# Barclays Bank UK PLC
## Annual Report
### 31 December 2022

## Contents

| Strategic Report | Page |
| --- | --- |
| Performance review | 2 |
| Performance measures | 5 |
| Managing risk | 7 |
| Our people and culture | 9 |
| Customers and clients | 13 |
| Society | 15 |
| Engaging with our stakeholders | 17 |
| Climate and sustainability report | 19 |

| Governance | Page |
| --- | --- |
| Chair’s Introduction | 24 |
| Governance Report (including our Corporate Governance Statement) | 26 |
| Directors’ Report | 37 |

| Risk review | Page |
| --- | --- |
| Risk review contents | 41 |
| Risk management strategy | 44 |
| Material existing and emerging risks | 46 |
| Climate change risk management | 59 |
| Principal risk management | 63 |
| Risk performance | 73 |
| Supervision and regulation | 135 |

| Financial statements | Page |
| --- | --- |
| Financial statements contents | 140 |
| Consolidated financial statements | 151 |
| Notes to the financial statements | 159 |

***

## Strategic Report
### Performance review

The Strategic Report was approved by the Board of Directors on 14 February 2023 and signed on their behalf by the Chair.

#### Overview
Barclays Bank UK PLC (the Company) is a wholly-owned subsidiary of Barclays PLC. The consolidation of Barclays Bank UK PLC and its subsidiaries is referred to as the Barclays Bank UK Group. The term Barclays refers to Barclays PLC, or depending on context the Barclays Group, and Barclays Group refers to Barclays PLC, together with its subsidiaries.

Barclays Bank UK PLC is the ring-fenced bank within the Barclays Group. The Barclays Bank UK Group contains the majority of the Barclays Group’s Barclays UK division, including the Personal Banking, Business Banking and Barclaycard Consumer UK businesses other than the Barclays Partner Finance business.

#### Our structure
Barclays is one of the most recognisable brands in the UK. We serve customers across a wide range of retail banking needs, from credit card users, to start-up businesses, to homebuyers getting on the property ladder for the first time.

**Personal Banking**
Offers retail solutions to help customers with their day-to-day banking needs.

**Business Banking**
Serves business clients, from high growth start-ups to small and medium-sized businesses, with specialist advice for their business banking needs.

**Barclaycard Consumer UK**
A leading credit card provider, offering flexible borrowing and payment solutions, while delivering a leading customer experience.

Barclays Bank UK PLC is supported by the Barclays Group service company, Barclays Execution Services Limited (BX), which provides technology, operations and functional services to businesses across the Barclays Group.

#### Market and operating environment
Against a challenging economic and political backdrop this year, customer confidence in both the UK economy and its impact on their personal finances fell. Inflationary pressures have put significant strain on our customers in the UK and elsewhere, with many adapting to address these challenges, from changing their spending habits to paying down higher cost debts. As a bank, we have an important duty to play in society, and use our expertise to help people with their financial wellbeing, providing them with the support they need to navigate these uncertain times, including help with money management and budgeting.

There continues to be a significant shift towards digital adoption and demand for digital financial services to meet day-to-day needs. The changes in competition over the past decade makes addressing these evolving customer expectations even more pertinent. We aim to provide customers with banking services in new and innovative ways, embracing technology as a means of making things simpler, more transparent and more secure. Whilst we have seen an increase in the number of customers moving to digital, there remains a cohort of customers who are digitally less confident, and require more traditional points of engagement.

UK regulation continues to evolve, seeking to provide higher levels of protection for the consumer. The Consumer Duty, due to come into force in July 2023, is focused on ensuring that firms deliver good customer and client outcomes through: ensuring that products and services provide fair value; enabling informed decision-making and providing support that meets the needs of customers and clients. These key principles align with the Barclays Bank UK PLC Purpose and strategy, and we are committed to ensuring that the Consumer Duty is demonstrably embedded throughout the organisation.

#### Focus areas
*   **Providing exceptional service and insights to customers:** We aim to provide simple, relevant and prompt services and propositions for our customers so they have greater choice and access to the support they need to make their money work for their individual circumstances.
*   **Driving technology and digital innovation:** We continue to invest in our digital capabilities, upgrading our systems, moving to cloud technology and implementing automation of manual processes. This is intended to allow us to deliver a more personalised digital experience, reduce cost and create additional capacity to support more of our customers. It aims to give us the capability to drive service and improve financial inclusion.
*   **Continuing to grow our business:** We are pursuing partnership and acquisition opportunities to build and deliver better propositions and services, while continuing to innovate across our Barclays platforms to unlock new and sustainable income streams. In the unsecured lending space, in particular, we are working with partners such as Avios, to adapt to evolving customer demands as they look for flexibility, convenience and safety from their lending solutions - driving a shift from overdrafts, towards reward credit cards and instalment lending.
*   **Evolving our societal purpose:** We are working across the communities in which we serve to support financial inclusion and recognise our role in supporting the transition towards a low-carbon economy. We are reinventing how we support customers in the community and also seeking to preserve access to banking for consumers and businesses over the long term.

#### Year in review
**Customer**
This year, the UK has seen its fastest increase in inflationary pressure on household budgets in 40 years, and we have focused on making sure our customers have the support they need to navigate these challenging times. This includes our Money Management Hub, which provides tools and information directly to our customers, giving them a better grasp of their spending behaviours and the steps they can take to improve their financial wellbeing. We have been focused on helping customers boost their financial resilience in the long term, by encouraging healthy saving habits through the launch of our Rainy Day Saver account, as well as providing one-to-one support for customers experiencing financial hardship through our expert financial assistance teams.

We continue to focus on improving the overall customer experience by identifying and supporting the removal of the root causes of customer complaints. Complaints in 2022 have further reduced, with volumes decreasing 17% year on year excluding PPI complaints, or decreasing 18% when looking at total complaints. This has been achieved through the continued stability of our platforms, alongside regular and direct communications with customers during times of change, particularly in relation to our service model. We have seen acute pressures in areas impacted by economic events, such as an increase in complaints related to mortgages as customers rushed to find the right rates for them in light of Bank of England base rate changes.

The Net Promoter Score (NPS) for Barclays UK, the Barclays PLC segment, was relatively stable throughout 2022 at +11. This reflects the returning capability to service our customers after previous declines during the pandemic. However, we recognise that we need to continue to push forward our initiatives to drive further improvements in customer experience, including improving and expanding our digital journeys. Barclaycard UK NPS continued to trend upwards throughout 2022 to +12, in line with the market, as usage and availability of credit became more important to customers.

Supporting vulnerable customers across all of our Barclays channels remains a key focus. We have trained over 16,000 frontline colleagues to better recognise the subtle signs of vulnerability when speaking to customers who might need additional support, and are encouraging them to allow us to put an indicator on their banking records to ensure that Barclays, holistically, understands their needs and can better serve them across all their touchpoints as a result. Whilst we have made great progress, we have more to do to embed this with colleagues, including further training and support materials.

We have delivered a regular programme of customer education on fraud, scams and mules alongside our new 'Scan for a Scam' campaign, leveraging social media and influencers to ensure as broad a reach as possible. We have also invested in upskilling and educating colleagues across economic crime, and as a result, complaints relating to fraud, scams and mules have reduced by 17% versus 2021.

**Access to banking services**
We continue to evolve our physical service model, expanding Barclays Local - an alternative branch presence for those who need in-person support - which includes mobile banking vans and pop-up banking sites in community centres, libraries and business hubs. This transformation reflects the reality of the rapid digitisation of transactional banking, as customers demand more convenient, simpler ways to bank that fit their lives. These new formats seek to ensure we leave no-one behind and remain available, in person, to support the small proportion of customers unable to self-serve digitally, who value physical presence when things go wrong or to support them through vulnerability.

As part of the changes to our physical branches, we are working to ensure that customers who rely on cash can still access it and get the support they need. Barclays is one of the driving forces behind the Cash Action Working Group (CAG), working with industry banks and consumer groups, the Post Office and LINK, in an agreement on shared services such as banking hubs, helping to ensure long-term cash availability across the UK. We also rolled out a new Cashback Without Purchase service, in partnership with Barclaycard Payments, creating thousands of new locations for consumers to withdraw cash from shops, cafes, restaurants and other small businesses for free. We anticipate that it will also help local community cash recycling and boost business footfall.

**Digital innovation**
We continue to invest in smarter technologies to improve the customer and colleague experience, particularly for our digital journeys. For example, our mortgage customers can now manage their mortgage through the Barclays app, including switching onto a new rate up to 180 days before their current rate expires, and have the ability to apply for additional borrowing. This provides customers with greater choice of channel, and avoids the need for an appointment to be made when advice is not required. In 2022, our active mobile customers grew to 10.5 million and we hit a record of 15.4 million logins in a single day, demonstrating the impact of going digital-first.

**Sustainability**
We are working to reduce our own emissions at Barclays and have recently introduced our first fully electric mobile banking van. Vans are just one of the ways Barclays provides an accessible in-person service, supporting customers in remote and rural locations, as well as growing our business in strategic locations. Since launching our first van in August 2020, we’ve supported c.9,500 customers across 238 locations such as hospitals, schools, markets and retail parks. We are at the start of this journey, introducing another six electric mobile banking vans in early 2023, as part of our ambition to transform our entire existing fleet of vehicles in the UK to electric by 2025.

This year we expanded our green mortgages proposition to support the transition to a low-carbon economy, launching the Barclays Green Home Buy-to-Let Mortgage product. We also launched a Greener Home Rewards pilot, providing eligible UK mortgage customers with cash rewards when retrofitting their homes, for example, when installing double or triple glazing, solar panels or insulation. For our business customers, we continued to develop our partnership with Propel, helping to provide financing for businesses wanting to invest in renewable assets. To support this, in 2022, we launched a reduced interest rate proposition incentivising the purchase of electric vehicles.

**Growing our business**
We continued to unlock new and sustainable sources of income which also provide innovative propositions for our customers. We have reached an agreement to acquire Kensington Mortgage Company, a specialist mortgage lending platform focused on providing mortgages via brokers to customers with complex incomes, together with a portfolio of UK mortgages. Regulatory approval has been obtained and the transaction is now expected to complete in Q123. This will complement our existing residential mortgage offerings and give us the chance to support even more customers. Within our unsecured lending proposition, we are also working with partners to provide differentiated solutions for our customers, helping them make the most of their day-to-day spending, including launching two new co-branded credit cards this year in partnership with Avios.

**Looking ahead**
Our aim remains putting customers and clients at the heart of the decisions we make, helping to ensure good customer outcomes for every customer and client. We are continuing to adapt our service model for customers, creating a more efficient, more resilient and seamless service at a pace that suits our customers' expectations. We’re also investing significantly in growing our financial assistance teams, to be on hand should customers and businesses run into some form of financial difficulty and need specialist support.

More interactions are moving to digital and virtual channels, with customers demanding better digital services and fewer customers using our branch network. Where traditional branches may have been the most appropriate point of engagement in the past, we are looking to increase the range of more flexible options for our customers; delivering human support for those customers who are digitally less confident.

This will continue to include physical branches, complemented with flexible banking pop-ups in community spaces, banking pods and mobile banking vans. We continue to ensure greater accessibility of cash in local and remote areas through our work with local businesses and the Post Office.

We are building partnerships in the open market and work across Barclays to deliver additional value for our customers and businesses through our size and scale, and continue to invest in digital platforms, remove unnecessary processes and costs and aim for a seamless self-service for customers.

We are acutely aware of increasing consumer expectations on climate and sustainability, and we are committed to supporting our customers and clients through the transition to a low-carbon economy. We continue to provide products and propositions which support greener choices.

**Measuring success**
*   Income (2021: £6.5bn, 2022: £7.4bn)
*   Operating expenses (2021: £4.7bn, 2022: £4.6bn)
*   Profit before tax (2021: £2.2bn, 2022: £2.6bn)
*   Return on tangible equity (2021: 17.6%, 2022: 18.7%)

***

## Performance measures

### Financial performance measures
The performance of Barclays Bank UK PLC contributes to the Barclays Group, upon which the delivery of strategy is measured.

#### Income statement

| Barclays Bank UK Group results | 2022 | 2021 |
| --- | --- | --- |
| For the year ended 31 December | £m | £m |
| Total income | 7,397 | 6,482 |
| Operating costs | (4,532) | (4,640) |
| Litigation and conduct | (45) | (51) |
| Total operating expenses | (4,577) | (4,691) |
| Profit on disposal of subsidiaries, associates and joint ventures | — | 1 |
| Profit before impairment | 2,820 | 1,792 |
| Credit impairment (charges)/releases | (268) | 371 |
| Profit before tax | 2,552 | 2,163 |
| Taxation | (745) | (294) |
| Profit after tax | 1,807 | 1,869 |
| **Attributable to:** | | |
| Equity holders of the parent | 1,634 | 1,696 |
| Other equity instrument holders | 173 | 173 |
| Profit after tax | 1,807 | 1,869 |

#### Income statement commentary
Profit before tax was £2,552m (2021: £2,163m) with benefits from the rising rate environment in the UK more than offsetting the non-recurrence of a prior year credit impairment release.

Total income increased 14% to £7,397m, consisting of:
*   Personal Banking income increased 17% to £4,700m driven by rising interest rates, partially offset by mortgage margin compression.
*   Barclaycard Consumer UK income decreased 13% to £1,095m as higher customer spend volumes were more than offset by lower interest earning lending (IEL) balances, which continue to decline with customer repayments and ongoing prudent risk management.
*   Business Banking income increased 16% to £1,629m driven by rising interest rates alongside improved transaction based revenues, partially offset by lower government scheme lending income as repayments continue.
*   Head Office expense of £27m, related primarily to hedging arrangements.

There was a credit impairment charge of £268m (2021: £371m net release). The charge reflects an updated macroeconomic scenario together with a partial return to more normalised levels of customer behaviour. This is partially offset from the release of COVID-19 related adjustments as performance stabilises at or below pre pandemic levels. As at 31 December 2022, UK cards 30 and 90 day arrears remain at 0.9% (Q4 2021: 1.0%) and 0.2% (Q4 2021: 0.2%) respectively$^{a}$. The UK cards business is supported by a total coverage ratio of 7.6% (FY21: 12.8%). The UK Cards coverage reflects revised recovery expectations under the ongoing debt sale program and continued resilience in the underlying book. PMAs are in place for the anticipated stress arising from the cost-of-living crisis.

Total operating expenses decreased 2% to £4,577m (2021: £4,691m) driven by efficiency savings more than offsetting the impact of inflation.

The effective tax rate (ETR) was 29.2% (2021: 13.6%). The tax charge includes a £163m re-measurement of the Barclays Bank UK Group’s UK deferred tax assets (DTAs) due to the enactment of legislation to reduce the UK banking surcharge rate. Excluding this DTA’s downward re-measurement, the ETR was 22.8%.

Note:
a As at 31 December 2019, UK cards 30 and 90 day arrears were 1.7% and 0.8% respectively.

***

### Balance sheet information
The following assets and liabilities represent key balance sheet items for the Barclays Bank UK Group:

| As at 31 December | 2022 £m | 2021 £m |
| --- | --- | --- |
| **Assets** | | |
| Loans and advances at amortised cost | 223,207 | 220,271 |
| Financial assets at fair value through other comprehensive income | 19,970 | 14,945 |
| Cash and balances at central banks | 54,208 | 69,488 |
| **Liabilities** | | |
| Deposits at amortised cost | 258,117 | 260,732 |

#### Balance sheet commentary
Total loans and advances increased to £223.2bn including an increase to debt securities at amortised cost of £5.8bn contributing to the Barclays Bank UK PLC liquidity pool. Loans and advances to customers at amortised cost decreased 1% to £203.3bn as mortgage growth was more than offset by a decrease in Business Banking balances due to repayment of government scheme lending and the yield curve impact from rising interest rates on the Education, Social Housing and Local Authority portfolio carrying value.

Active management of the liquidity pool has led to a change in the composition of the pool in Barclays Bank UK PLC with a decrease of 22% in cash at central banks to £54.2bn offset by an increase of 34% in financial assets at fair value through other comprehensive income to £20.0bn and the 45% increase in debt securities highlighted above.

Customer deposits at amortised cost remained broadly stable at £258.1bn maintaining a strong liquidity position.

#### Other metrics and capital$^{a}$

| As at 31 December | 2022 | 2021 |
| --- | --- | --- |
| Common equity tier 1 (CET1) ratio | 14.7% | 15.2% |
| Total risk weighted assets (RWAs) | £72.7bn | £71.2bn |
| Average UK leverage ratio | 5.3% | 5.5% |
| Liquidity coverage ratio | 183% | 204% |
| Net stable funding ratio | 168% | — |

Note
a Capital, RWAs and leverage are calculated applying the IFRS 9 transitional arrangements of the Capital Requirement Regulation (CRR) as amended by the Capital Requirement Regulation II (CRR II).

#### Capital commentary
The Barclays Bank UK Group CET1 ratio as at 31 December 2022 was 14.7%, which exceeds the CET1 regulatory capital minimum requirement of 11.8%.

#### Non-financial performance measures
Barclays Bank UK PLC is part of the Barclays Group which uses a variety of quantitative and qualitative measures to track and assess holistic strategic delivery.

Barclays Bank UK PLC has addressed the Non-Financial Reporting requirements contained in sections 414CA and 414CB of the Companies Act 2006 (the Act) through the disclosure contained in the Barclays PLC 2022 Annual Report on pages 60 to 62.

***

## Managing risk

The Barclays Bank UK Group is exposed to internal and external risks as part of its ongoing activities. These risks are managed as part of our business model.

### Enterprise Risk Management Framework
Within the Barclays Bank UK Group, risks are identified and overseen in accordance with the Enterprise Risk Management Framework (ERMF), which supports the business in its aim to embed effective risk management and a strong risk management culture.

The ERMF governs the way in which the Barclays Bank UK Group identifies and manages its risks. The ERMF is approved by the Barclays PLC Board on the recommendation of the Barclays Group Chief Risk Officer; it is then adopted by the Barclays Bank UK Group with minor modifications where needed.

The management of risk is then embedded into each level of the business, with all colleagues being responsible for identifying and controlling risk.

Given the increasing risks associated with climate change, and to support the Barclays Group’s ambition to be a net zero bank by 2050, climate risk became a Principal Risk at the start of 2022.

### Risk appetite
Risk appetite defines the level of risk we are prepared to accept across the different risk types, taking into consideration varying levels of financial and operational stress. Risk appetite is key to our decision-making processes, including ongoing business planning and setting of strategy, new product approvals and business change initiatives.

The Barclays Bank UK Group may choose to adopt a lower risk appetite than allocated to it by the Barclays Group.

### Three lines of defence
The first line of defence is comprised of the revenue-generating and client-facing areas, along with all associated support functions, including Finance, Treasury, Human Resources and Operations and Technology. The first line identifies the risks, sets the controls and escalates risk events to the second line of defence. Employees in the first line have primary responsibility for their risks and their activities are subject to oversight from the relevant parts of the second and third lines.

The second line of defence is made up of Risk and Compliance and oversees the first line by setting limits, rules and constraints on their operations, consistent with the risk appetite.

The third line of defence is comprised of Internal Audit, providing independent assurance to the Barclays Bank UK PLC Board and the Barclays Bank UK PLC Executive Committee on the effectiveness of governance, risk management and control over current, systemic and evolving risks.

The Legal function provides support to all areas of the Barclays Bank UK Group and is not formally part of any of the three lines of defence. The Legal function is responsible for the identification of all legal and regulatory risks. Except in relation to the legal advice it provides or procures, it is subject to second line oversight with respect to its own operational and conduct risks, as well as with respect to the legal and regulatory risks to which the Barclays Bank UK Group is exposed.

### Monitoring the risk profile
Together with a strong governance process, using business and the Barclays Group level Risk Committees as well as Board level forums, the Barclays Bank UK PLC Board receives regular information in respect of the risk profile of the Barclays Bank UK Group. Information received includes measures of risk profile against risk appetite as well as the identification of new and emerging risks, which are derived by mapping risk drivers, identified through horizon scanning, to risk themes, and similar analysis.

During 2022, the Barclays Group, including Barclays UK, ran a stress test to assess its capital adequacy and resilience under a severe but plausible macroeconomic scenario. The internal stress test was informed by the Bank of England 2022 regulatory stress test featuring high and persistent inflation, rising global interest rates, a severe UK recession brought by falling household real incomes, job losses leading to a high unemployment rate, energy and cost of goods shocks, increasing corporate defaults, and severe house and real estate price shocks.

We believe that our structure and governance supports us in managing risk in the changing economic, political and market environments.

For further detailed analysis of approach to risk management and risk performance see the full Risk review on pages 41 to 139.

***

### The Enterprise Risk Management Framework defines nine Principal Risks

| Principal Risk | Risks are classified into Principal Risks, as below | How risks are managed |
| --- | --- | --- |
| **Credit Risk** | The risk of loss to the Barclays Bank UK Group from the failure of clients, customers or counterparties (including sovereigns), to fully honour their obligations to the Barclays Bank UK Group, including the whole and timely payment of principal, interest, collateral and other receivables. | Credit risk teams identify, evaluate, sanction, limit and monitor various forms of credit exposure, individually and in aggregate. |
| **Market Risk** | The risk of loss arising from potential adverse changes in the value of the Barclays Bank UK Group’s assets and liabilities from fluctuation in market variables including, but not limited to, interest rates, foreign exchange, equity prices, commodity prices, credit spreads, implied volatilities and asset correlations. | A range of complementary approaches to identify and evaluate market risk are used to capture exposure to market risk. These are measured, limited and monitored by market risk specialists. |
| **Treasury and Capital Risk** | **Liquidity Risk:** The risk that the Barclays Bank UK Group is unable to meet its contractual or contingent obligations or that it does not have the appropriate amount, tenor and composition of funding and liquidity to support its assets. **Capital Risk:** The risk that the Barclays Bank UK Group has an insufficient level or composition of capital to support its normal business activities and to meet its regulatory capital requirements under normal operating environments and stressed conditions (both actual and as defined for internal planning or regulatory testing purposes). This also includes the risk from the Barclays Bank UK Group’s pension plans. **Interest Rate Risk in the banking book:** The risk that the Barclays Bank UK Group is exposed to capital or income volatility because of a mismatch between the interest rate exposures of its (non-traded) assets and liabilities. | Treasury and capital risk is identified and managed by specialists in Capital Planning, Liquidity, Asset and Liability Management and Market Risk. A range of approaches are used appropriate to the risk, such as limits; plan monitoring; and stress testing. |
| **Climate Risk** | The impact on Financial and Operational Risks arising from climate change through physical risks, risks associated with transitioning to a lower carbon economy and connected risks arising as a result of second order impacts on portfolios of these two drivers. | The Barclays Group assesses and manages its climate risk across its businesses and functions in line with its net zero ambition by monitoring exposure to elevated risk sectors, conducting scenario analysis and risk assessments for key portfolios. Climate risk controls are embedded across the Financial and Operational Principal Risk types through the Barclays Group’s Frameworks, Policies and Standards (which apply to the Barclays Bank UK Group). |
| **Operational Risk** | The risk of loss to the Barclays Bank UK Group from inadequate or failed processes or systems, human factors or due to external events (for example fraud) where the root cause is not due to credit or market risks. | The Barclays Bank UK Group assesses and manages its operational risk and control environment across its businesses and functions with a view to maintaining an acceptable level of residual risk. |
| **Model Risk** | The potential for adverse consequences from decisions based on incorrect or misused model outputs and reports. | Models are evaluated for approval prior to implementation, and on an ongoing basis. |
| **Conduct Risk** | The risk of poor outcomes for, or harm to, customers, clients and markets, arising from the delivery of the Barclays Bank UK Group’s products and services. | The Conduct Risk Management Framework (CRMF) sets out the control objectives and minimum control requirements which must be implemented to manage conduct risk. A selection of tools is mandated in the CRMF and Barclays Control Framework to support with the assessment of Conduct Risks, whilst the governance of Conduct Risk is fulfilled through management committees and forums with clear escalation and reporting lines to Board-level committees. |
| **Reputation Risk** | The risk that an action, transaction, investment, event, decision, or business relationship will reduce trust in the Barclays Bank UK Group’s integrity and/or competence. | Reputation risk is managed by embedding our purpose and values, and maintaining a controlled culture within the Barclays Bank UK Group, with the objective of acting with integrity, enabling strong and trusted relationships to be built with customers and clients, colleagues and broader society. Each business assesses reputation risk using standardised tools and the governance is fulfilled through management committees and forums, clear escalation and reporting lines to the Barclays Bank UK Group Board. |
| **Legal Risk** | The risk of loss or imposition of penalties, damages or fines from the failure of the Barclays Bank UK Group to meet its legal obligations, including regulatory or contractual requirements. | Legal risk is managed by the identification of legal risks by the Legal Function, the engagement of the Legal Function in situations that have the potential for legal risk, and the escalation of legal risk as necessary. |

Note: The ERMF defines nine Principal Risks. For further information on the how these Principal Risks apply specifically to Barclays Bank UK Group, please see pages 59 to 69.

***

## Our people and culture

The following sub-sections include a summary of the Barclays Bank UK PLC specific items from the Barclays PLC Annual Report 2022. For full details, refer to the Our people and culture section of the Barclays PLC Annual Report 2022. Figures mentioned are for the Barclays Group, other than where specifically mentioned.

### Empowering our colleagues
Our people and our culture are our greatest assets. We are committed to making Barclays a great place to work, enabling colleagues to deliver strong results for our customers, clients, communities and each other, by acting in line with our Mindset.

During 2022, we continued to embed the Barclays Mindset, helped colleagues to adapt to hybrid working, supported colleague wellbeing and made further progress against our diversity, equity and inclusion (DEI) ambitions. Through our colleague listening survey, Your View, we saw improved scores across all our indices.

Our data-led approach, underpinned by our Wellbeing Index (now in its second year), brings together actionable insights for people leaders. It also enables curation of content for colleagues that is grounded in clinical evidence to help them better manage their own health. Ongoing leader-led campaigns are at the forefront of the way we engage with colleagues, with regular expert speaker events chaired by senior executives. Our ‘Talk Money’ week in the UK challenged the stigma around talking about money, building confidence with financial management and signposting to free and confidential support. This is complemented by practical resources and guidance offered through our global Be Well portal, and our Employee Assistance Programme.

In response to increases in living costs experienced by our UK colleagues, we brought forward part of the 2023 pay increase, awarding 35,000 UK-based junior colleagues a £1,200 salary increase effective from August 2022, ahead of our annual salary review. In January 2023, Barclays worked closely with Unite the Union to agree a 2023 UK pay deal which, combined with the August 2022 increases, brought the total average salary increase for our lowest paid colleagues up to 11%. By doing this we ensured that our minimum rate of pay in the UK remains well ahead of Living Wage Foundation benchmarks.

### Our approach to diversity, equity and inclusion
We launched our refreshed DEI vision and strategy to incorporate ‘equity’ into how we talk about, and take action to progress, our DEI activities.

Our vision is to strengthen our diverse, equitable and inclusive culture, with a view to attracting and retaining the best talent, building high-performing teams which generate better outcomes for our customers and clients, whilst also meeting the expectations of our regulators, Barclays PLC shareholders, and other stakeholders.

We have five strategic priorities: workforce diversity; inclusive and equitable culture; leadership accountability; data transparency and accountability and optimisation of external relationships. These priorities are underpinned by our guiding principles of accountability, transparency and engagement. These principles and priorities help us to deliver against our six core agendas - disability, gender, LGBT+, multicultural, multigenerational and socio-economic.

#### Workforce diversity
**Developing diverse talent pipelines**
We are focused on recruiting the best talent and have created, and participated in, dedicated recruitment schemes across our agendas and regions to increase access to diverse talent, for example, the Barclays Military and Veterans Outreach programme in the UK and US.

Globally, there is training and support available for all hiring managers and interviewers to ensure inclusivity and consistency throughout the hiring journey. We are an equal opportunities employer and give full and fair consideration to all populations based on their competencies, strengths and potential.

Additionally, as part of the UK Government Disability Confident scheme, we encourage applications from people with a disability, or a physical or mental health condition. We require people leaders to give full and fair consideration to those with a disability on the basis of strengths, potential and ability, both when hiring and managing. We also ensure opportunities for training, career development and promotion are available to all.

For further information on our work on developing diverse talent pipelines, please visit our DEI website.

**Providing tools and support for colleagues to succeed and progress at every stage of their career**
We offer multiple development programmes to support the growth of our colleagues, providing them with the opportunities and resources necessary to strengthen key skills to progress and reach their full potential.

The Black Professionals Resource Group (BPRG) created Ascent, a six-month programme for Analysts in the UK and US, to support the development of Black colleagues across Barclays and was the first such programme conceived and delivered by a Barclays Employee Resource Group (ERG). For further information on our development programmes, please visit the Talent Now and for the Future section in the Barclays PLC Annual Report.

***

### Inclusive and equitable culture
At Barclays, we are committed to building a supportive and inclusive culture. We believe that making our organisation more equitable will help us to make the most of the different backgrounds, perspectives and experiences of our colleagues, and to better serve our customers and clients.

As part of our Continuous Listening strategy, we ask colleagues to participate in surveys, providing regular opportunities to feed back on their experience of working at Barclays. Colleagues are asked to share their feedback on topics ranging from inclusion to wellbeing, and responses help us to assess progress on our DEI journey and identify areas of focus. To learn more about the 2022 Your View survey results, please visit the Listening to Our Colleagues section in the Barclays PLC Annual Report.

#### Employee Resource Groups (ERGs)
Colleague networks have long played an important role at Barclays, through creating communities and fostering belonging. More recently, they have acted as a sounding board for the business, driving a better understanding of the needs of our customers, clients and communities. With over 24,000 colleagues globally participating in one or more of the ERGs, these colleague-led communities amplify the unique challenges of diverse groups at Barclays and provide insight into colleague sentiment and experience.

#### Socio-economic inclusion agenda
To support the launch of the socio-economic agenda, colleagues created the Inspire ERG, which aims to amplify the voices of those who identify as coming from a lower socio-economic background. Members and allies of the ERG are encouraged to develop their understanding of how socio-economic status can impact a person’s work and life experiences. Through Inspire, we are also connecting with schools and universities to remove barriers for people of varied backgrounds to join Barclays.

#### Pronouns
In 2022, we added two new features to our internal phonebook where colleagues can opt to display their personal pronouns, as well as the phonetic spelling or audio recording of their name. We also proudly partnered with Microsoft, to pilot a pronoun feature on Microsoft Teams.

Branch colleagues in the UK are also now able to add their pronouns, as well as markers indicating health conditions and flags denoting spoken languages, to their name badges. This helps to create a safe space for our trans, non-binary and LGBT+ colleagues, and promotes inclusivity of diverse nationalities, abilities and backgrounds. We support the sharing of pronouns as a personal choice.

#### Wellbeing and policies
Prioritising the wellbeing of our colleagues is central to creating productive teams where all individuals feel valued and included. Our holistic and inclusive perspective requires us to measure wellbeing, using our Wellbeing Index and to educate and empower our colleagues and leaders to actively manage their health and support that of others. We continue to deploy training which recognises the importance of mental wellbeing and building a supportive and inclusive culture. We have also partnered with our DEI ERGs and leaders on global campaigns to normalise conversations about mental health and wellbeing topics. In the UK, Barclays pioneered ‘This is Me’, now in its ninth year, where individual colleagues talk openly about the challenges they have faced, with the aim of tackling the stigma associated with mental ill health.

### Leadership accountability
Our leadership play an important role in progressing our DEI journey and meeting the rising expectations of colleagues, customers, clients and communities. Accountable Executives (AEs) from the Barclays Group Executive Committee have been appointed as visible advocates for the DEI agendas, shaping priorities and delivering against these.

Every colleague continues to have a mandatory inclusion performance objective against which they are assessed as part of their performance review. The objective encourages inclusive and supportive behaviours that recognise every individual’s background as key drivers of our Purpose, Values and Mindset.

### Data transparency and accountability
Data plays an essential role in delivering our DEI strategy, allowing senior leaders to make informed decisions and track our progress.

In an effort to ensure colleagues’ personal data records are accurate, this year we held another ‘Count Me In’ campaign, inviting colleagues in the UK and US to review and share their personal details in our HR systems, in line with local privacy laws. Maintaining up to date personal data records also helps us to develop and update programmes, practices and policies to best support colleagues at every level.

### Optimisation of external relationships
We develop relationships with external partners to challenge our thinking, leverage best practices and access diverse pools of talent. Across the Barclays Group we partner with organisations across all six agendas (disability, gender, LGBT+, multicultural, multigenerational and socio-economic).

***

### Recognising our colleagues
Over the past year, Barclays and several of our colleagues have been recognised for our efforts to advance diversity, equity and inclusion. For further details, refer to the Our people and culture section in the Barclays PLC Annual Report 2022.

### Talent now and for the future
#### Talent attraction – now and for the future
Across 2022, demand for talent has remained high, alongside a greater focus from candidates seeking flexible working options and on wellness and wellbeing. In response, we have pursued opportunities to attract and recruit talent as quickly and efficiently as possible, including doubling the number of recruiters to support our businesses and the launch of the Onboarding app, giving new joiners and their people leaders access to information required prior to joining Barclays, including the ability to sign employment contracts via the app.

Barclays was ranked number one in the [LinkedIn Top Companies UK 2022](https://www.linkedin.com) list, for the second year in a row. Based on LinkedIn-owned data, the list is a resource for jobseekers and career builders to explore open vacancies, enhance their skills and identify companies that invest in their talent. This was further recognised by the Learning and Performance Institute, where Barclays won a Bronze Learning Leader Award.

#### Developing our colleagues
We remain committed to our culture of lifelong learning, through a development proposition that supports colleagues at every stage of their career.

The Barclays Learning Lab is our learning ecosystem. Consisting of Barclays-designed knowledge and skills modules, as well as modules from external specialists, it provides our colleagues with the development tools needed to support them in their current and future roles. Colleagues can access a wide range of workshops, split between colleague and people leader development. This is complemented by our digital content providers, whose content has been mapped against role-specific learning pathways, making it easy for colleagues to navigate development resources suitable for their needs. The Learning Lab also offers a selection of self-assessment tools, empowering colleagues to understand their strengths and development areas. These are supported by business-led solutions that encompass professional and technical resources encouraging colleagues to drive their own development.

People leadership at Barclays is about helping others to achieve their potential. To equip our people leaders with the critical skills and behaviours to inspire, develop and support their teams today and into the future, we have refreshed our Management Unlocked programme. The programme provides participants with extensive digital content, as well as our Evolution programme, which supports new people leaders as they transition into leadership roles.

We also operate three high-potential flagship leadership programmes: The Enterprise Leaders Summit, for Managing Directors; the Strategic Leaders Programme, for Directors; and Aspire, for Vice Presidents. These programmes aim to build enterprise-wide leadership, alongside strong people leadership capabilities, helping colleagues tackle people management situations confidently, in line with our Values and Mindset.

#### Listening to our colleagues
Listening to colleagues allows us to obtain insights into what we are doing well and areas where we need to focus our attention.

Our biannual all-colleague Your View surveys measure colleague considerations across a breadth of topics including colleague engagement, organisational culture, including the Mindset and Values, wellbeing, inclusion and working practices and tools. The 2022 survey results indicated good progress for both engagement and our cultural measures. Senior leaders continue to receive and review the results from these surveys to inform decisions. Results from our surveys and other employee engagement were shared with colleagues and discussed with the Barclays PLC Board, Barclays Bank UK PLC Board, the Executive Committee and people leaders.

We have also evolved our Continuous Listening strategy, leveraging pulse surveys, as well as additional surveys deployed throughout the employee lifecycle, to capture insights which help us better understand our culture and improve colleague experience.

The Barclays PLC CEO held a number of engagement sessions with colleagues, including quarterly town halls on financial performance, listening sessions on flagship talent programmes and Q&A sessions. Other workforce engagement activities have also been carried out by the Barclays PLC Board, the trading entity Boards and Executive directors to deliver meaningful, regular two-way dialogue with colleagues. This helps the Barclays PLC Board, and the Barclays Bank UK PLC Board, reflect colleague feedback in their decision-making.

The Barclays Bank UK PLC Board has engaged, and will continue to engage, directly with colleagues and listen to feedback from the annual Your View surveys. In May 2022, the Barclays Bank UK PLC Board offsite was held in Southampton, where the Barclays Bank UK PLC Board visited the Barclays Eagle Lab for an immersion session, as well as spending time with colleagues at the local branch and a visit to the Barclays Flex Van. In September 2022, Barclays Bank UK PLC Board members facilitated networking lunches with multiple colleague groups. Additionally, two Game Changers events were held in 2022 which members of the Barclays Bank UK PLC Board participated in. Game Changers actively listen to take action and are committed to empowering others to build a better bank through our Barclays Mindset. The May event focused on #customerobsessed, whilst the November event was focused on #colleagueobsessed. Following the event, the Barclays Bank UK CEO and members of the Barclays Bank UK PLC Board hosted the Build a Better Bank Awards that recognised inspiring colleagues across a number of categories, including Mindset and Culture. We also keep colleagues updated on the strategy,

***

performance and progress of the organisation through a combination of leader-led engagement, digital and print communication, blogs, vlogs and podcasts.

We maintain a strong and effective partnership with Unite, whom we brief on our strategy and progress to obtain feedback on how we can improve the colleague experience. In 2022, we engaged with Unite on the transition to hybrid working and our updated DEI strategy. We also consult with colleague representatives on major change programmes which impact our people, to minimise compulsory job losses, and focus on reskilling and redeployment. In 2022, this included the launch of an enhanced mobility service to further mitigate redundancies across the organisation, redeploying colleagues into roles commensurate with their skills and experience, and upskilling colleagues where required.

### Our policies
Our people policies are designed to recruit the best people, provide equal opportunities and create an inclusive culture, in line with our Purpose, Values, Mindset and in support of our long-term success. They also reflect relevant employment law, including the provisions of the Universal Declaration of Human Rights and the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work.

We regularly review and update these policies to ensure that they are in line with our broader DEI and people strategy. To support the transition to hybrid working in 2022, we updated our policies on Working Flexibly to enable an approach that meets the requirements of each role, while also taking into account the needs of our colleagues. We also updated our policies and guidance on a range of topics including workplace support for menopause and baby loss.

We are committed to paying our people fairly and appropriately relative to their role, skills, experience and performance. This means our remuneration policies reward performance that is in line with our Purpose, Values and Mindset, as well as our risk expectations. We also encourage our people to benefit from Barclays’ performance by enrolling in our share ownership plans.

For further information please see the Barclays PLC Pay Gaps and Fair Pay reports.

***

## Customers & Clients

Barclays Bank UK PLC seeks to make sure we understand our customers and clients expectations and aspirations, developing products and services that support them especially during difficult economic conditions. We believe that transparency of information in our products and services is key to empowering consumers to make sound financial decisions.

The following sub-sections include a summary of the Barclays Bank UK PLC specific items with references to Barclays UK referring to the businesses of Barclays Bank UK PLC and its subsidiaries. For further details, refer to the Customer and Clients section of the Barclays PLC 2022 Annual Report.

### Supporting customers through Barclays UK
Barclays has a large retail presence in the UK, offering a wide range of products and services to c.20 million customers through Barclays UK.

We recognise that there is a heightened need to help customers who may be experiencing financial vulnerability due to the current inflationary pressures on household budgets. We are endeavouring to support customers during these challenging times, by focusing on four key areas:

1.  using data analytics to determine which customers are in need of support and the appropriate type of support;
2.  engaging those customers impacted to increase awareness of products, tools and support available;
3.  understanding customers’ needs and developing solutions to provide greater support; and
4.  ensuring colleagues have, and are aware of, the financial health tools to enable them to support customers.

Barclays defines vulnerability as any existing or potential customers who, due to their personal circumstances e.g. financial difficulty, long term medical conditions, or other personal circumstances, are especially susceptible to detriment.

Our aim at Barclays is to offer an accessible, empathetic and inclusive service for our customers, including for those who may typically face barriers to accessing banking services, such as customers living with disabilities, complex needs or experiencing difficult life events.

To better support financially vulnerable customers, we are enhancing our Barclays' tools, training, support and systems, continuing to improve our on-going support when customers need us the most.

Our key measures in 2022 have included:
*   Extending unsecured borrowing solutions for consumers allowing them to borrow money without offering up security based on a major asset, while being protected by the Consumer Credit Legislation and the FCA’s Consumer Credit Sourcebook
*   Cost of living support by proactively contacting over 13.5m customers in 2022 with targeted emails based on their financial needs, providing support and guidance on managing their finances offering them help ranging from budgeting to direct financial support and guiding them towards dedicated functions such as Barclays Financial Assistance (BFA) or external agencies such as Step Change.
*   Providing knowledge and expertise through our colleagues with the aim to offer our customers more tools and features to educate them on managing their money, including by giving them guidance on how to use our digital platforms via the Digital Eagles, or supporting them in their understanding of financial products, how to build financial plans, and save money through budgeting via our Barclays Money Mentors®.

Our early intervention strategies assess all customers who hold a retail product to determine if we think they would benefit from our support. These customer engagement strategies are bank-initiated and largely focused around proactive communications, based on sets of customer behavioural triggers, whilst we also support customers who initiate contact with us.

Our primary focus is to support customers whose account behaviours are showing signs of possible early financial difficulty, and look to help customers maintain or regain control of their finances.

Some of the other ways we seek to support vulnerability and provide responsible and inclusive banking are set out below:

#### Access to banking
Customers are looking for more convenient, simpler ways to bank that fit their lives, including banking digitally: our mobile app has over 10.5 million active users. We are continuing to help deliver these solutions at pace.

Alongside our investment in technology enabling digital customers to access tools and products whenever they need them, we’re transforming the role of physical locations across the UK to ensure older and more vulnerable customers can still access banking.

We have launched our own initiatives, including a cashback without purchase service and Barclays Local, and we are working with other banks, the Post Office and LINK, to keep Barclays at the heart of the community.

Alongside these changes, we are investing in multi-skilled training for our colleagues so they are better able to serve customers in ways that meet their needs today as well as breaking down internal barriers to enable quicker resolution of customer queries.

***

#### Economic crime and scams
We have an established programme to educate customers and prevent them from falling victim to scams.

We have also launched a new Fraud and Scams hub on the Barclays website, which hosts a variety of content and resources to help the public learn how to keep themselves safe.

Additionally, to help keep our customers safe, we have continued to invest in multi-layered security systems that protect against fraud and scams, including ‘Confirmation of Payee’, an account name checking service that helps to make sure payments are not sent to the wrong bank or building society account.

We introduced app ID, which allows Barclays colleagues to verify to customers that they’re a legitimate caller and not an impersonator.

We are part of the ‘Do not originate’ scheme, created in partnership with the telecommunications industry, UK Finance and Ofcom, to prevent our most common in-bound helpline phone numbers from being used in a scam.

We are also proud initial signatories of the Contingent Reimbursement Model Code, providing measures to help prevent Authorised Push Payments scams taking place and increased consumer protection standards for customers of signatory firms.

We are founding members of Stop Scams UK, a cross-industry group made up of banks, telecoms and tech firms that have come together to seek to put an end to scams by collaborating, sharing best practices and engaging with the government and regulators to make it harder for scammers to operate. Through Stop Scams UK, we have created a dedicated hotline for customers to call if they think they are being targeted by a scammer.

Further detail and evidence with regards to our position can be found in the Frontier Economics report published earlier this year, in conjunction with Barclays, which includes Barclays’ Scams Manifesto, outlining specific and actionable recommendations.

#### Digital accessibility
We aim to ensure that our digital services are easy to see, hear, understand and use for all customers, including those with disabilities.

Collectively we seek to deliver digital services and workplace tools that promote disability inclusion and meet accessibility requirements set out in the Web Content Accessibility Guidelines (WCAG) 2.1 AA level.

#### Basic current account
Since 2015, we have been offering our basic current account, to individuals who may not be eligible for a standard account access to banking, including over the counter services, access to ATMs, and digital banking and free text alerts to manage finances. There were over 660,000 Barclays basic current accounts open at the end of 2022.

Access to a transactional bank account enables consumers to benefit from bill reductions through paying by Direct Debit and access to cheaper goods and services on the internet, to help them along their financial journey. If their circumstances change, customers on the basic current account are able to apply for a standard Barclays current account at any time.

#### Barclays mortgages and first-time buyers
In 2022, we helped almost 40,000 first-time buyers get onto the property ladder, near the level achieved in 2021. We have continued to support customers buying their first home with 95% loan-to-value mortgages through Government schemes including: Help to Buy and Mortgage Guarantee Schemes, and Barclays Family Springboard Mortgage.

Help to Buy scheme allows first-time buyers to get on the property ladder with the help of an equity loan from the Government. Customers put down a five per cent deposit which is ‘topped up’ with an equity loan of 20% (or 40% in London) to support their property purchase. Help to Buy is only available on new build properties.

Mortgage Guarantee Scheme offers 95% LTV mortgages which are backed by a Government guarantee. Customers can apply for the scheme with a minimum deposit of 5% of the property purchase price, and is available for first-time buyers and those looking to make their next move on the property ladder.

#### Complaints
In Barclays UK, as in previous years we continue to be focused on improving the overall customer experience by identifying and supporting the removal of the root causes of customer complaints. Complaints across Barclays UK in 2022 have further reduced on those received in 2021, with volumes including PPI decreasing 18% YoY (17% excluding PPI). This is despite an 8% rise in interactions across our channels which therefore lowers the rate of complaints per 10k interactions annually by 24%.

This has been achieved through continued stability of our platforms alongside mitigation of potential increases driven by changes across the business as we continue to transform our servicing model in a post-pandemic market. Some acute pressures exist in areas impacted by the economic changes seen in 2022 with volumes rising across Mortgage complaints as customers rushed to find the right rates for them in light of the Bank of England interest rate changes and unpredicted demand for Mortgages with rate switch applications up 30% in the second half of the year.

***

## Society

The following sub-sections include a summary of the Barclays Bank UK PLC specific items from the Barclays PLC 2022 Annual report. For full details, refer to the Society section of the Barclays PLC 2022 Annual Report.

We believe that we can, and should, make a positive difference for society – globally and locally. We do that through the choices we make about how we run our business in light of all relevant risk and other factors and through the commitments we make to support our clients and communities and to champion sustainability for the long-term. We recognise that we are at our best when our clients, customers, communities, and colleagues all progress.

Our focus on society falls broadly into three categories: Climate, Communities and Suppliers.

#### Climate
Addressing climate change is an urgent and complex challenge. It requires a fundamental transformation of the global economy.

The financial sector has an important role to play in supporting the transition to a low-carbon economy. At Barclays, we are determined to play our part in view of our Purpose and relevant business and risk considerations.

In 2020, Barclays announced an ambition to be a net zero bank by 2050, across all of our direct and indirect emissions and we committed to align all of our financing activities with the goals and timelines of the Paris Agreement. We made it clear at the time that we would approach the climate challenge thoughtfully and transparently, engaging with our shareholders and other stakeholders and reporting our progress.

In doing so, we also recognise the importance of supporting a just transition considering the social risks and opportunities of the transition and seeking to ensure effective dialogue with affected stakeholders.

See below for further details on Barclays’ climate strategy.

#### Communities
In the communities in which we operate, Barclays is supporting people to develop the skills and confidence they need to succeed, now and in the future, and is working to help businesses create jobs. We collaborate with experienced partners, employability experts and businesses to develop meaningful and innovative programmes that aim to deliver a significant positive impact over the long-term.

#### Suppliers
As a global institution, we have responsibility for a large supply chain. We engage directly with our suppliers seeking to promote diversity, equity and inclusion and we work to identify and address modern slavery risks across our operations, supply chain, and customer and client relationships.

We engage with stakeholders internally and externally to assess our areas of focus against their priorities. That happens through ongoing conversations, as well as surveys and information requests from investors and ratings agencies. We also monitor closely the relevant ESG frameworks and reporting guidelines.

### Barclays’ climate strategy
Our climate strategy is driven by consideration of all relevant risks and all considerations, as well as our purpose to deploy finance responsibly to support people and businesses, acting with empathy and integrity, championing innovation and sustainability, for the common good and the long term.

As noted above, in March 2020, Barclays announced its ambition to be a net zero bank by 2050, becoming one of the first banks to do so.

All of our 2030 target-setting includes the integration of 1.5°C aligned scenarios such as the IEA Net Zero 2050 scenario in our financed emission targets and use of ranges for certain sectors. We have developed a methodology for measuring our financed emissions and tracking them at a portfolio level against the goals and timelines of the Paris Agreement – this methodology$^{a}$ is called BlueTrack™. Barclays’ climate strategy is comprised of three pillars:

**1) Achieving net zero operations**
Barclays is working to reduce its Scope 1, Scope 2 and Scope 3 operational emissions consistent with a 1.5°C aligned pathway and to counterbalance any residual emissions.

We are committed to achieving net zero operations and have made progress, having sourced 100% renewable electricity for our global real estate portfolio operations and created a pathway to address our supply chain emissions. We achieved our renewable electricity target ahead of schedule by matching 100% of our electricity consumption with energy attribute certificates and green tariffs which we consider to be a transitional solution as we seek to increase the proportion of on-site renewable electricity sources and Power Purchase Agreements.

Note
a. Further details on the methodology can be found on page 86 of the Barclays PLC 2022 Annual Report and in the 2023 BlueTrackTM Whitepaper at: [home.barclays/sustainability/esg-resource-hub/reporting-and-disclosures/](https://home.barclays/sustainability/esg-resource-hub/reporting-and-disclosures/)

***

**2) Reducing our financed emissions**
Barclays is committed to aligning its financing with the goals and timelines of the Paris Agreement, consistent with limiting the increase in global temperatures to 1.5°C.

We are also committed to reducing our financed emissions, those deriving from the activities of the clients that we finance and those generated in their respective value chains, by advising and supporting them in their own transition to net zero. We have now set 2030 reduction targets across five of the highest-emitting sectors in our portfolio: Energy, Power, Cement, Steel and Automotive Manufacturing and have assessed the baseline and convergence point for our Residential Real Estate portfolio.

**3) Financing the transition**
Barclays is helping to provide the green and sustainable finance required to transform the economies, customers and clients we serve.

As a large global financial intermediary, Barclays also has an important role in helping channel investment into new green technologies and low-carbon infrastructure projects.

After a strategic review of the Group’s capabilities, market demand and growth opportunities, we announced in December 2022, new targets to:
*   Facilitate $1 trillion of Sustainable and Transition Financing between 2023 and the end of 2030$^{a}$.
*   increase investment into global climate tech start-ups to £500m through our Sustainable Impact Capital portfolio by the end of 2027.

Our strategy is underpinned by the way we assess and manage our exposure to climate-related risk. Climate risk became a Principal risk at Barclays in 2022.

We keep our policies, targets and progress under review in light of the rapidly changing external environment and the need to support governments and clients in delivering an orderly energy transition and providing energy security.

The trajectory for our clients’ transition to a low-carbon economy is influenced by a number of external factors, including market developments, technological advancement, the public policy environment, geopolitical developments and regional variations, behavioural change in society and the scale of change needed to adapt their business models. Client transition pathways will vary, even within the same sectors and geographies.

Many highly carbon-intensive sectors require finance to transition. Restricting the flow of capital to these sectors could be harmful to the pace of the transition, limiting the real term impact on global warming. However, we anticipate that companies which are unwilling to reduce or eliminate their emissions consistent with internationally accepted pathways may find it increasingly difficult to access financing, including through Barclays.

Over the coming years, our strategy will continue to evolve and adapt to reflect external factors affecting the shape and timing of the transition to a low-carbon economy, similar to those impacting our clients' transitions. Progress is likely to vary year to year and we need to be able to adapt our approach to respond to external circumstances and to manage the effectiveness and impact of our support for the transition, whilst remaining focused on our ambition of becoming a net zero bank by 2050.

For details of how Barclays Bank UK Group is implementing Barclays’ climate strategy, please see the Climate and Sustainability Report below at page 19.

Note
a. Financing of climate and environmental solutions including green mortgages, energy efficient technology and renewable energy, as well as financing for broader social and sustainability work, will all count towards the target. See Barclays' Sustainable Finance Framework (https://home.barclays/content/dam/home-barclays/documents/citizenship/ESG/2022/Barclays-Sustainable-Finance-Framework.pdf) for further details of the eligible transactions.

***

## Engaging with our stakeholders

### Section 172(1) Statement

#### How the Board has regard to the views of our stakeholders
The Directors have acted in the way that they considered, in good faith, would be most likely to promote the success of the Company for the benefit of its member and this section forms our Section 172 disclosure, describing how, in doing so, the Directors considered the matters set out in Section 172(1)(a) to (f) of the Companies Act 2006.

For further details on the principal activities of the Board during 2022, please refer to our Governance Report on pages 26 to 36. Details of how the Barclays Group engages with its stakeholders can be found on pages 16 to 22 of the Barclays PLC 2022 Annual Report and are incorporated by reference into this Statement.

#### How does the Board engage with stakeholders?
Throughout the year, the Board engages directly and indirectly with stakeholders to ensure it has a comprehensive understanding of the impact of the Group's operations on key stakeholders, as well as their interests and views. This engagement, both directly and through regular reports from individual business areas and key functions, ensures the Board is well-versed on key issues to enable the Directors to comply with their legal duty under Section 172(1).

#### Engagement in action
See below to find out about how the Directors have had regard to the matters set out in Section 172 when discharging their duties, and the effect of those considerations in reaching certain decisions taken by them in the context of how we have supported our customers, clients, colleagues and communities during these challenging times.

#### Supporting our customers, clients, colleagues and communities during these challenging times
During 2022, against a challenging economic and political backdrop both in the UK and overseas, the Directors considered matters relevant to the Barclays Bank UK Group’s strategy at every scheduled Board meeting. Specifically, the Board has been acutely aware of how the rising cost of living is impacting our customers’ and clients’ financial wellbeing, and recognises the important part that banks have to play in this scenario. The outcomes of detailed discussions between management and the Board about the external environment have been critical in evolving the Barclays Bank UK Group’s strategy in order to respond to the changes arising from the economic, legal, political and regulatory landscape and, therefore, to support our customers, clients, colleagues and communities during these challenging times. Further detail on the Barclays Bank UK Group’s strategy, including our four focus areas, can be found on pages 2 and 3 of the Strategic Report.

#### Cost of living
High inflation and increasing interest rates, coupled with rising energy costs, have put strain on our customers in the UK and elsewhere. As a result, we are seeing almost everyone adapt in some form or another, from changing their spending habits to paying down higher cost debts. Customers’ and clients’ different needs have been reinforced by analysis of the key drivers underpinning customer metrics, customer insights, direct feedback from colleagues, and the receipt of regular reports on complaints. The Board understands that a “one size fits all” approach is not appropriate in the circumstances and has, therefore, overseen the creation of tailored responses for our customers and clients as part of our broader strategy. This includes early intervention strategies, engaging those customers impacted to increase awareness of products, tools and support available, and providing expertise and knowledge through our colleagues. Please refer to page 13 of the Strategic Report for more information.

Throughout 2022, the Board - through the Board Risk Committee - has maintained close oversight of the business’ ongoing review of the Personal Banking and Business Banking portfolios. This review has been carried out in order to identify areas of stress where customers and clients might be facing financial pressures and the actions taken to support them, balancing our duty to lend responsibly alongside the need to support customers and clients who might be struggling in the current environment, particularly those who are characterised as vulnerable.

In monitoring our response to the increased cost of living, we are working with a wide range of stakeholders – including the FCA, the Government and our peers – to ensure customers and clients are supported during these challenging times. This includes consistent, industry-wide communications, where appropriate, so that all customers and clients, irrespective of who they bank with, can know what to expect from their financial services provider. In October, we had the opportunity to discuss the Barclays Bank UK Group’s response to the rising cost of living with the FCA when the regulator attended one of our Board meetings. We were also able to discuss the Barclays Bank UK Group’s approach to implementation of the new Consumer Duty, which will set clearer and higher standards of consumer protection across the financial services sector. The Board is committed to ensuring good customer and client outcomes, and that the Consumer Duty is demonstrably embedded throughout the organisation.

We are also committed to supporting the financial health of our colleagues and our communities.

In this context, the Board has engaged directly with colleagues, both in person and virtually, inside and outside of the boardroom, including when joining Employee Resource Group meetings, participating in leadership panel events, reverse mentoring, and through visiting branches, Eagle Labs and operational sites. The Board has also listened to feedback from colleagues via the bi-annual Your View surveys, including in relation to colleagues’ financial and personal wellbeing in light of the rising cost of living. Mindful of this, part of the 2023 pay increase was brought forward, which resulted in 35,000 UK-based junior colleagues being awarded a £1,200 salary increase effective from August 2022, ahead of the annual salary review. The Board, through the Board Remuneration Committee, continued to have regard to the impact of the current macroeconomic environment as it reviewed pay during the year-end cycle. In January 2023, Barclays worked closely with Unite the Union to agree a 2023 UK pay deal which, combined with the August 2022 increases, brought the total average salary increase for our lowest paid colleagues up to 11%. By doing this, we ensured that our minimum rate of pay in the UK remained ahead of Living Wage Foundation benchmarks. Further information on the resources and support available to colleagues relating to financial wellness is available in the 2022 Barclays Fair Pay Report.

***

With reference to our communities, whilst based at the Network Eagle Lab in Southampton – which was celebrating three years of Barclays Eagle Labs and Southampton City Council supporting local businesses in the area – the Board met colleagues and stakeholders who had benefited from initiatives such as Barclays’ Black Founder Accelerator Programme (which supports the growth of early-stage digital and technology businesses founded by Black entrepreneurs in the UK) and Digital Eagles (which aims to help everyone get the most out of digital banking). The Directors also met colleagues involved with the LifeSkills programme, which has, this year, partnered with organisations like the Trussell Trust that work with local communities to help those most in need, building awareness of the help available to people facing financial difficulties, increasing access to the support they are entitled to and helping them maximise their incomes.

We want to assure our customers, clients, colleagues and communities that the Board will continue to keep the overarching cost of living situation under review so that the Barclays Bank UK Group can play its part in providing support during these challenging times.

**Crawford Gillies**
Chair – Barclays Bank UK PLC
14 February 2023

***

## Climate and Sustainability report

### Embedding Barclays’ climate strategy within Barclays Bank UK
The following sub-sections include a summary of the Barclays Bank UK specific items with references to Barclays UK referring to the businesses of Barclays Bank UK PLC and its subsidiaries. For full details, refer to the Climate and sustainability Report in the Barclays PLC 2022 Annual Report

Sustainability is a key focus area for Barclays Bank UK. We are actively engaging with our retail and business customers to better understand the steps they want to take to become more sustainable, and the role that finance can play in that. We are using this insight-led approach to design and develop sustainable finance solutions that meet the needs of our customers.

We have started embedding environmental considerations and climate risk into product and proposition standards, and we plan to further embed this into product governance through the New and Amended Product Approval (NAPA) process. We have recruited specialists into sustainability-focused roles across Barclays UK and we intend to roll out colleague training for the retail bank.

By working collaboratively under a unified strategy across Barclays UK, we aim to further expand our sustainable products and propositions to meet customers’ needs and support them in seeking to reduce emissions.

### Consumer Bank
#### Green home propositions
Barclays is committed to supporting our customers' transition to a more sustainable way of living; our Green Homes strategy is to deliver products and propositions to support our customers to take steps to improve the energy efficiency of their homes, switch to low-carbon heating and reduce their energy consumption. Our focus is on launching initiatives that aim to drive real benefit to society and to the environment

In 2018, Barclays led the market as one of the first UK lenders to launch a Green Mortgage. Since inception, Barclays UK has lent over £2.6bn to Green Home mortgage customers with £1.6bn of financing delivered in 2022. In 2022, Barclays expanded Green Home mortgages to include buy-to-let properties, supporting more customers to purchase an energy efficient new-build home.

In 2022, we launched the Greener Home Reward pilot, offering eligible customers up to £2,000 to improve the energy efficiency of their homes.

#### New sector assessed - Residential Real Estate
**Estimating our financed emissions**
Homes contributed to over 15% of total GHG UK emissions in 2021$^{a}$, primarily from the use of oil and gas in heating and hot water. Decarbonising UK homes is a complex challenge that will require widespread engagement and systemic change. In view of these challenges, we are announcing a convergence point for our UK residential real estate mortgage portfolio of a 40% reduction in CO2e emissions intensity against a 2022 baseline of 32.9 kgCO2e/m2 (Scopes 1 and 2).

Barclays has estimated the financed emissions and emissions intensity of its UK residential real estate portfolio by integrating the PCAF$^{2}$ approach into BlueTrack™. This is the first sector where we are leveraging the well-established approach and data sourcing recommended by PCAF. Our in scope portfolio consists mostly of Barclays UK residential mortgages, including properties to let. It also includes a smaller portfolio of mortgages originated by the Private Banking division of Barclays Bank PLC$^{c}$.

We have selected the Balanced Net Zero (BNZ) scenario developed by the UK's Climate Change Committee (CCC) as a benchmark for this sector, as it is specific to the UK, independent, developed by a credible institution and aims to achieve net zero emissions for the UK by 2050. In line with this scenario, our portfolio would need to reach an emissions intensity of 19.7kgCO2e/m2 by 2030 to be on a path to net zero by 2050, which would be a 40% reduction in emissions intensity from a 2022 baseline.

The transition of the residential real estate sector to net zero depends mostly on external changes and public policy interventions to: steer the UK energy grid towards renewable electricity; reduce dependence on fossil fuels for home heating; drive retrofitting of existing homes to promote energy efficiency; and require that new homes are built to a net zero standard.

Without these external changes, Barclays cannot materially decrease the emissions intensity of its mortgage portfolio. Barclays has therefore chosen to identify the 2030 emissions intensity 'convergence point' and measure our progress towards it, but not to set a formal target at the current time.

**Barclays UK Residential Real Estate ambition**
In addition to establishing a convergence point and measuring our progress towards it, we have set an ambition for 50% of homes in our Barclays UK mortgages book with known EPC rating to have an EPC of C or better by 2030. This will be an important improvement, but it will not be sufficient to reduce portfolio emissions intensity to the level required under a 1.5°C scenario.

Notes:
a Climate Change Committee 2022 Progress Report to Parliament.
b Our Data Quality scope for the Residential Real Estate sector is 3.7. The PCAF framework provides guidance for a data quality score for each sector to help institutions rate the reliability of their information. The score ranges from one to five, with one being the highest quality date. For Residential Real Estate, our Data Quality score is 3.7. Please refer to the BlueTrackTM Whitepaper for further details on how the data quality score is calculated.
c Corporate counterparties such as social housing associations or house builders, mortgages on properties outside of the UK or mortgages originated through Barclays UK Business Banking have not been included in this sector.

***

**Our UK mortgages by EPC rating**
Barclays UK regularly monitors the Energy Performance Certificate (EPC) rating of its mortgage portfolio, to support our management of climate risk and our understanding of the impact of our financing on the environment. In line with our commitment to the improvement in energy efficiency of our mortgages portfolio, Barclays UK has set an ambition for 50% of homes in its mortgage portfolio with a known EPC to be rated EPC band C or better by 2030. As at the end of Q3 2022, 42.3% were rated EPC C or better (out of homes with a valid EPC, or 27.5% including homes without an EPC).

In 2022, Barclays UK onboarded a third party to provide enhanced EPC matching in addition to a broad suite of climate data for assessing physical and transition risks in the Barclays UK Mortgages portfolio (owner-occupied and buy to let).

Based on the enhanced EPC matching, as of the end of Q3 2022, a valid EPC rating was available for 65.1%$^{a}$ of our mortgage book by volume compared to Q3 2021, where we had a valid EPC rating for 55.7% of our mortgage book. There are industry-wide challenges regarding obtaining greater coverage of EPC ratings as this data is sourced directly from the government EPC register and is released on a quarterly basis.

**Drivers of the reduction in emissions in Residential Real Estate**
The two most important drivers in the transition to net zero in this sector are the decarbonisation of the UK energy grid and the phasing out of fossil fuel in domestic heating through the switch to low-carbon heating bringing clean energy to our customers’ homes. This will be mostly driven by the transition of the energy sector and UK Government policy to drive the decarbonisation of the UK electricity grid and promote the take up of low-carbon heating,

Barclays can play a role through supporting renewable projects and clients in the Power sector, for example through our BlueTrack™ targets, our banking activity and Sustainable Impact Capital investments.

Another key driver required to reach net zero in the Residential Real Estate sector is improving the energy efficiency of existing homes, which includes our customers improving the fabric of their homes and other energy efficiency measures.

Other key contributors to the reduction in emissions intensity of this sector include new homes being built to net zero standard, with low carbon energy sources and high energy efficiency rating, and reduction in consumption through changes in behaviour.

As a mortgage lender, we can support our customers making the decision to retrofit their homes, switch to low-carbon heating e.g. heat pumps and reduce their energy consumption by providing education, financial incentives and partner offers, as well as financing through our wide range of lending products. However, we expect the overall impact of our actions to be low, given the barriers to retrofitting such as high upfront costs and low customer demand.

**Barclays approach to advocacy in residential real estate**
Barclays is also committed to working collaboratively with the UK Government to encourage and inform the development of strategies and policies to drive more energy-efficient homes and retrofitting, including through industry groups where appropriate, and through our own engagement with policymakers.

We have recommended that policymakers, in collaboration with the industry, take the following steps:
*   increase policy clarity through a national decarbonisation roadmap and retrofitting strategy to create a clear framework for action.
*   introduce measures to build trust and confidence in taking action, such as improved access to practical advice about retrofitting and installers who are TrustMark accredited.
*   long-term funding which will give supply chains confidence to grow.
*   Improve accuracy and confidence in EPC Standards as key basis for measuring change.

### Business Banking
Business Banking has a dedicated strategy to;
*   prepare colleagues by upskilling them on sustainability and client needs
*   support clients to understand the case for sustainability and know how to take action
*   develop products to finance the transition
*   embedding sustainability into the business

**Colleague engagement**
We have provided training to our Business Banking Relationship Managers and Specialist Client Solutions Team, this is a key limb of the Business Bank's strategy.

We have expanded our Specialist offering, with an initiative to introduce net zero as a new area of expertise within our Specialist Client Solutions Team. Colleagues can now refer clients into the team to discuss how the transition to a low-carbon economy can impact their business. This is intended to extend across all regions in 2023.

Note
a EPC rating metrics calculated based on volume of accounts. Data as of 30 Sept 2022.

***

Recognising that our business customers have experienced unprecedented challenges over the last two years, and to support them on their journey from recovery to growth, in 2022 we launched Barclays Business Health Pledge. Sustainability has been a key theme covered under this pledge and two masterclasses have been filmed with a sustainability expert, alongside hosting over 50 local Business Health Pledge events, supporting over 1300 attendees. We have also held a ‘High Growth Live’ panel event on sustainable funding with over 300 attendees.

To recognise the positive impact ESG focused entrepreneurs on the wider economy, we have created a new ‘Sustainability Award’ category for the Barclays Entrepreneur Awards this year which saw a total of 112 entries across the whole breadth of the UK.

Recognising that Agriculture is a high emitting sector, we have announced a three-year agri-climate partnership with Oxford University on a project that will establish sector decarbonisation pathways and methodologies for measuring farm-level greenhouse gas emissions. The partnership is aimed at supporting the sector’s transition to more sustainable practices and will inform financial decision-making.

The outcomes will be shared publicly and we aim to use these to set emissions reduction targets for the agriculture sector, in support of the bank’s net zero ambition.

We have also created a Dairy & Livestock Forum to consider carbon emissions as part of our lending decisions to livestock farms. The aim is to drive awareness of clients' emissions and help both colleagues and clients understand and share best practice and practical actions that can be taken to reduce them. Topics on our ‘Let’s Talk Business’ client podcast this year have also had a strong focus on sustainability.

#### External engagement
Barclays worked with the Cambridge Institute of Sustainability Leadership (CISL)’s Banking Environment Initiative (BEI) and Business for Social Responsibility (BSR) on a series of innovation sprints to better address the barriers SMEs face to reach net zero. The sprints produced a number of potential solutions to drive change and support SME net zero action.

#### Electric vehicle proposition
In July 2022, we created an initial £20m fund and launched a proposition with Propel Finance, our Asset Finance provider, to offer competitively priced fixed rate asset finance supporting business clients who are looking to purchase new electric vehicles.

#### Other ways of embedding climate and sustainability in our business
In 2022, we began issuing recycled cards for our retail credit and debit cards, as well as across our commercial card issuing portfolio. We have also used new digital journeys in the app and online banking to support an additional 1.8 million customers to become paperless and reduce their paper waste. We are also switching to a different paper type sourced from an integrated paper mill which has a lower environmental impact as it uses less energy.

We have launched our first electric mobile banking van to provide a lower emitting way of serving our customers and communities. Complementary to this, our electric mobile banking colleagues have been trained with a government approved Alternative Fuelled Vehicle (AFV) driving certification. Additional electric mobile banking vans will be introduced next year, in line with our intention to fully electrify our mobile banking vans by 2025. As part of our physical network, we are developing ‘Print’ and ‘Energy’ dashboards for our branch colleagues to provide information about usage and insights to encourage them to reduce the carbon footprint.

#### Consumer Bank - Barclays UK Sustainability Hub
We launched a Sustainability Hub to engage consumers and provide them information on financial products and services we offer that may support them in making more sustainable choices. This includes sharing Barclays’ approach to tackling climate change. Given the current energy crisis and consumer interest in reducing home energy usage, we are engaging customers on this topic by featuring information about making homes more energy efficient. We are also providing information on moving towards sustainable travel and we aim to focus on this area, particularly by helping to scale the adoption of electric vehicles across the UK for consumers through partnerships and propositions. We plan to expand the content on the Sustainability Hub and integrate the content into the Barclays app.

#### Business Bank Sustainability Hub
The Business Bank’s Sustainability Hub launched this year to support customers as they get started on their sustainability journey, to understand how they might be impacted and signposting them to support and financing options. It has content and resources on EV’s and other green assets, as well as customer case studies to help customers explore options that may be right for them.

***

### Important information / Disclaimers
In preparing the climate and sustainability content within the Barclays PLC and Barclays Bank UK PLC Annual Report, we have:

a.  made a number of key judgements, estimations and assumptions, and the processes and issues involved are complex. This is for example the case in relation to financed emissions, portfolio alignment, classification of environmental and social financing, operational emissions and measurement of climate risk.
b.  used ESG and climate data, models and methodologies that we consider to be appropriate and suitable for these purposes as at the date on which they were deployed. However, these data, models and methodologies are subject to future risks and uncertainties and may change over time. They are not of the same standard as those available in the context of other financial information, nor subject to the same or equivalent disclosure standards, historical reference points, benchmarks or globally accepted accounting principles. There is an inability to rely on historical data as a strong indicator of future trajectories, in the case of climate change and its evolution. Outputs of models, processed data and methodologies will also be affected by underlying data quality which can be hard to assess or challenges in accessing data on a timely basis
c.  continued (and will continue) to review and develop our approach to data, models and methodologies in line with market principles and standards as this subject area matures. The data, models and methodologies used and the judgements estimates or assumptions made are rapidly evolving and this may directly or indirectly affect the metrics, data points and targets contained in the climate and sustainability content within the Annual Report. Further development of accounting and/or reporting standards could impact (potentially materially) the performance metrics, data points and targets contained in this report. In future reports we may present some or all of the information for this reporting period using updated or more granular data or improved models, methodologies, market practices or standards or recalibrated performance against targets on the basis of updated data. Such represented, updated or recalibrated information may result in different outcomes than those included in this section of the Annual Report. It is important for readers and users of this report to be aware that direct like-for-like comparisons of each piece of information disclosed may not always be possible from one reporting period to another. Where information is re-presented, recalibrated or updated from time to time, our principles based approach to reporting financial emissions data (see page 87 of the Barclays PLC Annual Report) sets out when information in respect of a prior year will be identified and explained.

Information provided in climate and sustainability disclosures: What is important to our investors and stakeholders evolves over time and we aim to anticipate and respond to these changes. Disclosure expectations in relation to climate change and sustainability matters are particularly fast moving and differ in some ways from more traditional areas of reporting in the level of detail and forward-looking nature of the information involved and the consideration of impacts on the environment and other persons. We have adapted our approach in relation to disclosure of such matters. Our disclosures take into account the wider context relevant to these topics, including evolving stakeholder views, and longer time-frames for assessing potential risks and impacts having regard to international long-term climate and nature-based policy goals. Our climate and sustainability-related disclosures are subject to more uncertainty than disclosures relating to other subjects given market challenges in relation to data reliability, consistency and timeliness, and in relation to the use of estimates and assumptions and the application and development of methodologies. These factors mean disclosures may be amended, updated, and recalculated in future as market practice and data quality and availability develops.

***

## Governance

*   Chair’s Introduction 24
*   Governance Report (including our Corporate Governance Statement) 26
*   Directors’ Report 37

***

### Chair’s Introduction

I am pleased to present our Governance Report for 2022.

During 2022, as concerns turned from the COVID-19 pandemic to the macroeconomic environment, events both at home and overseas reinforced the importance of the Barclays Group Purpose to deploy finance responsibly whilst acting with empathy and integrity. The Board is acutely aware of how the increasing cost of living is impacting our customers’ and clients’ financial wellbeing, and recognises the important part that banks have to play in this scenario. We want to offer assurance that we are here to help individuals and businesses through this challenging time.

#### Strategy
As previously reported, in 2021, driven by the combination of the pandemic together with the low interest rate environment, the Board spent a considerable amount of time challenging and contributing to the Barclays Bank UK Group’s strategy. In light of geopolitical and macroeconomic issues (including increasing interest rates and inflationary pressures), and the fact that the rising cost of living is prompting changes to people’s behaviours and their spending, the Board re-tested that strategy in 2022 and is comfortable that the Company’s four focus areas, as detailed on pages 2 and 3 of the Strategic Report, remain appropriate. Of course, the strategy has evolved to respond to changes arising from the legal, political and regulatory landscape. This year, that included the publication by the FCA of the final rules and guidance for its new Consumer Duty, which will set clearer and higher standards of consumer protection across the financial services sector. We are committed to ensuring good customer and client outcomes and that the Consumer Duty is demonstrably embedded throughout the organisation. With that in mind, we have overseen the Barclays Bank UK Group’s approach to, and readiness for, implementation of the Consumer Duty, with enhanced management reporting to be brought to the Board in 2023 in order to ensure that we are able to evidence and measure customer and client outcomes. The Board will continue to receive regular implementation updates throughout 2023.

In fact, overseeing the evolution and execution of the Barclays Bank UK Group’s strategy has been a key priority in 2022, with the Board spending approximately 50% of its time on different aspects of the strategy. This has included briefing sessions and deep dives on customer strategy, digitalisation, evolving our societal purpose, climate and sustainability, our operating and service models, technology (including operational resilience) and people matters such as building skills for the future and strategic talent. We were also delighted – as a result of the easing of COVID-19 restrictions – to take the Board offsite, on two occasions, to hear directly from colleagues, customers and clients about a variety of topics, including customer and client needs, how digital innovation and technology can play a role in meeting such needs, how the Barclays Bank UK Group is engaging with local communities, and the role that we are playing in supporting the transition to a low-carbon economy. We look forward to continuing to engage on these very important topics in the months and years ahead. For further detail on what the Board did in 2022, please refer to pages 28 and 29. For more information on our role in society and our sustainable products and propositions, please refer to pages 15 and 16 of the Strategic Report and the Climate and Sustainability Report on pages 19 to 22.

The successful delivery of the strategy remains dependent on our colleagues and, in particular, the creation of a diverse, equal and inclusive workforce comprised of individuals with the requisite capabilities and skills who are empowered and motivated to provide exceptional service. Colleague engagement and retention are also crucial and we believe that the Barclays Mindset and the overarching culture of the organisation are integral to this. The Board has engaged, and will continue to engage, directly with colleagues and listen to feedback from the bi-annual Your View surveys so that we can take into account issues of interest to colleagues when decision-making.

To ensure we deliver consistent returns for our shareholder, and in turn Barclays’ investors, we continue to refine our operating model, identifying efficiencies and putting in place a more cost-effective infrastructure that can adapt to changing customer and client expectations whilst enabling us to invest for the future and remain competitive. The Board has remained close to the evolution of the operating model, including the changes to our physical footprint and the increased range of more flexible options that have been made available in order to better support the customers and clients we serve. We continue to believe that investment in digital innovation and technology will provide us with the capability to provide a greater range of services to more customers and clients as well as unlocking new sources of income.

Towards the end of 2022, Barclays established a change programme, alongside the Purpose, Values and Mindset, to ensure that the Barclays Group is performing at a consistently very high level, day in and day out. Shortly after its launch, we welcomed the Group Chief Executive to one of our Board meetings to talk to us about the programme. We fully support the principle of holding ourselves to a standard of consistent excellence in order to leave a strong legacy for the future and will, as a Board, spend time thinking about what this means for the Barclays Bank UK Group in early 2023.

#### Risk and control
This year, the Board Risk Committee has once again continued to oversee the risk management aspects of our strategy and its execution, helping ensure prudential soundness and that customer outcomes are delivered in the right way. In respect of new and emerging risks, the Committee has monitored the risks associated with the geopolitical and macroeconomic environments (including the implications of the Russian invasion of Ukraine), received regular reports on the Barclays Bank UK Group’s operational resilience (including in the context of upgrading our systems, moving to cloud technology and implementing automation of manual processes), and reviewed risks relating to acquisitions and strategic projects. This has been supported by the work of the Board Audit Committee, which – in addition to its usual matters – has monitored the internal control environment and received updates on financial crime activity that impacted the Barclays Bank UK Group in 2022, including overseeing the Money Laundering Reporting Officer’s report and regulatory correspondence as well as reviewing key accounting judgements.

#### Governance matters
As announced by Barclays on 23 January 2023, I will be stepping down from the Board as Chair and Non-Executive Director on 31 May 2023; this will coincide with my retirement as a Barclays Non-Executive Director, having served on that Board for nine years. The Board Nominations Committee, under the steer of Andrew Ratcliffe, led a formal and rigorous Chair succession process (further detail on which is set out on pages 30 and 31), appointing Spencer Stuart - a global executive search firm - to lead an external search. The process

***

culminated in the Board Nominations Committee recommending Sir John Kingman’s appointment to the Board, with such appointment being approved by the Directors subject to regulatory approval. Sir John, who has a deep background in financial services as a result of his executive and non-executive career, will join the Board on 1 June 2023.

In respect of the Board more generally, in order to ensure that Board composition continues to meet the ongoing needs of the Company and in line with the Barclays Group’s plans for orderly succession, there were several changes to the Board in 2022. Following various external Non-Executive Director search exercises led by Spencer Stuart on behalf of the Company, we were pleased to announce the appointment of four new independent Non-Executive Directors – Tracy Corrigan, Vanessa Bailey (who also assumed the role of Chair of the Board Risk Committee), Bernadette Wightman and John Liver, all of whom joined the Board during 2022. Our new Directors have brought significant expertise and insight from across a broad range of industries, which will greatly assist in the drive to support customers and clients in different and new ways and to grow the business. David Thorburn and Kathryn Matthews retired from the Board in February and December 2022 respectively. We thank David and Kathryn for their service and the significant contribution that each of them made to the Barclays Bank UK Group during their tenures.

Finally, as articulated in our corporate governance principles, a successful company is led by an effective and entrepreneurial Board. In 2022, an internal evaluation of the Board was carried out. The evaluation assessed, amongst other matters, the progress made against the recommendations of the external evaluation undertaken by Christopher Saul Associates (CSA) in 2021, as reported in last year’s Annual Report. This year’s evaluation concluded that the Board is operating effectively, with a continued strong collegiate culture in which all members contribute to discussions and offer constructive challenge. Whilst certain areas were identified for continued focus in order to further improve effectiveness – including ensuring a continued and streamlined two-way dialogue between the Board and the Barclays Board – none were material. A summary of the key findings can be found on page 30.

#### Looking ahead
The Barclays Bank UK Group will continue to take steps to help ease customers’ and clients’ financial pressures and to “make money work” for everyone, including society and the environment, through our people, our products and our services. Together with overseeing the continued evolution and execution of the Barclays Bank UK Group’s strategy to respond to changing customer and client needs, this will be the Board’s priority in 2023.

On that note, I would like to thank all colleagues for their dedication and ongoing support of customers and clients during these challenging times and my fellow Board members for their hard work and insights throughout 2022. It has been a pleasure and a privilege to Chair the Company, and I wish the Barclays Bank UK Group every success.

**Crawford Gillies**
Chair – Barclays Bank UK PLC
14 February 2023

***

## Governance Report
### Corporate Governance Statement

#### The Board
Welcome to our Board. The Directors who served during the year ended 31 December 2022 are set out in the table below, together with details of the composition of each of the Board Committees. All of the Directors, with the exception of David Thorburn and Kathryn Matthews, have served up to the date of signing this report.

| | Board | Board Audit Committee | Board Nominations Committee | Board Remuneration Committee | Board Risk Committee |
| --- | --- | --- | --- | --- | --- |
| **Current Directors** | | | | | |
| Crawford Gillies (Chair of the Board) | C | | C | | |
| Vanessa Bailey (appointed 13 June 2022) | M | M | M | | C |
| Tracy Corrigan (appointed 24 May 2022) | M | | | M | |
| Avid Larizadeh Duggan | M | | M | | |
| Michael Jary | M | | M | C | M |
| John Liver (appointed 17 October 2022) | M | M | | | M |
| Chris Pilling | M | M | | | M |
| Andrew Ratcliffe | M | C | M | | M |
| Bernadette Wightman (appointed 1 September 2022) | M | | | | |
| Matt Hammerstein (Chief Executive) | M | | | | |
| James Mack (Chief Financial Officer) | M | | | | |
| **Former Directors** | | | | | |
| David Thorburn (resigned 3 February 2022) | M | M | M | | C |
| Kathryn Matthews (resigned 31 December 2022) | M | M | | M | |

*   C Chair of Board or Board Committee.
*   M Member of Board or Board Committee.
*   1 Appointed as a member of the Board Audit Committee and the Board Risk Committee respectively on 13 June 2022, and as a member of the Board Nominations Committee on 1 September 2022. Assumed the role of Chair of the Board Risk Committee on 12 September 2022 (subject to regulatory approval, which was granted on 12 December 2022).
*   2 Appointed as a member of the Board Remuneration Committee on 1 September 2022.
*   3 Stepped down as a member of the Board Nominations Committee on 31 August 2022.
*   4 Appointed as a member of the Board Risk Committee on 17 October 2022 and as a member of the Board Audit Committee on 1 December 2022.
*   5 Appointed Interim Chair of the Board Risk Committee on 4 February 2022. Stepped down from that role and reverted to being a member on 12 September 2022.
*   6 Stepped down as a member of the Board Remuneration Committee on 30 September 2022 and as a member of the Board Audit Committee on 31 October 2022.

#### Charter of Expectations
Executive and Non-Executive Directors share the same statutory duties and are subject to the same constraints. The expectations of each Director are set out in the Company’s Charter of Expectations. This includes role profiles and the behaviours and competencies required for each role on the Board, namely: the Chair, Board Committee Chairs, Executive Directors and Non-Executive Directors.

#### Time commitment
The Company’s Charter of Expectations also sets out the time commitment for each role. Non-Executive Directors, including the Chair, are informed of the minimum time commitment required prior to their appointment; they must, on appointment and on an ongoing basis, be able to devote sufficient time to the Company to effectively discharge their responsibilities. A Non-Executive Director’s preparation for, and attendance at, Board and Board Committee meetings is only part of their role. In addition, Non-Executive Directors are expected to provide effective oversight and scrutiny, strategic guidance and constructive challenge whilst holding the Executive Directors to account against their agreed performance objectives.

The time commitments of Directors are considered by the Board on appointment and are reviewed annually. External appointments must be agreed with the Chair and disclosed to the Board, before appointment, with an indication of the time involved. During the year, the Board Nominations Committee kept under review the number of external directorships held by each Director and considered the limits on the number of directorships imposed by relevant regulations. Following this year’s review, the Board is satisfied that there are no Directors whose time commitment is considered to be a matter for concern.

***

#### Training and development
In order to enable the Directors to discharge their responsibilities and undertake their work with due care, ongoing training and development occurs throughout the year, with sessions on, for example, the Senior Managers Regime and Whistleblowing forming part of the Board programme. The Directors also participate in briefing sessions and deep dives in order to gain a more granular understanding of the business which, in turn, contributes to informed and sound decision-making. This year, the focus was - once again - on key areas of the Barclays Bank UK Group’s strategy, including customer strategy, digitalisation, evolving our societal purpose, climate and sustainability, our operating and service models, technology (including operational resilience), and people matters such as building skills for the future and strategic talent. In many cases, these topics were brought to life through interactive sessions with colleagues, customers and clients. The Board will continue to enhance its education and training proposition in 2023.

In order to deepen its knowledge of the Barclays Bank UK Group and stay close to the business, the Board had regular meetings with senior management during the year and - as a result of the lifting of COVID-19 restrictions - Directors were once again able to visit branches. This included a couple of Board members participating in the “Walk a Mile in our Colleague’s Shoes” initiative, which involved spending a day in branch working alongside colleagues and thus gaining invaluable insight into customer needs and colleague perspectives; other Directors visited Eagle Labs as well as operational and strategic sites. The Board participated in two offsite Board meetings, each of which was held over a two-day period. The meeting held at Barclays Radbroke campus focused on the digital agenda, talent development and technology whilst the meeting held at the Network Eagle Lab in Southampton focused on the Barclays Bank UK Group’s societal purpose. The Board also maintained a strong connection to the business and colleagues by, for example, joining DEI Employee Resource Group meetings, participating in panel events and roadshows, and reverse mentoring. Further details on what the Board did in 2022, including its engagement with customers and clients, colleagues, and suppliers, can be found on pages 35 and 38.

All Directors who are new to the Board participate in an extensive induction programme, which is structured around the core components of the Barclays Bank UK Group’s strategy. Each of the four Directors who joined the Board in 2022 received a personalised induction that was tailored to their specific experience and knowledge, and which provided access to all parts of the business in order to ensure that they had sufficient understanding of the nature of the business and the key issues that the Barclays Bank UK Group faces. Those Non-Executive Directors who joined Board Committees during the year also participated in sessions focused on the operation of the relevant Board Committee.

#### Our corporate governance principles and how we applied them in 2022
During the year ended 31 December 2022 and to the date of this report, the Company has continued to apply and has complied with its own corporate governance arrangements rather than the 2018 UK Corporate Governance Code or the Wates Corporate Governance Principles for Large Private Companies. This is on the basis that the Board believes that our own governance arrangements are the most appropriate for the Company, a wholly-owned subsidiary of a premium listed company which is also a complex financial institution subject to a comprehensive regulatory regime. This approach is consistent with the approach of other significant subsidiaries in the Barclays Group which are subject to the Companies (Miscellaneous Reporting) Regulations 2018 (2018 Regs).

The primary aim of our governance arrangements remains as stated in the Company’s 2021 Annual Report, namely that they:
*   are effective, in particular to ensure the safety and soundness of the ring-fenced bank
*   provide checks and balances and encourage constructive challenge
*   drive informed, collaborative and accountable decision-making
*   create long-term sustainable value for our shareholder, Barclays, the ultimate shareholders of Barclays and our wider stakeholders

Set out below is an explanation of how the six principles that underpin our governance arrangements have been applied during 2022.

The Barclays Bank UK Group governance framework is set by Barclays and has been designed to facilitate the effective management of the Barclays Group. This includes the setting of Barclays Group policies in relation to matters such as the Barclays Group’s Purpose, Values and Mindset and the Barclays Group Remuneration Policy. Where appropriate, this Corporate Governance Statement makes reference to those Barclays Group-wide policies which are relevant to the way in which the Company is governed.

***

#### Principle One: Board Leadership and Company Purpose
A successful company is led by an effective and entrepreneurial Board whose role is to establish the company’s purpose, values and strategy, aligned to its culture, and make decisions to promote its success for the long-term benefit of its shareholder, having regard to the interests of other relevant stakeholders and factors.

The Board is responsible for the overall leadership of the Company. The Board’s role involves articulating a clear vision for the Company based on Barclays’ Purpose, Values and Mindset, and establishing a strategy for both the Company and the Barclays Bank UK Group, supported by a framework of effective controls that are designed to mitigate financial and other risks and to protect the reputation of the business. This ultimately ensures that the business is able to operate effectively and independently, and is run in a way that promotes the long term success of the Company thereby creating and delivering sustainable value. For further details on internal control and risk management, please see pages 31 to 33.

The Board’s role also involves ensuring that the necessary resources are in place to enable the Company to meet its objectives and measure performance against them. The Board receives regular and timely information on all key aspects of the business - including customers, conduct matters, financial performance, operational matters, strategy, risks and opportunities - supported by key performance indicators.

#### What the Board did in 2022
As a matter of course, the Board ensures that the Company is managed in accordance with the ring-fencing legislation and monitors the ring-fence perimeter of the Barclays Bank UK Group to ensure ongoing compliance with the ring-fencing requirements. In addition to this, the principal activities of the Board during 2022 included the following:

**Strategic and operational matters**
*   Against the backdrop of the macroeconomic environment, overseeing the further evolution of the Barclays Bank UK Group’s strategy that was first reported in 2020 and reviewing delivery against the same. Further detail on the Barclays Bank UK Group’s strategy, including its four focus areas, can be found on pages 2 to 3 of the Strategic Report
*   Receiving updates on the market and operating environment (including but not limited to the cost of living, inflation and interest rates) and overseeing the Barclays Bank UK Group’s response to the same in relation to the support of customers, clients and colleagues
*   Overseeing, in conjunction with the Board Risk Committee, the Barclays Bank UK Group’s role in the Barclays Group’s response to the Russian invasion of Ukraine
*   Overseeing, in conjunction with the Board Risk Committee, the agreement to acquire Kensington Mortgage Company
*   Receiving updates on developments in UK banking (such as the final recommendations arising from the independent panel review of the operation of the ring-fencing legislation) and the evolving regulatory landscape. This included the FCA’s Consumer Duty in respect of which the Board oversaw the Barclays Bank UK Group’s response to regulatory consultations on the matter
*   Continuing to oversee the creation of an inclusive and supportive culture through the continued embedment of the Barclays Group Purpose, Values and Mindset, and DEI initiatives such as the DEI Employee Resource Groups and the Race at Work Action Plan as well as reviewing progress against key commitments. Further details can be found on pages 9 to 12 of the Strategic Report
*   Overseeing colleague engagement via the Your View surveys, which have provided invaluable early insight into the ongoing adoption of Hybrid working, and receiving updates in respect of colleague wellbeing. Further details can be found on pages 9 to 12 of the Strategic Report and, separately, on pages 31 to 38 of the Barclays PLC 2022 Annual Report
*   Overseeing customer, commercial, financial, operational, regulatory and risk matters, with regular updates from the Chief Executive and Executive Committee members
*   Overseeing reputational risk matters, including in relation to access to cash and the Barclays Bank UK Group’s physical footprint
*   Receiving updates on citizenship, societal purpose, climate and sustainability, with the Board continuing to challenge and drive ambition in relation to the climate and sustainability agenda

**Finance (including capital and liquidity)**
*   Discussing and approving the Barclays Bank UK Group’s Medium Term Plan (MTP), in which strategy is embedded, together with related funding and capital plans for the Barclays Bank UK Group
*   Overseeing the financial performance of the Barclays Bank UK Group and its main businesses through regular reports from the Chief Financial Officer
*   On the recommendation of the Board Audit Committee, approving the Barclays Bank UK Group’s full year and half year financial statements, and approving the payment of a 2021 full year dividend and the payment of a 2022 half year dividend
*   On the recommendation of the Board Risk Committee, approving the Internal Capital Adequacy Assessment Process (ICAAP) and the Internal Liquidity Adequacy Assessment Process (ILAAP)
*   Overseeing, in conjunction with the Board Risk Committee, the results of a range of stress tests to assess capital adequacy and resilience under severe but plausible macroeconomic scenarios

**Governance, risk, control and regulatory matters**
*   On the recommendation of the Board Risk Committee, approving the Company’s qualitative and quantitative Risk Appetite Statements, including the new Climate Risk Appetite Statement, and overseeing risk parameters
*   On the recommendation of the Board Risk Committee, approving the Barclays Bank UK Group elements of the Barclays Group Recovery and Resolution Plan and Resolvability Assessment Framework and the conclusions of the annual assessment of ring-fencing compliance
*   Approving the Barclays Bank UK Group’s Consumer Duty implementation plan and, separately, approving the appointment of an independent Non-Executive Director as the Barclays Bank UK Group’s Consumer Duty Champion
*   Overseeing key risk matters, including themes and emerging risks, through regular reports from the Chief Risk Officer as well as an annual report from the Barclays Group Chief Risk Officer in order to better understand the Group risk context

***

*   Overseeing the Barclays Bank UK Group’s operational and technology capacity, including - in conjunction with the Board Risk Committee - the annual self-assessment of operational resilience (which involved the identification of Important Business Services, as defined in the relevant regulation, and setting impact tolerances), the new Prudential Regulation Authority (PRA) Cyber Stress Test as well as the utilisation of more modern technology platforms
*   Overseeing the services received from BX through - amongst other reports - an annual update from the BX Chief Executive
*   Overseeing, with the support of the Board Audit Committee, the Barclays Bank UK Group’s internal controls framework through regular reports from the Chief Controls Officer
*   Overseeing, with the support of the Board Nominations Committee, changes to Board and Board Committee composition.
*   Receiving regular updates from the Chairs of the Board Committees on matters discussed at meetings
*   In conjunction with the Board Nominations Committee, overseeing the 2022 internal Board, Board Committee and Non-Executive Director evaluations

#### Principle Two: Division of Responsibilities
An effective Board requires a clear division of responsibilities with the Chair leading the Board and being responsible for its overall effectiveness, and the executive leadership of the company’s business being delegated to the Chief Executive. The Board should consist of an appropriate combination of executive and independent Non-Executive Directors each with a clear understanding of their accountability and responsibilities. The Board’s policies and procedures should support effective decision-making and independent challenge.

There is a clear division of responsibilities between the Chair and the Chief Executive. The Chair is responsible for leading the Board and its overall effectiveness, demonstrating objective judgement and promoting a culture of openness and constructive debate between all Directors. The Chair also facilitates constructive Board relations and the effective contribution of all Non-Executive Directors, and ensures Directors receive accurate, clear and timely information. The duties of the Board are executed in part through the Board Committees, which provide oversight and make recommendations on the matters delegated to them by the Board. The Chair of each Board Committee provides a report on Board Committee business at each Board meeting, including the matters being recommended for Board approval. Details on the principal Board Committees and their core responsibilities and activities in 2022 are set out in Principles Three to Five on pages 29 to 34.

**Executive Committee**
Responsibility for the day-to-day management of the Company is delegated to the Chief Executive who is supported by the Company’s Executive Committee. Executive Committee membership includes the Chief Financial Officer, Chief Risk Officer, Chief Operations Officer, Heads of Business Banking, Customer and Wealth Management & Investments, and the leaders of Compliance, Human Resources and Legal. From 1 January 2023, the Executive Committee will also include the newly appointed Head of Sustainable Finance. The Executive Committee meets weekly and is chaired by the Chief Executive. The Executive Committee supports the Chief Executive in ensuring that the values, strategy and culture align, and that those elements are implemented and communicated consistently to colleagues; for example, quarterly town halls on financial performance, listening sessions on flagship talent programmes and Q&A sessions. Further details are set out on pages 11 and 12 of the Strategic Report.

**Decision-making and conflicts of interest**
The Board maintains a formal schedule of powers reserved to it in order to ensure that it has control over key decision-making. These powers include approval of key appointments, strategy, financial statements and any major acquisitions, mergers or disposals; pursuant to changes to the Matters Reserved to the Board during the year, the Board also has the power to approve material non-financial matters impacting the Barclays Bank UK Group including, but not limited to, matters involving material conduct risk and/or reputation risk considerations as well as significant customer remediation matters and strategic business changes.

There are also policies and procedures in place to support effective decision-making and independent challenge, including the Barclays Group’s Corporate Governance Operating Manual, which clearly sets out how Barclays Group entities and their respective Boards and Board Committees should interact and, where appropriate, escalate issues.

For details of how the Directors have had regard to the matters set out in Section 172(1) of the Act when performing their duty to promote the success of the Company under Section 172, and the effect of those considerations in reaching certain decisions taken by them, please refer to the Section 172(1) Statement on pages 17 and 18 of the Strategic Report.

In accordance with the Act and the Company’s Articles of Association, the Board has authority to authorise conflicts of interest, and this ensures that the influence of third parties does not compromise or override the independent judgement of the Board. The Company Secretary maintains a conflicts register, which is a record of actual and potential conflicts, together with any Board authorisation of the conflict. Throughout the year, the Board has authorised a number of potential conflicts and, on occasion, put in place appropriate procedures to manage that potential conflict. Following authorisation, all conflicts - whether actual or potential - are monitored in order to assist the relevant individuals in discharging their duties as a Director.

#### Principle Three: Composition, Succession and Evaluation
A Board with the right balance of skills, experience and diversity is critical to the sustainable delivery of value to the company’s shareholder and broader stakeholders. The size of the Board should be guided by the scale and complexity of the company and appointments should be based on merit and objective criteria and with a view to promoting diversity and subject to a formal, rigorous and transparent procedure which is underpinned by an effective succession plan for the Board and senior management. A successful Board is a cohesive Board that provides informed and constructive challenge to the management team and measures its effectiveness.

***

As announced by Barclays on 23 January 2023, and referenced in the Chair’s Introduction, Crawford Gillies will be stepping down from the Board as Chair and Non-Executive Director on 31 May 2023; this will coincide with Crawford’s retirement as a Barclays Non-Executive Director, having served on that Board for nine years. The Board Nominations Committee, under the steer of Andrew Ratcliffe, led a formal and rigorous Chair succession process, appointing Spencer Stuart to lead an external search. The process culminated in the Board Nominations Committee recommending Sir John Kingman’s appointment to the Board, with such appointment being approved by the Directors in January 2023 subject to regulatory approval. Crawford will remain on the Board until 31 May 2023 in order to ensure an orderly transition to Sir John, who will join the Board on 1 June 2023. Sir John has a deep background in financial services as a result of his executive and non-executive career; his experience spans the private and public sector with his former roles including senior positions at HM Treasury, as the first Chief Executive of UK Financial Investments Ltd and as Global Co-Head of the Financial Institutions Group at Rothschild. Sir John is currently Chair of Legal & General Group plc, having stepped down from Chair of Tesco Bank on 22 January 2023.

In respect of the Board more generally, in order to ensure that Board composition continues to meet the ongoing needs of the Company and in line with the Barclays Group’s plans for orderly succession, there were several changes to the Board in 2022. Following various external Non-Executive Director search exercises led by Spencer Stuart on behalf of the Company, we were pleased to announce the appointment of four new independent Non-Executive Directors, which increased the overall size of the Board by two (taking into account in-year retirements). Having assessed the “new” composition and size of the Board, the Directors have confirmed that they consider both to be appropriate for a large UK retail bank. This assessment is supported by a skills matrix (refreshed annually), which helps the Directors to evaluate the experience and skills on the Board in order to ensure that there is the necessary expertise and knowledge to support and challenge management in its execution of the strategy. There is currently a good balance between the Executive Directors and independent Non-Executive Directors who, together, have a strong combination of financial, retail banking, risk and technical skills as well as experience in colleague engagement, customer experience, culture, financial regulation, technology and transformation. In particular, the new appointees to the Board bring significant expertise and insight across a broad range of industries as well as diversity of experience, gender and thought, which will greatly assist in the drive to support customers and clients in different and new ways and to grow the business. Overall, the majority of the Board is considered to be independent. Independence is reviewed annually, using the independence criteria set out in ring-fencing requirements. The Chair meets privately with the Non-Executive Directors, where appropriate, in order to promote the required independence.

Board succession planning will remain an area of focus in 2023 and beyond in order to ensure that there is the appropriate breadth and depth of talent on the Board. To the extent that any appointment(s) to the Board are made, such appointment(s) will be based on merit. Objective criteria are used to ensure that the Board has the necessary knowledge, skills and experience to be effective in the execution of the strategy whilst recognising the importance of diversity amongst the Directors including, but not limited to, diversity of experience, gender, ethnicity, geography and thought.

Our ambition, as set out in our Board Diversity Policy (which was revised in May 2022), is to achieve gender parity. However, it is recognised that, for practical reasons, there will be fluctuations around 50% female representation and 50% male representation on the Board. The Board acknowledges that although we made good progress towards our gender diversity target in 2022, with 42% female representation on the Board and 50% female representation amongst the Non-Executive Directors prior to Kathryn Matthews’ retirement, there remains work to be done. With female representation on the Board currently at 36%, this will be a key consideration in future recruitment and succession planning. With reference to ethnic diversity, the Board’s current target is to ensure that at least one Board member is a person of colour and that this is maintained once met.

Separately, the Board regularly reviews the leadership and succession needs of the business, which helps the Directors to understand the breadth and depth of talent at Executive Committee level and one level down. There were a number of changes to the Executive Committee during the year; however, the Board remains comfortable that the Executive Committee has the capabilities and strength of leadership required to support the execution of the strategy against the backdrop of a challenging and competitive operating environment. Talent and succession both at Executive Committee level and one level down will remain a key focus for 2023 and beyond in order to ensure that there is the appropriate diversity and range of talent within the organisation.

Accountability is driven through routine evaluations of the Board and Board Committees. In the fourth quarter of 2022, an internal evaluation of the Board, Board Committees and Non-Executive Directors (including the Chair) was carried out. The evaluation assessed, amongst other matters, the progress made against the recommendations of the external evaluation undertaken by CSA in 2021. As reported in our 2021 Annual Report, CSA has no connection to the Barclays Group or any individual Director, save as disclosed on page 166 of the Barclays PLC 2022 Annual Report. The overall conclusion of this year’s internal evaluation was that the Board is operating effectively, with a continued strong collegiate culture in which all of the Directors - including the newer members of the Board - contribute to discussions and offer constructive challenge. Significant progress has been made to enhance effectiveness in the last year, in particular by appointing four new independent Non-Executive Directors, continuing to reshape Board agendas to focus on strategic issues and opportunities, and developing more opportunities for those at Executive Committee level and one level down to interact with the Non-Executive Directors. However, certain areas were identified for continued focus in order to further improve effectiveness. These include ensuring an ongoing and streamlined two-way dialogue between the Board and the Barclays Board, further simplification of Board papers with more timely circulation of the same, and increasing the visibility of the Executive talent pipeline. Work is ongoing to progress these matters.

#### Board Nominations Committee
The Board Nominations Committee comprises independent Non-Executive Directors (see page 26). Following a review of Board Committee composition in May 2022, Avid Larizadeh Duggan stepped down from the Committee in August 2022 and Vanessa Bailey joined the Committee in September 2022. This returned the membership of the Committee to the Chair and the Chairs of the other Board Committees, in accordance with the preference expressed in the Committee’s Terms of Reference.

Meetings are attended by the Chief Executive and the Human Resources Director, at the invitation of the Committee Chair.

***

The principal role and responsibilities of the Committee are set out in its terms of reference and include:
*   Skills and Diversity - evaluating the balance of skills, knowledge, experience and diversity for the Board and more broadly across the senior management of the business
*   Director Appointments - identifying, and recommending to the Board, candidates for appointment to the Board and Board Committees
*   Director Independence - considering and assessing the independence of the Non-Executive Directors, including recommendations for any steps to manage actual or potential conflicts of interest
*   Board Performance - assessing the performance of the Non-Executive Directors and their annual time requirements
*   Board Evaluation - considering any actions from the Board and Board Committee evaluation process that relate to the composition of the Board or Board Committees and, in conjunction with the Board, review the Board’s progress against the recommendations arising from the evaluation process
*   Board Development – leading the development and effective implementation of policies and procedures for the induction, training and professional development of all members of the Board
*   Talent - overseeing the adoption of internal policies and talent progression for senior management

During 2022, the Committee’s principal activities were:
*   Reviewing the Board’s composition – including the skills and experience of Board members, time commitments and the independence of the Non-Executive Directors (excluding the Chair)
*   Leading, on behalf of the Board, the various Non-Executive Director search exercises that resulted in the Committee recommending four preferred candidates who were ultimately approved by the Board. This included, amongst other matters, agreeing the role specifications and carrying out initial interviews with candidates, with considerable oversight of the succession and transition of the Chair of the Board Risk Committee
*   Leading, on behalf of the Board, the Chair succession process following notification from Crawford Gillies of his intention to step down from the Board as Chair and Non-Executive Director during 2023. The succession process was driven by Andrew Ratcliffe, in conjunction with the Barclays Group Nominations Committee, led by the Barclays Group Chairman, on the basis that the successful candidate would also be appointed as a Barclays Non-Executive Director. As part of that process, the Committee: agreed the appointment of Spencer Stuart to lead an external search; approved the role specification and search criteria; and approved the process regarding the recommendation and appointment of a new Chair (considering all options available for Chair succession), which culminated in the Committee recommending Sir John Kingman’s appointment to the Board.
*   Reviewing the composition of all of the Board Committees in light of the appointments to, and resignations, from the Board
*   On a bi-annual basis, reviewing the Company’s talent and succession plans at Executive Committee level and one level down and, when required, overseeing Executive Committee appointments
*   Reviewing and updating the Board Diversity Policy, and monitoring the Board’s progress against the same
*   On behalf of the Board, reviewing and monitoring the Company’s progress against its diversity, equity and inclusion agenda, and initiatives such as the Race at Work Action Plan
*   Reviewing the results of the 2022 internal Board, Board Committee and Non-Executive Director evaluations, the overall conclusion of which was that the Board, Board Committees and the Non-Executive Directors are all operating effectively and meeting their required responsibilities
*   Overseeing the management of any Non-Executive Director conflicts of interest and the conflicts of interest management procedures

#### Principle Four: Audit, Risk and Internal Control
The Board should establish formal and transparent policies and procedures to: (i) identify the nature and extent of principal risks the company is willing to take in order to achieve its long-term strategic objectives; (ii) manage such risks effectively; (iii) oversee the internal control framework; (iv) promote the independence and effectiveness of internal and external audit functions; and (v) satisfy itself on the integrity of financial reporting.

The Company is committed to operating within a strong system of internal control that enables business to be transacted and risk taken without exposure to unacceptable potential losses or reputational damage. The Principal Risks facing the Barclays Bank UK Group have been identified and robust processes are in place to evaluate and manage such risks including regular reporting to, and oversight by, the Board Risk Committee and the Board. A key component of the risk management framework is the ERMF, which supports the business in its aim to embed effective risk management and a strong risk management culture. The ERMF is designed to identify and set minimum requirements, in respect of the main risks, to achieve the Barclays Bank UK Group strategic objectives and to provide reasonable assurance that internal controls are effective. Further detail on the Principal Risks and management of them can be found on page 8 of the Strategic Report.

The Board has overall responsibility for ensuring that management maintains an effective system of risk management and internal control and for assessing its effectiveness. Such a system is designed to identify, evaluate and manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. Having said that, the effectiveness of the risk management and internal control system is reviewed regularly by the Board Risk Committee and the Board Audit Committee. Details of the role, responsibilities and activities of both Committees are set out below.

The Board receives regular reports on risk matters, including reputational risk matters, in order to ensure sufficient focus around strategic and emerging risks, including those arising from within the broader Barclays Group, which may impact the Barclays Bank UK Group. Oversight of conduct risk and compliance remains within the remit of the Board Risk Committee, as detailed below.

***

#### Board Audit Committee
The Board Audit Committee comprises independent Non-Executive Directors (see page 26), including Vanessa Bailey, who joined the Committee in June 2022, and John Liver, who joined the Committee in December 2022.

At the invitation of the Committee Chair, meetings are attended by management and others, including the Chief Executive, Chief Financial Officer, Chief Internal Auditor, Chief Risk Officer, Chief Compliance Officer, Chief Controls Officer, Chief Operating Officer, General Counsel, the Company’s statutory auditor and, at their request, Non-Executive Directors who are not members of the Committee who wish to further their knowledge and understanding on audit matters. The Board, together with the Board Audit Committee, is responsible for ensuring the independence and effectiveness of the internal audit function and the statutory auditor. The Committee Chair meets regularly with both the Chief Internal Auditor and the Senior Statutory Auditor throughout the year and Committee members meet with both without management present at least annually.

The Committee is responsible for overseeing financial reporting processes, reviewing the effectiveness of internal controls, considering whistleblowing arrangements and overseeing the work of the internal auditor and the statutory auditor. Throughout the year ended 31 December 2022 and to date, a comprehensive internal control framework has been in place within the Barclays Bank UK Group that provides reasonable assurance of effective operations covering all controls, including financial and operational controls and compliance with laws and regulations. The Committee receives a quarterly report on the framework’s operation (and its continued enhancements). This includes reports from the internal audit function, the statutory auditor and the Chief Controls Officer, as well as related plans and management actions to remediate control recommendations raised in those reports.

The principal role and responsibilities of the Committee are set out in its terms of reference and include:
*   Financial Reporting - assessing the integrity of the Barclays Bank UK Group’s financial statements and examining any significant reporting issues and judgements made
*   Internal Controls - examining the operation and effectiveness of the Barclays Bank UK Group’s system of internal controls
*   Internal Audit - monitoring and examining the operation, effectiveness, independence and objectivity of the Internal Audit function
*   Regulatory Reporting - reviewing arrangements established by management for compliance with regulatory and financial reporting, including compliance with the ring-fencing requirements
*   External Audit - reviewing and monitoring the statutory auditor’s independence, objectivity and effectiveness, including oversight of the regulatory developments within the delivery of audit services
*   Whistleblowing - reviewing the integrity, independence and effectiveness of Barclays Bank UK Group’s well-established policies and procedures on whistleblowing
*   Material Legal Matters - overseeing significant contentious and non-contentious matters, together with current or emerging legal risks

During 2022, the principal activities of the Committee were:
*   Examining the Barclays Bank UK Group’s full year and half year financial statements and recommending their approval to the Board
*   Examining the Barclays Bank UK Group’s Q1 and Q3 2022 results for incorporation into Barclays PLC’s Q1 and Q3 2022 results
*   Assessing the appropriateness of key management judgements, including consideration of material conduct and litigation provisions (including collections and recoveries, and other material items) and accounting policy judgements (including expected credit losses, impairment and recoverability of goodwill)
*   Receiving reports from the General Counsel on litigation matters pertinent to accounting provisions
*   Receiving reports from the Chief Controls Officer on the internal controls framework and its effectiveness, and ensuring appropriate oversight of the BX control environment where it impacts the Barclays Bank UK Group’s control environment
*   Overseeing the statutory auditor’s independence and objectivity and contributing to the Barclays Group’s auditor effectiveness exercise, including receiving findings from the PRA on written auditor reporting and the Financial Reporting Council on their Audit Quality Review
*   Overseeing the performance of the Internal Audit function, including an internal quality assurance assessment and approving the interim revisions to the 2022 audit plan and approving the 2023 audit plan
*   Receiving reports from management on certain areas of the business where reports from the internal audit function had recommended improvements to existing controls (for example: Business Banking fraud and “Know Your Client” controls and procedures) or on areas of new risks (for example: third party suppliers)
*   Monitoring management progress on the embedding of a Risk Control Self-Assessment framework
*   Reviewing and re-adopting the refreshed Barclays Group policy on the provision of non-audit services by the statutory auditor
*   Monitoring the whistleblowing programme, including receiving regular whistleblowing metrics as they relate to the Barclays Bank UK Group, and ensuring that the procedures for protection from detrimental treatment of staff who raise concerns continue to be effective
*   Receiving updates on financial crime activity that impacted the Barclays Bank UK Group in 2022, including overseeing the Company’s Money Laundering Reporting Officer’s report, Post Office Cash Deposits Standards and Controls and Transaction Monitoring, as well as overseeing regulatory correspondence and related work
*   Receiving the Company’s Data Protection Officer’s report
*   Considering future internal control needs
*   Reviewing the Committee’s effectiveness

***

#### Board Risk Committee
The Board Risk Committee comprises independent Non-Executive Directors (see page 26). In February 2022, Andrew Ratcliffe assumed, on an interim basis, the role of Chair of the Board Risk Committee following David Thorburn’s resignation. Vanessa Bailey was appointed to the Board on 13 June 2022, and assumed the role of Chair of the Board Risk Committee on 12 September 2022 (subject to regulatory approval, which was granted on 12 December 2022). This was followed by John Liver joining the Committee as a member in October 2022.

At the invitation of the Committee Chair, meetings are attended by management, including the Chief Executive, Chief Risk Officer, Chief Compliance Officer, Chief Financial Officer, General Counsel, Chief Internal Auditor, the Company’s statutory auditor and, at their request, Non-Executive Directors who are not members of the Committee who wish to further their knowledge and understanding on risk matters. The Committee is responsible for providing oversight and advice to the Board in relation to current and potential future risk exposures examining reports covering the Principal Risks including those that would threaten its business model, future performance, solvency or liquidity, as well as reports on risk measurement methodologies and risk appetite.

The principal role and responsibilities of the Committee are set out in its terms of reference and include:
*   Risk Appetite and Risk Profile – reviewing and ensuring that the risks undertaken by the business are within the risk appetite of the Company, as set by the Board
*   Risk Limits – reviewing and adopting risk limits and mandates for financial and non-financial risk, monitoring the risk profile and receiving and considering reports on key risk issues (including emerging risks)
*   Regulatory – reviewing and monitoring the Company’s capital and liquidity position including considering both the existing and forecasted Company risk profile and the potential impact of stress
*   Internal Control and Risk Control – monitoring the Internal Control and Risk Control framework
*   Credit Risk – reviewing credit risk performance (including concentration of credit risk and expected credit losses)
*   Conduct Risk – reviewing the effectiveness of the management of conduct risk, seeking to ensure fair customer outcomes following the implementation of policies and reviewing the effectiveness of the Conduct Risk Management Framework, as it applies to the Company and its subsidiaries
*   Climate Risk - considering matters including the impact on financial and operational risks arising from climate change through physical risks, risks associated with transitioning to a lower carbon economy and connected risks (with the exception of reputation risk which is a matter reserved to the Board)
*   Risk Culture – monitoring to ensure a robust risk culture (relating to risk awareness, risk taking and risk management)
*   Ring-fencing – reviewing the ring-fencing requirements (including attestation and ongoing compliance requirements)

During 2022, the principal activities of the Committee were:
*   Recommending to the Board the adoption of qualitative and quantitative Risk Appetite Statements, including the new Climate Risk Appetite Statement
*   Reviewing and adopting the relevant Barclays Group policies, including the ERMF and the associated framework Company addenda as well as the Conduct Risk Management Framework
*   Receiving and reviewing regular financial and non-financial risk reporting on each of the Principal Risks (detailed on page 8 of the Strategic Report), and reviewing emerging risks
*   Adopting the 2022 Limits and Mandates and monitoring the risk profile in accordance with the same
*   Reviewing conduct risk
*   Monitoring compliance with key portfolio metrics, including the use of Chief Risk Officer discretion
*   Overseeing risk resources and the independence of the Risk and Compliance functions
*   Reviewing and recommending to the Board for approval the Barclays Bank UK Group elements of the Barclays Group Recovery and Resolution Plan and Resolvability Assessment Framework
*   Reviewing and challenging the risks identified by the findings of internal audits
*   Monitoring liquidity and capital levels and considering and recommending for Board approval the Company sections of the Barclays Group 2022 ICAAP and ILAAP
*   Reviewing and approving the Barclays Bank UK Group’s stress testing scenarios and results, including but not limited to the new PRA’s Annual Cyclical Stress Scenario
*   Overseeing the first and second line of defence elements of the risks and controls associated with the execution of the Barclays Bank UK Group’s strategy
*   Reviewing the first and second line of defence reports on the risks associated with the agreement to acquire Kensington Mortgage Company and strategic projects during the year
*   Monitoring the risks associated with the geopolitical and macroeconomic environment, including but not limited to receiving updates on operational risk, credit risk and market risk exposures (to the extent applicable) in relation to - amongst other matters - the Russian invasion of Ukraine, and overseeing management’s work to reduce these. The Committee also requested and received an additional sensitivity analysis to assess the impact of the conflict on the levels of stress not directly targeted by our internal stress tests if the conflict were to escalate further or become more prolonged in duration
*   Reviewing and challenging management’s preparations and actions to support customers facing, or who may face, difficulties as a result of increases in the cost of living
*   Monitoring the risks associated with Consumer Duty implementation and public cloud migration
*   Considering regular reports on the Barclays Bank UK Group’s operational resilience and recommending for Board approval the annual self-assessment of operational resilience, which included overseeing the identification of Important Business Services (as defined in the relevant regulation) and the setting of impact tolerances
*   Reviewing the Barclays Bank UK Group’s ring-fencing compliance
*   Reviewing and challenging the effectiveness of risk management and internal control systems
*   Reviewing the Committee’s effectiveness

***

#### Principle Five: Remuneration
The remuneration policies and practices should support strategy and promote long-term sustainable success, and be developed in accordance with formal and transparent procedures, ensuring no Director is involved in deciding their own remuneration outcome. Executive remuneration should be aligned to the company’s purpose and values and the successful delivery of the strategy; with outcomes taking account of company and individual performance, and wider circumstances such as pay across the company’s workforce and Barclays’ Fair Pay agenda.

The Barclays Group’s Remuneration Policy is set by the Barclays Group Remuneration Committee. This policy is reviewed and adopted by the independent Board Remuneration Committee. The policy ensures that remuneration is aligned to the Barclays Bank UK Group’s strategy and risk management approach and designed to promote the long-term success of the Company.

The approach to executive and senior management remuneration is set by the Barclays Group’s formal procedures on remuneration (these procedures ensure that no individual is involved in deciding their own remuneration). Additionally, remuneration is considered in relation to wider workforce remuneration policies, and alignment of incentives and rewards with culture and performance is reviewed annually by the Barclays Group Remuneration Committee.

The Barclays Bank UK Group is committed to paying people fairly, with regards to their specific role, seniority, responsibilities, skills and experience and other factors which properly affect pay, in a way that balances the needs of all of the Barclays Bank UK Group’s stakeholders. You can find more information in the 2022 Barclays Fair Pay Report. The Company also remains focused on closing its gender and ethnicity pay gaps, where they exist. You can find more information on our UK-wide gender and ethnicity pay gaps for the year in the Barclays UK Pay Gaps disclosure.

#### Board Remuneration Committee
The Committee comprises independent Non-Executive Directors (see page 26), one of whom - Tracy Corrigan - joined the Committee in September 2022. Kathryn Matthews stepped down from the Committee in October 2022, ahead of her retirement from the Board.

At the invitation of the Committee Chair, meetings are attended by management, including the Chief Executive, Chief Financial Officer, Chief Risk Officer, the Human Resources Director and the Head of Reward.

The principal role and responsibilities of the Committee are set out in its terms of reference and include:
*   Remuneration Policy – reviewing, adopting, and recommending for Board approval the Barclays Group’s Remuneration Policy (set by the Barclays Group Remuneration Committee)
*   Remuneration Approach – reviewing and approving the remuneration approach developed for the Company, which complies with the Barclays Group’s Remuneration Policy thereby ensuring such policy is aligned with the Barclays Bank UK Group’s strategy and risk management protocols and that incentives do not encourage risk taking beyond the tolerated risk of the Company, or undermine its ability to comply with ring-fencing requirements
*   Overall Pay Structure – overseeing overall pay and benefits across the Barclays Bank UK Group
*   Incentive Pay – considering the annual incentive pool and individual remuneration proposals for senior colleagues and the assessment of incentives to be delivered to the wider workforce. This includes considering ex-ante (current and future) and ex-post (crystallised) risk adjustments to remuneration

During 2022, the principal activities of the Committee were:
*   Overseeing reward and recognition across the entire workforce to ensure alignment with our desired culture and behaviours. This included overseeing the decision to bring forward part of the 2023 pay increase, which resulted in 35,000 UK-based junior colleagues being awarded a £1,200 salary increase effective from August 2022, ahead of the annual salary review
*   Receiving updates on the Barclays Bank UK Group’s remuneration initiatives and developments, including Barclays’ Fair Pay agenda and gender and ethnicity pay gaps
*   Reviewing and approving the methodology and framework for 2022 incentive funding, including a simplified incentive plan for 2022/2023, linking incentives to a scorecard focused on customers, colleagues, citizenship and progress against our strategy
*   Reviewing and approving the incentive pool outcome, including considering financial and risk performance updates (and the appropriateness of risk adjustments to incentives)
*   Reviewing and approving, for recommendation to the Barclays Group Remuneration Committee, where appropriate, the remuneration of Executive Directors and other senior employees
*   Considering legal, regulatory and stakeholder updates and ensuring that remuneration procedures and outcomes comply with regulatory requirements and that incentives do not encourage inappropriate risk taking
*   Reviewing the Committee’s effectiveness

The Committee also participated in informal briefing sessions on particularly pertinent topics, such as benchmarking in the industry. These will continue in 2023, with sessions on topics including financial services regulation proposed.

As referenced in the Strategic Report, and the Section 172(1) Statement, in January 2023, Barclays worked closely with Unite the Union to agree a 2023 UK pay deal which, combined with the aforementioned August increase, brought the total average salary increase for our lowest paid colleagues up to 11% and helped our minimum UK pay remain ahead of Living Wage Foundation benchmarks. Further information on the resources and support available to colleagues relating to financial wellness is available in the 2022 Barclays Fair Pay Report.

***

#### Principle Six: Stakeholder Relationships and Engagement
Directors should foster effective stakeholder relationships aligned to the company’s purpose. The Board should recognise the importance of listening to, and understanding the views of its stakeholders, including the workforce, and specifically the impact of the company’s behaviour and business on customers and clients, colleagues, suppliers, communities and society more broadly, having regard to these views and impact when taking decisions.

As set out under Principle One, the Board’s role involves articulating a clear vision for the Company based on Barclays’ Purpose, Values and Mindset and establishing a strategy for both the Company and the Barclays Bank UK Group. Through this, the Board has identified key stakeholders on whom the success of the Company and the Barclays Bank UK Group depends. The Board seeks to understand key stakeholders’ views, and the impact of the Barclays Bank UK Group’s behaviour and business on them.

**Customers and clients**
Customers and clients are at the heart of the decisions we make. The Board is committed to ensuring good customer and client outcomes and that the Consumer Duty is demonstrably embedded throughout the organisation.

In 2022, the Board engaged with customers and clients in a wide variety of ways, including analysis of the key drivers underpinning customer metrics, customer insights, direct feedback from colleagues, and the receipt of regular reports on complaints. The Board also heard directly from customers and clients during the Board offsite in Southampton, when the Directors spent time at both a local branch and the Network Eagle Lab. This provided invaluable insight into customers’ and clients’ needs, and their experience of initiatives such as Barclays’ Black Founder Accelerator Programme (which supports the growth of early-stage digital and technology businesses founded by Black entrepreneurs in the UK) and Digital Eagles (which aims to help everyone get the most out of digital banking).

Separately, the Barclays Bank UK Group is actively engaging with our retail customers to better understand the steps they want to take to live more sustainably, and the role that finance can play in that. This evidence-based approach is being used to design and develop sustainable finance solutions that meet the needs of our customers - please see “Communities and society” below.

**Colleagues**
Details of our colleague engagement model can be found on pages 11 and 12 of the Strategic Report – the model ensures effective and timely engagement with our colleagues, placing equal emphasis on listening (so that the Board can take colleagues’ views into account when making decisions likely to affect their interests) and keeping colleagues informed.

In the spirit of keeping colleagues abreast of the evolution of the Barclays Bank UK Group’s strategy in response to the changes arising from the economic, legal, political and regulatory landscape, there has been a combination of leader-led engagement, digital and print communication, blogs, vlogs, and podcasts. The Board has engaged directly with colleagues, both in person and virtually, inside and outside of the boardroom, including when joining DEI Employee Resource Group meetings, participating in leadership panel events, reverse mentoring, and through visiting branches, Eagle Labs and operational sites. The Board has also listened to feedback on a variety of topics via the bi-annual Your View surveys, including in relation to colleagues’ financial and personal wellbeing in the context of the rising cost of living. Further information on the resources and support available to colleagues relating to financial wellness is available in the 2022 Barclays Fair Pay Report.

This year’s Board immersion programme included a range of activities that allowed the Board to maintain a strong connection to colleagues; for example, attending celebratory events such as the “Build a Better Bank Awards” and getting involved in the day-to-day running of a branch through the “Walk a Mile in our Colleagues’ Shoes” initiative.

**Suppliers**
For information on our engagement with suppliers, please see page 38 of the Directors’ Report.

**Communities and society**
The Barclays Bank UK Group continues to play an important role in local communities, a role that goes beyond our physical footprint, as emphasised during the two-day offsite Board meeting in Southampton. Whilst based at the Network Eagle Lab, which was celebrating three years of Barclays Eagle Labs and Southampton City Council supporting local businesses in the area, the Board met colleagues and stakeholders who had benefited from initiatives such as Barclays’ Black Founder Accelerator Programme and Digital Eagles. The Directors also met colleagues involved with the LifeSkills programme, which has, this year, partnered with organisations like the Trussell Trust that work with local communities to help those most in need, building awareness of the help available to people facing financial difficulties, increasing access to the support they are entitled to and helping them maximise their incomes.

Of course, society extends much further than just our local communities and, over the last year, the Directors have continued to engage with both the Barclays Group and management in relation to the Barclays Group’s climate strategy and how the Barclays Bank UK Group can play its part in helping accelerate the transition to a low-carbon economy. The Board has overseen the introduction by the Barclays Bank UK Group of the ambition for 50% of homes in its mortgage portfolio with an EPC to be rated EPC band C or better by 2030, and the Directors fully support the expansion of the Barclays Bank UK Group’s green financing proposition. However, there remains much more to be done. For more information on our role in society and our sustainable products and propositions, please refer to pages 15 and 16 of the Strategic Report and the Climate and Sustainability Report on pages 19 to 22.

***

**Shareholder**
Finally, the Board continues to consider engagement with its shareholder as being crucial to its understanding of the Barclays Group’s strategy and the Barclays Bank UK Group’s role within that; this has been an important factor in evolving the Barclays Bank UK Group’s strategy this year. Akin with previous years, we were pleased to welcome both the Barclays Group Chairman and Group Chief Executive to our Board in 2022 - as well as certain Barclays’ Executive Committee members - in order to discuss Barclays Group matters and to gain a better understanding of the opportunities and risks of the retail consumer business. The Chair’s position on the Barclays Board also ensures the views of the Barclays Bank UK Group are represented at Barclays Group level. The Directors believe that this engagement model works well and intend to use it again in 2023, supported by any informal engagement opportunities that may arise during the course of the year.

For more information about the Barclays Bank UK Group’s key stakeholders, how management and/or the Directors engaged with them, the key issues raised and actions taken, please refer to the Section 172(1) Statement on pages 17 to 18 of the Strategic Report and pages 16 to 22 of the Barclays PLC 2022 Annual Report.

***

## Directors’ Report

The Directors present their report together with the audited accounts for the Company for the year ended 31 December 2022.

Section 414A of the Act requires the Directors to present a Strategic Report in the Annual Report. The information can be found on pages 2 to 18.

The Company has addressed the Non-Financial Reporting requirements contained in sections 414CA and 414CB of the Act through the disclosure contained on pages 60 to 62 of the Barclays PLC 2022 Annual Report. In addition, the Company has chosen, in accordance with section 414C(11) of the Act and as noted in this Directors’ Report, to include certain matters in its Strategic Report that would otherwise be disclosed in this Directors’ Report. Such information is incorporated by reference into this report.

The particulars of important events affecting the Company since 31 December 2022 can be found in the notes to the financial statements. An indication of likely future developments can be found in the Strategic Report.

Other information that is relevant to the Directors’ Report, and which is incorporated by reference into this report, can be located at:

| | Page(s) |
| --- | --- |
| Performance measures | 5 to 6 |
| Managing risk, including Principal Risks | 7 to 8 |
| Society | 15 to 16 |
| Climate and Sustainability Report | 19 to 22 |
| Chair’s Introduction | 24 to 25 |
| Governance Report | 26 to 36 |

Disclosures required pursuant to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (2008 Regs) as updated by the 2018 Regs can be found on the following pages:

| | Page(s) |
| --- | --- |
| Engagement with employees (Sch.7 Para 11 and 11A 2008/2018 Regs) | 11 to 12 |
| Policy concerning the employment of disabled persons (Sch.7 Para 10 2008 Regs) | 9 |
| Financial Instruments (Sch.7 Para 6 2008 Regs) | 178 to 194 |
| Hedge accounting policy (Sch.7 Para 6 2008 Regs) | 179 to 180 |

#### Profits and dividends
The results of the Barclays Bank UK Group show statutory profit after tax of £1,807m (2021: £1,869m). The Barclays Bank UK Group had net assets of £15,413m at 31 December 2022 (2021: £17,400m).

The Company will pay a £705m dividend to its parent, Barclays PLC. Further details on dividends on ordinary shares paid in 2022 are set out in Note 10 to the financial statements.

#### Share capital
There was no increase in ordinary share capital during the year. Barclays PLC owns 100% of the issued ordinary shares. There are no restrictions on the transfer of ordinary shares or agreements between holders of ordinary shares known to the Company, which may result in restrictions on the transfer of ordinary shares or voting rights. Further information on the Company’s share capital can be found in Note 26 to the financial statements.

#### Powers of Directors to issue or buy back the Company’s shares
The powers of the Directors are determined by the Act and the Company’s Articles of Association. No shares were repurchased in 2022.

#### Directors
The list of current Directors of the Company can be found in the Governance Report on page 26. Changes to Directors during the year and up to the date of signing this report are set out below.

| Name | Role | Effective date of appointment / resignation |
| --- | --- | --- |
| David Thorburn | Non-Executive Director | Resigned 3 February 2022 |
| Tracy Corrigan | Non-Executive Director | Appointed 24 May 2022 |
| Vanessa Bailey | Non-Executive Director | Appointed 13 June 2022 |
| Bernadette Wightman | Non-Executive Director | Appointed 1 September 2022 |
| John Liver | Non-Executive Director | Appointed 17 October 2022 |
| Kathryn Matthews | Non-Executive Director | Resigned 31 December 2022 |

***

#### Directors’ indemnities
‘Qualifying third party indemnity’ provisions (as defined by section 234 of the Act) were in force during the course of the financial year ended 31 December 2022 for the benefit of the then Directors of the Company and the then Directors of certain of the Company's subsidiaries and, at the date of this report, are in force for the benefit of the Directors of the Company and the Directors of certain of the Company's subsidiaries in relation to certain losses and liabilities which they may incur (or have incurred) in connection with their duties, powers or office. The Barclays Group also maintains Directors’ and Officers’ Liability Insurance which gives appropriate cover for legal action brought against the Company’s Directors.

#### Political donations
The Barclays Bank UK Group did not give any money for political purposes in the UK, or outside the UK, nor did it make any political donations to political parties or other political organisations, or to any independent election candidates, or incur any political expenditure during the year. Details of any political contributions made by the wider Barclays Group can be found in the Barclays PLC 2022 Annual Report.

#### Engagement with customers, suppliers and others in a business relationship with the Company
For information on our engagement with customers and clients, please refer to the Section 172(1) Statement on pages 17 to 18 of the Strategic Report, page 35 of the Governance Report and pages 16 to 22 of the Barclays PLC 2022 Annual Report.

Our engagement with suppliers is important. The Directors have regard, via management oversight, to the need to foster business relationships with suppliers and, as such, engage with them to seek adherence to the Barclays Third Party Code of Conduct (TPCoC) and Supplier Control Obligations (SCO), which cover our expectations of suppliers. For our higher risk suppliers, their adherence to the SCO and TPCoC is captured pre-contractually via a Pre-Contract Supplier Assurance Attestation. Further, Barclays is a signatory of the Prompt Payment Code in the UK, aiming to pay our suppliers within clearly defined terms.

For more information on supporting our supply chain, please refer to pages 43 to 44 of the Barclays PLC 2022 Annual Report.

#### Branches and Country-by-Country Reporting
The Barclays Bank UK Group operates through branches, offices and subsidiaries in the UK.

The Company is exempt from publishing information required by The Capital Requirements (Country-by-Country Reporting) Regulations 2013 as the information is published by its parent, Barclays PLC. The information is due to be published on or around 15 February 2023 and will be available at home.barclays/annualreport.

#### Research and development
In the ordinary course of business, the Barclays Bank UK Group develops new products and services in each of its business divisions.

#### The auditor
The Barclays Group Audit Committee reviews the appointment of the statutory auditor, as well as their relationship with the Barclays Group, including monitoring the Barclays Group’s use of the statutory auditor for non-audit services and the balance of audit and non-audit fees paid to them. More details on this can be found in Note 34 to the financial statements. Detail of the oversight of the statutory auditor by the Company’s Board Audit Committee is set out on page 32.

An external audit tender was conducted in 2015 and the decision was made to appoint KPMG as the Barclays Group’s statutory auditor with effect from the 2017 financial year, with PwC resigning as Barclays Group’s statutory auditor at the conclusion of the 2016 audit.

The Company is in compliance with the requirements of The Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender Processes and Audit Committee Responsibilities) Order 2014, which relates to the frequency and governance of tenders for the appointment of the statutory auditor and the setting of a policy on the provision of non-audit services.

Provided that KPMG continues to maintain its independence and objectivity, and the Barclays Group Audit Committee remains satisfied with its performance, the Barclays Group has no intention of tendering for an alternative statutory auditor before the end of the current required period of 10 years. Accordingly, any tender would be in respect of the 2027 financial year onwards and is likely to take place in 2025. The Barclays Group Audit Committee believes it would not be appropriate to tender before this date as it recognises that whilst it is important to ensure the audit firm remains objective and does not become overly familiar with management, there is an important balance to be struck with the investment of time required both from management and any completely new audit team for them to gain sufficient understanding of such a large complex organisation to ensure a top quality audit. The Barclays Group Audit Committee will give further consideration over the coming year to its audit tendering strategy to take account, as appropriate, of the outcome of the UK audit reform proposals.

#### Disclosure of information to the auditor
Each Director confirms that, so far as he/she is aware, there is no relevant audit information of which the Company’s auditor is unaware and that each of the Directors has taken all the steps that he/she ought to have taken as a Director to make himself/herself aware of any relevant audit information and to establish that the Company's auditor is aware of that information. This confirmation is given pursuant to section 418 of the Act and should be interpreted in accordance with and subject to those provisions.

***

#### Directors’ responsibilities
The following statement, which should be read in conjunction with the auditor’s report set out on pages 141 to 150, is made with a view to distinguishing for shareholders the respective responsibilities of the Directors and of the auditor in relation to the financial statements.

#### Going concern
In preparing the Barclays Bank UK Group’s financial statements, the Directors are required to:
*   assess the Barclays Bank UK Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
*   use the going concern basis of accounting unless they either intend to liquidate the Barclays Bank UK Group or to cease operations, or have no realistic alternative but to do so.

The Barclays Bank UK Group’s business activities, financial position, capital, factors likely to affect its future development and performance and its objectives and policies in managing the financial risks to which it is exposed are discussed in the Strategic Report and Risk Management sections.

The Directors have evaluated these risks in the preparation of the financial statements and consider it appropriate to prepare the financial statements on a going concern basis.

#### Preparation of accounts
The Directors are required by the Act to prepare the Company and the Barclays Bank UK Group accounts for each financial year and, with regard to Barclays Bank UK Group accounts, in accordance with UK-adopted international accounting standards. The Directors have prepared these accounts in accordance with (a) UK-adopted international accounting standards; and (b) International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), including interpretations issued by the IFRS Interpretations Committee. Pursuant to the Act, the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Barclays Bank UK Group and the Company and of their profit or loss for that period.

The Directors consider that, in preparing the financial statements on pages 151 to 224, the Barclays Bank UK Group and Company have used appropriate accounting policies, supported by reasonable judgements and estimates, and that all accounting standards which they consider to be applicable have been followed.

The Directors are satisfied that the Annual Report and financial statements, taken as a whole, provide the information necessary for its shareholder to assess the Barclays Bank UK Group and Company’s position and performance, business model and strategy.

The Directors are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

#### Directors’ responsibility statement
The Directors have responsibility for ensuring that the Company and the Barclays Bank UK Group keep accounting records which disclose with reasonable accuracy the financial position of the Company and the Barclays Bank UK Group and which enable them to ensure that the financial statements comply with the Act.

The Directors are also responsible for preparing a Strategic Report, Directors’ Report and Corporate Governance Statement in accordance with applicable law and regulations.

The Directors are responsible for the maintenance and integrity of the Annual Report and financial statements as they appear on the Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

The current Directors, whose names and functions are set out on page 26, confirm to the best of their knowledge that:
(a) the financial statements, prepared in accordance with (a) UK-adopted international accounting standards; and (b) IFRS as issued by the IASB, including interpretations issued by the IFRS Interpretations Committee, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

***

(b) the management report, on pages 2 to 18, which is incorporated in the Directors’ Report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

By order of the Board

**Katie Marshall**
Company Secretary
14 February 2023

Barclays Bank UK PLC
Registered in England. Company No. 9740322
Registered office: 1 Churchill Place, London E14 5HP

***

## Risk review
### Content

The management of risk is a critical underpinning to the execution of the Barclays Bank UK Group’s strategy. The material risks and uncertainties the Barclays Bank UK Group faces across its business and portfolios are key areas of management focus.

#### Risk management strategy
Overview of the Barclays Bank UK Group’s approach to risk management.
*   Enterprise Risk Management Framework (ERMF) (Page 44)
*   Segregation of duties – the “Three Lines of Defence” model (Page 44)
*   Principal risks (Page 44)
*   Risk appetite for the principal risks (Page 44)
*   Risk committees (Page 44)
*   The Barclays Bank UK Group’s risk culture (Page 45)

#### Material existing and emerging risks
Insight into the level of risk across our business and portfolios, the material existing and emerging risks and uncertainties we face and the key areas of management focus.
*   Material existing and emerging risks potentially impacting more than one principal risk (Page 46)
*   Climate risk (Page 50)
*   Credit risk (Page 51)
*   Treasury and capital risk (Page 52)
*   Operational risk (Page 53)
*   Model risk (Page 55)
*   Conduct risk (Page 56)
*   Reputation risk (Page 57)
*   Legal risk and legal, competition and regulatory matters (Page 57)

#### Principal risk management
The Barclays Bank UK Group’s approach to risk management for each principal risk with focus on organisation and structure and roles and responsibilities.
*   Climate risk management (Page 59)
*   Credit risk management (Page 63)
*   Market risk management (Page 64)
*   Treasury and capital risk management (Page 64)
*   Operational risk management (Page 66)
*   Model risk management (Page 67)
*   Conduct risk management (Page 67)
*   Reputation risk management (Page 68)
*   Legal risk management (Page 69)

***

#### Risk performance
**Climate risk:** The impact on Financial and Operational Risks arising from climate change through, physical risks, risks associated with transitioning to a lower carbon economy and connected risks arising as a result of second order impacts of these two drivers on portfolios.
*   Climate risk overview and summary of performance (Page 70)
*   Subsidence of the UK Mortgage book per risk band (Page 70)
*   Flood risk of the UK Mortgage book per risk band (Page 70)

**Credit risk:** The risk of loss to the Barclays Bank UK Group from the failure of clients, customers or counterparties (including sovereigns), to fully honour their obligations to the Barclays Bank UK Group, including the whole and timely payment of principal, interest, collateral and other receivables.
*   Credit risk overview and summary of performance (Page 74)
*   The Barclays Bank UK Group’s maximum exposure and effects of netting, collateral and risk transfer (Page 75)
*   Expected credit losses (Page 78)
*   Movements in gross exposure and impairment allowance including provisions for loan commitments and financial guarantees (Page 81)
*   Management adjustments to models for impairment (Page 90)
*   Measurement uncertainty and sensitivity analysis (Page 93)
*   Analysis of the concentration of credit risk (Page 101)
*   The Barclays Bank UK Group’s approach to management and representation of credit quality (Page 105)
*   Analysis of specific portfolios and asset types (Page 114)

**Market risk:** The risk of loss arising from potential adverse changes in the value of the Barclays Bank UK Group’s assets and liabilities from fluctuation in market variables including, but not limited to, interest rates, foreign exchange, equity prices, commodity prices, credit spreads, implied volatilities and asset correlations.
*   Market risk overview and summary of performance (Page 117)

**Treasury and capital risk – Liquidity:** The risk that the Barclays Bank UK Group is unable to meet its contractual or contingent obligations or that it does not have the appropriate amount, tenor and composition of funding and liquidity to support its assets.
*   Liquidity risk overview (Page 119)
*   Liquidity risk stress testing (Page 119)
*   Contractual maturity of financial assets and liabilities (Page 121)

**Treasury and capital risk – Capital:** The risk that the Barclays Bank UK Group has an insufficient level or composition of capital to support its normal business activities and to meet its regulatory capital requirements under normal operating environments and stressed conditions (both actual and as defined for internal planning or regulatory testing purposes). This also includes the risk from the Barclays Bank UK Group’s pension plans.
*   Capital risk overview (Page 127)

**Treasury and capital risk – Interest rate risk in the banking book:** The risk that the Barclays Bank UK Group is exposed to capital or income volatility because of a mismatch between the interest rate exposures of its (non-traded) assets and liabilities.
*   Interest rate risk in the banking book overview and summary of performance (Page 129)
*   Net interest income sensitivity (Page 129)
*   Analysis of equity sensitivity (Page 129)
*   Volatility of the fair value through other comprehensive income (FVOCI) portfolio in the liquidity pool (Page 130)

**Operational risk:** The risk of loss to the Barclays Bank UK Group from inadequate or failed processes or systems, human factors or due to external events (for example fraud) where the root cause is not due to credit or market risks.
*   Operational risk overview and summary of performance (Page 131)
*   Operational risk profile (Page 131)

**Model risk:** The potential for adverse consequences from decisions based on incorrect or misused model outputs and reports.
*   Model risk overview and summary of performance (Page 133)

**Conduct risk:** The risk of poor outcomes for, or harm to, customers, clients and markets, arising from the delivery of the Barclays Bank Group's products and services.
*   Conduct risk overview and summary of performance (Page 133)

**Reputation risk:** The risk that an action, transaction, investment, event, decision, or business relationship will reduce trust in the Barclays Bank UK Group’s integrity and/or competence.
*   Reputation risk overview and summary of performance (Page 133)

**Legal risk:** The risk of loss or imposition of penalties, damages or fines from the failure of the Barclays Bank UK Group to meet its legal obligations, including regulatory or contractual requirements.
*   Legal risk overview and summary of performance (Page 134)

***

#### Supervision and regulation
*   Supervision of the Barclays Bank UK Group (Page 135)

***

## Risk management

### The Barclays Bank UK Group’s risk management strategy
This section introduces Barclays Bank UK Group’s approach to managing and identifying risks, and for fostering a sound risk culture.

#### Enterprise Risk Management Framework (ERMF)
The ERMF outlines the highest level principles for risk management by setting out standards, objectives and key responsibilities of different groups of employees of the Barclays Bank UK Group. It is approved by the Barclays PLC Board on recommendation of the Barclays Group Board Risk Committee and the Barclays Bank UK Group Chief Risk Officer (CRO). The Barclays Bank UK PLC Board then approves its adoption on the recommendation of its Risk Committee, with modifications where needed.

The ERMF sets out:
*   principal risks faced by the Barclays Bank UK Group, which guide the organisation of risk management processes
*   risk appetite requirements: This helps define the level of risk we are willing to undertake in our business
*   risk management and segregation of duties: The ERMF defines a Three Lines of Defence model
*   roles and responsibilities for risk management and governance.

The ERMF is complemented by frameworks, policies and standards that are mainly aligned to individual principal risks:
*   frameworks cover high level principles guiding the management of principal risks, and set out details of which policies are needed, and high level governance arrangements
*   policies set out the control objectives and high level requirements to address the key principles articulated in their associated frameworks. Policies state ‘what’ those within scope are required to do
*   standards set out the detail of the control requirements to ensure the control objectives set by the policies are met.

#### Segregation of duties - the "Three Lines of Defence" model
The ERMF sets out a clear lines of defence model. All colleagues are responsible for understanding and managing risks within the context of their individual roles and responsibilities, as set out below:
*   The First line comprises of all employees engaged in the revenue generating and client facing areas of the Barclays Bank UK Group and all associated support functions, including Finance, Operations, Treasury, and Human Resources. The first line is responsible for identifying and managing the risks in which they are engaged, operating within applicable limits, and escalating risk events or issues as appropriate. Employees in the first line have primary responsibility for their risks and their activities are subject to oversight from the relevant parts of the second and third lines.
*   The Second line is comprised of the Risk and Compliance functions. The role of the second line is to establish the limits, rules and constraints, and the frameworks, policies and standards under which all activities shall be performed, consistent with the risk appetite of the Barclays Bank UK Group, and to oversee the performance of the firm against these limits, rules and constraints. Controls for first line activities will ordinarily be established by the control officers operating within the control framework of the firm. These will remain subject to oversight by the second line;
*   The Third line of defence is Internal Audit, who are responsible for providing independent assurance over the effectiveness of governance, risk management and controls over current, systemic and evolving risks;
*   The Legal function provides support to all areas of the bank and is not formally part of any of the three lines of defence. The Legal function is responsible for the identification of all Legal and Regulatory Risks. Except in relation to the legal advice it provides or procures, it is subject to second line oversight with respect to its own operational and conduct risks, as well as with respect to the Legal and Regulatory Risks to which the bank is exposed.

#### Principal risks
The ERMF identifies nine principal risks (see managing risk in the strategic report section) namely: credit risk, market risk, treasury and capital risk, climate risk, operational risk, model risk, conduct risk, reputation risk and legal risk. Note that climate risk was added in January 2022; see page 59 for more information.

Each of the principal risks is overseen by an accountable executive within the Barclays Group who is responsible for overseeing and/or assigning responsibilities for the framework, policies and standards that set out associated responsibilities and expectations, and detail the related requirements around risk management. In addition, certain risks span more across than one principal risk.

#### Risk appetite
Risk appetite is defined as the level of risk which the Barclays Group is prepared to accept in carrying out its activities. It provides a basis for ongoing dialogue between management and Board with respect to the Barclays Bank UK Group’s current and evolving risk profile, allowing strategic and financial decisions to be made on an informed basis. Risk appetite is approved by the Barclays PLC Board in aggregate and disseminated across legal entities and businesses, including the Barclays Bank UK Group. The Barclays Bank UK Board cannot approve a higher risk appetite than that determined by the Group Board without the approval of the Group Board but may choose to operate at a lower level of risk appetite than that approved by the Barclays Group. The Barclays Group total risk appetite and its allocation to the Barclays Bank UK Group are supported by limits to enable and control specific exposures and activities that have material concentration risk implications.

#### Risk committees
The Barclays Bank UK Group’s various risk committees consider risk matters relevant to their business, and escalate as required to the Barclays UK Risk Committee, whose Chair, in turn, escalates to the Barclays Group Risk Committee, Barclays Bank UK PLC Board Committees and the Barclays Bank UK PLC Board.

***

```mermaid
graph TD
    A[Barclays Bank UK PLC Board] -->|Oversees| B(Barclays Bank UK PLC Board Risk Committee)
    A -->|Oversees| C(Barclays Bank UK PLC Board Audit Committee)
    A -->|Oversees| D(Barclays Bank UK PLC Board Remuneration Committee)
    B -.->|Escalates to| A
    C -.->|Escalates to| A
    D -.->|Escalates to| A
    B -->|Provides guidance| E(Barclays UK Risk Committee)
    C -->|Receives reports| F(Barclays Bank UK Group internal control framework)
    D -->|Reviews| G(Barclays Group Remuneration Policy)
    E -->|Provides guidance| H(Barclays Bank UK PLC Product / Risk Type Committees)
```

The Barclays Bank UK PLC Board receives regular information on the risk profile of the Barclays Bank UK Group, and has ultimate responsibility for risk appetite and capital plans, within the parameters set by the Barclays PLC Board. The Barclays Bank UK PLC Board is also responsible for the adoption of the ERMF.

Further, there are two Board-level committees which oversee the application of the ERMF and review and monitor risk across the Barclays Bank UK Group. These are: the Barclays Bank UK PLC Board Risk Committee and the Barclays Bank UK PLC Board Audit Committee. Additionally, the Barclays Bank UK PLC Board Remuneration Committee oversees pay practices focusing on aligning pay to sustainable performance.

*   **The Barclays Bank UK PLC Board Risk Committee (BRC):** The BRC monitors Barclays Bank UK Group’s risk profile against the agreed appetite. Where actual performance differs from expectations, the actions taken by management are reviewed to ascertain that the Committee is comfortable with them. The Barclays Bank UK Group CRO regularly presents a report to the BRC summarising developments in the risk environment and performance trends in the key portfolios. The BRC also reviews certain key risk methodologies, the effectiveness of risk management, and Barclays Bank UK Group's risk profile, including the material issues affecting each business portfolio and forward risk trends. The Committee also commissions in-depth analyses of significant risk topics, which are presented by the Barclays Bank UK Group CRO or senior risk managers in the business.
*   **The Barclays Bank UK PLC Board Audit Committee (BAC):** receives regular reports on the effectiveness of internal control systems, on material control issues of significance and on accounting judgements (including impairment), and a quarterly review of the adequacy of impairment allowances, relative to the risk inherent in the portfolios, the business environment, and Barclays policies and methodologies.
*   **The Barclays Bank UK PLC Board Remuneration Committee (RemCo):** receives proposals on ex-ante and ex-post risk adjustments to variable remuneration based on risk management performance including events, issues and the wider risk profile. These inputs are considered by the RemCo in the review and approval of performance incentives.

#### Barclays’ risk culture
Risk culture can be defined as the norms, attitudes and behaviours related to risk awareness, risk taking and risk management. This is reflected in how the Barclays Bank UK Group identifies, escalates and manages risk matters.

The Barclays Bank UK Group is committed to maintaining a robust risk culture in which:
*   management expect, model and reward the right behaviours from a risk and control perspective
*   colleagues identify, manage and escalate risk and control matters, and meet their responsibilities around risk management

The CEO works with the Executive Management to embed a sound risk culture within the Bank, with particular regard to the identification, escalation and management of risk matters, in accordance with the ERMF. Specifically, all employees regardless of their positions, functions or locations must play their part in the Barclays Bank UK Group’s risk management. Employees are required to be familiar with risk management policies which are relevant to their responsibilities, know how to escalate actual or potential risk issues, and have a role appropriate level of awareness of the risk management process as defined by the ERMF.

#### Our Code of Conduct – the Barclays Way
Globally, all colleagues must attest to the “Barclays Way”, our Code of Conduct, and comply with all frameworks, policies and standards applicable to their roles. The Code of Conduct outlines the Purpose, Values and Mindset which govern our ‘Barclays Way’ of working across our business globally. It constitutes a reference point covering all aspects of colleagues’ working relationships, and provides guidance on working with other Barclays employees, customers and clients, governments and regulators, business partners, suppliers, competitors and the broader community. See [home.barclays/sustainability/esg-resource-hub/statements-and-policy-positions/](https://home.barclays/sustainability/esg-resource-hub/statements-and-policy-positions/) for more details.

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## Material existing and emerging risks

### Material existing and emerging risks to the Barclays Bank UK Group’s future performance
The Barclays Bank UK Group has identified a broad range of risks to which its businesses are exposed. Material risks are those to which senior management pay particular attention and which could cause the delivery of the Barclays Bank UK Group’s strategy, results of operations, financial condition and/or prospects to differ materially from expectations. Emerging risks are those which have unknown components, the impact of which could crystallise over a longer time period. In addition, certain other factors beyond the Barclays Bank UK Group’s control, including escalation of global conflicts, acts of terrorism, natural disasters, pandemics and similar events, although not detailed below, could have a similar impact on the Barclays Bank UK Group.

#### Material existing and emerging risks potentially impacting more than one principal risk

**i) Business conditions, general economy and geopolitical issues**
The Barclays Bank UK Group’s operations are subject to changes in global and local economic and market conditions, as well as geopolitical developments, which may have a material impact on the Barclays Bank UK Group’s business, results of operations, financial condition and prospects.

A deterioration in global or local economic and market conditions may result in (among other things): (i) deteriorating business, consumer or investor confidence and lower levels of investment and productivity growth, which in turn may lead to lower customer and client activity, including lower demand for borrowing; (ii) higher default rates, delinquencies, write-offs and impairment charges as borrowers struggle with their debt commitments; (iii) subdued asset prices, which may impact the value of any collateral held by the Barclays Bank UK Group and require the Barclays Bank UK Group and its customers to post additional collateral in order to satisfy margin calls; and (iv) revisions to calculated ECLs leading to increases in impairment allowances. In addition, the Barclays Bank UK Group’s ability to borrow from other financial institutions or raise funding from external investors may be affected by deteriorating economic conditions and market disruption. Geopolitical events can also cause financial instability and affect economic growth.

In particular:
*   Global GDP growth in 2022 was severely hampered by inflationary pressures resulting from (a) the disruptive legacy of the COVID-19 pandemic on supply chains, (b) restricted labour markets and upward pressure on employment costs, and (c) escalating energy and food prices intensified by the Russian invasion of Ukraine. These pressures have led to the on-going ‘cost of living’ pressures in much of the world, but particularly in the UK and Europe.
*   In response to persistent inflationary pressures, throughout 2022, central banks, including the Bank of England, pursued policies of raising interest rates while also curtailing quantitative easing and in some cases commencing quantitative tightening.
*   Both the elevated inflationary environment and higher interest rates are likely to adversely affect economic growth globally in 2023, particularly in developed markets, with the possibility of elevated unemployment as a result, with potentially negative implications for the Barclays Bank UK Group's performance, including through increased impairment allowances. It remains possible that a resurgence in COVID-19 and/or restrictions on movement imposed locally to combat outbreaks or new strains, could exacerbate the expected slowdown in economic performance.
*   The UK Government responded to escalating energy prices via short term subsidies for consumers and industry, in part funded by windfall taxes on targeted sectors. Revisions to these schemes during 2023 may cause upward pressure on household and corporate finances, which could result in higher impairment charges.
*   Trading arrangements between the UK and the European Union (EU), following the UK's exit from the EU, may: (i) raise costs for UK customers trading with the EU and/or otherwise adversely affect their business; and (ii) impact the Barclays Group's European operations.
*   Further, any trading disruption between the EU and the UK may have a significant impact on economic activity in the EU and the UK which, in turn, could have a material adverse effect on the Barclays Bank UK Group’s business, results of operations, financial condition and prospects. Unstable economic conditions could result in (among other things):
    *   a deeper recession in the UK, with lower growth, higher unemployment and falling property prices, which could lead to increased impairments in relation to a number of the Barclays Bank UK Group’s portfolios (including, but not limited to, its UK mortgage portfolio, UK unsecured lending portfolio (including credit cards) and commercial real estate exposures)
    *   increased market and interest rate volatility, which could affect the underlying value of assets in the banking book and securities held by the Barclays Bank UK Group for liquidity purposes
    *   a credit rating downgrade for Barclays Bank UK PLC (either directly or indirectly as a result of a downgrade in the UK sovereign credit ratings), which could significantly increase Barclays Bank UK PLC’s cost of funding and/or reduce its access to funding, widen credit spreads and materially adversely affect Barclays Bank UK PLC’s interest margins and liquidity position
    *   a widening of credit spreads more generally or reduced investor appetite for Barclays Bank UK PLC’s debt securities, which could negatively impact Barclays Bank UK PLC’s cost of and/or access to funding

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**ii) Risks relating to the impact of COVID-19**
The COVID-19 pandemic has had a material adverse impact on businesses around the world and the economic and social environments in which they operate. Consequently, there are a number of factors associated with the COVID-19 pandemic and its impact on global economies that have had and could continue to have a material adverse effect on the profitability, capital and liquidity of the Barclays Bank UK Group.

The COVID-19 pandemic caused disruption to the Barclays Bank UK Group’s customers, suppliers and staff. In the UK severe restrictions on the movement of people were implemented by the UK, Scottish, Welsh and Northern Irish governments, with a resultant significant impact on economic activity. It remains unclear how the COVID-19 pandemic will evolve through 2023 and the risks from further waves, new strains and/or vaccines proving ineffective cannot be ruled out and could result in the re-introduction of, or additional, restrictions placed on local populations. The Barclays Bank UK Group continues to monitor the situation.

Macroeconomic expectations are that the effects of the COVID-19 pandemic will be long lasting with the level and speed of economic recovery still uncertain. To the extent that the residual impacts of the COVID-19 pandemic continue to adversely affect the global economy and/or the Barclays Bank UK Group, it may also have the effect of increasing the likelihood and/or magnitude of other risks described herein or may pose other risks which are not presently known to the Barclays Bank UK Group or not currently expected to be significant to the Barclays Bank UK Group’s profitability, capital and liquidity.

Further waves or new strains of COVID-19 could impact the Barclays Bank UK Group’s ability to conduct business in the jurisdictions in which it operates through disruptions to infrastructure and supply chains, business processes and technology services provided by third parties, and unavailability of staff due to illness. These interruptions to business may be detrimental to customers (who may seek reimbursement from the Barclays Bank UK Group for costs and losses incurred as a result of such interruptions), and result in potential litigation costs (including regulatory fines, penalties and other sanctions), as well as reputational damage.

Changes in macroeconomic variables such as gross domestic product (GDP) and unemployment have a significant impact on the modelling of expected credit losses (ECLs) by the Barclays Bank UK Group. The economic environment remains uncertain and future impairment charges may be subject to additional volatility (including from changes to macroeconomic variable forecasts) caused by further waves or new strains of the COVID-19 pandemic and related containment measures and the continued efficacy of vaccines and/or boosters, as well as the longer term effectiveness of the Bank of England’s, UK Government’s and other support measures. For further details on macroeconomic variables used in the calculation of ECLs, refer to the credit risk performance section.

Any and all such events mentioned above could have a material adverse effect on the Barclays Bank UK Group’s business, results of operations, financial condition, prospects, liquidity, capital position and credit ratings (including potential credit rating agency changes of outlooks or ratings), as well as on the Barclays Bank UK Group’s customers, employees and suppliers.

**iii) The impact of interest rate changes on the Barclays Bank UK Group’s profitability**
Changes to the Bank of England base interest rate are significant for the Barclays Bank UK Group, especially given the uncertainty as to the size and frequency of such changes.

Interest rate rises result in higher funding costs but could positively impact the Barclays Bank UK Group’s profitability as retail and corporate business net interest income increases due to margin decompression, as observed for the interest rate rises in 2022. However, increases in interest rates, if larger or more frequent than expected, could lead to generally weaker than expected growth, reduced business confidence and higher unemployment. This, combined with the impact interest rate rises may have on the affordability of loan arrangements for borrowers (especially when combined with inflationary pressures), could cause stress in the lending portfolio with resultant higher credit losses driving an increased impairment charge which would most notably impact retail unsecured portfolios and could have a material effect on the Barclays Bank UK Group’s business, results of operations, financial condition and prospects.

Interest rate cuts may affect, and put pressure on, the Barclays Bank UK Group’s net interest margins (the difference between its lending income and borrowing costs) and could adversely affect the profitability and prospects of the Barclays Bank UK Group.

In addition, changes in interest rates could have an adverse impact on the value of the securities held in the Barclays Bank UK Group’s liquid asset portfolio. Consequently, this could create more volatility than expected through the Barclays Bank UK Group’s Fair Value through Other Comprehensive Income (FVOCI) reserve and could adversely affect the profitability and prospects of the Barclays Bank UK Group.

**iv) Competition in the banking and financial services industry**
The Barclays Bank UK Group operates in a highly competitive environment in which it must evolve and adapt to significant changes as a result of regulatory reform, technological advances, increased public scrutiny and prevailing economic conditions. The Barclays Bank UK Group expects that competition in the financial services industry will continue to be intense and may have a material adverse effect on the Barclays Bank UK Group’s future business, results of operations, financial condition and prospects.

New competitors in the financial services industry continue to emerge. Technological advances and the growth of e-commerce have made it possible for non-banks to offer products and services that traditionally were banking products such as electronic securities trading, payments processing and online automated algorithmic-based investment advice. Furthermore, payments processing and other services could be significantly disrupted by technologies, such as blockchain (used in cryptocurrency systems) and ‘buy now pay later’ lending, both of which are currently subject to lower levels of regulatory oversight. Furthermore, the introduction of Central Bank Digital Currencies could potentially have significant impact on the banking system and the role of commercial banks within it by disrupting the current provision of

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banking products and services. This disruption could allow new competitors, some previously hindered by banking regulation (such as FinTechs), to provide customers with access to banking facilities and increase disintermediation of banking services.

New technologies and changing consumer behaviour have required and could require the Barclays Bank UK Group to incur additional cost to modify or adapt its products or make additional capital investments in its businesses to attract and retain clients and customers or to match products and services offered by its competitors, including technology companies.

Ongoing or increased competition and/or disintermediation of banking services may put pressure on the pricing of the Barclays Bank UK Group’s products and services, which could reduce the Barclays Bank UK Group's revenues and profitability, or may cause the Barclays Bank UK Group to lose market share, particularly with respect to traditional banking products such as deposits, bank accounts and mortgage lending. This competition may be on the basis of quality and variety of products and services offered, transaction execution, innovation, reputation and/or price. These factors may be exacerbated by further industry wide initiatives to address access to banking. The failure of any of the Barclays Bank UK Group’s businesses to meet the expectations of clients and customers, whether due to general market conditions, underperformance, a decision not to offer a particular product or service, branch closures, changes in client and customer expectations or other factors, could affect the Barclays Bank UK Group’s ability to attract or retain clients and customers. Any such impact could, in turn, reduce the Barclays Bank UK Group’s revenues.

**v) Regulatory change agenda and impact on business model**
The Barclays Bank UK Group’s businesses are subject to ongoing regulation and associated regulatory risks, including the effects of changes in laws, regulations, policies, voluntary codes of practice and interpretations in the UK and, in some cases, other jurisdictions. Many regulatory changes relevant to the Barclays Bank UK Group’s business may have an effect beyond the country in which they are enacted, either because the Barclays Bank UK Group’s regulators deliberately enact regulation with extra-territorial impact or because the nature of its operations, or the location of its customers, mean that the Barclays Bank UK Group is obliged to give effect to local laws and regulations on a wider basis.

In recent years, regulators and governments have focused on reforming both the prudential regulation of the financial services industry and the ways in which the business of financial services is conducted. Measures taken include enhanced capital, liquidity and funding requirements, the separation or prohibition of certain activities by banks, the introduction of tax levies and transaction taxes, changes in compensation practices and more detailed requirements on how business is conducted. The governments and regulators in the UK or elsewhere may intervene further in relation to areas of industry risk already identified, or in new areas, which could adversely affect the Barclays Bank UK Group.

Current and anticipated areas of particular focus for the Barclays Bank UK Group’s regulators, where regulatory changes could have a material effect on the Barclays Bank UK Group’s business, financial condition, results of operations, prospects, capital position, and reputation include, but are not limited to:
*   the increasing focus by regulators, international bodies, organisations and unions on how institutions conduct business, particularly with regard to the delivery of fair outcomes for customers and promoting effective competition in the interests of consumers, including the proposed introduction in the UK of a new consumer duty and measures resulting from ongoing thematic reviews into the workings of the retail, small- and medium-sized enterprise and wholesale banking sectors and the provision of financial advice to consumers;
*   the implementation of any conduct measures as a result of regulators’ focus on organisational culture, employee behaviour and whistleblowing;
*   the demise of certain benchmark interest rates and the transition to new risk-free reference rates (as discussed further under ‘vi) Impact of benchmark interest rate reforms on the Barclays Bank UK Group’ below);
*   the focus globally on technology adoption and digital delivery, underpinned by customer protection, including the use of artificial intelligence and digital assets (data, identity and disclosures), financial technology risks, payments and related infrastructure, operational resilience, virtual currencies (including central bank digital currencies and global stable coins) and cybersecurity. This also includes the introduction of new and/or enhanced regulatory standards in these areas;
*   increasing regulatory expectations of firms around governance and risk management frameworks, particularly for management of climate change, diversity and inclusion and other ESG risks and enhanced ESG disclosure and reporting obligations;
*   the continued evolution of the UK’s regulatory framework following the UK's withdrawal from the EU, including in light of the UK financial services regulatory reform agenda announced in December 2022 and the proposals in the Financial Services and Markets Bill, and similarly regarding the access of UK and other non-EU financial institutions to EU markets;
*   the implementation of the reforms to the Basel III package, which includes changes to the RWA approaches to credit risk, market risk, counterparty risk, operational risk, and credit valuation adjustments and the application of RWA floors and the leverage ratio;
*   the implementation of more stringent capital, liquidity and funding requirements;
*   the ongoing regulatory response to the COVID-19 pandemic and its implications for banks’ credit risk management and provisioning processes, capital adequacy and liquidity, and a renewed focus on vulnerable customers including the treatment of customers and consideration of longer-term initiatives to support borrowers in financial difficulty and measures designed to maximise access to cash for consumers;

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*   the incorporation of climate change within the global prudential framework, including the transition risks resulting from a shift to a low carbon economy and its financial effects;
*   increasing requirements to detail management accountability within the Barclays Bank UK Group (for example, the requirements of the Senior Managers and Certification Regime in the UK and similar regimes elsewhere that are either in effect or under consideration/implementation), as well as requirements relating to executive remuneration;
*   changes in national or supra-national requirements regarding the ability to offshore or outsource the provision of services and resources or transfer material risk to financial services companies located in other countries, which impact the Barclays Bank UK Group’s ability to implement globally consistent and efficient operating models;
*   financial crime, fraud and market abuse standards and increasing expectations for related control frameworks, to ensure firms are adapting to new threats such as those arising from the COVID-19 pandemic, and are protecting customers from cyber-enabled crime;
*   the application and enforcement of economic sanctions including those with extra-territorial effect and those arising from geopolitical tensions;
*   requirements flowing from arrangements for the resolution strategy of the Barclays Group and its individual operating entities (including the Barclays Bank UK Group) that may have different effects in different countries
*   the increasing regulatory expectations and requirements relating to various aspects of operational resilience, including an increasing focus on the response of institutions to operational disruptions;
*   continuing regulatory focus on data privacy, including the collection and use of personal data, and protection against loss and unauthorised or improper access;
*   the regulatory focus on policies and procedures for identifying and managing cybersecurity risks, cybersecurity governance and the corresponding disclosure and reporting obligations; and
*   continuing regulatory focus on the effectiveness of internal controls and risk management frameworks, as evidenced in regulatory fines and other measures imposed against the Barclays Bank UK Group and other financial institutions.

For further details on the regulatory supervision of, and regulations applicable to, the Barclays Bank UK Group, refer to the Supervision and regulation section.

**vi) Impact of benchmark interest rate reforms on the Barclays Bank UK Group**
Global regulators and central banks in the UK, the US and the EU have driven international efforts to reform key benchmark interest rates and indices, such as the London Interbank Offered Rate (LIBOR), used to determine the amounts payable under a wide range of transactions and make them more reliable and robust. These benchmark reforms have resulted in significant changes to the methodology and operation of certain benchmarks and indices, the adoption of alternative risk-free reference rates (RFRs), the discontinuation of certain reference rates (including LIBOR) and the introduction of implementing legislation and regulations. Specifically, certain LIBOR tenors either ceased at the end of 2021 or became permanently unrepresentative. Furthermore, certain US dollar LIBOR tenors are to cease by the end of June 2023, and restrictions have been imposed on new use of US dollar LIBOR. Notwithstanding these developments, given the unpredictable consequences of benchmark reform, any of these developments could have an adverse impact on market participants, including the Barclays Bank UK Group, in respect of any financial instruments linked to, or referencing, any of these benchmark interest rates.

The Barclays Bank UK Group predominantly offers products which reference central bank rates rather than LIBOR or other indices which are likely to be subject to reform. Consequently, the product offering and business model are unlikely to be significantly affected. Nevertheless, there are other ways the Barclays Bank UK Group could be affected.

Uncertainty associated with such potential changes, including the availability and/or suitability of alternative RFRs, the participation of customers and third-party market participants in the transition process, challenges with respect to required documentation changes, and impact of legislation to deal with certain legacy contracts that cannot convert into or add fall-back RFRs before cessation of the benchmark they reference, may adversely affect a broad range of transactions (including any securities, loans and derivatives which use LIBOR or any other affected benchmark to determine the interest payable which are included in the Barclays Bank UK Group’s financial assets and liabilities) that use these reference rates and indices, and present a number of risks for the Barclays Bank UK 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 UK Group faces conduct risks. These may lead to customer complaints, regulatory sanctions or reputational impact if the Barclays Bank UK 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

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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 UK 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 securities, and (iii) the Barclays Bank UK Group’s preparation and readiness for the replacement of LIBOR with alternative RFRs.
*   **Financial risk:** the valuation of certain of the Barclays Bank UK Group’s financial assets and liabilities may change. Moreover, transitioning to alternative RFRs may impact the ability of members of the Barclays Bank UK 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 certain 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 an adverse effect on the Barclays Bank UK Group’s cash flows.
*   **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 UK 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 UK 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 UK Group’s financial results and performance.

Any of these factors may have a material adverse effect on the Barclays Bank UK Group’s business, results of operations, financial condition, prospects and reputation.

For further details on the impacts of benchmark interest rate reforms on the Barclays Bank UK Group, refer to Note 35.

**vii) Change delivery and execution risks**
The Barclays Bank UK Group will need to adapt and/or transform the way it conducts business in response to changing customer behaviour and needs, technological developments, regulatory expectations, increased competition and cost management initiatives. Accordingly, effective management of transformation projects is required to successfully deliver the Barclays Bank UK Group's strategic priorities, involving delivering both on externally driven programmes, as well as key business initiatives to deliver revenue growth, product enhancement and operational efficiency outcomes. The magnitude, complexity and, at times, concurrent demands of the projects required to meet these priorities can result in heightened execution risk.

The ability to execute the Barclays Bank UK Group’s strategy may be limited by operational capacity and the increasing complexity of the regulatory environment in which the Barclays Bank UK Group operates. In addition, whilst the Barclays Bank UK Group continues to pursue cost management initiatives, they may not be as effective as expected and cost saving targets may not be met.

The failure to successfully deliver or achieve any of the expected benefits of these strategic initiatives and/or the failure to meet customer and stakeholder expectations could have a material adverse effect on the Barclays Bank UK Group’s business, results of operations, financial condition, customer outcomes, prospects and reputation.

### Material existing and emerging risks impacting individual principal risks

**i) Climate risk**
The risks associated with climate change are subject to rapidly increasing societal, regulatory and political focus, both in the UK and internationally. In line with regulatory expectations and requirements, the Group has embedded climate risk within the Enterprise Risk Management Framework, to address the financial and operational risks resulting from: (i) the physical risk of climate change; and (ii) the risk from the transition to a low-carbon economy. Climate risk is considered to be a driver of financial and operational risks.

Physical risks from climate change arise from a number of factors and relate to specific weather events (acute) and longer-term shifts in the climate (chronic). The nature and timing of extreme weather events are uncertain, but they are increasing in frequency and in the potential severity of economic impact. The potential impact on the economy includes, but is not limited to, lower GDP growth, higher unemployment, shortage of raw materials and products due to supply chain disruptions and significant changes in asset prices and profitability of industries. Damage to properties and operations of borrowers could decrease production capacity, increase operating costs, impair asset values and the creditworthiness of customers leading to increased default rates, delinquencies, write-offs and impairment charges in the Barclays Bank UK Group’s portfolios. In addition, the Barclays Bank UK Group’s premises and resilience may also suffer physical damage due to weather events leading to increased costs for the Barclays Bank UK Group.

Transition risks arising from moving towards a low-carbon economy include changes to policy, law and regulation, as well as changes in societal expectations and consumer behaviours. When the transition is rapid and disorderly, these risks are more pronounced and can impact the lending activities undertaken by Barclays Bank UK Group, as well as its lending portfolios and the value of the Barclays Bank UK Group’s assets. As sentiment towards climate change shifts and societal preferences change, the Barclays Bank UK Group may face greater scrutiny of the type of business it conducts, adverse media coverage and reputational damage, which may in turn impact customer

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demand for the Barclays Bank UK Group's products, returns on certain business activities and the value of certain assets resulting in impairment charges.

For the Barclays Bank UK Group, UK mortgages & business banking Agriculture portfolios have been identified as sectors with ‘elevated’ climate risks given that they are sensitive to financial impacts as a result of the physical and/or transition risks of climate change. The UK mortgage portfolio is affected by acute physical risks, including flooding, and chronic physical risks such as subsidence and coastal erosion. From a transition risk perspective, the UK Mortgage portfolio is exposed to potential changes in energy efficiency performance requirements. Both the physical and transition risks that the UK Mortgages portfolio is exposed to may impact property valuations and affordability.

The Business Banking Agriculture portfolio is exposed to the physical risks of climate change such as flooding and drought, with the Arable sub-sector being particularly exposed. The Dairy & Cattle sub-sector is exposed to the transition risks of climate change, including changes in consumer behaviour, such as the increasing popularity of plant based diets, as well as the potential introduction of emissions taxation given the sector’s significant contributor to the UK’s methane emissions.

In addition, the impacts of physical and transition climate risks can lead to second order connected risks, which have the potential to affect the Barclays Bank UK Group’s portfolios. For example, an increase in defaults and rising unemployment as a result of the physical and or transition risks as a result of climate change may lead to wider deterioration in the creditworthiness of the Barclays Bank UK Group’s clients, higher expected credit losses (ECLs), and defaults among retail customers.

From January 2022, climate risk became one of the principal risks within the Barclays Bank UK Group’s ERMF. Failure to adequately embed financial and operational risks associated with climate change into its risk framework to appropriately measure, manage and disclose the various financial and operational risks it faces as a result of climate change or failure to adapt the Barclays Bank UK Group’s strategy and business model to the changing regulatory requirements and market expectations on a timely basis, may have a material and adverse impact on the Barclays Bank UK Group’s level of business growth, competitiveness, profitability, capital requirements, cost of funding, and financial condition.

In March 2020, the Barclays Group announced its ambition to become a net zero bank by 2050 and its commitment to align all of its financing activities with the goals and timelines of the Paris Agreement. In order to reach these ambitions and targets or any other climate-related ambitions or targets the Barclays Group may commit to in future, the Barclays Bank UK Group will need to incorporate climate considerations into its strategy, business model, the products and services it provides to customers and its financial and non-financial risk management processes (including processes to measure and manage the various financial and non-financial risks the Barclays Bank UK Group faces as a result of climate change). The Barclays Bank UK Group also needs to ensure that its strategy and business model adapt to changing standards, industry and scientific practices, regulatory requirements and market expectations regarding climate change, which remain under continuous development. There can be no assurance that these standards, practices, requirements and expectations will not change in a manner that substantially increases the cost or effort for the Barclays Bank UK Group to achieve such ambitions and targets. In addition, the Barclays Group’s ambitions and targets may prove more challenging to achieve due to changing circumstances and external factors which are beyond our control, including geopolitical issues, energy security, energy poverty and other considerations such as just transition to a low carbon economy. This may be exacerbated if the Barclays Group chooses or is required to accelerate its climate-related ambitions or targets as a result of regulatory developments or stakeholder expectations.

Achieving the Barclays Group’s climate-related ambitions and targets will also depend on a number of factors outside the Barclays Bank UK Group’s control, including reliable forecast of hazards from the physical climate models, availability of data and models to measure and assess the climate impact of the Barclays Bank UK Group’s customers, advancements of low-carbon technologies and supportive public policies in the markets where the Barclays Bank UK Group operates. If these external factors and other changes do not occur, or do not occur on a timely basis, the Barclays Group may fail to achieve its climate-related ambitions and targets and this could have a material adverse effect on the Barclays Bank UK Group’s business, results of operations, financial condition, prospects and reputation.

For further details on the Barclays Bank UK Group’s approach to climate change, refer to the climate change risk management section.

**ii) Credit risk**
Credit risk is the risk of loss to the Barclays Bank UK Group from the failure of clients, customers or counterparties, including sovereigns, to fully honour their obligations to members of the Barclays Bank UK Group, including the whole and timely payment of principal, interest, collateral and other receivables. Credit risk is impacted by a number of factors outside the Barclays Bank UK Group’s control, including wider economic conditions.

**a) Impairment**
Impairment is calculated in line with the requirements of IFRS9 which results in recognition of loss allowances, based on ECLs, on a forward-looking basis using a broad scope of metrics. Measurement involves complex judgement and impairment charges are potentially volatile and may not successfully predict actual credit losses, particularly under stressed conditions. Any failure by the Barclays Bank UK Group to accurately estimate credit losses through ECLs could have a material adverse effect on the Barclays Bank UK Group’s business, results of operations, financial condition and prospects. For further details, refer to Note 7.

**b) Specific portfolios, sectors and concentrations**
The Barclays Bank UK Group is subject to risks arising from changes in credit quality and recovery rates for loans and advances due from borrowers and counterparties and is subject to a concentration of those risks where the Barclays Bank UK Group has significant exposures

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to borrowers and counterparties in specific sectors, or to particular types of borrowers and counterparties. Any deterioration in the credit quality of such borrowers and counterparties could lead to lower recoverability from loans and advances and higher impairment charges. Accordingly, any of the following areas of uncertainty could have a material adverse impact on the Barclays Bank UK Group’s business, results of operations, financial condition and prospects:

*   **Consumer affordability:** this has remained a key area of focus, particularly in unsecured lending, as the cost of living pressures grow. Macroeconomic factors, such as unemployment, higher interest rates or broader inflationary pressures, that impact a customer’s ability to service debt payments could lead to increased arrears in both unsecured and secured products.
*   **UK retail, hospitality and leisure:** falling demand, rising costs and, for UK retail, a structural shift to online shopping, continue to pressurise sectors heavily reliant on consumer discretionary spending. Such sectors may also be adversely impacted by cost of living pressures and other macroeconomic factors which affect consumers. This represents a potential risk in the Barclays Bank UK Group’s corporate portfolio as a higher probability of default exists for retailers, hospitality providers and their landlords while these pressures remain.
*   **UK real estate:** UK property represents a significant portion of the Barclays Bank UK Group’s overall retail credit exposure and the Barclays Bank UK Group remains at risk of increased impairment from a material fall in property prices. During 2021 and continuing through the first half of 2022, property prices rose, particularly in the residential property market where customers sought more space as home working became more prevalent. However, rising mortgage interest rates and increasing economic concerns have reduced demand and borrowing capacity which resulted in small house price decreases in Q4 2022. This is likely to continue in 2023, especially in London and the South East of the UK where the Barclays Bank UK Group has a high exposure. Additionally, as mortgages roll off existing rates and onto new rates at higher levels, there is a risk of increasing borrower defaults which could then put further downward pressure on property prices and in turn impact the Barclays Bank UK Group’s impairment and capital position. Furthermore, small segments of the housing market could be subject to specific valuation impacts (for example, certain properties within the Barclays Bank Group’s residential loan portfolio may be subject to remediation activities relating to fire safety standards).

For further details on the Barclays Bank UK Group’s approach to credit risk, refer to the credit risk management and credit risk performance sections.

**iii) Treasury and capital risk**
There are three primary types of treasury and capital risk faced by the Barclays Bank UK Group:

**a) Liquidity risk**
Liquidity risk is the risk that the Barclays Bank UK Group is unable to meet its contractual or contingent obligations or that it does not have the appropriate amount, tenor and composition of funding and liquidity to support its assets. This could cause the Barclays Bank UK Group to fail to meet regulatory and/or internal liquidity requirements, make repayments of principal or interest as they fall due or support day-to-day business activities. Key liquidity risks that the Barclays Bank UK Group faces include:

*   **Stability of the Barclays Bank UK Group’s deposit funding profile:** deposits which are payable on demand or at short notice could be adversely affected by the Barclays Bank UK Group failing to preserve the current level of customer and investor confidence or as a result of competition in the banking industry.
*   **Impacts of market volatility:** adverse market conditions, with increased volatility in asset prices could: (i) negatively impact the Barclays Bank UK Group’s liquidity position through increased derivative margin requirements and/or wider haircuts when monetising liquidity pool securities; and (ii) make it more difficult to execute secured financing transactions
*   **Intraday liquidity usage:** increased collateral requirements for payments and securities settlement systems could negatively impact the Barclays Bank UK Group’s liquidity position, as cash and liquid assets required for intraday purposes are unavailable to meet other outflows
*   **Off-balance sheet commitments:** deterioration in economic and market conditions could cause customers to draw on off-balance sheet commitments provided to them, negatively affecting the Barclays Bank UK Group’s liquidity position
*   **Credit rating changes and impact on funding costs:** any reductions in a credit rating (in particular, any downgrade below investment grade) may affect the Barclays Bank UK Group’s access to the money markets and/or terms on which the Barclays Bank UK Group is able to obtain market funding (for example, this could lead to increased costs of funding and wider credit spreads, the triggering of additional collateral or other requirements in derivative contracts and other secured funding arrangements, or limits on the range of counterparties who are willing to enter into transactions with the Barclays Bank UK Group)

**b) Capital risk**
Capital risk is the risk that the Barclays Bank UK Group has an insufficient level or composition of capital to support its normal business activities and to meet its regulatory capital requirements under normal operating environments and stressed conditions (both actual and as defined for internal planning or regulatory stress testing purposes). This also includes the risk from the Barclays Bank UK Group’s pension plans. Key capital risks that the Barclays Bank UK Group faces include:
*   **Failure to meet prudential capital requirements:** this could lead to the Barclays Bank UK Group being unable to support some or all of its business activities, a failure to pass regulatory stress tests, increased cost of funding due to deterioration in investor appetite or

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credit ratings, restrictions on distributions and/or the need to take additional measures to strengthen the Barclays Bank UK Group's capital or leverage position.
*   **Adverse changes in FX rates impacting capital ratios:** the Barclays Bank UK Group share capital is denominated in sterling. However, some capital resources and MREL are denominated in foreign currencies. Changes in foreign currency exchange rates may adversely impact the sterling equivalent value of these items. As a result, the Barclays Bank UK Group’s regulatory capital ratios are sensitive to foreign currency movements. Failure to appropriately manage the Barclays Bank UK Group’s balance sheet to take account of foreign currency movements could result in an adverse impact on its regulatory capital.

**c) Interest rate risk in the banking book**
Interest rate risk in the banking book is the risk that the Barclays Bank UK Group is exposed to capital or income volatility because of a mismatch between the interest rate exposures of its (non-traded) assets and liabilities. The Barclays Bank UK Group’s hedging programmes for interest rate risk in the banking book rely on behavioural assumptions and, as a result, the effectiveness of the hedging strategy cannot be guaranteed. A potential mismatch in the balance or duration of the hedging assumptions could lead to earnings deterioration if there are interest rate movements which are not adequately hedged. A decline in sterling interest rates may also compress net interest margin on retail portfolios. In addition, the Barclays Bank UK Group’s liquid asset portfolio is exposed to potential capital and/or income volatility due to movements in market rates and prices which may have a material adverse effect on the capital position of the Barclays Bank UK Group.

For further details on the Barclays Bank UK Group’s approach to treasury and capital risk, refer to the treasury and capital risk management and treasury and capital risk performance sections.

**iv) Operational risk**
Operational risk is the risk of loss to the Barclays Bank UK Group from inadequate or failed processes or systems, human factors or due to external events where the root cause is not due to credit or market risks. Examples include:

**a) Operational resilience**
The Barclays Bank UK Group functions in a highly competitive market, with customers and clients that expect consistent and smooth business processes. The loss of or disruption to business processing is a material inherent risk within the Barclays Bank UK Group and across the financial services industry, whether arising through failures in the Barclays Bank UK Group’s technology systems, closure of the Barclays Bank UK Group’s real estate services including its retail branch network, or availability of personnel or services supplied by third parties. Failure to build resilience and recovery capabilities into business processes or into the services on which the Barclays Bank UK Group’s business processes depend, may result in significant customer detriment, costs to reimburse losses incurred by the Barclays Bank UK Group’s customers, and reputational damage.

**b) Cyberattacks**
Cyberattacks continue to be a global threat that is inherent across all industries, with the number and severity of attacks continuing to rise. The financial sector remains a primary target for cybercriminals, hostile nation states, opportunists and hacktivists. The Barclays Bank UK Group, like other financial institutions, experiences numerous attempts to compromise its cybersecurity protections.

The Barclays Bank UK Group dedicates significant resources to reducing cybersecurity risks, but it cannot provide absolute security against cyberattacks. Malicious actors are increasingly sophisticated in their methods, tactics, techniques, and procedures, seeking to steal money, gain unauthorised access to, destroy or manipulate data, and disrupt operations, and some of their attacks may not be recognised or discovered until launched or after initial entry into the environment, such novel or zero-day attacks that are launched before patches are available and defences can be readied. Malicious actors are also increasingly developing methods to avoid prevention, detection and alerting capabilities, including employing counter-forensic tactics making response activities more difficult. Cyberattacks can originate from a wide variety of sources and target the Barclays Bank UK Group in numerous ways, including attacks on networks, systems, applications or devices used by the Barclays Bank UK Group or parties such as service providers and other suppliers, counterparties, employees, contractors, customers or clients, presenting the Barclays Bank UK Group with a vast and complex defence perimeter. Moreover, the Barclays Bank UK Group does not have direct control over the cybersecurity of the systems of its clients, customers, counterparties and third-party service providers and suppliers, limiting the Barclays Bank UK Group’s ability to effectively protect and defend against certain threats. Some of the Barclays Bank UK Group’s third-party service providers and suppliers have experienced successful attempts to compromise their cybersecurity. These included ransomware attacks that disrupted the service providers’ or suppliers’ operations and, in some cases, had an impact on the Barclays Bank UK Group’s operations. Such cyberattacks are likely to continue.

A failure in the Barclays Bank UK Group’s adherence to its cybersecurity policies, procedures or controls, employee malfeasance, and human, governance or technological error could also compromise the Barclays Bank UK Group’s ability to successfully prevent and defend against cyberattacks. Furthermore, certain legacy technologies that are at or approaching end-of-life may not be able to maintain acceptable levels of security. The Barclays Bank UK Group has experienced cybersecurity incidents and near-misses in the past, and it is inevitable that additional incidents will occur in the future. Cybersecurity risks are expected to increase, due to factors such as the increasing demand across the industry and customer expectations for continued expansion of services delivered over the Internet; increasing reliance on Internet-based products, applications and data storage; and changes in ways of working by the Barclays Bank UK Group’s employees, contractors, and third party service providers and suppliers and their subcontractors as a long-term consequence of the COVID-19 pandemic. Bad actors have taken advantage of remote working practices and modified customer behaviours, exploiting the situation in novel ways that may elude defences. Additionally, geopolitical turmoil may serve to increase the risk of a cyberattack that could

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impact Barclays directly, or indirectly through its critical suppliers or national infrastructure. In 2022, the Barclays Bank UK Group faced a heightened risk of cyberattack as a result of the Russian invasion of Ukraine.

Common types of cyberattacks include deployment of malware to obtain covert access to systems and data; ransomware attacks that render systems and data unavailable through encryption and attempts to leverage business interruption or stolen data for extortion; novel or zero-day exploits; denial of service and distributed denial of service (DDoS) attacks; infiltration via business email compromise; social engineering, including phishing, vishing and smishing; automated attacks using botnets; third-party customer, vendor, service provider and supplier account take-over; malicious activity facilitated by an insider; and credential validation or stuffing attacks using login and password pairs from unrelated breaches. A successful cyberattack of any type has the potential to cause serious harm to the Barclays Bank UK Group or its clients and customers, including exposure to potential contractual liability, claims, litigation, regulatory or other government action, loss of existing or potential customers, damage to the Barclays Bank UK Group’s brand and reputation, and other financial loss. The impact of a successful cyberattack also is likely to include operational consequences (such as unavailability of services, networks, systems, devices or data) remediation of which could come at significant cost.

Regulators worldwide continue to recognise cybersecurity as an increasing systemic risk to the financial sector and have highlighted the need for financial institutions to improve their monitoring and control of, and resilience to cyberattacks. A successful cyberattack may, therefore, result in significant regulatory fines on the Barclays Bank UK Group. In addition, any new regulatory measures introduced to mitigate these risks are likely to result in increased technology and compliance costs for the Barclays Bank UK Group.

For further details on the Barclays Bank UK Group’s approach to cyberattacks, see the operational risk performance section. For further details on cybersecurity regulation applicable to the Barclays Bank UK Group, refer to the Supervision and regulation section.

**c) New and emergent technology**
Technology is fundamental to the Barclays Bank UK Group’s business and the financial services industry. Technological advancements present opportunities to develop new and innovative ways of doing business across the Barclays Bank UK Group, with new solutions being developed both in-house and in association with third-party companies. For example, payment services are increasingly occurring electronically, both on the Barclays Bank UK Group’s own systems and through other alternative systems, and becoming automated. Whilst increased use of electronic payment systems could significantly reduce the Barclays Bank UK Group’s cost base, it may, conversely, reduce the commissions, fees and margins made by the Barclays Bank UK Group on these transactions which could have a material adverse effect on the Barclays Bank UK Group’s business, results of operations, financial condition and prospects.

Introducing new forms of technology, however, has the potential to increase inherent risk. Failure to evaluate, actively manage and closely monitor risk during all phases of business development and implementation could introduce new vulnerabilities and security flaws and have a material adverse effect on the Barclays Bank UK Group’s business, results of operations, financial condition and prospects.

**d) External fraud**
The nature of fraud is wide-ranging and continues to evolve, as criminals seek opportunities to target the Barclays Bank UK Group’s business activities and exploit changes to customer behaviour and product and channel use (such as the increased use of digital products and enhanced online services) or exploit new products. Fraud attacks can be very sophisticated and are often orchestrated by organised crime groups who use various techniques to target customers and clients directly to obtain confidential or personal information that can be used to commit fraud. The UK market has also seen significant growth in ‘scams’ where the Barclays Bank UK Group takes increased levels of liability as part of a voluntary code to provide additional safeguards to customers and clients who are tricked into making payments to fraudsters. The impact from fraud can lead to customer detriment, financial losses (including the reimbursement of losses incurred by customers) loss of business, missed business opportunities and reputational damage, all of which could have a material adverse impact on the Barclays Bank UK Group’s business, results of operations, financial condition and prospects.

**e) Data management and information protection**
The Barclays Bank UK Group holds and processes large volumes of data, including personal information, financial data and other confidential information, and the Barclays Bank UK Group’s businesses are subject to complex and evolving laws and regulations governing the privacy and protection of data, including Regulation (EU) 2016/679 (General Data Protection Regulation as it applies in the EU and the UK). This data could relate to: (i) the Barclays Bank UK Group’s clients, customers, prospective clients and customers and their employees; (ii) clients and customers of the Barclays Bank UK Group’s clients and customers and their employees (iii) the Barclays Bank UK Group’s suppliers, counterparties and other external parties, and their employees; and (iv) the Group’s employees and prospective employees.

Concerns regarding the effectiveness of the Barclays Bank UK Group’s measures to safeguard data, including personal information, or even the perception that those measures are inadequate, could expose the Barclays Bank UK Group to the risk of loss or unavailability of data or data integrity issues and/or cause the Barclays Bank UK Group to lose existing or potential clients and customers, and thereby reduce the Barclays Bank UK Group’s revenues. Furthermore, any failure or perceived failure by the Barclays Bank UK Group to comply with applicable privacy or data protection laws and regulations may subject it to potential contractual liability, claims, litigation, regulatory or other government action (including significant regulatory fines) and require changes to certain operations or practices which could also inhibit the Barclays Bank UK Group’s development or marketing of certain products or services, or increase the costs of offering them to customers. Any of these events could damage the Barclays Bank UK Group’s reputation, subject the Barclays Bank UK Group to material fines or other monetary penalties, make the Barclays Bank UK Group liable to the payment of compensatory damages, divert management’s time and attention, lead to enhanced regulatory oversight and otherwise materially adversely affect its business, results of operations, financial condition and prospects.

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For further details on data protection regulation applicable to the Barclays Bank UK Group, refer to the supervision and regulation section.

**f) Processing errors**
The Barclays Bank UK Group’s businesses are highly dependent on its ability to process and monitor, on a daily basis, a very large number of transactions, many of which are complex and occur at high volumes and frequencies. As the Barclays Bank UK Group’s customer base expands and the volume, speed, frequency and complexity of transactions increase, developing, maintaining and upgrading operational systems and infrastructure becomes more challenging, and the risk of systems or human error in connection with such transactions increases, as well as the potential consequences of such errors due to the speed and volume of transactions involved and the potential difficulty associated with discovering errors quickly enough to limit the resulting consequences. Furthermore, events that are wholly or partially beyond the Barclays Bank UK Group’s control, such as a spike in transaction volume, could adversely affect the Barclays Bank UK Group’s ability to process transactions or provide banking and payment services.

Processing errors could result in the Barclays Bank UK Group, among other things: (i) failing to provide information, services and liquidity to clients and counterparties in a timely manner; (ii) failing to settle and/or confirm transactions; (iii) causing funds transfers and/or other transactions to be executed erroneously, illegally or with unintended consequences; and (iv) adversely affecting financial markets. Any of these events could materially disadvantage the Barclays Bank UK Group’s customers, clients and counterparties (including them suffering financial loss) and/or result in a loss of confidence in the Barclays Bank UK Group which, in turn, could have a material adverse effect on the Barclays Bank UK Group’s business, results of operations, financial condition and prospects.

**g) Supplier exposure**
The Barclays Bank UK Group depends on suppliers for the provision of many of its services and the development of technology. Whilst the Barclays Bank UK Group depends on suppliers, it remains fully accountable to its customers and clients for risks arising from the actions of suppliers and may not be able to recover from its suppliers any amounts paid to customers and clients for losses suffered by them. The dependency on suppliers and sub-contracting of outsourced services introduces concentration risk where the failure of specific suppliers could have an impact on the Barclays Bank UK Group’s ability to continue to provide material services to its customers. Failure to adequately manage supplier risk could have a material adverse effect on the Barclays Bank UK Group’s business, results of operations, financial condition and prospects.

**h) Estimates and judgements relating to critical accounting policies and regulatory disclosures**
The preparation of financial statements requires the application of accounting policies and judgements to be made in accordance with IFRS. Regulatory returns and capital disclosures are prepared in accordance with the relevant capital reporting requirements and also require assumptions and estimates to be made. The key areas involving a higher degree of judgement or complexity, or areas where assumptions are significant to the consolidated and individual financial statements, include credit impairment provisions, fair value of financial instruments, goodwill and intangible assets and provisions including conduct and legal, competition and regulatory matters (refer to the notes to the audited financial statements for further details). There is a risk that if the judgement exercised, or the estimates or assumptions used, subsequently turn out to be incorrect, this could result in material losses to the Barclays Bank UK Group, beyond what was anticipated or provided for. Further development of accounting standards and regulatory interpretations could also materially impact the Barclays Bank UK Group’s results of operations, financial condition and prospects.

**i) Tax risk**
The Barclays Bank UK Group is required to comply with the tax laws and practice of all countries in which it has business operations. There is a risk that the Barclays Bank UK Group could suffer losses due to additional tax charges, other financial costs or reputational damage as a result of failing to comply with such laws and practice (including where the Barclays Bank UK Group’s interpretation of such laws differs from the interpretation of tax authorities), or by failing to manage its tax affairs in an appropriate manner. In addition, increasing tax authority focus on customer tax reporting requirements for UK and international customers and the digitisation of the administration of tax has potential to increase the Barclays Bank UK Group’s tax compliance obligations further.

**j) Ability to hire and retain appropriately qualified employees**
As a regulated financial institution, the Barclays Bank UK Group requires diversified and specialist skilled colleagues. The Barclays Bank UK Group’s ability to attract, develop and retain a diverse mix of talent is key to the delivery of its core business activity and strategy. This is impacted by a range of external and internal factors, such as macroeconomic factors, labour and immigration policy in the jurisdictions in which the Barclays Bank UK Group operates, industry-wide headcount reductions in particular sectors, regulatory limits on compensation for senior executives and the potential effects on employee engagement and wellbeing from long-term periods of working remotely. Failure to attract or prevent the departure of appropriately qualified and skilled employees could have a material adverse effect on the Barclays Bank UK Group’s business, results of operations, financial condition and prospects. Additionally, this may result in disruption to service which could in turn lead to customer detriment and reputational damage.

For further details on the Barclays Bank UK Group’s approach to operational risk, refer to the operational risk management and operational risk performance sections.

**v) Model risk**
Model risk is the potential for adverse consequences from decisions based on incorrect or misused model outputs and reports. The Barclays Bank UK Group relies on models to support a broad range of business and risk management activities, including informing

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business decisions and strategies, measuring and limiting risk, valuing exposures (including the calculation of impairment), conducting stress testing, calculating RWAs and assessing capital adequacy, supporting new business acceptance, risk and reward evaluation, managing client assets, and meeting reporting requirements.

Models are, by their nature, imperfect representations of reality and have some degree of uncertainty because they rely on assumptions and inputs, and so are subject to intrinsic uncertainty, errors and inappropriate use affecting the accuracy of their outputs. This may be exacerbated when dealing with unprecedented scenarios, as was the case during the COVID-19 pandemic, due to the lack of reliable historical reference points and data. For instance, the quality of the data used in models across the Barclays Bank UK Group has a material impact on the accuracy and completeness of its risk and financial metrics. Model uncertainty, errors and inappropriate use may result in (among other things) the Barclays Bank UK Group making inappropriate business decisions and/or inaccuracies or errors in the Barclays Bank UK Group’s risk management and regulatory reporting processes. This could result in significant financial loss, imposition of additional capital requirements, enhanced regulatory supervision and reputational damage, all of which could have a material adverse effect on the Barclays Bank UK Group’s business, results of operations, financial condition and prospects.

For further details on the Barclays Bank UK Group’s approach to model risk, refer to the model risk management and model risk performance sections.

**vi) Conduct risk**
Conduct risk is the risk of poor outcomes for, or harm to, customers, clients and markets, arising from the delivery of the Barclays Bank UK Group’s products and services. This risk could manifest itself in a variety of ways, including:

**a) Market conduct**
The Barclays Bank UK Group’s businesses are exposed to risk from potential non-compliance with its policies and standards and instances of wilful and negligent misconduct by employees, all of which could result in potential customer and client detriment, enforcement action (including regulatory fines and/or sanctions), increased operation and compliance costs, redress or remediation or reputational damage which in turn could have a material adverse effect on the Barclays Bank UK Group’s business, financial condition and prospects. Examples of employee misconduct which could have a material adverse effect on the Barclays Bank UK Group’s business include: (i) improperly selling or marketing the Barclays Bank UK Group’s products and services; (ii) engaging in insider trading, market manipulation or unauthorised trading; or (iii) misappropriating confidential or proprietary information belonging to the Barclays Bank UK Group, its customers or third parties. These risks may be exacerbated in circumstances where the Barclays Bank UK Group is unable to rely on physical oversight and supervision of employees, noting the move to a hybrid working model for many colleagues. .

**b) Customer protection**
The Barclays Bank UK Group must ensure that its customers, particularly those that are vulnerable, are able to make well-informed decisions on how best to use the Barclays Bank UK Group’s financial services and understand the protection available to them if something goes wrong. Poor customer outcomes can result from the failure to: (i) communicate fairly and clearly with customers; (ii) provide services in a timely and fair manner; (iii) handle and protect customer data appropriately; and (iv) undertake appropriate activity to address customer detriment, including the adherence to regulatory and legal requirements on complaint handling. The Barclays Bank UK Group is at risk of financial loss and reputational damage as a result.

A key area of focus is the implementation and embedment of the FCA’s new Consumer Duty, with rules for open products and services due to take effect at the end July 2023. This will impact areas including governance and accountability, MI and reporting, communications, product design and end-to-end customer journeys. The Barclays Bank UK Group may be required to incur significant additional expense in connection with this regulatory change.

**c) Product design and review risk**
Products and services must meet the needs of clients, customers, markets and the Barclays Bank UK Group throughout their life cycle. However, there is a risk that the design and review of the Barclays Bank UK Group’s products and services fail to reasonably consider and address potential or actual negative outcomes for customers, which may result in customer detriment, enforcement action (including regulatory fines and/or sanctions), redress and remediation and reputational damage. Both the design and review of products and services are a key area of focus for regulators and the Barclays Bank UK Group.

**d) Financial crime**
The Barclays Bank UK Group may be adversely affected if it fails to effectively mitigate the risk that third parties or its employees facilitate, or that its products and services are used to facilitate, financial crime (money laundering, terrorist financing, breaches of economic and financial sanctions, bribery and corruption, and the facilitation of tax evasion). UK and US regulations covering financial institutions continue to focus on combating financial crime. Failure to comply may lead to enforcement action by the Barclays Bank UK Group’s regulators, including severe penalties, which may have a material adverse effect on the Barclays Bank UK Group’s business, financial condition, prospects and reputation.

**e) Regulatory focus on culture and accountability**
Regulators around the world continue to emphasise the importance of culture and personal accountability and enforce the adoption of adequate internal reporting and whistleblowing procedures to help to promote appropriate conduct and drive positive outcomes for

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customers, colleagues, clients and markets. The requirements and expectations of the UK Senior Managers Regime, Certification Regime and Conduct Rules reinforce additional accountabilities for individuals across the Barclays Bank UK Group with an increased focus on governance and rigour. Failure to meet these requirements and expectations may lead to regulatory sanctions, both for the individuals and the Barclays Bank UK Group.

For further details on the Barclays Bank UK Group’s approach to conduct risk, refer to the conduct risk management and conduct risk performance sections.

**vii) Reputation risk**
Reputation risk is the risk that an action, transaction, investment, event, decision or business relationship will reduce trust in the Barclays Bank UK Group’s integrity and/or competence.

Any material lapse in standards of integrity, compliance, customer service or operating efficiency may represent a potential reputation risk. Stakeholder expectations constantly evolve, and so reputation risk is dynamic and varies between geographical regions, groups and individuals. A risk arising in one business area can have an adverse effect upon the Barclays Bank UK Group’s overall reputation and any one transaction, investment or event (in the perception of key stakeholders) can reduce trust in the Barclays Bank UK Group’s integrity and competence. The Barclays Bank UK Group’s association with sensitive topics and sectors has been, and in some instances continues to be, an area of concern for stakeholders, including: (i) the financing of, and investments in, businesses which operate in sectors that are sensitive because of their relative carbon intensity or local environmental impact; (ii) potential association with human rights violations (including combating modern slavery) in the Barclays Bank UK Group’s operations or supply chain and by clients and customers; and (iii) the financing of businesses which manufacture and export military and riot control goods and services.

Reputation risk could also arise from negative public opinion about the actual, or perceived, manner in which the Barclays Bank UK Group (including its employees, clients and other associations) conducts its business activities, or the Barclays Bank UK Group’s financial performance, as well as actual or perceived practices in banking and the financial services industry generally. Modern technologies, in particular online social media channels and other broadcast tools that facilitate communication with large audiences in short time frames and with minimal costs, may significantly enhance and accelerate the distribution and effect of damaging information and allegations. Negative public opinion may adversely affect the Barclays Bank UK Group’s ability to retain and attract customers, in particular, corporate and retail depositors, and to retain and motivate staff, and could have a material adverse effect on the Barclays Bank UK Group’s business, results of operations, financial condition and prospects.

In addition to the above, reputation risk has the potential to arise from operational issues or conduct matters which cause detriment to customers, clients, market integrity, effective competition or the Barclays Bank UK Group (refer to ‘iv) Operational risk’ above).

For further details on the Barclays Bank UK Group’s approach to reputation risk, refer to the reputation risk management and reputation risk performance sections.

**viii) Legal risk and legal, competition and regulatory matters**
The Barclays Bank UK Group conducts activities in a highly regulated market which exposes it and its employees to legal risk arising from: (i) the multitude of laws and regulations that apply to the businesses it operates, which are highly dynamic, may vary between jurisdictions and/or conflict, and may be unclear in their application to particular circumstances especially in new and emerging areas; and (ii) the diversified and evolving nature of the Barclays Bank UK Group’s businesses and business practices. In each case, this exposes the Barclays Bank UK Group and its employees to the risk of loss or the imposition of penalties, damages or fines from the failure of members of the Barclays Bank UK Group to meet their respective obligations, including legal, regulatory or contractual requirements. Legal risk may arise in relation to any number of the material existing and emerging risks identified above.

A breach of applicable legislation and/or regulations by the Barclays Bank UK Group or its employees could result in criminal prosecution, regulatory censure, potentially significant fines and other sanctions. Where clients, customers or other third parties are harmed by the Barclays Bank UK Group’s conduct, this may also give rise to civil legal proceedings, including class actions. Other legal disputes may also arise between the Barclays Bank UK Group and third parties relating to matters such as breaches or enforcement of legal rights or obligations arising under contracts, statutes or common law. Adverse findings in any such matters may result in the Barclays Bank UK Group being liable to third parties or may result in the Barclays Bank UK Group’s rights not being enforced or not being enforced in the manner intended or desired by the Barclays Bank UK Group.

Details of legal, competition and regulatory matters to which the Barclays Bank UK Group is currently exposed are set out in Note 24. In addition to matters specifically described in Note 24, the Barclays Bank UK Group is engaged in various other legal proceedings which arise in the ordinary course of business. The Barclays Bank UK Group is also subject to requests for information, investigations and other reviews by regulators, governmental and other public bodies in connection with business activities in which the Barclays Bank UK Group is, or has been, engaged. and may (from time to time) be subject to legal proceedings and other investigations relating to financial and non-financial disclosures made by members of the Barclays Bank UK Group (including, but not limited to, in relation to ESG disclosures). Additionally, due to the increasing number of new climate and sustainability-related laws and regulations (or laws and regulatory processes seeking to protect the energy sector from any risks of divestment or challenges in accessing finance), growing demand from investors and customers for environmentally sustainable products and services, and regulatory scrutiny, financial institutions, including the Barclays Bank UK Group, may through their business activities face increasing litigation, conduct, enforcement and contract liability risks related to climate change, environmental degradation and other social, governance and sustainability-related issues. Furthermore, there is a risk that shareholders, campaign groups, customers and other interest groups could seek to take legal action against the Barclays Bank UK Group for financing or contributing to climate change and environmental degradation.

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The outcome of legal, competition and regulatory matters, both those to which the Barclays Bank UK Group is currently exposed and any others which may arise in the future, is difficult to predict (and any provision made in the Barclays Bank UK Group’s financial statements relating to those matters may not be sufficient to cover actual losses). In connection with such matters, the Barclays Bank UK Group may incur significant expense, regardless of the ultimate outcome, and any such matters could expose the Barclays Bank UK Group to any of the following outcomes: substantial monetary damages, settlements and/or fines; remediation of affected customers and clients; other penalties and injunctive relief; additional litigation; criminal prosecution; the loss of any existing agreed protection from prosecution; regulatory restrictions on the Barclays Bank UK Group’s business operations including the withdrawal of authorisations; increased regulatory compliance requirements or changes to laws or regulations; suspension of operations; public reprimands or censure; loss of significant assets or business; a negative effect on the Barclays Bank UK Group’s reputation; loss of confidence by investors, counterparties, clients and/or customers; risk of credit rating agency downgrades; potential negative impact on the availability and/or cost of funding and liquidity; and/or dismissal or resignation of key individuals. In light of the uncertainties involved in legal, competition and regulatory matters, there can be no assurance that the outcome of a particular matter or matters (including formerly active matters or those arising after the date of this Annual Report) will not have a material adverse effect on the Barclays Bank UK Group’s business, results of operations, financial condition and prospects.

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## Principal risk management

### Climate risk management
The impact on Financial and Operational Risks arising from climate change through: physical risks, risks associated with transitioning to a lower carbon economy and connected risks arising as a result of second order impacts of these two drivers on portfolios.

#### Overview
Given the risks associated with climate change, and to support the Group’s ambition to be a net zero bank by 2050, climate risk became a principal risk in January 2022. To support the embedment of the principal risk, in 2022 the Group delivered a Climate Risk Plan with three overarching objectives:

1.  Governance Framework: Establish a Climate Risk Committee (CRC), a Climate Risk Controls Forum, and refresh the Board Risk Committee reporting. The Barclays Bank UK Climate Risk Forum escalates to the Barclays UK Risk Committee and also into the Group CRC.
2.  Scenario Analysis: Build out the vision and plan for undertaking scenario analysis exercises. This involved developing a climate scenario analysis framework
3.  Carbon Modelling: Expand the BlueTrack model for measuring and tracking financed emissions to cover our automobiles and residential real estate portfolios, in addition to energy, power, cement and steel.

For the Barclays Bank UK Group, UK mortgages & business banking agriculture portfolios have been identified as sectors with ‘elevated’ climate risks given that they are sensitive to financial impacts as a result of the physical and/or transition risks of climate change. These portfolios are therefore the focus for scenario analysis and carbon modelling within Barclays Bank PLC UK.

#### Organisation and Structure
On behalf of the Barclays PLC Board, the Barclays PLC BRC reviews and approves the Barclays Group’s approach to managing the financial and operational risks associated with climate change. Reputation risk is the responsibility of the Barclays PLC Board, which directly handles the most material issues facing the Barclays Group. Broader sustainability matters and other reputation risk issues associated with climate change are coordinated by the Sustainability team. The Barclays Group Head of Climate Risk reports directly to Group Chief Risk Officer.
On behalf of the Barclays Bank UK Board, the Barclays Bank UK PLC Board Risk Committee reviews and approves the Barclays Bank UK approach to managing the financial and operational risks associated with climate change. Reputation risk is the responsibility of the Barclays Bank UK Board, which directly handles the most material issues facing Barclays Bank UK. Broader sustainability matters and other reputation risk issues associated with climate change are coordinated by the Sustainability team.

Within Barclays Bank UK, a Climate Risk lead was appointed in 2021, and a Barclays Bank UK Climate Risk Forum was established in November 2021. The forum provides support, guidance and oversight of the implementation and operation of Climate Risk within Barclays Bank UK. The forum undertakes duties such as recommending climate risk mandates and limits, monitoring the Barclays Bank UK climate risk profile and considering emerging risks or expected trends pertaining to Barclays Bank UK elevated and non-elevated portfolios. The forum also monitors physical and transition risk exposure and reviews risk measurement developments in relation to risk appetite, stress testing, scenario analysis and stress loss quantification. The Barclays Bank UK Climate Risk Forum escalates to the Barclays UK Risk Committee and also into the Group CRC.

To support the oversight of Barclays Group climate risk profile, a CRC has been established. The CRC is chaired by the Head of Climate Risk, who took the role of Climate Principal Risk owner in 2021, reporting directly to the Group Chief Risk Officer. The CRC is a subcommittee of the Group Risk Committee (GRC), the most senior executive body responsible for review and challenge of risk practices and risk profile, for climate risk and other principal risk types. The authority of the CRC is delegated by the GRC.

The Climate Risk Control Forum (CRCF) was established in July 2022 and escalates to GRC via the Group Controls Committee. The purpose of the CRCF is to oversee the consistent and effective implementation and operation of the Barclays Controls Framework as relating to the Climate Risk. It reviews the control environment relating to Climate Risk, including risk events, policy and issues management. Climate Risk assurance groups have been established and are responsible for performing Climate Risk specific reviews to ensure we are continually improving and addressing identified issues in our risk practices.

***

```mermaid
graph TD
    subgraph "Barclays UK Governance"
        ERMF[Enterprise Risk Management Framework (ERMF)]
        CRF[Climate Risk Framework (CRF)]
        RRMF[Reputation Risk Management Framework (RRMF)]
        BRC[Barclays Bank UK PLC Board Risk Committee]
        Board[Barclays Bank UK PLC Board]
        UKRC[Barclays UK Risk Committee]
        UKCRF[Barclays UK Climate Risk Forum]
    end
    
    subgraph "Risk"
        Risks[Credit, market, treasury & capital and operational risks]
        ClimateRisks[Sustainability matters and reputation risk associated with climate change]
    end
    
    subgraph "Group Ownership"
        GRC[Group Risk Committee (CRC)]
        CRC[Climate Risk Committee (CRC)]
        GHP[Global Head of Public Policy and Corporate responsibility]
    end
```

The elevation of climate risk to Principal Risk included establishing the following:
*   A Climate Risk Framework that defines climate risk and summarises the approach to identification, measurement, monitoring and reporting of climate risk
*   Climate Risk Appetite and constraint at the Group level established in line with the Group’s risk appetite approach and informed by scenario analysis
*   Climate Risk Register is used to inform risk appetite. This includes a breakdown of key risk drivers for physical and transition risks, and materiality ratings which are inferred from the results of the 2020 climate Internal Stress Test and 2021 Bank of England’s Climate Biennial Exploratory Scenario (CBES). The Climate Risk Register continues to align with the Group’s Risk Register Taxonomy

Climate risk across Financial and Operational Risks is managed via a Climate Change Financial Risk and Operational Risk Policy (CCFOR), which is embedded in each of the Financial and Operational Principal Risk Frameworks.

Climate risk across Model, Conduct, Reputation and Legal Principal Risks are out of the scope of the CRF and continue to be managed under their respective Principal Risk Frameworks.

The table below sets out how climate risk is integrated across Barclays using the ERMF aligned Climate Risk Framework, CCFOR and the Climate Change Standard.

#### Risk appetite
In 2022, as part of establishing a principal risk, Barclays defined a risk appetite statement and constraint for climate risk. The statement outlines that Barclays views climate change as a driver of financial and operational risk. Barclays has appetite to manage climate risk in line with its climate ambition and to reduce financed emissions in line with disclosed targets. Targets to 2025 are set for energy and power. Targets to 2030 are set for energy, power, cement and steel. In 2023, a target for auto manufacturing will also be set.

An assessment of progress to reduce financed emissions against the disclosed targets was made. It noted that reaching even the lower emissions reduction in the disclosed ranges may prove challenging and that a clearer forward plan be defined to set out the range of management actions that could be taken to meet the disclosed target ranges, including a more detailed understanding of client transition expectations and the external dependencies and variables beyond Barclays control that may will determine the pace of transition. For more detail on Barclays disclosed targets see the Barclays PLC 2022 Annual Report.

***

| | Enterprise Risk Management Framework (ERMF) | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| | Climate Risk Framework | | | | | Climate Change Standard |
| | | Climate Change Financial Risk and Operational Risk Policy | | | | |
| **Responsibilities** | **Climate Risk** | **Credit Risk** | **Market Risk** | **Treasury and Capital Risk** | **Operational Risk** | **Reputation Risk** |
| | Provide climate horizon scanning information and emerging trends to BRC and Principal Risk Leads | Monitor portfolio level exposure to the physical and transition risks of climate change | Identify and assess climate-related risk factors | Identify exposure to climate risk | Integrate climate change across different risk categories, e.g. Operational Recovery Planning and Premises | Outline minimum requirements and controls for Reputation Risk management relating to client relationships or transactions |
| | Recommend risk appetite statement, constraints and exclusions to BRC | Review individual obligors’ exposure to climate risk via the Climate Lens questionnaire | Apply stress scenarios, assess stress losses and set risk limits | Consider key risk indicators and limits to support risk management | Include climate change within risk assessment processes including Strategic Risk Assessment | Outline the expected business behaviours in relation to these issues |
| | Define areas of concern and recommend scenario analysis priorities | Assess climate risk within Sovereign Credit Risk reviews | Oversight by Market Risk Committee and Board Risk Committee | Include in ICAAP and ILAAP | | Outline the approach to enhanced due diligence. |
| | Lead the development of climate-specific risk methodologies | Include material exposures to climate risk within the Internal Capital Adequacy Assessment Process (ICAAP) | | Oversight by Treasury & Capital Risk Committee and Board Risk Committee | | |
| | Interpret stress test results for relevance as drivers of risk | Oversight by Legal Entity Climate Risk Forums and relevant Risk Management Committees as appropriate, including regular climate risk reporting up to Board Risk Committee level | | | | |
| | Review and challenge risk type approaches and support consistency across risk types | | | | | |
| **Ownership** | **Climate Risk Accountable Officer** | **Credit Risk Accountable Officer** | **Market Risk Accountable Officer** | **Treasury & Capital Risk Accountable Officer** | **Operational Risk Accountable Officer** | **Group Head of Sustainability** |

***

### Climate-related Risk Management Processes

| | Credit Risk | Market Risk | Treasury and Capital Risk | Operational Risk |
| --- | --- | --- | --- | --- |
| **Frequency of assessment** | Annually | Quarterly | Various (quarterly for pensions, IRRBB and liquidity risk; annually for capital risk) | Annually |
| **Risk identification** | Exposure in mortgage portfolio identified through a concentration risk framework. Exposure in Barclays Bank PLC Identified as part of sovereign, portfolio and obligor credit annual reviews. | Identified by assessing climate-related risk factors across asset classes, sectors and geographies, and aggregating market risk exposures from climate-related risks. | Identified through risk assessment activity across certain industries and asset classes to analyse and assess exposures which may be impacted by climate-related risks. | Confirmed operational risks associated with climate change are included in the Bank’s Operational Risk Taxonomy. Climate risks are included within the Strategic Risk Assessment process. |
| **Risk assessment** | Portfolios are monitored through regular reporting of climate metrics and are assessed against mandates and limits where appropriate. Clients in elevated risk sectors above a threshold exposure will have their credit risk exposure to Climate Risk qualitatively assessed through the Credit Climate Lens questionnaire. Future exposure to Climate Risk as a driver to Credit Risk is quantified through scenario analysis and stress testing exercises. In addition to the Credit Climate Lens questionnaire, Sovereign Credit Reviews are also carried out for Sovereigns above a threshold exposure to assess their susceptibility to Climate risks. | Measured by using adverse multi-asset stress scenarios applied to individual risk factors reflecting climate change risks across sectors, countries and regions. | Measured as part of stress testing and key risk indicator monitoring. | Established reporting on internal and external climate-related risk events to the Climate Risk Control Forum. Risk tolerances for premises and resilience risks are reviewed so these adequately capture climate-related risk drivers. |

***

### Credit risk management (audited)
The risk of loss to the Barclays Bank UK Group from the failure of clients, customers or counterparties, including sovereigns, to fully honour their obligations to the Barclays Bank UK Group including the whole and timely payment of principal, interest, collateral and other receivables.

#### Overview
The credit risk that the Barclays Bank UK Group faces arises from retail and wholesale loans and advances together with the counterparty credit risk arising from derivative contracts with market counterparties; trading activities, including: debt securities, settlement balances with market counterparties, Fair value through other comprehensive income (FVOCI) assets and reverse repurchase loans. Wholesale lending in the Barclays Bank UK Group includes Business Banking, Education, Social Housing and Local Authorities (ESHLA) and Wealth UK portfolios.

Credit risk management objectives are to:
*   maintain a framework of controls to oversee credit risk
*   identify, assess and measure credit risk clearly and accurately across the Barclays Bank UK Group and within each separate business, from the level of individual facilities up to the total portfolio
*   control and plan credit risk taking in line with external stakeholder expectations and avoiding undesirable concentrations
*   monitor credit risk and adherence to agreed controls.

#### Organisation, roles and responsibilities
The first line of defence has primary responsibility for managing credit risk within the risk appetite and limits set by the Risk function, supported by a defined set of policies, standards and controls. In the Barclays Bank UK Group, business risk committees (attended by the first line) monitor and review the credit risk profile of each business unit where the most material issues are escalated to the Retail Credit Risk Management Committee, Wholesale Credit Risk Management Committee and Barclays UK Risk Committee.

Wholesale and retail portfolios are managed separately to reflect the differing nature of the assets; wholesale balances tend to be larger and are managed on an individual basis, while retail balances are greater in number but lesser in value and are, therefore, managed in aggregated segments.

The responsibilities of the credit risk management teams in the businesses, the sanctioning team and other shared services include: sanctioning new credit agreements; setting strategies for approval of transactions (principally retail); setting risk appetite; monitoring risk against limits and other parameters; setting recession readiness frameworks to protect portfolios in the event of economic stress, maintaining robust processes, data gathering, quality, storage and reporting methods for effective credit risk management; performing effective turnaround and workout scenarios for wholesale portfolios via dedicated restructuring and recoveries teams and maintaining robust collections and recovery processes/units for retail portfolios. The credit risk management teams in the Barclays Bank UK Group are accountable to the Barclays Bank UK Group CRO who, in turn, reports to the Barclays Group CRO.

For wholesale portfolios, credit risk managers are organised in sanctioning teams by client portfolio. In the wholesale portfolios, credit risk approval is undertaken by experienced credit risk professionals operating within a clearly defined delegated authority framework, with only the most senior credit officers entrusted with the higher levels of delegated authority. The largest credit exposures require the support of the Barclays Bank UK PLC Senior Credit Officer. For exposures in excess of the Barclays Bank UK PLC Senior Credit Officer’s authority, approval by the Barclays Bank UK PLC CRO is also required. Where exposures are also of Barclays Group level significance, the Barclays Group Credit Risk Committee, attended by the Barclays Bank UK PLC Senior Credit Officer, provides a formal mechanism for the Barclays Group Senior Credit Officer to exercise the highest level of credit authority.

#### Credit risk mitigation
The Barclays Bank UK Group employs a range of techniques and strategies to actively mitigate credit risks. These can broadly be divided into three types:
*   netting and set-off
*   collateral
*   risk transfer

**Netting and set-off**
Credit risk exposures can be reduced by applying netting and set-off. For derivative transactions, the Barclays Bank UK Group’s normal practice is to enter into standard master agreements with counterparties (e.g. ISDAs). These master agreements typically allow for netting of credit risk exposure to a counterparty resulting from derivative transactions against the obligations to the counterparty in the event of default, and so produce a lower net credit exposure. These agreements may also reduce settlement exposure (e.g. for foreign exchange transactions) by allowing payments on the same day in the same currency to be set-off against one another.

**Collateral**
The Barclays Bank UK Group has the ability to call on collateral in the event of default of the counterparty, comprising:
*   home loans: a fixed charge over residential property in the form of houses, flats and other dwellings

***

*   wholesale lending: a fixed charge over commercial property and other physical assets, in various forms
*   other retail lending: includes second lien charges over residential property and finance lease receivables
*   derivatives: the Barclays Bank UK Group also often seeks to enter into a margin agreement (e.g. Credit Support Annex) with counterparties with which the Barclays Bank UK Group has master netting agreements in place. These annexes to master agreements provide a mechanism for further reducing credit risk, whereby collateral (margin) is posted on a regular basis (typically daily) to collateralise the mark to market exposure of a derivative portfolio measured on a net basis
*   reverse repurchase agreements: collateral typically comprises highly liquid securities which have been legally transferred to the Barclays Bank UK Group subject to an agreement to return them for a fixed price
*   financial guarantees and similar off-balance sheet commitments: cash collateral may be held against these arrangements

**Risk transfer**
A range of instruments including guarantees can be used to transfer credit risk from one counterparty to another. These mitigate credit risk in two main ways:
*   if the risk is transferred to a counterparty which is more creditworthy than the original counterparty, then overall credit risk is reduced
*   where recourse to the first counterparty remains, both counterparties must default before a loss materialises. This is less likely than the default of either counterparty individually so credit risk is reduced

#### Market risk management (audited)
The risk of loss arising from potential adverse changes in the value of the Barclays Bank UK Group’s assets and liabilities from fluctuation in market variables including, but not limited to, interest rates, foreign exchange, credit spreads, implied volatilities and asset correlations.

**Overview**
Market Risk within the Barclays Bank UK Group arises from the risk management of the assets held within the liquidity pool. As a result, the market risk in the Barclays Bank UK Group is minimal. Transactions carrying market risk are executed by the Barclays Bank UK Group Treasury function.

**Organisation, roles and responsibilities**
The objectives of market risk management are to:
*   understand and control market risk by robust measurement, limit setting, reporting and oversight
*   control market risk within the allocated risk appetite

To meet the above objectives, a governance structure is in place to manage these risks consistent with the ERMF.

The Barclays Bank UK PLC Board Risk Committee recommends market risk appetite to the Barclays Bank UK PLC Board for their approval, within the parameters set by the Barclays PLC Board. The Barclays Bank UK Group CRO confirms the Barclays Bank UK Group market risk appetite with the Barclays Group CRO. The Market Risk Committee (MRC) reviews and makes recommendations concerning the Barclays Group-wide market risk profile to the Barclays Group Risk Committee. This includes overseeing the operation of the Market Risk Framework and associated policies and standards, monitoring market and regulatory changes, and reviewing limit utilisation levels. The committee is chaired by the Market Risk Principal Risk Lead and attendees include the business heads of market risk and business aligned market risk managers.

The Barclays Bank UK Group Treasurer is accountable for all market risks associated with its activities, whilst the Barclays Bank UK Group CRO is the senior manager accountable for oversight of market risk, in line with the Barclays Group Framework.

#### Treasury and capital risk management
This comprises:

**Liquidity risk:** The risk that the Barclays Bank UK Group is unable to meet its contractual or contingent obligations or that it does not have the appropriate amount, tenor and composition of funding and liquidity to support its assets.

**Capital risk:** The risk that the Barclays Bank UK Group has an insufficient level or composition of capital to support its normal business activities and to meet its regulatory capital requirements under normal operating environments and stressed conditions (both actual and as defined for internal planning or regulatory testing purposes). This also includes the risk from the Barclays Bank UK Group’s pension plans.

**Interest rate risk in the banking book (IRRBB):** The risk that the Barclays Bank UK Group is exposed to capital or income volatility because of a mismatch between the interest rate exposures of its (non-traded) assets and liabilities.

Barclays Bank UK Group Treasury manages treasury and capital risk exposure on a day-to-day basis with the Barclays Bank UK PLC Asset and Liability Committee (ALCO) acting as the principal management body. The Treasury and Capital Risk function is responsible for oversight and provides insight into key capital, liquidity and interest rate risk in the banking book (IRRBB) activities.

***

#### Liquidity risk management (audited)

**Overview**
The efficient management of liquidity is essential to the Barclays Bank UK Group in order to retain the confidence of the financial markets and maintain the sustainability of the business. Treasury and Capital Risk have created a framework to manage all liquidity risk exposures under both normal and stressed conditions. The framework is designed to maintain liquidity resources that are sufficient in amount, quality and funding tenor profile to remain within the liquidity risk appetite as expressed by the Barclays Bank UK PLC Board. The liquidity risk appetite is monitored against both internal and regulatory liquidity metrics.

**Organisation, roles and responsibilities**
Treasury has the primary responsibility for managing liquidity risk within the set risk appetite. Both Risk and Treasury contribute to the production of the Internal Liquidity Adequacy Assessment Process (ILAAP). The Barclays Bank UK Treasury and Capital Risk function is responsible for the management and governance of the liquidity risk framework, consistently with Barclays PLC Group policies and framework and with Barclays Bank UK CRO mandates.

The framework established by Treasury and Capital Risk is designed to deliver the appropriate term and structure of funding, consistent with the liquidity risk appetite set by the Board.

The framework incorporates a range of ongoing business management tools to monitor, limit and stress test the Barclays Bank UK Group’s balance sheet and contingent liabilities. Limit setting and transfer pricing are tools designed to control the level of liquidity risk taken, and drive the appropriate mix of funds. In addition, Barclays Group maintains a recovery plan which includes application to the Barclays Bank UK Group. Adherence to limits reduces the likelihood that a liquidity stress event could lead to an inability to meet the Barclays Bank UK Group’s obligations as they fall due.

The Barclays Bank UK Board approves the Barclays Bank UK Group funding plan, internal stress tests, regulatory stress test results, and the Barclays Bank UK contribution to the Barclays Group recovery plan. The Barclays Bank UK PLC ALCO is responsible for monitoring and managing liquidity risk in line with the Barclays Bank UK Group’s funding management objectives, funding plan and risk framework. The Barclays UK Risk Committee monitors and reviews the liquidity risk profile and control environment, providing second line oversight of the management of liquidity risk. The Barclays Bank UK PLC Board Risk Committee reviews the risk profile, and reviews liquidity risk appetite at least annually and the impact of stress scenarios on the Barclays Bank UK Group funding plan/forecast in order to agree the Barclays Bank UK Group’s projected funding abilities.

#### Capital risk management (audited)

**Overview**
Capital risk is managed through ongoing monitoring and management of the capital position, regular stress testing and a robust capital governance framework. The objectives of the framework are to maintain adequate capital for the Barclays Bank UK Group to withstand the impact of the risks that may arise under normal and stressed conditions, and maintain adequate capital to cover current and forecast business needs and associated risks to provide a viable and sustainable business offering.

**Organisation, roles and responsibilities**
Treasury has the primary responsibility for managing and monitoring capital adequacy. The Barclays Bank UK Group Treasury and Capital Risk function provides oversight of capital risk. Production of the Barclays Bank UK PLC Internal Capital Adequacy Assessment Process is the responsibility of Barclays Bank UK Group Treasury.

Capital risk management is underpinned by a control framework and policies. Capital plans reflect the capital management strategy and are implemented to deliver on the Barclays Bank UK Group’s objectives, which are aligned to those of Barclays Group. The Barclays Bank UK Group-specific capital plans are developed in conformance with the Barclays Group control framework and policies for capital risk.

The Barclays Bank UK PLC Board approves the Barclays Bank UK Group capital plan, internal stress tests and results of regulatory stress tests. The Barclays Bank UK PLC Board also approves the recovery options documented in the Barclays Group recovery plan pertaining to the Barclays Bank UK Group. The Barclays Bank UK PLC ALCO is responsible for monitoring and managing capital risk in line with the Barclays Bank UK Group’s capital management objectives, capital plan and risk frameworks. The Barclays UK Risk Committee monitors and reviews the capital risk profile and control environment, providing second line oversight of the management of capital risk. The Barclays Bank UK PLC Board Risk Committee reviews the risk profile, and sets risk appetite at a minimum annually and the impact of stress scenarios on the Barclays Bank UK Group capital plan/forecast in order to agree Barclays Bank UK Group’s projected capital resources.

Management assures compliance with minimum regulatory capital requirements by reporting to the Barclays Bank UK PLC ALCO with oversight by the Barclays Group Treasury Committee, as required. In 2022, Barclays complied with all regulatory minimum capital requirements.

**Pension risk**
Barclays Bank UK PLC is a participating employer in the UK Retirement Fund (UKRF), whose assets and liabilities are currently held on the Barclays Bank PLC balance sheet. This participation is expected to cease in 2025. The nature of pension risk for Barclays Bank UK PLC is contingent, specifically on a Barclays Bank PLC default. Refer to note 28 Staff Costs for further detail.

***

#### Interest rate risk in the banking book management (IRRBB)

**Overview**
Interest rate risk in the banking book is driven by customer deposit taking and lending activities, investments in the liquid asset portfolio and funding activities. As per the Barclays Bank UK Group’s policy to remain within the defined risk appetite, hedging strategies are executed to mitigate the various IRRBB risks that result from these activities. However, the Barclays Bank UK Group remains susceptible to interest rate risk and other non-traded market risks from the following key sources:
*   **Interest rate and repricing risk:** the risk that net interest income could be adversely impacted by a change in interest rates, differences in the timing of interest rate changes between assets and liabilities, and other constraints on interest rate changes as per product terms and conditions.
*   **Customer behavioural risk:** the risk that net interest income could be adversely impacted by the discretion that customers and counterparties may have in respect of being able to vary from their contractual obligations with the Barclays Bank UK Group. This risk is often referred to by industry regulators as ‘embedded option risk’.
*   **Investment risks in the liquid asset portfolio:** the risk that the fair value of assets held in the liquid asset portfolio and associated risk management portfolios could be adversely impacted by market volatility, creating volatility in capital directly.

**Organisation, roles and responsibilities**
The Barclays Bank UK Group ALCO, together with the Barclays Group Treasury Committee, are responsible for monitoring and managing IRRBB risk in line with the Barclays Bank UK Group’s management objectives and risk frameworks. The Barclays UK Risk Committee and Treasury and Capital Risk Committee monitor and review the IRRBB risk profile and control environment, providing second line oversight of the management of IRRBB. The Barclays Bank UK Group BRC reviews the interest rate risk profile, including setting of risk appetite at a minimum annually and the impact of stress scenarios on the interest rate risk of the Barclays Bank UK Group’s banking books.

In addition, the Barclays Bank UK Group’s IRRBB policy sets out the processes and key controls required to identify all IRRBB risks arising from banking book operations, to monitor the risk exposures via a set of metrics with a frequency in line with the risk management horizon, and to manage these risks within agreed risk appetite and limits.

### Operational risk management
The risk of loss to the Barclays Bank UK Group from inadequate or failed processes or systems, human factors or due to external events (for example fraud) where the root cause is not due to credit or market risks.

**Overview**
The management of operational risk has three key objectives:
*   deliver an operational risk capability owned and used by business leaders to enable sound risk decisions over the long term
*   provide the frameworks, policies and standards to enable management to meet their risk management responsibilities while the second line of defence provides robust, independent, and effective oversight and challenge
*   deliver a consistent and aggregated measurement of operational risk that will provide clear and relevant insights, so that the right management actions can be taken to keep the operational risk profile consistent with the Barclays Bank UK Group’s strategy, the stated risk appetite and stakeholder needs.

The Barclays Bank UK Group operates within a system of internal controls that enables business to be transacted and risk taken without exposing Barclays Bank UK Group to unacceptable potential losses or reputational damages.

**Organisation, roles and responsibilities**
The prime responsibility for the management of operational risk and the compliance with control requirements rests with the business and functional units where the risk arises. The operational risk profile and control environment is reviewed by business management through business risk committees and control committees. Operational risk issues escalated from these meetings are considered through the second line of defence review meetings. Depending on their nature, the outputs of these meetings are presented to the Operational Risk Profile Forum, the Operational Risk Committee, the Barclays UK Operational Risk Committee, the Barclays UK Risk Committee, the Barclays Bank UK PLC Board Risk Committee or the Barclays Bank UK PLC Board Audit Committee. In addition, specific reports are prepared by Operational Risk on a regular basis for the GRC and the Barclays Bank UK PLC Board Risk Committee.

Businesses and functions are required to report their operational risks on both a regular and an event-driven basis. The reports include a profile of the material risks that may threaten the achievement of their objectives and the effectiveness of key controls, operational risk events and a review of scenarios. Specific reports are prepared by the business and Barclays Bank UK Group Operational Risk on a regular basis for the Barclays UK Operational Risk Committee, the Barclays UK Risk Committee, and the BRC.

The Barclays Group Head of Operational Risk is responsible for establishing, owning and maintaining an appropriate Barclays Group-wide Operational Risk Framework, meanwhile the Barclays Bank UK PLC Head of Operational Risk is responsible for overseeing the portfolio of operational risk across all Barclays Bank UK Group businesses.

The Operational Risk function acts in a second line of defence capacity, and is responsible for defining and overseeing the implementation of the framework and monitoring the Barclays Bank UK Group’s operational risk profile. The Operational Risk function alerts management when risk levels exceed acceptable tolerance in order to drive timely decision making and actions by the first line of defence.

***

**Operational risk categories**
Operational risks are grouped into risk categories to support effective risk management, measurement and reporting. These comprise: Data Management Risk; Financial Reporting Risk; Fraud Risk; Information Security Risk; Operational Recovery Planning Risk; Payments Process Risk; People Risk; Premises Risk; Physical Security Risk; Change Delivery Management Risk; Supplier Risk; Tax Risk; Technology Risk and Transaction Operations Risk.

In addition to the above, operational risk encompasses the risk associated with compliance with Group Resolution Planning Prudential regulatory requirements.

**Connected risks**
Barclays Bank UK Group also recognises that there are certain threats/risk drivers which are interconnected and have the potential to impact Barclays Bank UK Group’s strategic objectives. These are referred to as Connected Risks and require an overarching and integrated risk management and/or reporting approach. The Barclays Bank UK Group’s Connected Risks include Cyber, Data, Resilience and Third-Party Service Providers.

For definitions of the Barclays Bank UK Group’s Operational Risk Categories and Connected Risks, refer to pages 121 to 122 of the Barclays Bank UK PLC Pillar 3 Report 2022.

### Model risk management
The potential for adverse consequences from decisions based on incorrect or misused model outputs and reports.

**Overview**
The Barclays Bank UK Group uses models to support a broad range of activities, including informing business decisions and strategies, measuring and limiting risk, valuing exposures, conducting stress testing, assessing capital adequacy, managing client assets, and meeting reporting requirements.

**Organisation, roles and responsibilities**
The Barclays Group has a dedicated Model Risk Management (MRM) function that consists of five teams: (i) Independent Validation Unit (IVU), responsible for model validation and approval; (ii) Group Model Risk Governance, responsible for model risk governance, controls and reporting, as well as providing oversight for compliance of the Model Owner community with the Model Risk Framework; (iii) Framework team, responsible for the Model Risk Policy and associated standards; (iv) Strategy and Transformation, responsible for inventory, strategy, communications and business management and (v) Model Risk Measurement and Quantification (MRMQ), responsible for the design of the framework and methodology to measure and, where possible, quantify model risk. It is also responsible for the strategic Validation Centre of Excellence (VCoE), which is an independent quality assurance function within MRM with the mandate to review and challenge validation outcomes.

The Model Risk Framework consists of the Model Risk Policy and standards. The policy prescribes group-wide, end-to-end requirements for the identification, measurement and management of model risk, covering model documentation, development, monitoring, annual review, independent validation and approval, change and reporting processes. The policy is supported by global standards covering model inventory, documentation, validation, testing and monitoring, overlays, risk appetite, and stress testing challenger models.

The function reports to the Barclays Group CRO and operates a global framework. Implementation of best practice standards is a central objective of the Barclays Bank UK Group.

The key model risk management activities include:
*   Correctly identifying models across all relevant areas of the Barclays Bank UK Group, and recording models in the Barclays Bank UK Group Models Database (GMD), the Barclays Group-wide model inventory
*   Enforcing that every model has a model owner who is accountable for the model. The model owner must sign off models prior to submission to IVU for validation and maintain that the model presented to IVU is and remains fit for purpose
*   Overseeing that every model is subject to validation and approval by IVU, prior to being used and on a continual basis
*   Defining model risk appetite in terms of risk tolerance, and qualitative metrics which are used to track and report model risk

### Conduct risk management
The risk of poor outcomes for, or harm to, customers, clients and markets, arising from the delivery of the Barclays Bank UK Group’s products and services.

**Overview**
The Barclays Bank UK Group defines, manages and mitigates conduct risk with the objective of providing good customer and client outcomes and protecting market integrity.

***

Conduct risk incorporates market integrity, customer protection, financial crime and product design and review risks.

**Organisation, roles and responsibilities**
The Conduct Risk Management Framework (CRMF) outlines how the Barclays Bank UK Group manages and measures its Conduct Risk Profile. The Group Chief Compliance Officer is accountable for developing, maintaining and overseeing a group-wide CRMF. The Barclays Bank UK Group Chief Compliance Officer is responsible for providing effective oversight, management and escalation of conduct risk in line with the CRMF at the Entity and Subsidiary level. This includes overseeing the development and maintenance of the relevant conduct risk policies and standards including monitoring and reporting on the consistent application and effectiveness of the implementation of controls to manage conduct risk. It is the responsibility of the first line of defence to establish controls to manage its performance and assess conformance to these policies and controls.

Senior managers are accountable within their areas of responsibility for owning and managing conduct risk in accordance with the CRMF, as defined within their regulatory Statement of Responsibilities.

Compliance as an independent second line function oversees that conduct risks are effectively identified, managed, monitored and escalated, and has a key role in helping Barclays achieve the right conduct outcomes and evolve a conduct-focused culture.

The governance of conduct risk within the Barclays Bank UK Group is fulfilled through management committees and forums operated by the first and second lines of defence with clear escalation and reporting lines into Board level committees. The Barclays Bank UK Group Risk Committee is the primary second line governance committees for the oversight of the conduct risk profile. The Barclays Bank UK risk committee’s responsibilities include the identification and discussion of any emerging conduct risks exposures in the Barclays Bank UK Group.

### Reputation risk management
The risk that an action, transaction, investment, event, decision, or business relationship will reduce trust in the Barclays Bank UK Group’s integrity and/or competence.

**Overview**
A reduction of trust in the Barclays Bank UK Group’s integrity and competence may reduce the attractiveness of the Barclays Bank UK Group to stakeholders and could lead to negative publicity, loss of revenue, regulatory or legislative action, loss of existing and potential client business, reduced workforce morale and difficulties in recruiting talent. Ultimately it may destroy shareholder value.

**Organisation, roles and responsibilities**
The Barclays PLC Board is responsible for reviewing and monitoring the effectiveness of the Barclays Bank UK Group’s management of reputation risk.

The Barclays Bank UK Group Chief Compliance Officer is responsible for overseeing the management of Reputation Risk for Barclays Bank UK Group and the Head of Public Policy and Corporate Responsibility is responsible for developing a reputation risk policy and associated standards, including tolerances against which data is monitored, reported on and escalated, as required. The Reputation Risk Management Framework sets out what is required to manage reputation risk across the Barclays Bank UK Group.

The primary responsibility for identifying and managing reputation risk and adherence to the control requirements sits with the business and support functions where the risk arises.

The Barclays Bank UK Group is required to operate within established reputation risk appetite, and its component businesses prepare reports for its respective Risk and Board Risk Committees highlighting their most significant current and potential reputation risks and issues and how they are being managed. These reports are a key internal source of information for the quarterly reputation risk reports which are prepared for the Barclays UK Risk Committee and the Barclays Bank UK PLC Board.

***

### Legal risk management
The risk of loss or imposition of penalties, damages or fines from the failure of the Barclays Bank UK Group to meet its legal obligations, including regulatory or contractual requirements.

**Overview**
The Barclays Bank UK Group has no tolerance for wilful breaches of laws, regulations or other legal obligations. However, the multitude of laws and regulations that the Barclays Bank UK Group is subject to are highly dynamic and their application to particular circumstances is often unclear. This results in a high level of inherent legal risk which Barclays Bank UK Group seeks to mitigate through the operation of a Barclays Group-wide legal risk management framework, which requires identification of legal risks by legal professionals, engagement of legal professionals in situations that have the potential for legal risk, and escalation of legal risk as necessary. Notwithstanding these mitigating actions, Barclays Bank UK Group operates with a level of residual legal risk, for which the Barclays Bank UK Group has limited tolerance.

**Organisation, roles and responsibilities**
The Barclays Bank UK Group’s businesses and functions have responsibility for identifying and escalating to the Legal Function legal risk in their areas, as well as responsibility for adherence to control requirements.

The Legal function organisation and coverage model aligns legal expertise to businesses, functions, products, activities and geographic locations so that the Barclays Bank UK Group receives legal advice and support from appropriate legal professionals, working in partnership proactively to identify, manage and escalate legal risks as necessary.

The senior management of the Legal Function oversees, challenges and monitors the legal risk profile and effectiveness of the legal risk control environment across the Barclays Group. The Legal Function does not sit in any of the three lines of defence but supports them all. Except in relation to the legal advice it provides or procures, the Legal Function is subject to oversight from the second line of defence.

The Barclays Group General Counsel is responsible for developing and maintaining a Barclays Group-wide legal risk management framework. This includes defining the relevant legal risk policies, developing Barclays Group-wide risk appetite for legal risk, and oversight of the implementation of controls to manage and escalate legal risk.

The legal risk profile and control environment is reviewed by management through business risk committees and control committees. The Barclays Bank UK Group Risk Committee is the most senior executive body responsible for reviewing and monitoring the effectiveness of risk management across the Barclays Bank UK Group. Escalation paths from this committee exist to the Barclays Group Risk Committee and Barclays Bank UK PLC Board Risk Committee.

***

### Financial statements
#### Contents

| | Page | Note |
| --- | --- | --- |
| **Consolidated financial statements** | | |
| Independent Auditor’s report | 141 | n/a |
| Consolidated income statement | 151 | n/a |
| Consolidated statement of comprehensive income | 152 | n/a |
| Consolidated balance sheet | 153 | n/a |
| Consolidated statement of changes in equity | 154 | n/a |
| Consolidated cash flow statement | 155 | n/a |
| Parent company accounts | 156 | n/a |
| **Notes to the financial statements** | | |
| Significant accounting policies | 159 | 1 |
| Financial performance/return | | |
| Segmental reporting | 165 | 2 |
| Net interest income | 166 | 3 |
| Net fee and commission income | 166 | 4 |
| Net trading income | 168 | 5 |
| Net investment income | 168 | 6 |
| Operating expenses | 169 | 7 |
| Credit impairment charges | 170 | 8 |
| Tax | 175 | 9 |
| Dividends on ordinary shares | 177 | 10 |
| Assets and liabilities held at fair value | | |
| Trading portfolio | 178 | 11 |
| Financial assets at fair value through the income statement | 178 | 12 |
| Derivative financial instruments | 179 | 13 |
| Financial assets at fair value through other comprehensive income | 187 | 14 |
| Fair value of financial instruments | 187 | 15 |
| Offsetting financial assets and financial liabilities | 192 | 16 |
| Assets held at amortised cost and other investments | | |
| Loans and advances and deposits at amortised cost | 195 | 17 |
| Property, plant and equipment | 196 | 18 |
| Leases | 197 | 19 |
| Goodwill and intangible assets | 199 | 20 |
| Accruals, provisions, contingent liabilities and legal proceedings | | |
| Other liabilities | 203 | 21 |
| Provisions | 203 | 22 |
| Contingent liabilities and commitments | 205 | 23 |
| Legal, competition and regulatory matters | 205 | 24 |
| Capital instruments, equity and reserves | | |
| Subordinated liabilities | 207 | 25 |
| Ordinary shares, share premium and other equity | 208 | 26 |
| Reserves | 208 | 27 |
| Employee benefits | | |
| Staff costs | 210 | 28 |
| Share-based payments | 211 | 29 |
| Scope of consolidation | | |
| Structured entities | 213 | 30 |
| Securitisations | 214 | 31 |
| Assets pledged, collateral received and assets transferred | 216 | 32 |
| Other disclosure matters | | |
| Related party transactions and Directors’ remuneration | 217 | 33 |
| Auditor’s remuneration | 220 | 34 |
| Interest rate benchmark reform | 220 | 35 |
| Barclays Bank UK PLC (the parent company) | 222 | 36 |
| Related undertakings | 223 | 37 |

***

#### Independent Auditor’s report to the members of Barclays Bank UK PLC

**1 Our opinion is unmodified**
We have audited the financial statements of Barclays Bank UK PLC (“the Parent Company”) for the year ended 31 December 2022 which comprise the consolidated and Parent company balance sheets as at 31 December 2022, the consolidated income statement and statement of comprehensive income, the consolidated and Parent company statements of changes in equity and cash flow statements for the year then ended and the related notes, including the accounting policies in note 1.

In our opinion:
*   the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2022 and of the Group’s profit for the year then ended;
*   the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;
*   the Parent Company financial statements have been properly prepared in accordance with UK-adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and
*   the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

**Basis for opinion**
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the audit committee.

We were first appointed as auditor by the directors on 21 March 2018 for the audit of the financial year ended 31 December 2017. The period of total uninterrupted engagement is for the six financial years ended 31 December 2022. We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to public interest entities. No non-audit services prohibited by that standard were provided.

**2 Key audit matters: our assessment of risks of material misstatement**
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We summarise below the key audit matters (unchanged from 2021), in decreasing order of audit significance, in arriving at our audit opinion above, together with our key audit procedures to address those matters and, as required for public interest entities, our results from those procedures.

These matters were addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on these matters.