate 0.1 0.2 0.6
US GDP(1) 6.1 5.8 2.4
US unemployment(4) 5.5 4.2 4.2
US HPI(5) 6.2 6.8 5.7
US federal funds rate 0.3 0.3 0.9
As at 31.12.20
=========================================== ======== ======== ========
UK GDP(1) 9.3 3.9 3.4
UK unemployment(2) 6.4 6.0 5.2
UK HPI(3) 4.6 6.1 6.1
UK bank rate 0.1 0.1 0.3
US GDP(1) 5.5 4.0 3.7
US unemployment(4) 6.0 4.8 4.6
US HPI(5) 6.8 6.7 6.3
US federal funds rate 0.3 0.3 0.5
1 Average Real GDP seasonally adjusted change in year.
2 Average UK unemployment rate 16-year+.
3 Change in average yearly UK HPI = Halifax All Houses, All Buyers
index, relative to prior year end.
4 Average US civilian unemployment rate 16-year+.
5 Change in average yearly US HPI = FHFA House Price Index, relative
to prior year end.
Scenario probability weighting
Upside Upside Downside Downside
2 1 Baseline 1 2
% % % % %
=============================== ====== ====== ======== ======== ========
As at 30.06.21
Scenario probability weighting 19.6 24.5 26.4 16.9 12.6
=============================== ====== ====== ======== ======== ========
As at 31.12.20
Scenario probability weighting 20.2 24.2 24.7 15.5 15.4
Specific bases show the most extreme position of each variable
in the context of the scenario, for example, the highest
unemployment for downside scenarios, average unemployment for
baseline scenarios and lowest unemployment for upside scenarios.
GDP and HPI downside and upside scenario data represents the lowest
and highest points relative to the start point in the 20 quarter
period.
Macroeconomic variables (specific bases)(1)
Upside Upside Baseline Downside Downside
2 1 1 2
As at 30.06.2021 % % % % %
UK GDP(2) 25.9 20.2 3.3 (4.2) (8.1)
UK unemployment(3) 4.1 4.3 5.1 7.5 9.8
UK HPI(4) 48.2 25.5 1.6 (5.8) (11.8)
UK bank rate(3) 0.1 0.1 0.4 0.3 0.1
US GDP(2) 23.7 18.3 2.8 (0.2) (3.2)
US unemployment(3) 3.8 4.2 4.7 8.9 12.0
US HPI(4) 41.2 32.6 3.6 (1.3) (7.9)
US federal funds rate(3) 0.3 0.3 0.8 1.5 0.8
As at 31.12.20
UK GDP(2) 14.2 8.8 0.7 (22.1) (22.1)
UK unemployment(3) 4.0 4.0 5.7 8.4 10.1
UK HPI(4) 48.2 30.8 3.6 (4.5) (18.3)
UK bank rate(3) 0.1 0.1 - 0.6 0.6
US GDP(2) 15.7 12.8 1.6 (10.6) (10.6)
US unemployment(3) 3.8 3.8 6.4 13.0 13.7
US HPI(4) 42.2 30.9 3.8 (3.7) (15.9)
US federal funds rate(3) 0.1 0.1 0.3 1.3 1.3
1 UK GDP = Real GDP growth seasonally adjusted; UK unemployment =
UK unemployment rate 16-year+; UK HI = Halifax All Houses, All
Buyers Index; US GDP = Real GDP growth seasonally adjusted; US
unemployment = US civilian unemployment rate 16-year+; US HPI =
FHFA House Price Index. 20 quarter period starts from Q121 (2020:
Q120).
2 Maximum growth relative to Q420 (2020: Q419), based on 20 quarter
period in Upside scenarios; 5-year yearly average Compound Annual
Growth Rate (CAGR) in Baseline; minimum growth relative to Q420
(2020: Q419), based on 20 quarter period in Downside scenarios.
3 Lowest quarter in 20 quarter period in Upside scenarios; 5-year
average in Baseline; highest quarter 20 quarter period in Downside
scenarios..
4 Maximum growth relative to Q420 (2020: Q419), based on 20 quarter
period in Upside scenarios; 5-year quarter end CAGR in Baseline;
minimum growth relative to Q420 (2020: Q419), based on 20 quarter
period in Downside scenarios.
Average basis represents the average quarterly value of
variables in the 20 quarter period with GDP and HPI based on yearly
average and quarterly CAGRs respectively.
Macroeconomic variables (5-year averages)(1)
Upside Upside Baseline Downside Downside
2 1 1 2
As at 30.06.2021 % % % % %
UK GDP(2) 5.2 4.2 3.3 2.6 1.8
UK unemployment(3) 4.6 4.8 5.1 5.7 6.5
UK HPI(4) 8.2 4.7 1.6 - (1.6)
UK bank rate(3) 0.7 0.6 0.4 0.2 -
US GDP(2) 4.6 3.7 2.8 2.0 1.4
US unemployment(3) 4.1 4.4 4.7 6.3 8.5
US HPI(4) 7.1 5.8 3.6 1.6 (0.4)
US federal funds rate(3) 1.1 0.9 0.8 0.6 0.3
As at 31.12.20
UK GDP(2) 2.5 1.6 0.7 0.1 (0.9)
UK unemployment(3) 5.0 5.3 5.7 6.5 7.2
UK HPI(4) 8.2 5.5 3.6 (0.2) (3.6)
UK bank rate(3) 0.3 0.2 - - (0.1)
US GDP(2) 2.9 2.4 1.6 0.8 0.1
US unemployment(3) 5.3 5.7 6.4 8.3 10.4
US HPI(4) 7.3 5.5 3.8 0.8 (3.0)
US federal funds rate(3) 0.5 0.5 0.3 0.3 0.3
1 UK GDP = Real GDP growth seasonally adjusted; UK unemployment =
UK unemployment rate 16-year+; UK HPI = Halifax All Houses, All
Buyers Index; US GDP = Real GDP growth seasonally adjusted; US
unemployment = US civilian unemployment rate 16-year+; US HPI =
FHFA House Price Index. .
2 5-year yearly average CAGR, starting 2020 (2020: 2019).
3 5-year average. Period based on 20 quarters from Q121 (2020: Q120).
4 5-year quarter end CAGR, starting Q420 (2020: Q419).
Market Risk
Analysis of management value at risk (VaR)
The table below shows the total management VaR on a diversified
basis by asset class. Total management VaR includes all trading
positions in CIB and Treasury within the Barclays Bank Group and it
is calculated with a one-day holding period. VaR limits are applied
to total management VaR and by asset class. Additionally, the
market risk management function applies VaR sub-limits to material
businesses and trading desks.
Management VaR (95%) by asset class
Half year ended Half year ended Half year ended
30.06.21 31.12.20 30.06.20
=================== =================== ===================
Average High Low Average High Low Average High Low
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
================= ======= ==== ==== ======= ==== ==== ======= ==== ====
Credit risk 18 30 9 19 23 15 22 38 10
Interest rate
risk 8 14 4 11 17 6 9 17 6
Equity risk 10 15 6 10 16 7 15 35 6
Basis risk 7 10 3 9 11 7 9 14 7
Spread risk 4 6 3 5 7 4 5 9 3
Foreign exchange
risk 3 6 2 4 7 3 4 7 2
Commodity risk - 1 - 1 1 - 1 1 -
Inflation risk 2 4 2 2 3 1 1 2 1
Diversification
effect(1) (30) n/a n/a (33) n/a n/a (31) n/a n/a
================= ======= ==== ==== ======= ==== ==== ======= ==== ====
Total management
VaR 22 36 13 28 35 20 35 57 17
1 Diversification effects recognise that forecast losses from different
assets or businesses are unlikely to occur concurrently, hence
the expected aggregate loss is lower than the sum of the expected
losses from each area. Historical correlations between losses are
taken into account in making these assessments. The high and low
VaR figures reported for each category did not necessarily occur
on the same day as the high and low VaR reported as a whole. Consequently,
a diversification effect balance for the high and low VaR figures
would not be meaningful and is therefore omitted from the above
table.
Average management VaR decreased 21% to GBP22m (H220: GBP28m),
reflecting a reduction of GBP5m due to a methodology update which
changed the historical lookback period of the VaR model from two
years to one year and reduced risk taking in the period. The
methodology change has increased the responsiveness of the model to
changes over time in volatility levels in the lookback period.
Treasury and Capital Risk
Funding and liquidity
Overview
The Barclays Bank Group liquidity pool increased to GBP211bn
(December 2020: GBP206bn), driven by continued deposit growth and a
seasonal increase in short-term wholesale funding, which were
partly offset by an increase in business funding consumption. The
Barclays Bank PLC DoLSub LCR remained well above the 100%
regulatory requirement at 131% (December 2020: 145%), and reflects
higher net stress outflows versus the year-end position.
For the purpose of liquidity management, Barclays Bank PLC and
its subsidiary Barclays Capital Securities Limited, a UK broker
dealer entity, are monitored on a combined basis by the PRA under
the Barclays Bank PLC DoLSub arrangement.
Liquidity risk stress testing
The liquidity risk stress assessment measures the potential
contractual and contingent stress outflows under a range of
scenarios, which are then used to determine the size of the
liquidity pool that is immediately available to meet anticipated
outflows if a stress occurs. The scenarios include a 30 day
Barclays-specific stress event, a 90 day market-wide stress event
and a 30 day combined scenario consisting of both a Barclays
specific and market-wide stress event.
The CRR (as amended by CRR II) LCR requirement takes into
account the relative stability of different sources of funding and
potential incremental funding requirements in a stress. The LCR is
designed to promote short-term resilience of a bank's liquidity
risk profile by holding sufficient high quality liquid assets to
survive an acute stress scenario lasting for 30 days.
As at 30 June 2021, Barclays Bank PLC DoLSub held eligible
liquid assets well above 100% of the net stress outflows to its
internal and regulatory requirements. The proportion of the
liquidity pool between cash and deposits with central banks,
government bonds and other eligible securities is broadly similar
to the Barclays Group.
A significant portion of the liquidity pool is located in
Barclays Bank PLC and Barclays Bank Ireland PLC. The residual
portion of the liquidity pool, which is predominantly in the US
subsidiaries, is held against entity-specific stress outflows and
local regulatory requirements.
As at 30.06.21 As at 31.12.20
GBPbn GBPbn
================================================== ============== ==============
Barclays Bank Group liquidity pool 211 206
%%
================================================== ============== =============
Barclays Bank PLC DoLSub liquidity coverage ratio 131 145
Capital and leverage
Barclays Bank PLC is currently regulated by the 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 capital
metrics for Barclays Bank PLC solo-consolidated with further
information on its risk profile to be included in the Barclays PLC
Pillar 3 Report H1 2021, expected to be published on 13 August
2021, and which will be available at
home.barclays/investor-relations/reports-and-events/latest-financial-results.
Following the withdrawal of the UK from the EU, any references
to CRR as amended by CRR II mean, unless otherwise specified, CRR
as amended by CRR II, as it forms part of UK law pursuant to the
European Union (Withdrawal) Act 2018 and subject to the temporary
transitional powers (TTP) available to UK regulators to delay or
phase-in on-shoring changes to UK regulatory requirements arising
at the end of the transition period until 31 March 2022, as at the
applicable reporting date. With effect from 26 June 2021, the
Financial Services Act 2021 amended CRR as amended by CRR II in
part. The amendments included an extension to the application of
CRR II settlement netting to the CRR leverage exposure which was
due to expire on 27 June 2021 under CRR II quick fix measures.
Throughout the TTP period, the Bank of England (BoE) and PRA will
continue to review the UK regulatory framework and the Group
disclosures will reflect the amended framework as applicable at the
effective reporting date.
On 26 April 2019, a prudential backstop was implemented for
qualifying exposures originating after 26 April 2019 that have been
non-performing for more than two years. Where minimum coverage
requirements for qualifying non-performing exposures are not met,
the difference must be deducted from CET1 capital. Different
conversion factors are applied for secured and unsecured exposures
depending on the length of time the exposures have been
non-performing. For 2021, the conversion factor applied to secured
non-performing exposures is 0% and for unsecured non-performing
exposures is 35% prior to any coverage being applied. For H121
there was no impact to CET1 capital.
On 29 June 2021, the Financial Policy Committee and PRA issued a
consultation paper on proposed changes to the UK leverage ratio
framework. The consultation states the intention to move to a
single UK leverage ratio requirement meaning that the CRR leverage
ratio will no longer apply for UK banks from 1 January 2022. Whilst
largely upholding the existing framework, some technical changes to
the exposure measure have been proposed that will align to the
Basel III standards. Minimum requirements for Barclays Bank PLC are
expected to apply from 1 January 2023 at the individual level;
individual requirements may be replaced with a sub-consolidated
measure, subject to permission from the PRA, from 1 January 2023
.
As at As at
Capital ratios(1,2,3) 30.06.21 31.12.20
========================= ========= =========
CET1 13.9% 14.2%
Tier 1 (T1) 17.7% 18.1%
Total regulatory capital 21.2% 21.0%
Capital resources GBPm GBPm
============================ ======= =======
CET1 capital 24,538 25,227
T1 capital 31,392 32,172
Total regulatory capital 37,571 37,493
Risk weighted assets (RWAs) 176,898 178,156
Leverage ratio(1,4) GBPm GBPm
====================== ======= =======
CRR leverage ratio 3.6% 3.9%
T1 capital 31,392 32,172
CRR leverage exposure 882,543 826,371
1 Capital, RWAs and leverage are calculated applying the transitional
arrangements of the CRR as amended by CRR II. This includes IFRS
9 transitional arrangements and the grandfathering of CRR and CRR
II non-compliant capital instruments.
2 The fully loaded CET1 ratio was 13.5%, with GBP23.9bn of CET1 capital
and GBP176.4bn of RWAs calculated without applying the transitional
arrangements of the CRR as amended by CRR II.
3 The Barclays PLC CET1 ratio, as is relevant for assessing against
the conversion trigger in Barclays Bank PLC 7.625% Contingent Capital
Notes, was 15.1%. For this calculation CET1 capital and RWAs are
calculated applying the transitional arrangements under the CRR,
including the IFRS 9 transitional arrangements. The benefit of
the Financial Services Authority (FSA) October 2012 interpretation
of the transitional provisions, relating to the implementation
of CRD IV, expired in December 2017.
4 Barclays Bank PLC solo-consolidated is not subject to the UK Leverage
framework and discloses the CRR Leverage Ratio which had no binding
requirement as at 30 June 2021. Had the UK leverage rules been
applied, which provides a similar exclusion on qualifying claims
on central banks as under CRR II, the 30 June 2021 leverage exposure
would have reduced to GBP789.9bn and the ratio would have increased
to 3.9%. The exclusion for qualifying claims on central banks under
CRR II is subject to PRA approval for all UK banks and as at 30
June 2021 this approval had not been given.
Statement of Directors' Responsibilities
The Directors (the names of whom are set out below) are required
to prepare the financial statements on a going concern basis unless
it is not appropriate to do so. In making this assessment, the
directors have considered information relating to present and
future conditions. Each of the Directors confirm that, to the best
of their knowledge, the condensed consolidated interim financial
statements set out on pages 23 to 28 have been prepared in
accordance with International Accounting Standard 34, Interim
Financial Reporting, as adopted by the United Kingdom (UK), and
that the interim management report herein includes a fair review of
the information required by Disclosure Guidance and Transparency
Rules 4.2.7R and 4.2.8R namely:
-- An indication of important events that have occurred during the
six months ended 30 June 2021 and their impact on the condensed
consolidated interim financial statements, and a description of
the principal risks and uncertainties for the remaining six months
of the financial year.
-- Any related party transactions in the six months ended 30 June
2021 that have materially affected the financial position or performance
of the Barclays Bank Group during that period and any changes in
the related party transactions described in the last Annual Report
that could have a material effect on the financial position or
performance of the Barclays Bank Group in the six months ended
30 June 2021.
Signed on 27 July 2021 on behalf of the Board by
James E Staley Steven Ewart
Barclays Bank Group Chief Barclays Bank Group Chief
Executive Officer Financial Officer
Barclays Bank PLC Board of
Directors:
Chairman Executive Directors Non-Executive Directors
Nigel Higgins James E Staley Mike Ashley
Tushar Morzaria Tim Breedon CBE
Mohamed A, El-Erian
Dawn Fitzpatrick
Mary Francis CBE
Diane Schueneman
Independent Review Report to Barclays Bank PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the Interim Results Announcement for the
six months ended 30 June 2021 which comprises:
-- the condensed consolidated income statement and condensed consolidated
statement of comprehensive income for the period then ended;
-- the condensed consolidated balance sheet as at 30 June 2021;
-- the condensed consolidated statement of changes in equity for the
period then ended;
-- the condensed consolidated cash flow statement for the period then
ended; and
-- the related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Interim Results Announcement for the six months ended 30
June 2021 is not prepared, in all material respects, in accordance
with IAS 34 Interim Financial Reporting as adopted for use in the
UK and the Disclosure Guidance and Transparency Rules ("the DTR")
of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the Interim
Results Announcement and consider whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The Interim Results Announcement is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the Interim Results Announcement in accordance with
the DTR of the UK FCA.
As disclosed in Note 1, Basis of preparation, the latest annual
financial statements of the Barclays Bank Group are prepared in
accordance with International Financial Reporting Standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union and in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006 and the next annual financial statements will be prepared in
accordance with UK-adopted international accounting standards. The
directors are responsible for preparing the condensed set of
financial statements included in the Interim Results Announcement
in accordance with IAS 34 as adopted for use in the UK.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the Interim Results
Announcement based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Michelle Hinchliffe
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London, E14 5GL
27 July 2021
Condensed Consolidated Financial Statements
Condensed consolidated income statement (unaudited)
Half year Half year
ended ended
30.06.21 30.06.20
Notes(1) GBPm GBPm
=============================================== ======== ========= =========
Interest and similar income 2,444 3,173
Interest and similar expense (921) (1,502)
=============================================== ======== ========= =========
Net interest income 1,523 1,671
Fee and commission income 4,070 3,818
Fee and commission expense (870) (939)
=============================================== ======== ========= =========
Net fee and commission income 3 3,200 2,879
Net trading income 3,467 4,225
Net investment expense (36) (146)
Other income 35 8
=============================================== ======== ========= =========
Total income 8,189 8,637
Credit impairment releases/(charges) 288 (2,674)
=============================================== ======== ========= =========
Net operating income 8,477 5,963
Staff costs (2,385) (2,191)
Infrastructure, administration and general
expenses (2,674) (2,357)
Litigation and conduct (87) (19)
=============================================== ======== ========= =========
Operating expenses (5,146) (4,567)
Share of post-tax results of associates and
joint ventures 3 1
Profit on disposal of subsidiaries, associates
and joint ventures - 126
=============================================== ======== ========= =========
Profit before tax 3,334 1,523
Tax charge 4 (611) (230)
=============================================== ======== ========= =========
Profit after tax 2,723 1,293
Attributable to:
=============================================== ======== ========= =========
Equity holders of the parent 2,420 960
Other equity instrument holders 303 333
=============================================== ======== ========= =========
Profit after tax 2,723 1,293
1 For notes to the Financial Statements see pages 29 to 49.
Condensed consolidated statement of comprehensive income (unaudited)
Half year Half year
ended ended
30.06.21 30.06.20
Notes(1) GBPm GBPm
=============================================== ======== ========= =========
Profit after tax 2,723 1,293
Other comprehensive (loss)/income that may
be recycled to profit or loss(2)
=============================================== ======== ========= =========
Currency translation reserve 12 (552) 1,386
Fair value through other comprehensive income
reserve 12 (312) 137
Cash flow hedging reserve 12 (823) 1,065
Other - (6)
=============================================== ======== ========= =========
Other comprehensive (loss)/income that may
be recycled to profit or loss (1,687) 2,582
Other comprehensive (loss)/income not recycled
to profit or loss
=============================================== ======== ========= =========
Retirement benefit remeasurements 9 103 645
Own credit 12 (47) 496
=============================================== ======== ========= =========
Other comprehensive income not recycled to
profit or loss 56 1,141
Other comprehensive (loss)/income for the
period (1,631) 3,723
Total comprehensive income for the period 1,092 5,016
1 For notes to the Financial Statements see pages 29 to 49.
2 Reported net of tax.
Condensed consolidated balance sheet (unaudited)
As at As at
30.06.21 31.12.20
Assets Notes(1) GBPm GBPm
================================================ ======== ========= =========
Cash and balances at central banks 163,804 155,902
Cash collateral and settlement balances 108,536 97,616
Loans and advances at amortised cost 133,815 134,267
Reverse repurchase agreements and other similar
secured lending 3,048 8,981
Trading portfolio assets 147,144 127,664
Financial assets at fair value through the
income statement 191,128 171,761
Derivative financial instruments 256,129 302,693
Financial assets at fair value through other
comprehensive income 50,184 51,902
Investments in associates and joint ventures 22 24
Goodwill and intangible assets 1,453 1,154
Property, plant and equipment 1,193 1,537
Current tax assets 500 424
Deferred tax assets 4 2,362 2,552
Retirement benefit assets 9 2,701 1,814
Other assets 2,318 1,440
================================================ ======== ========= =========
Total assets 1,064,337 1,059,731
Liabilities
================================================ ======== ========= =========
Deposits at amortised cost 249,732 244,696
Cash collateral and settlement balances 100,957 85,549
Repurchase agreements and other similar secured
borrowing 11,067 10,443
Debt securities in issue 42,931 29,423
Subordinated liabilities 7 29,045 32,005
Trading portfolio liabilities 56,137 46,139
Financial liabilities designated at fair value 263,920 249,626
Derivative financial instruments 246,983 300,580
Current tax liabilities 586 644
Deferred tax liabilities 4 29 225
Retirement benefit liabilities 9 275 232
Other liabilities 8,028 5,251
Provisions 8 951 1,208
================================================ ======== ========= =========
Total liabilities 1,010,641 1,006,021
Equity
================================================ ======== ========= =========
Called up share capital and share premium 10 2,348 2,348
Other equity instruments 11 8,621 8,621
Other reserves 12 1,449 3,183
Retained earnings 41,278 39,558
================================================ ======== ========= =========
Total equity 53,696 53,710
Total liabilities and equity 1,064,337 1,059,731
1 For notes to the Financial Statements see pages 29 to 49.
Condensed consolidated statement of changes in equity (unaudited)
Called
up share
capital Other
and share equity Other Retained Total
premium(1) instruments(1) reserves(1) earnings equity
Half year ended 30.06.21 GBPm GBPm GBPm GBPm GBPm
======================================= =========== =============== ============ ========= =======
Balance as at 1 January 2021 2,348 8,621 3,183 39,558 53,710
Profit after tax - 303 - 2,420 2,723
Currency translation movements - - (552) - (552)
Fair value through other comprehensive
income reserve - - (312) - (312)
Cash flow hedges - - (823) - (823)
Retirement benefit remeasurements - - - 103 103
Own credit - - (47) - (47)
Total comprehensive income
for the period - 303 (1,734) 2,523 1,092
Other equity instruments coupons
paid - (303) - - (303)
Equity settled share schemes - - - 255 255
Vesting of Barclays PLC shares
under equity settled share
schemes - - - (349) (349)
Dividends paid - ordinary
shares - - - (694) (694)
Dividends paid - preference
shares - - - (13) (13)
Other movements - - - (2) (2)
======================================= =========== =============== ============ ========= =======
Balance as at 30 June 2021 2,348 8,621 1,449 41,278 53,696
Half year ended 31.12.20
======================================= =========== =============== ============ ========= =======
Balance as at 1 July 2020 2,348 8,323 6,319 39,704 56,694
Profit after tax - 344 - 814 1,158
Currency translation movements - - (2,033) - (2,033)
Fair value through other comprehensive
income reserve - - 246 - 246
Cash flow hedges - - (272) - (272)
Retirement benefit remeasurements - - - (753) (753)
Own credit - - (1,077) - (1,077)
Other - - - 9 9
======================================= =========== =============== ============ ========= =======
Total comprehensive income
for the period - 344 (3,136) 70 (2,722)
Issue and exchange of other
equity instruments - 298 - (53) 245
Other equity instruments coupons
paid - (344) - - (344)
Equity settled share schemes - - - (126) (126)
Vesting of Barclays PLC shares
under equity settled share
schemes - - - (11) (11)
Dividends paid - preference
shares (14) (14)
Other movements - - - (12) (12)
======================================= =========== =============== ============ ========= =======
Balance as at 31 December
2020 2,348 8,621 3,183 39,558 53,710
1 Details of share capital, other equity instruments and other reserves
are shown on pages 40 to 41.
Condensed consolidated statement of changes in equity (unaudited)
Called
up share
capital Other
and share equity Retained
premium(1) instruments(1) Other reserves(1) earnings Total equity
Half year ended 30.06.20 GBPm GBPm GBPm GBPm GBPm
======================================= =========== =============== ================= ========= ============
Balance as at 1 January 2020 2,348 8,323 3,235 36,709 50,615
Profit after tax - 333 - 960 1,293
Currency translation movements - - 1,386 - 1,386
Fair value through other comprehensive
income reserve - - 137 - 137
Cash flow hedges - - 1,065 - 1,065
Retirement benefit remeasurements - - - 645 645
Own credit - - 496 - 496
Other - - - (6) (6)
======================================= =========== =============== ================= ========= ============
Total comprehensive income
for the period - 333 3,084 1,599 5,016
Other equity instruments coupon
paid - (333) - - (333)
Equity settled share schemes - - - 475 475
Vesting of Barclays PLC shares
under equity settled share
schemes - - - (289) (289)
Dividends paid - ordinary shares - - - (263) (263)
Dividends paid - preference
shares - - - (28) (28)
Capital contribution from Barclays
PLC - - - 1,500 1,500
Other movements - - - 1 1
======================================= =========== =============== ================= ========= ============
Balance as at 30 June 2020 2,348 8,323 6,319 39,704 56,694
1 Details of share capital, other equity instruments and other reserves
are shown on pages 40 to 41.
Condensed consolidated cash flow statement (unaudited)
Half year Half year
ended ended
30.06.21 30.06.20(1)
GBPm GBPm
======================================================== ========= ============
Profit before tax 3,334 1,523
Adjustment for non-cash items(2) 5,001 (35)
Net decrease/(increase) in loans and advances at
amortised cost(2) 2,932 (6,581)
Net increase in deposits at amortised cost 5,036 32,357
Net increase in debt securities in issue 13,508 16,960
Changes in other operating assets and liabilities(3) (8,814) (6,447)
Corporate income tax paid (617) (270)
======================================================== ========= ============
Net cash from operating activities 20,380 37,507
Net cash from investing activities(2) (3,112) (11,201)
Net cash from financing activities (2,883) 653
Effect of exchange rates on cash and cash equivalents (5,534) 7,813
======================================================== ========= ============
Net increase in cash and cash equivalents 8,851 34,772
Cash and cash equivalents at beginning of the period(3) 173,125 139,314
======================================================== ========= ============
Cash and cash equivalents at end of the period(3) 181,976 174,086
1 H120 comparative figures have been restated to make the condensed
cash flow statement more relevant following a review of the disclosure
and the accounting policies applied that was undertaken in H220.
Amendments, which were first applied in the Barclays Bank PLC Annual
Report 2020, 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 2 and 3 below quantify the impact of the changes to the
respective cash flow categories in H120 and provide further detail.
2 Movements in cash and cash equivalents relating to debt securities
at amortised cost were previously shown within loans and advances
at amortised cost 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 H121.
Comparatives have been restated. The effect of this change was
to reclassify GBP4,179m of net cash outflows from operating activities
to investing activities in H120.
3 Cash and cash equivalents have been restated to exclude cash collateral
and settlement balances, with the exception of balances that the
Barclays Bank Group holds at central banks related to payment schemes.
The effect of this change decreased cash and cash equivalents by
GBP27,974m as at 30 June 2020 and GBP16,702m as at 31 December
2019. As a result, net cash from operating activities decreased
by GBP11,272m in H120, representing the net increase in the cash
collateral and settlement balances line item in this period.
Financial Statement Notes
1. Basis of preparation
These condensed consolidated interim financial statements for
the six months ended 30 June 2021 have been prepared in accordance
with the Disclosure and Transparency Rules (DTR) of the UK's
Financial Conduct Authority (FCA) and IAS 34, Interim Financial
Reporting, as published by the International Accounting Standards
Board (IASB) and adopted by the UK. The condensed consolidated
interim financial statements should be read in conjunction with the
annual financial statements for the year ended 31 December 2020.
The annual financial statements for the year ended 31 December 2020
were prepared in accordance with international accounting standards
in conformity with the requirements of the Companies 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 as well as adopted by the UK. UK adopted IFRS
and EU adopted IFRS are currently the same and were the same as at
31 December 2020.
The accounting policies and methods of computation used in these
condensed consolidated interim financial statements are the same as
those used in the Barclays Bank PLC Annual Report 2020.
1. Going concern
The financial statements are prepared on a going concern basis,
as the Directors are 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 interim financial
statements. In making this assessment, the Directors have
considered a wide range of information relating to present and
future conditions which includes a review of a working capital
report (WCR). The WCR is used by the Directors to assess the future
performance of the Barclays Bank Group and that is has the
resources in place that are required to meet its ongoing regulatory
requirements. The WCR includes an assessment of the impact of
internally generated stress testing scenarios on the liquidity and
capital requirements forecasts. The stress tests used were based
upon an assessment of reasonably possible downside economic
scenarios that the Barclays Bank Group could experience.
The WCR indicated 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 internal
stress scenarios.
2. Other disclosures
The Credit risk disclosures on pages 6 to 17 form part of these
interim financial statements.
2. Segmental reporting
Analysis of results by business
Corporate Consumer,
and Investment Cards Barclays
Bank and Payments Head Office Bank Group
Half year ended 30.06.21 GBPm GBPm GBPm GBPm
================================ =============== ============= =========== ===========
Total income 6,632 1,649 (92) 8,189
Credit impairment releases 260 22 6 288
================================ =============== ============= =========== ===========
Net operating income/(expenses) 6,892 1,671 (86) 8,477
Operating expenses (3,617) (1,126) (316) (5,059)
Litigation and conduct (2) (82) (3) (87)
================================ =============== ============= =========== ===========
Total operating expenses (3,619) (1,208) (319) (5,146)
Other net income(1) 3 - - 3
================================ =============== ============= =========== ===========
Profit/(loss) before tax 3,276 463 (405) 3,334
As at 30.06.21 GBPbn GBPbn GBPbn GBPbn
================================ =============== ============= =========== ===========
Total assets 991.3 62.7 10.3 1,064.3
Corporate Consumer,
and Investment Cards and Head Barclays
Bank Payments Office Bank Group
Half year ended 30.06.20 GBPm GBPm GBPm GBPm
================================ =============== ========== ======= ===========
Total income 6,973 1,742 (78) 8,637
Credit impairment charges (1,320) (1,299) (55) (2,674)
================================ =============== ========== ======= ===========
Net operating income/(expenses) 5,653 443 (133) 5,963
Operating expenses (3,458) (1,053) (37) (4,548)
Litigation and conduct (4) (8) (7) (19)
================================ =============== ========== ======= ===========
Total operating expenses (3,462) (1,061) (44) (4,567)
Other net income(1) 12 115 - 127
================================ =============== ========== ======= ===========
Profit/(loss) before tax 2,203 (503) (177) 1,523
As at 31.12.20 GBPbn GBPbn GBPbn GBPbn
================================ =============== ========== ======= ===========
Total assets 990.9 57.8 11.0 1,059.7
1 Other net income represents the share of post-tax results of associates
and joint ventures and profit (or loss) on disposal of subsidiaries,
associates and joint ventures.
Split of income by geographic region(1)
Half year Half year
ended ended
30.06.21 30.06.20
GBPm GBPm
======================================== ========= =========
United Kingdom 2,698 2,835
Europe 1,213 1,240
Americas 3,676 3,872
Africa and Middle East 20 23
Asia 582 667
======================================== ========= =========
Total 8,189 8,637
1 The geographical analysis is based on the location of the office
where the transactions are recorded.
3. Net fee and commission income
Fee and commission income is disaggregated below and includes a
total for fees in scope of IFRS 15, Revenue from Contracts with
Customers:
Corporate Consumer,
and Investment Cards
Bank and Payments Head Office Total
Half year ended 30.06.21 GBPm GBPm GBPm GBPm
================================== =============== ============= =========== =====
Fee type
Transactional 184 984 - 1,168
Advisory 399 61 - 460
Brokerage and execution 527 26 - 553
Underwriting and syndication 1,715 - - 1,715
Other 25 76 11 112
================================== =============== ============= =========== =====
Total revenue from contracts with
customers 2,850 1,147 11 4,008
Other non-contract fee income 59 3 - 62
================================== =============== ============= =========== =====
Fee and commission income 2,909 1,150 11 4,070
Fee and commission expense (369) (496) (5) (870)
================================== =============== ============= =========== =====
Net fee and commission income 2,540 654 6 3,200
Corporate Consumer,
and Investment Cards
Bank and Payments Head Office Total
Half year ended 30.06.20 GBPm GBPm GBPm GBPm
================================== =============== ============= =========== =====
Fee type
Transactional 177 968 - 1,145
Advisory 260 46 - 306
Brokerage and execution 654 31 - 685
Underwriting and syndication 1,468 - - 1,468
Other 35 100 19 154
================================== =============== ============= =========== =====
Total revenue from contracts with
customers 2,594 1,145 19 3,758
Other non-contract fee income 57 3 - 60
================================== =============== ============= =========== =====
Fee and commission income 2,651 1,148 19 3,818
Fee and commission expense (441) (497) (1) (939)
================================== =============== ============= =========== =====
Net fee and commission income 2,210 651 18 2,879
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.
Advisory fees are generated from wealth management services and
investment banking advisory services related to mergers,
acquisitions and financial restructurings.
Brokerage and execution fees are earned for executing client
transactions with various exchanges and over-the-counter markets
and assisting clients in clearing transactions.
Underwriting and syndication fees are earned for the
distribution of client equity or debt securities, and the
arrangement and administration of a loan syndication. These include
commitment fees to provide loan financing.
4. Tax
The tax charge for H121 was GBP611m (H120: GBP230m),
representing an effective tax rate of 18.3% (H120: 15.1%). The
effective tax rate for H121 includes a benefit recognised as a
result of the increase in the UK corporation tax rate and absent
this benefit the tax charge would have been GBP748m and the
effective tax rate would have been 22.4%. The H120 effective tax
rate included a benefit recognised for re-measurement of the
Barclays Bank Group's UK deferred tax assets as a result of UK
corporation tax previously being maintained at a rate of 19%.
In its Budget held in March 2021, the UK Government announced
that the UK rate of corporation tax will increase from 19% to 25%
from 1 April 2023. This legislative change has been enacted,
resulting in the Barclays Bank Group's UK deferred tax liabilities
increasing by GBP28m with a tax benefit in the income statement of
GBP137m and a tax charge within other comprehensive income of
GBP165m.
The UK Government also announced that it will undertake a review
of the additional 8% banking surcharge during 2021. The Budget
Report issued on 3 March 2021 outlines that "the government will
set out how it intends to ensure that the combined rate of tax on
banks' profits does not increase substantially from its current
level". Any subsequent reduction in the banking surcharge arising
from the Government's review would result in the Barclays Bank
Group's UK deferred tax liabilities again being re-measured, the
timing of which is uncertain but is expected to occur in H122.
In the USA, the Biden administration published in April 2021 The
Made In America Tax Plan, which proposes an increase in the US
federal corporate income tax rate. This would result in a
re-measurement to increase the Barclays Bank Group's US deferred
tax assets upon enactment, the timing of which is uncertain. In
addition, revisions to international elements of the US tax regime
are being considered that could affect the Barclays Bank Group's US
tax position in future.
The G7 finance ministers published a communiqué on 5 June
2021which sets out high level political agreement on global tax
reform, including the implementation of a global minimum tax rate.
The Barclays Bank Group will continue to monitor developments and
assess the potential impact of associated future legislative
changes.
As at As at
30.06.21 31.12.20
Deferred tax assets and liabilities GBPm GBPm
==================================== ========= =========
USA 1,908 2,049
Other territories 454 503
==================================== ========= =========
Deferred tax assets 2,362 2,552
Deferred tax liabilities - UK (29) (225)
Analysis of deferred tax assets
==================================== ========= =========
Temporary differences 1,591 1,841
Tax losses 771 711
==================================== ========= =========
Deferred tax assets 2,362 2,552
5. Dividends on ordinary shares
Half year Half year
ended ended
30.06.21 30.06.20
Dividends paid during the period GBPm GBPm
================================= ========= =========
Ordinary shares 694 263
Preference shares 13 28
================================= ========= =========
Total 707 291
An interim dividend in respect of the year ended 31 December
2021 of GBP100m will be paid on 2 August 2021.
6. Fair value of financial instruments
This section should be read in conjunction with Note 16, Fair
value of financial instruments of the Barclays Bank PLC Annual
Report 2020, which provides more detail about accounting policies
adopted, valuation methodologies used in calculating fair value and
the valuation control framework which governs oversight of
valuations. There have been no changes in the accounting policies
adopted or the valuation methodologies used.
Valuation
The following table shows the Barclays Bank Group's assets and
liabilities that are held at fair value disaggregated by valuation
technique (fair value hierarchy) and balance sheet
classification:
Valuation technique using
===================================
Quoted Significant
market Observable unobservable
prices inputs inputs
(Level (Level (Level
1) 2) 3) Total
As at 30.06.21 GBPm GBPm GBPm GBPm
======================================= ======== ========== ============= =========
Trading portfolio assets 73,307 71,285 2,552 147,144
Financial assets at fair value through
the income statement 1,089 186,032 4,007 191,128
Derivative financial instruments 11,643 240,830 3,656 256,129
Financial assets at fair value through
other comprehensive income 14,495 35,646 43 50,184
Investment property - - 8 8
======================================= ======== ========== ============= =========
Total assets 100,534 533,793 10,266 644,593
Trading portfolio liabilities (30,063) (26,057) (17) (56,137)
Financial liabilities designated at
fair value (142) (263,482) (296) (263,920)
Derivative financial instruments (11,227) (230,157) (5,599) (246,983)
======================================= ======== ========== ============= =========
Total liabilities (41,432) (519,696) (5,912) (567,040)
As at 31.12.20
======================================= ======== ========== ============= =========
Trading portfolio assets 60,619 65,182 1,863 127,664
Financial assets at fair value through
the income statement 4,439 162,930 4,392 171,761
Derivative financial instruments 9,154 289,071 4,468 302,693
Financial assets at fair value through
other comprehensive income 12,150 39,599 153 51,902
Investment property - - 10 10
======================================= ======== ========== ============= =========
Total assets 86,362 556,782 10,886 654,030
Trading portfolio liabilities (23,331) (22,780) (28) (46,139)
Financial liabilities designated at
fair value (159) (249,126) (341) (249,626)
Derivative financial instruments (8,762) (285,579) (6,239) (300,580)
======================================= ======== ========== ============= =========
Total liabilities (32,252) (557,485) (6,608) (596,345)
The following table shows the Barclays Bank Group's Level 3
assets and liabilities that are held at fair value disaggregated by
product type:
As at 30.06.21 As at 31.12.20
=================== ===================
Assets Liabilities Assets Liabilities
GBPm GBPm GBPm GBPm
================================== ====== =========== ====== ===========
Interest rate derivatives 916 (1,269) 1,613 (1,615)
Foreign exchange derivatives 151 (129) 144 (143)
Credit derivatives 100 (364) 196 (351)
Equity derivatives 2,489 (3,837) 2,497 (4,112)
Commodity derivatives - - 18 (18)
Corporate debt 981 (38) 698 (3)
Reverse repurchase and repurchase
agreements - (161) - (174)
Non-asset backed loans 3,467 - 3,093 -
Asset backed securities 562 - 767 (24)
Equity cash products 401 - 542 -
Private equity investments 98 - 84 -
Other(1) 1,101 (114) 1,234 (168)
================================== ====== =========== ====== ===========
Total 10,266 (5,912) 10,886 (6,608)
1 includes commercial real estate loans, fund and fund-linked products,
asset backed loans, issued debt, commercial paper, government sponsored
debt and investment property.
Assets and liabilities reclassified between Level 1 and Level
2
During the period there were no material transfers between Level
1 and Level 2 (period ended December 2020: no material transfers
between Level 1 and Level 2).
Level 3 movement analysis
The following table summarises the movements in the balances of
Level 3 assets and liabilities during the period. The table shows
gains and losses and includes amounts for all financial assets and
liabilities that are held at fair value transferred to and from
Level 3 during the period. Transfers have been reflected as if they
had taken place at the beginning of the period.
Asset and liability moves between Level 2 and Level 3 are
primarily due to i) an increase or decrease in observable market
activity related to an input or ii) a change in the significance of
the unobservable input, with assets and liabilities classified as
Level 3 if an unobservable input is deemed significant.
Level 3 movement analysis
Total gains
and losses
in the period
recognised
in the income
statement Transfers
================ ===========
Total
gains
or losses
As at Settle- Trading Other recognised As at
01.01.21 Purchases Sales Issues ments income income in OCI In Out 30.06.21
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=============== ========= ========= ======= ====== ======= ======= ======= =========== ==== ===== =========
Corporate debt 151 305 (87) - - 25 - - 40 (11) 423
Non-asset
backed
loans 709 620 (131) - (84) 13 - - 124 (106) 1,145
Asset backed
securities 686 112 (294) - - (10) - - 43 (48) 489
Equity cash
products 214 13 (17) - - 32 - - 29 (9) 262
Other 103 21 - - (51) (1) - - 162 (1) 233
=============== ========= ========= ======= ====== ======= ======= ======= =========== ==== ===== =========
Trading
portfolio
assets 1,863 1,071 (529) - (135) 59 - - 398 (175) 2,552
Non-asset
backed
loans 2,280 696 (299) - (388) 10 - - 69 (47) 2,321
Equity cash
products 320 166 (194) - - (171) 18 - - - 139
Private equity
investments 88 22 (7) - (7) (1) 3 - - - 98
Other 1,704 2,296 (2,389) - (160) (19) 1 - 16 - 1,449
=============== ========= ========= ======= ====== ======= ======= ======= =========== ==== ===== =========
Financial
assets
at fair value
through the
income
statement 4,392 3,180 (2,889) - (555) (181) 22 - 85 (47) 4,007
Non-asset
backed
loans 106 - - - - - - - - (106) -
Asset backed
securities 47 - - - (5) - - 1 - - 43
=============== ========= ========= ======= ====== ======= ======= ======= =========== ==== ===== =========
Financial
assets
at fair value
through other
comprehensive
income 153 - - - (5) - - 1 - (106) 43
Investment
property 10 - (2) - - - - - - - 8
Trading
portfolio
liabilities (28) (3) 14 - - (7) - - - 7 (17)
Financial
liabilities
designated
at fair value (341) - - - 98 7 - - (78) 18 (296)
Interest rate
derivatives (2) 9 - - 33 (121) 4 - 21 (296) (352)
Foreign
exchange
derivatives 1 - - - 58 (6) - - 3 (34) 22
Credit
derivatives (155) (118) 2 - (5) 12 (1) - 1 (1) (265)
Equity
derivatives (1,615) (315) (1) - (32) (221) - - 28 808 (1,348)
=============== ========= ========= ======= ====== ======= ======= ======= =========== ==== ===== =========
Net derivative
financial
instruments1 (1,771) (424) 1 - 54 (336) 3 - 53 477 (1,943)
Total 4,278 3,824 (3,405) - (543) (458) 25 1 458 174 4,354
1 Derivative financial instruments are represented on a net basis.
On a gross basis, derivative financial assets were GBP3,656m and
derivative financial liabilities were GBP5,599m.
Level 3 movement analysis
Total gains
and losses
in the period
recognised
in the income
statement Transfers
================ ===========
Total
gains
or
losses
recognised
As at Settle- Trading Other in As at
01.01.20 Purchases Sales Issues ments income income OCI In Out 30.06.20
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=============== ========= ========= ======= ====== ======= ======= ======= =========== ==== ===== =========
Corporate debt 120 25 - - - (26) - - 4 (17) 106
Non-asset
backed
loans 974 1,927 (740) - (4) (111) - - 97 (320) 1,823
Asset backed
securities 656 249 (224) - (76) (12) - - 41 (11) 623
Equity cash
products 392 2 (4) - - (67) - - 28 (4) 347
Other 122 47 - - - 2 - - 8 - 179
=============== ========= ========= ======= ====== ======= ======= ======= =========== ==== ===== =========
Trading
portfolio
assets 2,264 2,250 (968) - (80) (214) - - 178 (352) 3,078
Non-asset
backed
loans 1,964 1,050 (270) - (112) 110 - - - - 2,742
Equity cash
products 835 14 - - - (22) (29) - - - 798
Private equity
investments 113 1 (2) - - 2 4 - 20 (12) 126
Other 1,250 1,865 (2,017) - (13) (8) 55 - 24 - 1,156
=============== ========= ========= ======= ====== ======= ======= ======= =========== ==== ===== =========
Financial
assets
at fair value
through the
income
statement 4,162 2,930 (2,289) - (125) 82 30 - 44 (12) 4,822
Non-asset
backed
loans 343 79 - - (157) - - (3) - - 262
Asset backed
securities 86 - (1) - - 1 - (1) - - 85
Financial
assets
at fair value
through other
comprehensive
income 429 79 (1) - (157) 1 - (4) - - 347
Investment
property 13 - (1) - - - (2) - 2 (2) 10
Trading - - - - - - - - - - -
portfolio
liabilities
-
=============== ========= ========= ======= ====== ======= ======= ======= =========== ==== ===== =========
Financial
liabilities
designated
at fair value (343) - - (3) - (12) (1) - (22) 26 (355)
Interest rate
derivatives (206) 17 - - 10 268 1 - 300 (10) 380
Foreign
exchange
derivatives (7) - - - (12) 89 - - 5 (8) 67
Credit
derivatives 198 (258) 11 - (376) 151 1 - 2 8 (263)
Equity
derivatives (820) (447) (1) - 17 (90) - - (5) (23) (1,369)
=============== ========= ========= ======= ====== ======= ======= ======= =========== ==== ===== =========
Net derivative
financial
instruments(1) (835) (688) 10 - (361) 418 2 - 302 (33) (1,185)
Total 5,690 4,571 (3,249) (3) (723) 275 29 (4) 504 (373) 6,717
1 Derivative financial instruments are presented on a net basis.
On a gross basis, derivative financial assets were GBP7,747m and
derivative financial liabilities were GBP8,932m.
Unrealised gains and losses on Level 3 financial assets and
liabilities
The following table discloses the unrealised gains and losses
recognised in the period arising on Level 3 financial assets and
liabilities held at the period end.
Half year ended 30.06.21 Half year ended 30.06.20
========================================== ==========================================
Income statement Income statement
================== ==================
Other Other
Trading Other compre-hensive Trading Other compre-hensive
income income income Total income income income Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============================== ======== ======== =============== ===== ======== ======== =============== =====
Trading portfolio assets 35 - - 35 (177) - - (177)
Financial assets at fair
value through the income
statement (67) 35 - (32) 126 (24) - 102
Financial assets at fair
value through other
comprehensive
income - - - - - - (2) (2)
Investment properties - - - - - (2) - (2)
Trading portfolio liabilities (6) - - (6) - - - -
Financial liabilities
designated at fair value 7 - - 7 (16) (1) - (17)
Net derivative financial
instruments (367) - - (367) 248 - - 248
============================== ======== ======== =============== ===== ======== ======== =============== =====
Total (398) 35 - (363) 181 (27) (2) 152
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 valuation techniques used, as
well as the availability and reliability of observable proxy and
historical data and the impact of using alternative models.
Sensitivity analysis of valuations using unobservable inputs
As at 30.06.21 As at 31.12.20
======================================== ========================================
Unfavourable Unfavourable
Favourable changes changes Favourable 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 52 - (83) - 82 - (123) -
Foreign exchange
derivatives 6 - (10) - 6 - (11) -
Credit derivatives 53 - (44) - 55 - (44) -
Equity derivatives 185 - (193) - 174 - (179) -
Commodity derivatives 2 - (2) - 2 - (2) -
Corporate debt 22 - (16) - 16 - (14) -
Non-asset backed
loans 129 - (172) - 104 3 (190) (3)
Equity cash products 122 - (111) - 158 - (141) -
Private equity
investments 17 - (18) - 15 - (15) -
Other(1) 18 - (18) - 21 - (21) -
========================== ============ ====== ========== ====== ============ ====== ========== ======
Total 606 - (667) - 633 3 (740) (3)
1 Other includes commercial real estate loans, fund and fund-linked
products, asset backed loans, issued debt, commercial paper, 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 GBP606m (December 2020: GBP636m) or to decrease fair values by
up to GBP667m (December 2020: GBP743m) with substantially all the
potential effect impacting profit and loss rather than
reserves.
Significant unobservable inputs
The valuation techniques and significant unobservable inputs for
assets and liabilities recognised at fair value and classified as
Level 3 are consistent with those described within Note 16, Fair
value of financial instruments in the Barclays Bank PLC Annual
Report 2020.
Fair value adjustments
Key balance sheet valuation adjustments are quantified
below:
As at As at
30.06.21 31.12.20
GBPm GBPm
===================================================== ========= =========
Exit price adjustments derived from market bid-offer
spreads (492) (483)
Uncollateralised derivative funding (80) (115)
Derivative credit valuation adjustments (210) (268)
Derivative debit valuation adjustments 91 113
-- Exit price adjustments derived from market bid-offer spreads increased
by GBP9m to GBP492m.
-- Uncollateralised derivative funding decreased by GBP35m to GBP80m
as a result of tightening input funding spreads.
-- Derivative credit valuation adjustments decreased by GBP58m to
GBP210m as a result of tightening input counterparty credit spreads.
-- Derivative debit valuation adjustments decreased by GBP22m to GBP91m
as a result of tightening input Barclays Bank PLC credit spreads.
Portfolio exemption
The 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, the
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 GBP114m
(December 2020: GBP103m) for financial instruments measured at fair
value and GBP29m (December 2020: GBP30m) for financial instruments
carried at amortised cost. There are additions of GBP32m (December
2020: GBP26m) and amortisation and releases of GBP21m (December
2020: GBP23m) for financial instruments measured at fair value and
amortisation and releases of GBP1m (December 2020: GBP2m) offset by
additions of GBPnil (December 2020: GBP1m) for financial
instruments carried at amortised cost.
Third party credit enhancements
Structured and brokered certificates of deposit issued by the
Barclays Bank Group are insured up to $250,000 per depositor by the
Federal Deposit Insurance Corporation (FDIC) in the United States.
The FDIC is funded by premiums that the 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 GBP1,241m (December 2020:
GBP1,494m).
Comparison of carrying amounts and fair values for assets and
liabilities not held at fair value
Valuation methodologies employed in calculating the fair value
of financial assets and liabilities measured at amortised cost are
consistent with those described within Note 16, Fair value of
financial instruments in the Barclays Bank PLC Annual Report
2020.
The following table summarises the fair value of financial
assets and liabilities measured at amortised cost on the Barclays
Bank Group's balance sheet:
As at 30.06.21 As at 31.12.20
===================== =====================
Carrying Carrying
amount Fair value amount Fair value
Financial assets GBPm GBPm GBPm GBPm
======================================== ========= ========== ========= ==========
Loans and advances at amortised cost 133,815 134,228 134,267 134,537
Reverse repurchase agreements and
other similar secured lending 3,048 3,048 8,981 8,981
Financial liabilities
======================================== ========= ========== ========= ==========
Deposits at amortised cost (249,732) (249,757) (244,696) (244,738)
Repurchase agreements and other similar
secured borrowing (11,067) (11,067) (10,443) (10,443)
Debt securities in issue (42,931) (42,925) (29,423) (29,486)
Subordinated liabilities (29,045) (30,515) (32,005) (33,356)
7. Subordinated liabilities
Half year
ended Year ended
30.06.21 31.12.20
GBPm GBPm
================ ========= ==========
Opening balance 32,005 33,425
Issuances 5,075 3,856
Redemptions (6,599) (5,954)
Other (1,436) 678
================ ========= ==========
Closing balance 29,045 32,005
Issuances of GBP5,075m comprise GBP4,920m of intra-group loans
from Barclays PLC and GBP82m ZAR Floating Rate
Notes and GBP73m USD Floating Rate Notes issued externally by Barclays Bank PLC subsidiaries.
Redemptions of GBP6,599m comprise GBP2,065m of intra-group loans
from Barclays PLC and GBP4,534m of externally issued notes
comprising GBP1,961m GBP 10% Fixed Rate Subordinated Notes,
GBP1,339m EUR 6% Fixed Rate Subordinated Notes, GBP1,075m USD
10.179% Fixed Rate Subordinated Notes and GBP86m EUR Subordinated
Floating Rate Notes issued by Barclays Bank PLC and GBP73m USD
Floating Rate Notes issued by a Barclays Bank PLC subsidiary.
Other movements predominantly comprise foreign exchange
movements and fair value hedge adjustments.
8. Provisions
As at As at
30.06.21 31.12.20
GBPm GBPm
========================================================== ========= =========
Customer redress 51 44
Legal, competition and regulatory matters 207 222
Redundancy and restructuring 22 44
Undrawn contractually committed facilities and guarantees 572 769
Onerous contracts 4 6
Sundry provisions 95 123
========================================================== ========= =========
Total 951 1,208
9. Retirement benefits
As at 30 June 2021, the Barclays Bank Group's IAS 19 pension
surplus across all schemes was GBP2.4bn (December 2020: GBP1.6bn).
The UK Retirement Fund (UKRF), which is the Group's main scheme,
had an IAS 19 pension surplus of GBP2.6bn (December 2020:
GBP1.8bn). The movement in the surplus for the UKRF was driven by
payment of deficit reduction contributions, and an increase in the
discount rate, partially offset by higher than expected long-term
price inflation.
UKRF funding valuations
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 reduction contributions paid over
the year. The deficit recovery plan agreed at the last triennial
valuation requires deficit reduction contributions from Barclays
Bank PLC of GBP700m in 2021, GBP294m in 2022 and GBP286m in 2023.
The deficit reduction contributions are in addition to the regular
contributions to meet the Group's share of the cost of benefits
accruing over each year. GBP350m of the 2021 deficit reduction
contributions were paid in April 2021, with the remaining GBP350m
for 2021 due in September 2021. The next triennial actuarial
valuation of the UKRF is due to be completed in 2023 with an
effective date of 30 September 2022.
10. Called up share capital
Ordinary shares
As at 30 June 2021 the issued ordinary share capital of Barclays
Bank PLC comprised 2,342m (December 2020: 2,342m) ordinary shares
of GBP1 each.
Preference shares
As at 30 June 2021 the issued preference share capital of
Barclays Bank PLC of GBP6m (December 2020: GBP6m) comprised 1,000
Sterling Preference Shares of GBP1.00 each (December 2020: 1,000);
31,856 Euro Preference Shares of EUR100 each (December 2020:
31,856); and 58,133 US Dollar Preference shares of $100 each
(December 2020: 58,133).
There were no issuances or redemptions of ordinary or preference
shares in the six months to 30 June 2021.
11. Other equity instruments
Other equity instruments of GBP8,621m (December 2020: GBP8,621m)
are AT1 securities issued to Barclays PLC. Barclays PLC uses funds
from market issuances to purchase AT1 securities from Barclays Bank
PLC. There have been no issuances or redemptions in the period.
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.
AT1 securities are undated and are redeemable, at the option of
Barclays Bank PLC, in whole on (i) the initial call date, or on any
fifth anniversary after the initial call date or (ii) any day
falling in a named period ending on the initial reset date, or on
any fifth anniversary after the initial reset date. In addition,
the AT1 securities are redeemable, at the option of Barclays Bank
PLC, in whole in the event of certain changes in the tax or
regulatory treatment of the securities. Any redemptions require the
prior consent of the PRA.
12. Other reserves
As at As at
30.06.21 31.12.20
GBPm GBPm
====================================================== ========= =========
Currency translation reserve 2,184 2,736
Fair value through other comprehensive income reserve (68) 244
Cash flow hedging reserve 358 1,181
Own credit reserve (1,001) (954)
Other reserves (24) (24)
====================================================== ========= =========
Total 1,449 3,183
Currency translation reserve
The currency translation reserve represents the cumulative gains
and losses on the retranslation of the Barclays Bank Group's net
investment in foreign operations, net of the effects of
hedging.
As at 30 June 2021, there was a credit balance of GBP2,184m
(December 2020: GBP2,736m credit) in the currency translation
reserve. The GBP552m debit movement principally reflects the
strengthening of GBP against USD and EUR during the period.
Fair value through other comprehensive income reserve
The fair value through other comprehensive income reserve
represents the unrealised change in the fair value through other
comprehensive income investments since initial recognition.
As at 30 June 2021, there was a debit balance of GBP68m
(December 2020: GBP244m credit) in the fair value through other
comprehensive income reserve. The loss of GBP312m is principally
driven by a GBP303m loss from the decrease in fair value of bonds
due to increasing bond yields and GBP151m of net gains transferred
to the income statement along with impairment release of GBP5m,
which was partially offset by a tax credit of GBP147m.
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.
As at 30 June 2021, there was a credit balance of GBP358m
(December 2020: GBP1,181m credit) in the cash flow hedging reserve.
The decrease of GBP823m principally reflects a GBP931m decrease in
the fair value of interest rate swaps held for hedging purpose as
major interest rate forward curves increased and GBP143m of gains
transferred to the income statement. This is partially offset by a
tax credit of GBP256m.
Own credit reserve
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.
As at 30 June 2021, there was a debit balance of GBP1,001m
(December 2020: GBP954m debit) in the own credit reserve. The
movement of GBP47m principally reflects a GBP266m loss from the
tightening of EF spreads. This is partially offset by other
activity of GBP100m and a tax credit of GBP115m.
Other reserves
As at 30 June 2021, there was a debit balance of GBP24m
(December 2020: GBP24m debit) in other reserves relating to
redeemed ordinary and preference shares issued by Barclays Bank
Group.
13. Contingent liabilities and commitments
As at As at
30.06.21 31.12.20
Contingent liabilities GBPm GBPm
======================================================= ========= =========
Guarantees and letters of credit pledged as collateral
security 13,805 15,138
Performance guarantees, acceptances and endorsements 6,601 5,794
======================================================= ========= =========
Total 20,406 20,932
Commitments
======================================================= ========= =========
Documentary credits and other short-term trade related
transactions 1,017 1,086
Standby facilities, credit lines and other commitments 282,742 263,936
======================================================= ========= =========
Total 283,759 265,022
In addition to the above, Note 14, Legal, competition and
regulatory matters details out further contingent liabilities where
it is not practicable to disclose an estimate of the potential
financial effect on the Barclays Bank Group.
14. Legal, competition and regulatory matters
The 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 applicable to Note 8,
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 certain advisory services agreements 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.
Civil action
In 2021, the High Court of Justice (High Court) dismissed a
claim brought by PCP Capital Partners LLP and PCP International
Finance Limited (PCP) against Barclays Bank PLC for fraudulent
misrepresentation and deceit arising from certain statements made
by Barclays Bank PLC to PCP relating to the November 2008 capital
raising. PCP's application to appeal the High Court's decision has
also been refused which concludes these proceedings.
Investigations into LIBOR and other benchmarks 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 $100m 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. Barclays Bank PLC also
settled a further matter for $7.5m, paid in June 2021.
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' appeal of the dismissal of their claims was granted in
March 2021 and the matter has been remanded to the lower court for
further proceedings.
ICE LIBOR civil actions
In 2019, several putative class actions were filed in the SDNY
against a panel of banks, including 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 by a group
of individual plaintiffs 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. Plaintiffs have filed motions seeking,
among other things, preliminary and permanent injunctions to enjoin
the defendants from continuing to set LIBOR or enforce any
financial instrument that relies in whole or in part on USD
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.
Credit Default Swap civil action
In July 2021, the New Mexico Attorney General, on behalf of the
New Mexico State Investment Council, filed an antitrust class
action in the US District Court for the District of New Mexico
against Barclays PLC, Barclays Bank PLC, BCI and other financial
institutions. The plaintiff alleges that the defendants conspired
to manipulate the benchmark price used to value Credit Default Swap
(CDS) contracts at settlement (i.e. the CDS final auction price).
The plaintiff alleges violations of the Antitrust Act and the CEA,
and unjust enrichment under state law.
Foreign Exchange investigations 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. The Barclays
Group 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.
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 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 US
Department of Justice (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 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
six 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. 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 court dismissed the consolidated action in
March 2021. The plaintiffs have filed an amended complaint, which
the defendants have moved 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' motions to dismiss the plaintiffs' complaint. The
dismissal was affirmed on appeal. The plaintiffs have voluntarily
dismissed the other SDNY action. In the Federal Court of Canada
action, the plaintiffs reached settlements with a small number of
banks in 2020 (not including Barclays Capital Canada, Inc.), but
the plaintiffs have not commenced the class certification process
and the action remains at an early stage.
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.
Three putative class action complaints, two of which have been
consolidated, have been filed in the SDNY (the third complaint was
filed in June 2021). In the consolidated SDNY class action, certain
of the plaintiff's claims were dismissed in November 2020. In the
California action, the plaintiffs' claims were dismissed in June
2021. The plaintiffs may appeal.
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. The parties have reached a settlement
to resolve these matters. 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.
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
Supreme Court of the State of New York (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 (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 April
2021, the trial court entered judgement in favour of Barclays Bank
PLC for $3.3m and as yet to be determined legal fees and costs. 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 actions in respect 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 Iranian Government 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' motions to dismiss three out
of the six actions in the EDNY. Plaintiffs have appealed in one
action. The remaining actions are stayed pending decisions on the
appeal. Out of the two actions in the SDNY, the court also granted
the defendants' motion to dismiss one action. The remaining action
is stayed pending any appeal in the former case.
Shareholder derivative action
In November 2020, 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 nominal
defendant Barclays PLC, alleging that the individual defendants
harmed the company through breaches of their duties, including
under the Companies Act 2006. The plaintiff seeks damages on behalf
of Barclays PLC for the losses that Barclays PLC allegedly suffered
as a result of these alleged breaches. An amended complaint was
filed in April 2021, which BCI and certain other defendants have
moved to dismiss.
Derivative transactions civil action
In July 2021, Vestia (a Dutch housing association) issued a
claim against Barclays Bank PLC in the UK in the High Court in
relation to a series of derivative transactions entered into with
Barclays Bank PLC between 2008 and 2012. The claim has not been
served on Barclays.
Skilled person review and associated matters
In August 2020, the FCA granted an application by Clydesdale
Financial Services Limited (CFS), which trades as Barclays Partner
Finance and houses Barclays' point-of-sale finance business, for a
validation order with respect to certain loans to customers
brokered by Azure Services Limited (ASL), a timeshare operator,
which did not, at the point of sale, hold the necessary broker
licence. As a condition to the validation order, the FCA required
CFS to undertake a skilled person review of the assessment of
affordability processes for the loans brokered by ASL (ASL Loans)
as well as CFS' policies and procedures for assessing affordability
and oversight of brokers more generally, and dictated a remediation
methodology in the event that ASL Loans did not pass the
affordability test. CFS has voluntarily agreed to remediate the ASL
Loans, which is expected to amount to GBP37m, in accordance with
the FCA's methodology. The remaining scope of the skilled person
review is ongoing and the skilled person is expected to report in
the fourth quarter of 2021.
It is not currently possible to predict the outcome of the
skilled person review and/or whether remediation activity will be
undertaken or required in relation to other parts of CFS' loan
portfolio and the scope of, and methodology for, any such
remediation.
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 were successful in their applications to strike out the
claims. One local authority has obtained permission to pursue an
appeal against this decision, while the claims brought by the other
local authorities have been settled on terms such that the parties
have agreed not to pursue these claims and to bear their own
costs.
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.
15. Related party transactions
Related party transactions in the half year ended 30 June 2021
were similar in nature to those disclosed in the Barclays Bank PLC
Annual Report 2020.
Amounts included in the Barclays Bank Group's financial
statements with other Barclays Group companies are as follows:
Half year ended Half year ended
30.06.21 30.06.20
===================== =====================
Fellow Fellow
Parent subsidiaries Parent subsidiaries
GBPm GBPm GBPm GBPm
=================== ====== ============= ====== =============
Total income (304) 10 (346) 31
Operating expenses (31) (1,560) (34) (1,443)
As at 30.06.21 As at 31.12.20
===================== =====================
Fellow Fellow
Parent subsidiaries Parent subsidiaries
GBPm GBPm GBPm GBPm
=================== ====== ============= ====== =============
Total assets 6,311 1,672 6,803 1,917
Total liabilities 28,201 3,779 25,819 3,954
Except for the above, no related party transactions that have
taken place in the half year ended 30 June 2021 have materially
affected the financial position or performance of the Barclays Bank
Group during this period.
16. Interest rate benchmark reform
Following the financial crisis, the reform and replacement of
benchmark interest rates such as LIBOR has become a priority for
global regulators. The FCA and other global regulators have
instructed market participants to prepare for the cessation of
LIBOR after the end of 2021, and to adopt RFRs. While it is
expected that most reforms affecting the Barclays Bank Group will
be completed by the end of 2021, consultations and regulatory
changes are in progress and as certain US Dollar tenors will
continue to be published up to mid-2023, significant remediation
efforts will continue beyond the end of 2021.
How the Barclays Group is managing the transition to alternative
benchmark rates
Barclays has established a Group-wide LIBOR Transition
Programme. Further detail on the transition programme is available
in the Barclays Bank PLC Annual Report 2020 (page 261).
In March 2021 the FCA announced the dates by which panel bank
submissions for all LIBOR settings will cease, after which
representative LIBOR rates will no longer be available. These dates
are: immediately after 31 December 2021, in the case of all
sterling, euro, Swiss franc and Japanese yen settings, and the
1-week and 2-month US dollar settings; and immediately after 30
June 2023, in the case of the remaining US dollar settings.
Throughout 2021 the FCA will consult with market participants to
require continued publication on a 'synthetic' basis for some
sterling LIBOR settings and, for one additional year, some Japanese
yen LIBOR settings.
Approaches to transition exposure expiring post the expected end
dates for LIBOR vary by product and nature of counterparty. The
transition we are undertaking is at the request of the regulators,
in line with their expectations and according to the regulatory
endorsed timetable. The rates to which clients and customers are
being transitioned are endorsed by the regulators. We are making
disclosures as part of the transition to clarify the rate to be
applied and the potential risks inherent in the transition.
Barclays is actively engaging with counterparties to transition or
include appropriate fallback provisions and transition mechanisms
in its floating rate assets and liabilities with maturities after
2021, when most IBORs are expected to cease to be published, or
will be published on a non-representative basis for a limited
time.
Barclays is working with central clearing counterparties where
the transition of cleared derivative contracts will follow a
market-wide, standardised approach to reform. Barclays is working
to the UK Risk Free Rate Working Group (RFRWG) target of completion
of active conversion of, and/or addition of robust fallbacks to
legacy GBP LIBOR contracts where viable by the end of Q321.
Additionally, plans are in place to address non-GBP and other
official sector industry milestones and targets.
Progress made during H121
Building on the progress made in 2020, the Barclays Bank Group
has delivered further alternative RFR product capabilities and
alternatives to LIBOR across loans, bonds and derivatives. Client
outreach is progressing to plan and we have continued to engage
actively with customers and counterparties to transition or include
the appropriate fallback provisions. The Barclays Bank Group has in
place detailed plans, processes and procedures to support the
transition of the remainder during 2021. Barclays has adhered to
the ISDA IBOR Fallbacks Protocol for its major derivative dealing
entities and we continue to track progress and engage with clients
on their own adherence. Following the progress made during 2020,
the Barclays Bank Group continues to deliver technology and
business process changes in preparation for LIBOR cessation and
transitions to RFRs that will be necessary during 2021 and beyond
in line with official sector expectations and milestones.
The Barclays Bank Group met the Q121 UK RFRWG milestone to cease
initiation of GBP LIBOR linked loans, securitisations or linear
derivatives and the Q221 milestones to cease initiation of new
non-linear derivatives, exchange traded futures and Bank Of Japan
milestone to cease issuance of JPY LIBOR linked loans and bonds.
The Barclays Bank Group has put in place controls so that any
exceptions or exemptions are approved, and is taking a similar
approach to forthcoming cessation milestones.
17. Barclays Bank PLC parent condensed balance sheet
As at As at
30.06.21 31.12.20
Assets GBPm GBPm
=========================================================== ========= =========
Cash and balances at central banks 139,089 133,386
Cash collateral and settlement balances 85,357 87,723
Loans and advances at amortised cost 191,048 191,538
Reverse repurchase agreements and other similar
secured lending 5,745 11,535
Trading portfolio assets 95,985 84,089
Financial assets at fair value through the income
statement 241,198 203,073
Derivative financial instruments 247,767 297,129
Financial assets at fair value through other comprehensive
income 48,618 50,308
Investment in associates and joint ventures 12 13
Investment in subsidiaries 19,168 17,780
Goodwill and intangible assets 109 112
Property, plant and equipment 149 425
Current tax assets 566 545
Deferred tax assets 1,122 1,171
Retirement benefit assets 2,652 1,812
Other assets 1,652 913
=========================================================== ========= =========
Total assets 1,080,237 1,081,552
Liabilities
=========================================================== ========= =========
Deposits at amortised cost 271,293 272,190
Cash collateral and settlement balances 69,758 68,862
Repurchase agreements and other similar secured
borrowing 18,849 27,722
Debt securities in issue 30,404 17,221
Subordinated liabilities 28,813 31,852
Trading portfolio liabilities 54,033 48,093
Financial liabilities designated at fair value 310,115 267,137
Derivative financial instruments 238,875 292,538
Current tax liabilities 390 336
Deferred tax liabilities 29 225
Retirement benefit liabilities 113 104
Other liabilities 5,701 3,145
Provisions 776 984
=========================================================== ========= =========
Total liabilities 1,029,149 1,030,409
Equity
=========================================================== ========= =========
Called up share capital and share premium 2,348 2,348
Other equity instruments 13,328 13,328
Other reserves (541) 776
Retained earnings 35,953 34,691
=========================================================== ========= =========
Total equity 51,088 51,143
Total liabilities and equity 1,080,237 1,081,552
Barclays Bank PLC considers the carrying value of its investment
in subsidiaries to be fully recoverable.
Other Information
Results timetable(1) Date
======================================= ======== ======== ======== ======== ========
2021 Annual Report 23 February 2022
% Change(3)
Exchange rates(2) 30.06.21 31.12.20 30.06.20 31.12.20 30.06.20
Period end - USD/GBP 1.38 1.37 1.24 1% 11%
6 month average - USD/GBP 1.39 1.31 1.26 6% 10%
3 month average - USD/GBP 1.40 1.32 1.24 6% 13%
Period end - EUR/GBP 1.17 1.12 1.10 4% 6%
6 month average - EUR/GBP 1.15 1.11 1.14 4% 1%
3 month average - EUR/GBP 1.16 1.11 1.13 5% 3%
For further information please contact
Investor relations Media relations
=======================================
Chris Manners +44 (0) 20 7773 2136 Thomas Hoskin +44 (0) 20 7116 4755
More information on Barclays Bank PLC can be found on our website:
home.barclays.
Registered office
1 Churchill Place, London, E14 5HP, United Kingdom. Tel: +44 (0) 20
7116 1000. Company number: 1026167.
1 Note that this date is provisional and subject to change.
2 The average rates shown above are derived from daily spot rates
during the year.
3 The change is the impact to GBP reported information.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR SELFAWEFSEFW
(END) Dow Jones Newswires
July 28, 2021 02:00 ET (06:00 GMT)
Grafico Azioni Barclays. 25 (LSE:78MM)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Barclays. 25 (LSE:78MM)
Storico
Da Lug 2023 a Lug 2024
