# Barclays PLC Annual Report 2000

Barclays PLC and Barclays Bank PLC Annual report on Form 20-F 2000

## Contents

Presentation of information 2
Financial data 3
Business description 6
Financial review 12
Analysis of results by business 15
Results by nature of income and expense 21
Yields, spreads and margins 22
Average balance sheet 28
Capital resources 32
Deposits 33
Short-term borrowings 34
Securities 35
Risk management – Overview 36
Credit Risk Management 38
Analysis of loans and advances 39
Provisions for bad and doubtful debts 44
Potential credit risk lendings 48
Cross border outstandings 50
Market Risk management 51
Derivatives 53
Treasury asset and liability management 54
Management of operational and other risks 57
Other information 58
Economic and monetary environment 58
Supervision and regulation 58
Risk factors 59
Directors and officers 60
Directors’ report 62
Corporate governance 65
Auditors’ reports 75

Consolidated accounts Barclays PLC 76
Accounting policies 76
Accounting presentation 79
Consolidated profit and loss account 80
Statement of total recognised gains and losses 81
Consolidated balance sheet 82
Consolidated statement of changes in reserves 84
Consolidated cash flow statement 85
Parent company accounts 86
Notes to the accounts 87

SEC Form 20-F cross reference and other information 153
Glossary 155
Barclays Bank PLC data 156
US GAAP financial data 167
Shareholder information 168
Dividends 168
Trading market for ordinary shares of Barclays PLC 169
Trading market for preference shares 170
Shareholdings at 31st December 2000 171
Memorandum and Articles of Association 172
Taxation 173
Exchange controls and other limitations affecting security holders 174
Group senior management and principal offices 176

Registered No. 48839

This document contains certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act 1995 with respect to certain of the Group’s plans and its current goals and expectations relating to its future financial condition and performance. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including UK domestic and global economic and business conditions, market related risks such as interest rate and exchange rate risks, the policies and actions of regulatory authorities and the impact of competition, a number of which are beyond the Group’s control. As a result, the Group’s actual future results may differ materially from the plans, goals and expectations set forth in the Group’s forward-looking statements. For a discussion of some of the factors that may cause actual future results and developments to differ materially from these forward-looking statements, see Risk factors on page 59.

Barclays PLC Annual Report 2000 1

---

# Presentation of information

This document comprises the 2000 Annual report of Barclays PLC and the 2000 Annual report on Form 20-F to the US Securities and Exchange Commission of Barclays PLC and Barclays Bank PLC. It contains the Directors’ report and accounts of Barclays PLC, together with the Auditors’ report thereon, as required by the UK Companies Act 1985. The Barclays PLC Annual Review and Summary Financial Statement 2000 is published as a separate document.

Barclays PLC is a public limited company registered in England and Wales under number 48839. The Company, originally named Barclay & Company Limited, was incorporated in England and Wales on 20th July 1896 under the Companies Acts 1862 to 1890 as a company limited by shares. The company name was changed to Barclays Bank Limited on 17th February 1917 and it was re-registered in 1982 as a public limited company under Companies Acts 1948 to 1980. On 1st January 1985, the company changed its name to Barclays PLC.

Barclays Bank PLC is a public limited company registered in England and Wales under number 1026167. The Bank was incorporated on 7th August 1925 under the Colonial Bank Act 1925 and on 4th October 1971 was registered as a company limited by shares under the Companies Acts 1948 to 1967. Pursuant to The Barclays Bank Act 1984, on 1st January 1985 the Bank was re-registered as a public limited company and its name was changed from Barclays Bank International Limited to Barclays Bank PLC.

All of the issued ordinary share capital of Barclays Bank PLC is owned by Barclays PLC. This report has therefore been prepared as a joint annual report on Form 20-F for Barclays PLC and Barclays Bank PLC and it also contains the consolidated accounts of and other information relating to Barclays Bank PLC. Except where otherwise indicated, the information given is identical with respect to both Barclays PLC and Barclays Bank PLC.

The accounts of Barclays Bank PLC included in this document do not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985. The statutory accounts of Barclays Bank PLC, which contain an unqualified audit report and do not contain any statement under Section 237(2) or (3) of that Act, will be delivered to the Registrar of Companies in accordance with Section 242 of that Act and are published as a separate document.

The consolidated accounts of Barclays PLC and its subsidiary undertakings are set out on pages 78 to 85 along with the accounts of Barclays PLC itself on page 86. The consolidated accounts of Barclays Bank PLC and its subsidiary undertakings are set out on pages 156 to 165. The accounting policies on pages 76 to 78 and the notes commencing on page 87 apply equally to both sets of accounts unless otherwise stated. The financial statements contained in this document, which include the results of Woolwich plc from acquisition on 25th October 2000, also reflect changes in the Group’s management structure which took place in 2000, as explained on page 11. The comparative data has been restated, where appropriate.

The term ‘Barclays PLC Group’ means Barclays PLC together with its subsidiary undertakings and the term ‘Barclays Bank PLC Group’ means Barclays Bank PLC together with its subsidiary undertakings. ‘Barclays’ and ‘Group’ are terms which are used to refer to either of the preceding groups when the subject matter is identical. The term ‘Company’ refers to Barclays PLC and the term ‘Bank’ refers to Barclays Bank PLC. The term ‘The Woolwich’ means Woolwich plc and its subsidiary undertakings.

In this report, the abbreviations ‘£m’ and ‘£bn’ represent millions and thousands of millions of pounds sterling respectively; the abbreviations ‘$m’ and ‘$bn’ represent millions and thousands of millions of US dollars respectively and €m and €bn represent millions and thousands of millions of euros respectively.

References to operating results ‘before the impact of the Finance Act’ exclude the impact of taxation changes arising from the Finance (No. 2) Act 1997 and the Finance Act 1998.

2 Barclays PLC Annual Report 2000

---

# Financial data

## Consolidated profit and loss account summary$^{(a)}$

| | 2000 £m | 1999 £m | 1998 £m | 1997 £m | 1996 £m |
| --- | --- | --- | --- | --- | --- |
| Interest receivable | 11,788 | 9,320 | 9,952 | 9,204 | 8,730 |
| Interest payable | 6,635 | 4,696 | 5,604 | 5,095 | 4,825 |
| Write-down of leases (c) | – | – | (40) | (77) | – |
| Profit on redemption/repurchase of loan capital | 2 | 3 | 3 | 2 | 32 |
| Net interest income | 5,155 | 4,627 | 4,311 | 4,034 | 3,937 |
| Fees and commissions receivable | 3,689 | 3,207 | 3,008 | 3,197 | 3,168 |
| Less: fees and commissions payable | (320) | (275) | (229) | (218) | (223) |
| Dealing profits | 677 | 556 | (42) | 361 | 382 |
| Other operating income | 397 | 258 | 298 | 203 | 199 |
| Life-fund charge (c) | – | – | – | (28) | – |
| Operating income | 9,598 | 8,373 | 7,346 | 7,549 | 7,463 |
| Administration expenses – staff costs | 3,219 | 3,057 | 2,811 | 3,035 | 2,980 |
| Administration expenses – other | 1,967 | 1,807 | 1,829 | 1,889 | 1,816 |
| Depreciation and amortisation | 306 | 280 | 275 | 269 | 301 |
| Operating expenses | 5,492 | 5,144 | 4,915 | 5,193 | 5,097 |
| Operating profit before provisions | 4,106 | 3,229 | 2,431 | 2,356 | 2,366 |
| Provisions for bad and doubtful debts | 817 | 621 | 492 | 227 | 215 |
| Provisions for contingent liabilities and commitments | (1) | 1 | 76 | 4 | 9 |
| Provisions | 816 | 622 | 568 | 231 | 224 |
| Operating profit | 3,290 | 2,607 | 1,863 | 2,125 | 2,142 |
| Loss from joint ventures | (1) | (1) | – | – | – |
| (Loss)/income from associated undertakings | (7) | (13) | 22 | 16 | 23 |
| Loss on sale or restructuring of BZW | – | (30) | (3) | (469) | – |
| Profit/(loss) on disposal of other Group undertakings | 214 | (108) | 4 | 44 | 70 |
| Write-down of fixed asset investments | – | – | (4) | (19) | – |
| Profit on ordinary activities before tax | 3,496 | 2,455 | 1,882 | 1,697 | 2,235 |
| Tax on profit on ordinary activities | 944 | 644 | 520 | 520 | 558 |
| Profit on ordinary activities after tax | 2,552 | 1,811 | 1,362 | 1,177 | 1,677 |
| Profit attributable to minority interests | (79) | (52) | (45) | (44) | (47) |
| Profit for the financial year attributable to the members of Barclays PLC | 2,473 | 1,759 | 1,317 | 1,133 | 1,630 |
| Dividends | (927) | (746) | (646) | (563) | (479) |
| Profit retained for the financial year | 1,546 | 1,013 | 671 | 570 | 1,151 |

## Selected financial statistics

| | 2000 | 1999 | 1998 | 1997 | 1996 |
| --- | --- | --- | --- | --- | --- |
| Earnings per ordinary share | 163.3p | 117.5p | 87.2p | 74.6p | 103.6p |
| Dividends per ordinary share | 58.0p | 50.0p | 43.0p | 37.0p | 31.5p |
| Dividend cover (times) | 2.7 | 2.4 | 2.0 | 2.0 | 3.4 |
| Attributable profit before tax as a percentage of average shareholders’ funds | 34.4% | 28.9% | 23.5% | 22.0% | 30.5% |
| Attributable profit after tax as a percentage of average shareholders’ funds | 25.1% | 21.2% | 16.9% | 15.2% | 22.9% |
| average total assets (note (b)) | 0.8% | 0.7% | 0.5% | 0.5% | 0.9% |
| Average US dollar exchange rate used in preparing the accounts | 1.52 | 1.62 | 1.66 | 1.64 | 1.56 |
| Average euro exchange rate used in preparing the accounts | 1.64 | 1.52 | – | – | – |

4 Barclays PLC Annual Report 2000

---

# Financial data (continued)

## Consolidated balance sheet summary$^{(a)}$

| Assets | 2000 £m | 1999 £m | 1998 £m | 1997 £m | 1996 £m |
| --- | --- | --- | --- | --- | --- |
| Loans and advances to banks and customers | 198,536 | 156,194 | 132,722 | 136,707 | 118,441 |
| Other assets | 102,493 | 88,470 | 77,402 | 87,499 | 59,480 |
| | 301,029 | 244,664 | 210,124 | 224,206 | 177,921 |
| Infrastructure | 6,450 | 2,089 | 2,285 | 2,264 | 2,400 |
| | 307,479 | 246,753 | 212,409 | 226,470 | 180,321 |
| Retail life-fund assets attributable to policyholders | 8,711 | 8,040 | 7,085 | 5,959 | 4,840 |
| Total assets | 316,190 | 254,793 | 219,494 | 232,429 | 185,161 |
| **Liabilities** | | | | | |
| Deposits by banks, customer accounts and debt securities in issue | 240,607 | 191,781 | 161,049 | 173,283 | 142,554 |
| Other liabilities | 45,715 | 41,540 | 39,470 | 42,377 | 27,159 |
| | 286,322 | 233,321 | 200,519 | 215,660 | 169,713 |
| **Capital resources** | | | | | |
| Undated loan capital | 2,672 | 1,749 | 1,742 | 1,657 | 1,635 |
| Dated loan capital | 3,698 | 2,848 | 1,992 | 1,211 | 1,396 |
| Other subordinated liabilities | – | – | – | 59 | 56 |
| Minority and other interests | 1,600 | 352 | 314 | 326 | 320 |
| Shareholders’ funds | 13,187 | 8,483 | 7,842 | 7,557 | 7,201 |
| | 21,157 | 13,432 | 11,890 | 10,810 | 10,608 |
| | 307,479 | 246,753 | 212,409 | 226,470 | 180,321 |
| Retail life-fund liabilities attributable to policyholders | 8,711 | 8,040 | 7,085 | 5,959 | 4,840 |
| Total liabilities and shareholders’ funds | 316,190 | 254,793 | 219,494 | 232,429 | 185,161 |

## Weighted risk assets and capital ratios

| | 2000 | 1999 | 1998 | 1997 | 1996 |
| --- | --- | --- | --- | --- | --- |
| Weighted risk assets | 147,040 | 115,878 | 109,800 | 108,341 | 98,405 |
| Tier 1 ratio | 7.2% | 7.5% | 7.3% | 7.2% | 7.5% |
| Risk asset ratio | 11.0% | 11.3% | 10.6% | 9.9% | 10.3% |

## Selected financial statistics

| | 2000 | 1999 | 1998 | 1997 | 1996 |
| --- | --- | --- | --- | --- | --- |
| Average shareholders’ funds as a percentage of average total assets (note (b)) | 3.2% | 3.4% | 3.2% | 3.5% | 3.9% |
| Net asset value per ordinary share | 794p | 568p | 519p | 494p | 467p |
| Year-end US dollar exchange rates used in preparing the accounts | 1.49 | 1.62 | 1.66 | 1.65 | 1.71 |
| Year-end euro exchange rate used in preparing the accounts | 1.60 | 1.61 | – | – | – |

## Notes

(a) The financial information on pages 4 and 5 is extracted from the published accounts for the last five years, restated where appropriate to accord with the current accounting policies of the Group (see page 78). This information should be read together with, and is qualified by reference to, the accounts and notes included in this report.

(b) For the purposes of this summary, the retail life-fund assets attributable to policyholders have been excluded from average total assets.

(c) The write-down of leases in 1998 and 1997 and the life-fund charge in 1997 reflect the impact of the Finance Acts in those years.

(d) Note 61 to the accounts provides a reconciliation of net profit and shareholders’ funds between the amounts calculated under UK GAAP and US GAAP.

Barclays PLC Annual Report 2000 5

---

# Business description

## Introduction

Barclays is a UK-based financial services group engaged primarily in banking, investment banking and asset management. In terms of assets employed, Barclays is one of the largest financial services groups in the UK. The Group also operates in many other countries around the world and is a leading provider of co-ordinated global services to multinational corporations and financial institutions in the world’s main financial centres.

The results for Barclays for 2000 are reported separately for the following activities: Retail Financial Services, Barclaycard, Corporate Banking, Barclays Capital, Barclays Global Investors, Other operations and Head office functions. The results for Retail Financial Services and Corporate Banking are reported after allocating the costs of shared support functions, the UK branch network and other common infrastructure. The results for Retail Financial Services include those of The Woolwich following its acquisition on 25th October 2000 and excludes Barclaycard which is now presented separately.

## Retail Financial Services

Retail Financial Services (RFS) brings together the Group’s retail interests around the world.

The business has three principal strategic aims:

- To become the customers’ first choice as the provider of innovative and dependable financial solutions.
- To become a market leader for affluent and wealthy customers in the UK and continental Europe by building on the Group’s strong customer base.
- To use The Woolwich’s proven capabilities in the mortgage and savings markets in order to boost the Group’s competitive position.

The position of RFS has been greatly strengthened by the acquisition of The Woolwich. In addition, the recently announced strategic alliance with Legal & General will enable RFS to provide one stop provision of ‘best of breed’ products across the full range of distribution channels for the benefit of customers.

RFS is organised into three major business groupings, Retail Customers, The Woolwich and Wealth Management.

## Retail Customers

Retail customers provides a wide range of services and products to personal and small business customers throughout the UK and to personal and corporate customers in parts of Africa. These services are provided through a network of branches and ATMs and through direct channels such as the telephone and the internet.

At the heart of Retail Customers are the core relationship banking products of current accounts and money transmission, savings and loans. These provide customers with the ability to manage their financial affairs on a day to day basis. Longer term and more complex needs are met from a full range of long term lending and investment products.

The business aim is to be the customers’ first choice for dependable financial solutions in an environment of rapidly changing customer attitudes, demands and buying behaviours by:

- Increasing convenience and access to products and services.
- Ensuring the Bank’s products and services are appropriate and relevant to customers’ needs.

Key to this success is the ongoing development and enhancement of new delivery channels, while continuing to invest significantly in the branch network. The result is the creation of a true multi-channel bank in the UK with more than 500,000 Open plan customers and almost 1.7m customers banking on-line with Barclays at the end of 2000. Barclays was the first UK bank to launch a free internet service. Barclaycall and Businesscall continue to provide 24-hour telephone access for 1.2m personal and small business customers. In UK Small Business, the launch of the joint venture with Freeserve (Clearlybusiness.com) to provide a small business portal in the UK for services, information and advice needed to start and run a successful small business, further strengthened Barclays position as the UK’s leading on-line bank by number of customers.

It is through continued investment in customer information systems, and the wealth of customer data that these provide, that the creation and development of the right products and services are achieved.

6 Barclays PLC Annual Report 2000

---

# Business description (continued)

## The Woolwich

The Woolwich provides a wide range of personal financial services, primarily to individuals in the UK, combined with the provision of financial advice through one of the largest independent advisory companies in the country. The Woolwich’s emphasis has been on innovation and the application of technology to deliver customised solutions through its Open Plan proposition. Since its acquisition by Barclays, The Woolwich is the mortgage specialist within the Barclays Group.

The Woolwich’s strategy has been to integrate the emerging distribution channels into its core business and to develop multi-product offerings. This has enhanced The Woolwich’s brand by delivering tangible benefits to customers and increasing the depth of their relationships with The Woolwich. Open Plan customers can view all their Woolwich relationships including mortgage, savings, investment and insurance on one statement and can deal with all the various products through any available channel.

Key elements of The Woolwich strategy are:

- Expansion of the Open Plan customer base while maintaining multi-product holdings of at least 3 products per customer.
- Developing the mortgage franchise of the Barclays Group and expanding the UK market share of mortgage lending.
- Expansion of the Group’s Independent Financial Advice operation.
- Developing distribution capabilities and access to customers through strategic partnerships with like-minded organisations.

The target of 500,000 customers for Open Plan by the end of 2000 was exceeded and the penetration rate of products per customer is significantly above the rest of The Woolwich and market average at three products per customer. An outright purchase of the Sedgwick Independent Financial Advisory business has considerably strengthened the Group’s overall IFA position.

During the year The Woolwich further developed its service to customers. The first UK mobile banking service was launched to customers in April and this was further enhanced by the launch of digital television access in September. The Woolwich is still the only UK retail bank to enable customers to see balances, pay bills and transfer money between accounts at branches, via the telephone, via the internet, via WAP mobile phone and via digital television.

As part of the enlarged Barclays Group, The Woolwich aims to extend its Open Plan offering to a wider customer base to the benefit of both customers and shareholders.

## Wealth Management

Wealth Management serves affluent and high net worth clients globally with bespoke, relationship-based services in the areas of banking, asset management, broking and long-term financial planning. Wealth Management serves over 1 million clients across 34 countries worldwide and manages £74bn in client funds. The business has extensive geographical diversity with over a third of clients based outside the UK, mainly in France, Iberia and the Caribbean.

Wealth Management aims to be recognised as the pre-eminent European Wealth player. This will be achieved by doing more business with its customers and growing assets under management. Clients will be offered a distinctive proposition with five main features:

- Single relationship across banking and investment.
- Professional and proactive financial planning advice.
- World class investment products at great value.
- A single picture of a client’s financial affairs.
- Seamless, multi-channel service.

Last year saw the launch of a major transformation programme. Investment grew to £33m as this programme began to strengthen the customer propositions, including:

- The launch of a new programme to enable UK launch Premier relationship managers to offer “one stop” advice across banking and investment. By the year end, 70 managers were trained and successfully selling investment products.
- The commitment of a major investment to build a leading edge multi-channel distribution platform, which will offer clients seamless service across electronic and physical channels with real-time information update.
- The launch of innovative “direct” channel propositions which substantially increased internet usage. The number of registered internet users grew from 73,000 to 225,000 and the proportion of total stockbroking retail deals executed across the internet rose to 34% over the year. During the year a multi-currency internet service for offshore clients, an on-line portfolio nominee offering and a WAP broking service in the UK were launched.

Barclays PLC Annual Report 2000 7

---

# Business description (continued)

In 2001, the business transformation programme will continue and accelerate:

- 350 UK Premier relationship managers will be qualified and supported by a leading edge financial planning tool.
- The multi-channel platform will be implemented across the UK and offshore markets.
- Internet users are targeted to grow to 400,000, a 78% increase, as functionality is substantially upgraded.
- The funds supermarket, which was launched as a telephone based service in 1998, will be rolled out on-line.

Two further initiatives are to be put in place to deliver the target customer proposition:

- World class investment products are to be launched with “best of breed” multi-funds from Legal & General and a move to independent advice in the UK.
- A single picture of a client’s financial affairs will be offered by leveraging our leading Stockbrokers nominee service and using new aggregation technologies.

## Barclaycard

Barclaycard is the leading credit card business in Europe* and it offers a full range of credit card services to individual customers, together with card payment facilities to retailers and other businesses.

Barclaycard is building on its position as the leading European consumer credit and payment business by continuing to expand in the UK, Germany, France, Spain and Greece, and delivering business opportunities in the internet arena.

Continued strategic investment to enhance customer data management techniques has helped develop and tailor more sophisticated customer products and services. This has assisted the delivery of high levels of recruitment and increased lending growth. New initiatives included the balance consolidation offer with no fixed expiry, which was a first in the UK market.

Barclaycard was the first UK credit card on the internet and offers a range of internet services including bill payment and on-line statement and transaction information. The number of registered users for this service has risen to 390,000. IndigoSquare, Barclaycard’s internet-based shopping portal joint venture, was launched in October and provides an easy to use on-line retail shopping facility. With the potential to become an important non-traditional revenue stream, IndigoSquare is targeted to have 500,000 users by the end of 2001.

Barclaycard’s European operation continues to grow with increases in revenues, extended credit balances and cards issued. The international business is now web-enabled, providing a springboard for development and expansion in 2001.

During 2001 Barclaycard expects to:

- Further develop the use of information management techniques to increase cross sales income in its core UK business.
- Leverage its status in continental Europe as a well recognised brand to enter attractive and emerging new markets.
- Seize the opportunities in e-commerce of internet card penetration, the preferred payment method on the web, by offering e-commerce solutions to business retailers and by leveraging the Barclaycard brand to enhance consumer confidence and increase card spend.

* Based on value of transactions and number of cards in issue.

8 Barclays PLC Annual Report 2000

# Business description

## Corporate Banking

Corporate Banking provides relationship banking to the Group’s corporate customers.

UK customers are served by a network of 1,200 relationship managers who provide access to an extensive range of products and services. Customers are also offered access to business centres in the rest of Europe, the United States and the Middle East. In addition an office in Miami provides finance and correspondent banking services to the Group’s customers in Latin America. Barclays Capital’s strong position in the wholesale market ensures that larger corporate customers have access to the capital markets and to specialist investment banking products which complement Corporate Banking’s product and service range.

Corporate Banking has a strong competitive position in the UK, where almost a quarter of middle market companies bank with Barclays. Opportunities for growth exist within the UK, through customer acquisition and increased product penetration, and in the rest of Europe, where Corporate Banking’s presence exceeds that of its UK and many of its European competitors.

In 2000, Corporate Banking completed the implementation of mobile working for its 1,200 corporate relationship managers in the UK. ‘Barclays in a briefcase’ provides managers with laptop computers enabling access to relevant customer data, communication facilities and credit assessment software. This means relationship managers can spend more time working with their customers, understanding their businesses and establishing a strong foundation for a long-term relationship.

More than 40,000 customers are registered to use electronic banking, up 45% in 12 months, enabling customers to access their account information and make transactions electronically.

Barclays B2B.com, the Barclays business-to-business electronic services portal was unveiled in April 2000. Customer recruitment commenced in October and by the year end, more than 2,000 businesses had registered to trade on-line. The portal aims to provide a range of internet-based business services designed to change the way UK businesses trade with one another and will over time provide a direct channel for the sale and delivery of a number of business services.

In collaboration with Accenture and Oracle, Barclays B2B.com was created to enable the delivery of business services to companies primarily with a turnover of between £5m and £250m. Its initial offering, the Barclays B2B Exchange, enables buyers to benefit from lower processing costs and increased management information.

The Business Banking strategic business unit was created in the second half of the year, bringing together the Bank’s small business and middle market banking businesses, making Barclays the only UK bank with a single division providing seamless banking support to companies from start-up to flotation; and delivering to businesses the full range of products and services which they require to grow and thrive.

Serving the whole small and medium sized enterprise market from one division will allow all customers to benefit from the Bank’s relationship approach and technological investment providing a uniform “feel” across Business Banking. Product and service developments will provide customers with greater flexibility and convenience in their dealings with the Bank while maximising the value derived from customer relationships.

During 2001 Corporate Banking intends to:

- Introduce a range of distinctive new value propositions that will provide better customer choice and strengthen relationships.
- Provide a comprehensive, integrated set of services to enable a company to undertake its day to day activities more efficiently and effectively.

## Barclays Capital

Barclays Capital conducts the Group’s investment banking business.

Barclays Capital operates in the wholesale markets to provide corporate, institutional and government clients with solutions to their financing and risk management needs. Barclays Capital is the Group’s principal point of access to the wholesale markets and provides financing and risk management products to the Group’s other businesses.

Barclays Capital’s business model focuses on two broad areas of activity where the Group has a strong and growing competitive presence: Rates which includes sales, trading and research relating to government bonds, money markets, foreign exchange, commodities and their related derivative instruments; and Credit, which includes origination, sales, trading and research relating to loans, securitised assets, corporate bonds and their related derivative instruments, equity derivatives and private equity investment.

During 2000 Barclays Capital continued to capture profitable growth opportunities, especially in continental Europe, where the capital markets are developing rapidly following the introduction of the euro.

Significant progress was made in all of Barclays Capital’s core businesses during the year.

- It lead managed 225 bond issues (1999 156), with a total value of US$48bn (1999 US$36bn). This included transactions for a wide range of European, US and Asian issuers in all major issuing currencies.
- In the sterling bond market, Barclays Capital led a higher volume and a greater number of new issues than any other institution. Barclays Capital maintained its position as one of the leading UK government bond and sterling derivatives dealers.
- In the syndicated loans market, Barclays Capital arranged financings in excess of US$115bn (1999 US$59bn). It held its position as the top arranger of syndicated credits in Europe, Middle East and Africa and ended the year No.4 worldwide (1999 – No.6).
- International Financing Review (IFR) named Barclays Capital “European Loan Trading House of the Year” for the second year running.

Barclays Capital is well positioned for rapid organic growth, as a result of its tailored investment programme in both technology and intellectual property, combined with the growing appetite for credit products amongst European investors and the increasing recognition of Europe amongst global borrowers as a deep and liquid international capital market. Barclays Capital will continue to implement its existing growth strategy based on a distinctive business model, offering a broad span of debt-focused financing and risk management services, combined with specialist niches in commodities and equities.

During 2001 it will seek to:

- Build on its investment in technology and intellectual capital to further develop distribution capability and client penetration in Europe and worldwide.
- Leverage Group relationships with large corporate borrowers to bring a greater number of issuers to the international bond markets.
- Leverage institutional relationships through the delivery of a wider product range, including derivative products across all asset classes.
- Broaden the product offering in respect of advisory services linked to financing and risk management.
- Continue to improve capital efficiency and internal controls.
- Exploit cost-efficient technological opportunities through electronic delivery of integrated research and execution services to clients.

## Barclays Global Investors

Barclays Global Investors (BGI) is the world’s largest institutional asset manager and has some of the most sophisticated investing institutions amongst its 1,800 clients.

BGI offers advanced active and indexed asset management services for institutional clients. The objective of advanced active management is to outperform market benchmarks by the application of disciplined investment processes. The objective of indexed management is to replicate the performance of market benchmarks. In addition to these activities, BGI is a major lender of securities. BGI’s activities are carried out from eleven locations in eight countries. BGI continually invests in its business to ensure it maintains its strong competitive position in this market.

Over twenty-five years ago BGI introduced the world’s first index fund. Today it manages funds on behalf of 1800 clients in over 36 countries and has £435bn of assets under management in index funds. BGI continues to build on its expertise as the world’s largest index fund manager to develop advanced active strategies, which use quantitative methods to outperform an index. Advanced active funds now account for approximately 21%, or £115bn, of assets under management, making BGI the largest quantitative active manager in the world. Almost 50% of BGI revenues now come from these value-added products.

Exchange traded funds (ETFs) are index funds that are bought and sold like shares on a national exchange. In 2000 BGI introduced an ETF to the London market.

In 2001 BGI expects to strengthen its leading position in one of the fastest growing sectors of the financial services industry. In order to do this it intends to:

- Develop new products with the intention of improving the performance of its existing active products and broadening its reach into market segments beyond that of the defined benefit market.
- Increase the profitability of index products by extending the range of its value chain. This will include expanded security lending activities, an improved cash management product set and improved cross selling to index clients.
- Develop products to meet the growing demand by individual investors for institutional quality products. This will also involve entering the individual investor channel through Exchange Traded Funds and Defined Contribution plan.
- Develop an increasing market share through investment in high growth areas such as Europe through leveraging the existing Barclays distribution network and third party partnerships.

## Other operations

Property management includes Barclays Group Property Services which is responsible for the management of the Group’s operational premises and property related services. Property costs also include the central administration of certain operational property costs.

Central services includes a variety of activities which support the operating businesses, and Service Provision which provides central information technology services.

Management of Group capital is the earnings on that part of the Group’s capital which is not allocated to business groups. Allocations to business groups are based generally on weighted risk assets. Management of Group capital also includes residual balances arising from centrally managed transition activities.

## Head office functions

Head office functions comprise the Group’s central executive, Group finance, corporate communications, human resources and Group risk.

## Competition

The financial services environment remains competitive and the industry is experiencing structural change driven by technological change, development of new distribution channels and increasing customer sophistication as well as an increasing tendency to globalisation in some markets. New entrants to the market continue to appear confirming the competitive environment and low barriers to entry in the sector.

The Group believes it is well positioned to respond to these developments and continues to develop its strategy to enable it to meet competitive challenges.

## Changes in reporting of Group structure in 2000

From 1st January 2000, Barclaycard became a separate business unit. Retail Financial Services now comprises Retail Customers, Wealth Management, and, from 25th October 2000, The Woolwich.

Within Other operations, costs relating to the central administration of certain operational property costs have been combined with Barclays Group Property Services under the heading Property management.

Comparative figures have been restated for the above changes, where appropriate.

## Changes in accounting presentation

The Group’s share of the results of joint ventures and associated undertakings are shown separately below operating profit having previously been included in Other operating income. For the purposes of business group analysis the share of the results is still included in Operating profit.

There have been no other changes in accounting presentation from that reflected in the 1999 Annual report.

## Recent developments

On 16th January, 2001 Barclays PLC and Legal & General Group Plc (Legal & General) announced their intention to form a strategic alliance under which Barclays Bank PLC would, subject to regulatory approval, sell Legal & General branded life, pension (including stakeholder pension) and investment products through its UK distribution network.

## Group structure

During 2000, significant changes were announced to the Group’s organisational structure, moving from five major business groups to an organisation based on a larger number of smaller strategic business units, or SBUs, which are supported by shared services. Each SBU is tasked with identifying and implementing value-maximising strategies, and achieving these by creating advantage for customers, through superior products and services. The Group’s reporting in 2001 will reflect this new structure.

---

# Financial review

Profit/(loss) before tax and total assets and weighted risk assets

## Profit/(loss) before tax

| | 2000 £m | 1999 £m | 1998 £m |
| :--- | ---: | ---: | ---: |
| Retail Financial Services | 1,710 | 1,312 | 1,142 |
| Barclaycard | 418 | 401 | 334 |
| Corporate Banking | | | |
| – before impact of Finance Act | 1,070 | 947 | 991 |
| – write-down of leases | – | – | (40) |
| | 1,070 | 947 | 951 |
| Barclays Capital | 403 | 311 | (281) |
| Barclays Global Investors | 65 | 43 | 51 |
| Businesses in Transition | | | |
| – former BZW businesses | – | – | (33) |
| – other | – | – | 48 |
| Other operations | (1) | 13 | (167) |
| Head office functions | (93) | (77) | (72) |
| Restructuring charge | (232) | (344) | – |
| Integration costs | (7) | – | – |
| Goodwill amortisation | (51) | (13) | (12) |
| Provision for litigation settlement | – | – | (76) |
| Operating profit* | 3,282 | 2,593 | 1,885 |
| Loss on sale or restructuring of BZW | – | (30) | (3) |
| Profit/(loss) on disposal of other Group undertakings | 214 | (108) | 4 |
| Write-down of fixed asset investments | – | – | (4) |
| | 3,496 | 2,455 | 1,882 |

\* including (loss)/income from joint ventures and associated undertakings (2000 (£8m), 1999 (£14m), 1998 £22m).

## Total assets and weighted risk assets

| | Total assets | | | Weighted risk assets | | |
| :--- | ---: | ---: | ---: | ---: | ---: | ---: |
| | 2000 £m | 1999 £m | 1998 £m | 2000 £m | 1999 £m | 1998 £m |
| Retail Financial Services | 80,128 | 41,383 | 39,955 | 47,246 | 26,152 | 25,386 |
| Barclaycard | 8,705 | 7,343 | 6,195 | 8,523 | 7,210 | 6,113 |
| Corporate Banking | 52,869 | 47,422 | 45,341 | 54,651 | 48,218 | 45,869 |
| Barclays Capital | 156,869 | 144,807 | 114,706 | 34,431 | 32,032 | 29,344 |
| Barclays Global Investors | 259 | 232 | 183 | 653 | 456 | 207 |
| Businesses in Transition | – | – | 554 | – | – | 594 |
| Other operations and head office functions | 4,380 | 5,383 | 5,279 | 1,536 | 1,810 | 2,287 |
| Goodwill | 4,269 | 183 | 196 | – | – | – |
| Retail life-fund assets attributable to policyholders | 8,711 | 8,040 | 7,085 | – | – | – |
| | 316,190 | 254,793 | 219,494 | 147,040 | 115,878 | 109,800 |

## Summary profit and loss account

| | 2000 £m | 1999 £m | 1998 £m |
| :--- | ---: | ---: | ---: |
| Operating income* | 9,598 | 8,373 | 7,386 |
| Impact of Finance Act | – | – | (40) |
| Operating income | 9,598 | 8,373 | 7,346 |
| Operating expenses | (5,492) | (5,144) | (4,915) |
| Operating profit before provisions | 4,106 | 3,229 | 2,431 |
| Provisions for bad and doubtful debts | (817) | (621) | (492) |
| Provisions for contingent liabilities and commitments | 1 | (1) | (76) |
| Operating profit | 3,290 | 2,607 | 1,863 |
| Loss from joint ventures | (1) | (1) | – |
| (Loss)/income from associated undertakings | (7) | (13) | 22 |
| Loss on sale or restructuring of BZW | – | (30) | (3) |
| Profit/(loss) on disposal of other Group undertakings | 214 | (108) | 4 |
| Write-down of fixed asset investments | – | – | (4) |
| Profit on ordinary activities before tax | 3,496 | 2,455 | 1,882 |

\* Before the impact of the Finance Act.

---

# Introduction

The Group’s operating profit increased by 26% to £3,290m (1999 £2,607m). The 2000 result is after accounting for £232m of restructuring costs (1999 £344m) and a profit after fair value amortisation of £64m reported by The Woolwich from 25th October 2000. Earnings per share increased by 39% to 163.3p from 117.5p.

Retail Financial Services performed strongly with a 30% increase in operating profit to £1,710m (1999 £1,312m). Retail customers and Wealth Management profits rose 27% and 22% to £1,124m and £522m respectively. The Woolwich’s operating profit contribution was £64m for the last two months of the year following the acquisition. Total costs were held flat at £2,294m, excluding two months costs of The Woolwich of £98m.

Barclaycard operating profit increased 4% to £418m (1999 £401m). Net interest income improved by 12% benefiting from continued strong growth in average UK extended credit balances. Net fees and commissions increased 9% as a result of growth in UK transaction volumes.

Corporate Banking operating profit increased 13% to £1,070m (1999 £947m). Net interest income rose by 6% reflecting growth in average customer lending balances. Net fees and commissions increased by 9% as a result of growing in lending related fees. Costs excluding strategic investment fell by 6%.

Barclays Capital operating profit increased 30% to £403m (1999 £311m) reflecting continued strong performances in both the Rates and the Credit businesses. The growth in profits was achieved despite difficult market conditions in the second half of 2000.

Barclays Global Investors operating profit increased 51% to £65m (1999 £43m) in a year of major investments and flat or declining markets in most parts of the business. Total assets under management grew to £550bn (1999 £486bn).

Total provisions for bad and doubtful debts rose by £196m, or 32%, to £817m, mainly as a result of higher levels of new and increased provisions reflecting strong volume growth in Retail Financial Services and Barclaycard.

The restructuring charge of £232m for 2000 primarily relates to Retail Financial Services, Corporate Banking and Service Provision. The staff cost charge of £171m is in respect of 4,800 job reductions, 2,700 of which were achieved in 2000.

Non-performing lendings increased by £768m of which The Woolwich accounted for £592m. Potential problem lendings increased by £0.4bn reflecting overseas exposures held by both Barclays Capital and Corporate Banking. Excluding the impact of The Woolwich, non-performing lendings coverage has increased from 76.4% to 81.2% while the coverage of total potential problem lendings has marginally fallen from 60.0% to 58.1%.

The exceptional profit of £214m included a £186m profit on the sale of the Dial business in June 2000 and £18m profit on the sale of Barclays Property Investment in October 2000.

Shareholders’ funds increased by a net £4,687m before favourable exchange differences resulting from shares issued in respect of The Woolwich acquisition (£3,359m) and profit retentions of £1,546m after allowing for a 24% increase in dividends to £927m. A further £311m of buy-backs were completed in the year. Risk weighted assets increased by £31bn or 27% to £147bn of which £19bn (13%) related to The Woolwich. The tier 1 ratio reduced from 7.5% to 7.2% and the total risk asset ratio was 11.0% from 11.3% at the end of 1999. Total assets increased by £61bn in 2000, and included £37bn of assets and £4.1bn of goodwill in respect of The Woolwich.

In 1999, Group profit before tax increased by 30% to £2,455m. The 1999 profit was after charging £344m for restructuring and a £75m provision for the possible cost of redress to personal pension customers. The 1998 profit was after charging £76m in respect of the settlement of the Atlantic litigation and £40m from the impact of taxation changes arising under the Finance Act.

---

# Analysis of results by business

The following section analyses the Group’s performance within the businesses, showing selected income and expenditure information extracted from the Group’s profit and loss account. As inter-business activities are included within these figures, the total income and expenditure for the businesses do not equate to the amounts reported in the Group’s results.

## Retail Financial Services

### Financial performance

| | 2000 £m | 1999 £m | 1998 £m |
| :--- | ---: | ---: | ---: |
| Net interest income | 2,761 | 2,471 | 2,390 |
| Net fees and commissions | 1,419 | 1,300 | 1,267 |
| Income from long-term assurance business* | 171 | 44 | 109 |
| Other operating income | 169 | 143 | 61 |
| Total income | 4,520 | 3,958 | 3,827 |
| Total costs | (2,392) | (2,326) | (2,439) |
| Provisions for bad and doubtful debts | (418) | (320) | (246) |
| Operating profit** | 1,710 | 1,312 | 1,142 |

\* 1999 figures included a £75m provision for the possible cost of redress to personal pension customers (2000 and 1998 £nil).

\*\* Including the two months results of The Woolwich since acquisition and £6m of fair value adjustments.

Retail Financial Services performed strongly with a 30%, or £398m, increase in operating profit to £1,710m. Total income increased by 14% to £4,520m. Adjusted for the impact of the personal pension redress provision of £75m in 1999 and for the two months results of The Woolwich, operating profit and total income rose 19% and 8%, respectively.

Net interest income increased 12%, to £2,761m, primarily as a result of strong growth in lending and deposit balances. In the UK, current accounts and average UK savings balances benefited from good volume growth despite pressure on margins.

Net fees and commissions grew 9%, or £119m, to £1,419m. There was good growth in Retail Customers and Wealth Management.

Income from long-term assurance business increased 44% or £52m, adjusting for the £75m personal pension provisions raised in 1999. No additional provision for possible redress for personal pension customers has been taken in the year.

Total customer funds (excluding The Woolwich), which include assets under management and on-balance sheet deposits, grew 4% to £123bn (1999 £118bn). Assets under management (excluding The Woolwich) increased 4%, or £2bn, to £57bn, primarily due to growth in Private Banking and managed investment portfolios. Deposits (excluding The Woolwich) grew 6% as a result of strong growth in European and offshore banking as well as in current accounts and UK savings, specifically ISAs. Loans to customers (excluding The Woolwich) rose 9% to £36bn (1999 £33bn).

For The Woolwich total customer funds were £23.5bn, assets under management were £3.0bn, deposits were £20.5bn and loans to customers were £32.7bn.

Total customers registered for on-line banking were 1,700,000 (1999 500,000) at the end of 2000, confirming Barclays position as the UK’s leading on-line bank. On-line personal customers now have 2.7 products, compared to 2.3 for all personal current account customers.

Total costs were held flat at £2,294m after adjusting for the impact of two months results for The Woolwich (1999 £2,326m). This was despite a significant increase in strategic investment expenditure, up 49%, or £47m, to £143m and higher revenue related costs up 12%, or £13m, to £125m. Total staff costs, excluding restructuring costs, were down 2% compared with 1999 resulting principally from the job reduction programmes carried out during 1999 and 2000.

Provisions rose 31% to £418m (1999 £320m). Adjusted for The Woolwich and an £11m release of general provision in 1999 relating to the disposal of Merck Finck, the underlying increase in provisions was 24%. This growth was mainly attributable to the volume growth in personal and small business unsecured lending and as a result of difficult market conditions in Kenya and Zimbabwe.

Operating profit increased in 1999 by 15%, or £170m, to £1,312m. Adjusting for the impact of the personal pension redress provision, operating profit rose by 21%. This increase was primarily due to an increase in net interest income arising from strong volume growth in UK consumer lending and strong growth in fees and commissions resulting from increased volumes in Private Banking, Stockbrokers and UK Premier. In addition a decrease in total costs of 5% resulted from lower operating costs achieved through efficiency improvements, particularly in the branch network.

### Retail Customers

| | 2000 £m | 1999 £m | 1998 £m |
| :--- | ---: | ---: | ---: |
| Net interest income | 2,015 | 1,916 | 1,865 |
| Net fees and commissions | 780 | 735 | 777 |
| Income from long-term assurance business* | 161 | 32 | 98 |
| Other operating income | 139 | 114 | 42 |
| Total income* | 3,095 | 2,797 | 2,782 |
| Total costs | (1,573) | (1,588) | (1,714) |
| Provisions for bad and doubtful debts | (398) | (325) | (243) |
| Operating profit* | 1,124 | 884 | 825 |

\* 1999 includes a £75m provision for possible redress for personal pension customers (2000 and 1998 £nil).

Operating profit in Retail Customers increased 27%, or £240m, to £1,124m. Adjusted for the impact of the provision for the redress of personal pension customers of £75m during the year ended 31st December 1999, operating profit increased by 17% and total income by 8% to £3,095m.

Net interest income increased by 5%, mainly as a result of good volume growth in current accounts and average UK savings balances. Net fees and commissions increased by 6% mainly as a result of additional current account and overdraft lending activity and higher fee income from the Additions accounts, which more than offset the absence of £19m ATM commissions received during 1999. Additions accounts increased by 21% to 1,050,000 (1999 871,000).

Total costs were flat at £1,573m resulting from the implementation of a number of improvements in operational and processing activities throughout the network, including centralisation of call centres. These savings have been partially offset by the additional costs associated with significant increased strategic investment of £110m (1999 £79m) in infrastructure, particularly in on-line banking.

Total customer funds, which include assets under management and on-balance sheet deposits increased by 4% to £50bn (1999 £48bn). Loans to customers rose slightly to £24bn (1999 £23bn).

### UK Personal Customers

Average current account deposits increased 9% to £9.5bn (1999 £8.7bn) reflecting the rise in the number of current account customers due to the improvement of the current account proposition.

Average UK savings balances grew 7% to £20.9bn (1999 £19.6bn), ahead of market growth. Overall average margins remained broadly flat.

Average UK mortgage lending increased 7% to £17.3bn (1999 £16.1bn). Gross new lendings remained flat at £4.8bn (1999 £4.8bn) and market share of balances outstanding was broadly maintained at 4%. Average margins decreased from 1.21% to 1.12% during the year as a result of a change in the mix of products, reflecting the high level of sales of the base rate tracker mortgages.

Average consumer lending balances increased 7% to £6.4bn. Against a background of increasing and historically high consumer debt, the risk assessment criteria were further tightened to improve the overall quality of the portfolio and as a result consumer lending balance growth was slower than the market.

In November, individual pricing was introduced on the Barclayloan product as part of a drive to increase product penetration for existing customers and further improve asset quality.

Income from payment protection and underwriting benefited in line with improved volumes of consumer lending, overdraft, credit card and mortgage lending.

Annual premium income of UK based unit trusts, managed investment portfolios and life and pension products totalled £222m (1999 £238m). Sales of managed investment portfolios were broadly similar at £80m and sales of UK based unit trusts were down 9% at £89m because of exceptionally high sales in the period up to the withdrawal of PEPs in 1999. Sales of life and pension products were down 14% at £53m; this was primarily as a result of the cessation of endowment sales.

In 1999 operating profit increased by 7% to £884m. Excluding a further provision of £75m (1998 £nil) for the possible cost of redress to personal pension customers (non-priority cases) operating profit increased by 16%.

### UK Small Business

Total income within UK Small Business increased 9% during the year as a result of growth in its customer base, combined with new product development and enhanced customer information management techniques. Deposits grew 4% to £6.7bn and lending balances grew 8% to £1.8bn.

Fees and commissions were maintained at similar levels to 1999, despite significant continuing competitive pressures on money transmission tariffs. Margins were also held at levels similar to last year.

Total costs fell 4% during the year, benefiting from increased efficiency arising from the continued centralisation of non-customer facing activities. Removal of processing from the branch network has enabled relationship managers increasingly to focus on customer activity.

UK Small Business launched a series of innovative new products and services during 2000. Most significant was the launch in August of the internet portal Clearlybusiness.com, a joint e-commerce development with Freeserve, which offers advice and information on starting-up and running a successful small business.

The number of Small Business customers registered for on-line banking continued to grow, up 123% to 150,000 (1999 67,000).

### Africa

Operating profit rose by 24%, or £24m, to £122m. Total income across Africa increased 20% to £290m. Overall costs increased £5m to £140m, predominantly due to the high inflationary environment in Zimbabwe. Provisions increased to £28m (1999 £9m), reflecting the difficult political and economic situations experienced during the year in Kenya and Zimbabwe.

### The Woolwich

| Period from 25th October to 31st December 2000 | £m |
| :--- | ---: |
| Net interest income | 119 |
| Net fees and commissions | 49 |
| Income from long-term assurance business | 5 |
| Other operating income | 4 |
| Total income | 177 |
| Total costs | (99) |
| Provisions for bad and doubtful debt | (8) |
| Operating profit before fair value amortisation | 70 |
| Amortisation of fair value adjustments | (6) |
| Operating profit after fair value amortisation | 64 |

Operating profit for the period from 25th October to 31st December 2000 was £70m before the amortisation of fair value adjustments (note 55) and includes £3m of mortgage incentives and £8m of software costs which have been written off in accordance with Barclays’ accounting policies.

Net new lending on UK mortgages was £2.2bn for the year 2000, 40% higher than last year and gross new lending was £6.7bn, both representing a market share performance above The Woolwich’s 5.3% market share of UK mortgage balances outstanding. As a result total UK mortgage balances rose 8.4% to £28.5bn at the end of 2000. The overall mortgage margin based on Barclays’ accounting policies decreased slightly during the year to 0.83%.

Retail savings balances rose to £19.0bn (1999 £18.3bn) with increases being experienced in both UK mainland and offshore operations. This reversed previous years’ trends of net annual outflows which were the result of competition from both established providers and new entrants to the market. The overall deposit margin for the full year was maintained at 1.28% despite continuing intense competition for retail funds.

Funds under management as at 31st December 2000 were £3bn, being composed of unit trust balances and life assurance assets.

Total costs of £99m for the period included £14m ongoing strategic investment expenditure primarily to support the Open Plan proposition as well as the cost of Sedgwick Independent Financial Consultants which became a subsidiary in October 2000. The Woolwich exceeded its targeted number of Open Plan customers for 2000 and ended the year with 544,000 (1999 44,000).

## Wealth Management

| | 2000 £m | 1999 £m | 1998 £m |
| :--- | ---: | ---: | ---: |
| Net interest income | 634 | 555 | 525 |
| Net fees and commissions | 590 | 565 | 490 |
| Income from long-term assurance business | 5 | 12 | 11 |
| Other operating income | 26 | 29 | 19 |
| Total income | 1,255 | 1,161 | 1,045 |
| Total costs | (721) | (738) | (725) |
| Provisions for bad and doubtful debts | (12) | 5 | (3) |
| Operating profit | 522 | 428 | 317 |

Operating profit in Wealth Management increased 25%, or £106m, to £522m after adjusting for the contribution of £12m from Merck Finck in 1999. The principal sources of profit growth were the UK (15% to £161m), continental Europe (31% to £98m), the Caribbean (62% to £76m) and offshore banking (23% to £184m).

Total income grew 10% to £1,255m, after adjusting for the adverse impact of exchange rate movements and the sale of Merck Finck.

Net interest income increased 14%, or £79m, to £634m as a result of good growth in lending and deposit balances across the businesses. Particularly strong growth was achieved in the UK with mortgage volumes increasing 19% and also in continental Europe where lending and deposits grew 24% and 15% respectively on a comparable basis.

Net fees and commissions grew 10%, or £52m, to £590m on a comparable basis. This growth is attributable to increased investment sales, introduction of new fee-based products and higher dealing commissions. Stockbroking volumes in the UK increased to 8,100 average deals per day (1999 6,600), and the leading position in the UK, as measured by retail client orders was maintained.

Total customer funds, which include assets under management and on balance sheet deposits, grew 9% to £74bn (1999 £68bn excluding discontinued businesses) despite adverse market movements. Loans to customers grew 20% to £12bn (1999 £10bn).

Business as usual costs reduced 6%, or £46m, absorbing the impact of inflation and volume growth through business efficiency improvements. Strategic investment expenditure grew £21m to £33m in 2000, arising from major initiatives to strengthen our customer propositions. The key features were the development of a single banking and investment relationship for our customers including the qualification of UK relationship managers to provide investment advice, and the development of a seamless multi-channel service.

Across the business there are now 225,000 customers who are registered to use internet services (1999 73,000).

In 1999 operating profit in Wealth Management rose by 35% to £428m predominantly driven by strong growth in UK Premier Banking, Private Banking, Offshore Services, Stockbrokers and the Continental European retail businesses.

## Barclaycard

### Financial performance

| | 2000 £m | 1999 £m | 1998 £m |
| :--- | ---: | ---: | ---: |
| Net interest income | 548 | 488 | 435 |
| Net fees and commissions | 521 | 480 | 456 |
| Total income | 1,069 | 968 | 891 |
| Total costs | (410) | (397) | (413) |
| Provisions for bad and doubtful debts | (239) | (170) | (144) |
| Loss from joint ventures | (2) | – | – |
| Operating profit | 418 | 401 | 334 |

Operating profit for Barclaycard increased 4% to £418m.

Net interest income increased 12% to £548m benefiting from continued strong growth in average UK extended credit balances, which rose 19% year on year to £5.5bn. This compared with the market growth rate of 13%. The proportion of interest earning balances to non-interest earning balances was maintained at over 70%.

The net interest margin reduced compared to 1999, mainly as a result of the balance consolidation promotions of 2000 and the increased range of rates available to cardholders.

Recruitment of UK retail customers improved 15% on last year to 740,000. Barclaycard has increased its share of the market across most measures such as interest earning balances and number of cards.

Fees and commissions increased 9% to £521m, principally reflecting cardholder turnover which grew by 12% year on year.

Barclaycard’s international businesses in Europe recorded an operating loss of £27m (1999 loss £16m). This resulted from increased strategic investment expenditure and higher provisions as the business continued to grow. Average extended credit balances increased 58% and the number of cards in issue overseas increased 16% to 1.2m.

Business as usual costs fell 2% despite a rise in fraud costs. Strategic investment spend increased £19m, to £59m representing the development of information management capabilities, international expansion and e-commerce businesses. Barclaycard continues to invest in chip technology and fraud identification systems to mitigate growth in fraud.

Provisions for bad and doubtful debts increased by 41% to £239m (1999 £170m). This increase was attributable to strong lending growth across the UK and international businesses and reflecting high levels of recruitment over the last two years.

Barclaycard has continued to build on its technological developments. It was the first UK credit card company to offer products on the web and now has 390,000 registered users of its website for on-line services. It also has over 80,000 active merchant relationships, of which over 4,400 are utilising Barclaycard’s payment systems to provide shopping facilities on-line. In 2000, Barclaycard launched a joint venture with Nomura called IndigoSquare. This is an internet-based shopping portal, designed to provide a comprehensive and easy to use on-line shopping facility with products available from 80 retailers. The goal is to have more than 350 retailers supplying over 5 million products to 500,000 users by the end of 2001. IndigoSquare represents a new business opportunity providing Barclaycard with non-traditional revenue growth.

Barclaycard’s 1999 operating profit at £401m was 20% higher than in 1998 following strong growth in extended credit balances and merchant transaction volumes.

## Corporate Banking

### Financial performance

| | 2000 £m | 1999 £m | 1998 £m |
| :--- | ---: | ---: | ---: |
| Net interest income | 1,324 | 1,252 | 1,214 |
| Net fees and commissions | 752 | 690 | 613 |
| Other operating income | (6) | 1 | 3 |
| Total income | 2,070 | 1,943 | 1,830 |
| Total costs | (870) | (863) | (862) |
| Provisions for bad and doubtful debts | (124) | (120) | 2 |
| (Loss)/income from associated undertakings | (6) | (13) | 21 |
| Operating profit before impact of Finance Act | 1,070 | 947 | 991 |
| Write-down of leases | – | – | (40) |
| Operating profit | 1,070 | 947 | 951 |

Corporate Banking operating profit increased 13% to £1,070m in 2000. This reflected the combined effect of continued growth in total income of 7%, a significant increase in strategic investment and an increase in overseas provision levels.

Net interest income rose 6%. Average customer lending balances increased 10% to £47bn as a result of strong growth in UK lending and in the rest of Europe. Average customer deposit balances increased 6% to £37bn.

UK middle market lending volumes grew strongly, resulting from the implementation of the new sales strategy, providing relationship managers with a more focused sales management approach, together with mobile working technology. Lending growth was concentrated towards larger and higher quality customers and as a result the overall quality of the portfolio has improved. The Sales Financing product range, which includes factoring and invoice discounting, saw rapid growth in total volumes, up 63% to £7.1bn. This resulted from the ongoing investment programme to develop this business.

Growth in customer lending within the rest of Europe was predominantly in the established operations in Germany and France. Lending exposure to Latin America fell.

UK lending margins were maintained in line with the improved quality of the lending portfolio. Overseas margins were held as stability returned to Latin American markets.

The growth in average UK deposits was stronger in branch based accounts which attract a higher margin compared with treasury deposit products. As a result, the overall deposit margin was maintained, despite competitive pressures and a reduced contribution from non-interest bearing current accounts.

Net fees and commissions increased 9% to £752m. Lending related fees rose strongly as a result of the growth in the use of on and off balance sheet financing products and strong sales of products relating to structured trade and export finance. Money transmission income reduced slightly due to intensifying competitive pressure. Foreign exchange related income increased in line with volume growth. Increased use of electronic products, such as BusinessMaster, has led to over 35% of UK corporate customers now being registered for these services.

The loss from associated undertakings primarily reflected the Group’s Brazilian associate, Banco Barclays e Galicia SA.

Costs excluding strategic investment fell 6%, with the continued reduction in headcount and the sale of Dial (the contract hire business) in June 2000 being contributory factors. There was a significant increase in strategic investment to £93m (1999 £37m) including investment in Barclays B2B.com and enhancements to the Corporate Banking middle market franchise.

In collaboration with Accenture and Oracle, Barclays B2B.com was created in 2000 to e-enable the delivery of business services to companies with a turnover of between £5m and £250m. Its initial offering, the Barclays B2B exchange, has created a secure marketplace enabling buyers and sellers to benefit from lower processing costs and increased management control in their business transactions. Barclays B2B.com had over 2,000 businesses registered to trade on-line at the end of 2000.

The net provisions charge increased to £124m (1999 £120m) and included a charge for two larger non-UK items. The net charge was also impacted by lower levels of releases and recoveries at £76m (1999 £85m). UK provisions, while showing a slightly rising trend, currently remain at relatively low levels.

Corporate Banking operating profit in 1999 (excluding the impact of a £40m write down in lease receivables in 1998), reduced by £44m or 4% to £947m as a result of a reduction in the level of releases and recoveries to £86m (1998 £168m).

Financial review
Analysis of results by business

# Barclays Capital

## Financial performance

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Net interest income | 483 | 400 | 417 |
| Dealing profits | 672 | 549 | (38) |
| Net fees and commissions | 268 | 163 | 159 |
| Other operating income | 39 | 40 | 42 |
| Total income | 1,462 | 1,152 | 580 |
| Total costs | (998) | (805) | (701) |
| Provisions for bad and doubtful debts | (61) | (36) | (160) |
| Operating profit | 403 | 311 | (281) |

Operating profit increased 30% to £403m reflecting continued strong performance in both the Rates and the Credit businesses. The growth in profits was achieved despite difficult market conditions in the second half of 2000.

Dealing profits rose 22%, or £123m, to £672m. The Rates businesses continued to perform well, in particular interest rate derivatives. In the Credit businesses, equity derivatives and credit repackaging made good contributions but in the second half these were in part offset by difficult market conditions in the secondary bond market due to the widening of credit spreads.

Risk management continued to be an important focus. Operating profit growth significantly exceeded the increase in risk utilisation; average daily value at risk (DVAR) increased 9%.

Net interest income increased 21% to £483m primarily as a result of continued strong growth in revenues from structured capital markets and the credit portfolio.

Net fees and commissions rose 64% to £268m reflecting the increased number and size of transactions completed in the Credit businesses. Fees and commissions growth was strong across all the Credit businesses, in particular primary loans, primary bonds and structured capital markets. Primary loans activity included large acquisition related lending across Europe, America and Asia, while in primary bonds, Barclays Capital strengthened its position in euros and maintained its leading position in sterling new issues.

Provisions for bad and doubtful debts grew 69% to £61m (1999 £36m) and were mainly related to overseas exposures.

Total costs rose 24% to £998m (1999 £805m). Revenue related costs grew due to higher performance related remuneration. There was also increased strategic investment in product, client coverage and distribution capabilities, most notably the distribution and coverage networks in Germany, France and Switzerland.

Business as usual costs increased 4%, mainly reflecting growth in headcount in the second half of the year. Headcount increased by 8% over the previous year.

The 1999 operating profit of £311m, compared to an operating loss of £281m in 1998, was a result of stability returning to the world credit markets.

# Barclays Global Investors

## Financial performance

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Net fees and commissions | 435 | 318 | 277 |
| Net interest income | 10 | 6 | 9 |
| Other operating income | (1) | 1 | 1 |
| Total income | 444 | 325 | 287 |
| Total costs | (379) | (281) | (236) |
| Loss from associated undertakings | – | (1) | – |
| Operating profit | 65 | 43 | 51 |

Operating profit grew 51% to £65m in a year of major investments and flat or declining markets in most parts of the business. This was mainly as a result of a 37% growth in fees and commissions. This revenue growth resulted from strong active product growth and performance, which generated significant incentive fees (active fees comprised almost 50% of total fees and commissions). There was also strong securities lending revenue growth, reflecting value chain extension strategies to enhance the profitability of indexing.

Total assets under management grew 13% to £550bn from £486bn at 31st December 1999; £34bn of the increase was attributable to net new business and £30bn was attributable to market and exchange rate translation movements. Assets under management consist of £435bn of indexed funds and £115bn under advanced active management. Most geographical regions experienced good growth in assets.

The strong profit performance was achieved notwithstanding a 21% increase in business as usual costs which largely reflected the growth in business volumes. Strategic investment expenditure increased to £51m (1999 £35m) with investments aimed at ensuring sustained growth and increased market share in one of the fastest growing sectors in the financial services industry. Revenue related costs grew £31m with a 53% increase in performance related remuneration reflecting the strong revenue and profit performance for the year.

Notable accomplishments in 2000 include a successful and extensive launch of iShares (exchange-traded funds) in the US, UK and Canada; the introduction of several new Advanced Active products in the US, UK and Europe; and first-to-market internet-based product and service offerings that both open new markets to BGI and enhance client service.

Operating Profit in 1999 declined by £8m and costs rose by £45m reflecting the doubling of strategic investments (£28m). Fees and commissions increased by 15% and assets under management by 31% because of growth in assets, favourable market conditions and new markets for securities lending.

Barclays PLC Annual Report 2000 19

Financial review
Analysis of results by business

# Businesses in Transition

## Financial performance

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| France in Transition | – | – | 18 |
| United States Transition | – | – | 19 |
| Other Businesses in Transition | – | – | 11 |
| | – | – | 48 |
| Former BZW businesses | – | – | (33) |
| Operating profit | – | – | 15 |

These asset portfolios, which continue to be managed down, have been reported primarily within Other operations since 1999.

# Other operations

## Financial performance

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Property management | 41 | 21 | (17) |
| Central services | (75) | (52) | (52) |
| Management of Group capital | 33 | 44 | (98) |
| Operating (loss)/profit | (1) | 13 | (167) |

The increased surplus on Property management reflects an increase in the profit on disposal of properties (2000 £11m, 1999 £3m) and an increase in costs recharged to Group businesses. The Central services deficit for the year increased by £23m as a result of increased strategic investment in e-commerce and other infrastructure technology by Service Provision.

The surplus reported in Management of Group capital is attributable to credits arising in transition businesses that are managed centrally. These have been partly offset by a deficit from the central management of Group capital, compared with a surplus in 1999. This is mainly attributable to increased interest allocations to business groups, reflecting higher short-term interest rates and increased usage of regulatory capital by individual businesses. The basis of allocation to the businesses remains in line with previous years. Lower average medium term rates have also had an adverse effect on the earnings from capital balances as have the costs of share buy-backs.

# Head office functions

## Financial performance

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Operating costs | (93) | (77) | (72) |

20 Barclays PLC Annual Report 2000

Financial review
Results by nature of income and expense

# Results by nature of income and expense

In the tables below, income and cost totals excluding, where appropriate, the results of The Woolwich, related integration costs, restructuring costs, the results of former BZW businesses and the write-down of leases are shown to assist in the analysis of the ongoing business performance.

## Net Interest Income

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Interest receivable | 11,788 | 9,320 | 9,952 |
| Interest payable | (6,635) | (4,696) | (5,604) |
| Profit on redemption/repurchase of loan capital | 2 | 3 | 3 |
| | 5,155 | 4,627 | 4,351 |
| Write-down of leases | – | – | (40) |
| | 5,155 | 4,627 | 4,311 |
| Excluding The Woolwich, former BZW businesses and write-down of leases | 5,068 | 4,627 | 4,353 |

Net interest income increased 11% to £5,155m. Adjusting for the impact of The Woolwich acquisition (including interest forgone on the cash element of the acquisition cost), loss of interest income arising from the share repurchases and business disposals, underlying net interest income also increased by 11%.

In Retail Financial Services net interest income increased 7% to £2,649m excluding net interest arising in The Woolwich. This was primarily as a result of strong growth in Wealth Management and increased UK lending and deposit balances. In Wealth Management, particularly strong growth was achieved in the UK, with average Premier Banking mortgage balances increasing by 19% and, in continental Europe, where average lendings and deposits grew by 24% and 15% respectively. In Small Business average deposits grew by 4% to £6.7bn and average lending balances grew 8% to £1.8bn. In UK Personal Customers, current accounts and average savings balances benefited from good volume growth, despite some pressure on margins. Excluding The Woolwich, the overall UK retail lending margin reduced primarily as a result of pricing decisions in respect of consumer lending products and a change in mix of mortgage products. The overall UK retail deposit margin, excluding The Woolwich, experienced some downward pressure in the second half of the year.

Net interest income in Barclaycard improved 12% to £548m benefiting from continued strong growth in average UK extended credit balances which rose 19% year on year to £5.5bn. This compared with the market growth rate of 13%. The net interest margin fell slightly compared to 1999, mainly as a result of the balance consolidation promotions of 2000 and the increased range of rates available to cardholders.

Corporate Banking net interest income rose 6% to £1,324m. Average customer lending balances increased 10% to £47bn as a result of strong growth in UK lending and in the rest of Europe. Average customer deposit balances increased 6% to £37bn with relatively strong growth in the UK. The overall UK lending margin in Corporate Banking was maintained in line with the improving quality of the portfolio.

In Barclays Capital net interest income increased 21% to £483m primarily as a result of continued strong growth in revenues from structured capital markets and the credit portfolio.

Overall banking margins reduced to 3.11% from 3.40% as a result of increased volumes in lower margin wholesale business in Barclays Capital and also reductions in UK margins in Retail Financial Services, Barclaycard and Corporate Banking. Additionally, the two month impact of the acquisition of The Woolwich on the Group's mix of interest earning assets has been to reduce the Group margin by 6 basis points.

The benefit of free funds was flat at 0.51% (1999 0.52%). The rise in short-term market rates of interest reduced the contribution to the net margin from the central management of Group interest rate exposure to 0.05% from 0.21%. The overall benefit of free funds on a hedged basis has reduced to 0.56% from 0.73% in 1999 as a result of a decrease in the effective rate of the hedge and a reduction in the proportion of free funds to interest earning assets.

In 1999 net interest income increased by £274m or 6% excluding the contribution from the former BZW businesses and the write-down of leases. This reflected volume growth in Retail Financial Services and Corporate Banking and an improved contribution from the central management of Group capital.

Barclays PLC Annual Report 2000 21

Financial review
Results by nature of income and expense

## Prevailing average Interest rates

| | 2000 % | 1999 % | 1998 % |
| --- | --- | --- | --- |
| UK: | | | |
| Barclays Bank PLC base rate | 5.96 | 5.35 | 7.23 |
| London Inter-Bank Offered Rate (LIBOR): | | | |
| three month sterling | 6.10 | 5.54 | 7.43 |
| three month eurodollar | 6.47 | 5.37 | 4.90 |
| United States prime rate | 9.24 | 7.99 | 8.36 |

## Average interest earning assets and liabilities – banking business

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Average interest earning assets: | | | |
| Group | 166,200 | 136,267 | 127,396 |
| Domestic | 104,845 | 87,407 | 82,095 |
| International | 61,355 | 48,860 | 45,301 |
| Average interest bearing liabilities: | | | |
| Group | 147,367 | 118,496 | 109,225 |
| Domestic | 89,130 | 73,850 | 66,492 |
| International | 58,237 | 44,646 | 42,733 |

## Yields, spreads and margins – banking business

| | 2000 % | 1999 % | 1998 % |
| --- | --- | --- | --- |
| Gross yield (a) | | | |
| Group | 7.09 | 6.84 | 7.81 |
| Domestic | 7.90 | 7.66 | 8.90 |
| International | 5.71 | 5.38 | 5.84 |
| Interest spread (b) | | | |
| Group | 2.60 | 2.88 | 2.69 |
| Domestic | 3.54 | 3.89 | 3.40 |
| International | 1.01 | 1.10 | 1.30 |
| Interest margin (c) | | | |
| Group | 3.11 | 3.40 | 3.42 |
| Domestic | 4.19 | 4.47 | 4.44 |
| International | 1.25 | 1.47 | 1.55 |

### Notes

(a) Gross yield is the interest rate earned on average interest earning assets.

(b) Interest spread is the difference between the interest rate earned on average interest earning assets and the interest rate paid on average interest bearing liabilities.

(c) Interest margin is net interest income as a percentage of average interest earning assets.

Domestic business is conducted primarily in sterling and is transacted by Retail Financial Services, Barclaycard, Corporate Banking, Barclays Capital and Group Treasury. International business is conducted primarily in foreign currencies. In addition to the business carried out by overseas branches and subsidiaries, international business is transacted in the UK by Barclays Capital, mainly with customers domiciled outside the UK.

The yields, spreads and margins shown opposite have been computed on this basis, which generally reflects the domicile of the borrower. They exclude profits and losses on the redemption and repurchase of loan capital, one-off write-downs of leases and the unwinding of the discount on vacant leasehold property provisions.

The net interest income and average balances of the trading business are shown separately on the average balance sheet on pages 28 and 29.

## Net fees and commissions

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Fees and commissions receivable | 3,689 | 3,207 | 3,008 |
| Less: fees and commissions payable | (320) | (275) | (229) |
| | 3,369 | 2,932 | 2,779 |
| Excluding The Woolwich and former BZW businesses | 3,320 | 2,932 | 2,771 |

Net fees and commissions, excluding The Woolwich, increased 13% to £3,320m reflecting strong growth in Barclays Global Investors and Barclays Capital and good performances in the other businesses.

In Barclays Global Investors fee income increased by 37% to £435m driven by strong active product growth and performance which has generated significant incentive fees. Fees on active products comprised almost 50% of total fees and commissions. The increase also reflects strong securities lending revenue growth and a net increase in assets under management of 13% despite flat or declining global markets.

Net fees and commissions in Barclays Capital rose 64% to £268m reflecting the increased number and size of transactions completed in the Credit businesses. Growth was strong across all the Credit businesses, in particular, primary loans, primary bonds and structured capital markets.

In Retail Financial Services, fees and commissions, excluding The Woolwich increased 5% to £1,370m. Within Retail Customers net fees increased 6% mainly as a result of additional current account and overdraft lending activity and higher fee income from Additions accounts. In Wealth Management, fees and commissions grew 10% to £590m on a comparable basis (including adjustments for disposals) reflecting increased investment sales, introduction of new fee based products and higher dealing commissions.

Corporate Banking fees increased 9% to £752m. Lending related fees rose strongly and foreign exchange income increased in line with volume growth. Money transmission income reduced slightly due to intensifying competitive pressures.

In Barclaycard, fees and commissions increased 9% to £521m, principally reflecting cardholder turnover which grew by 12% year on year.

Corporate Banking and Retail Financial Services fees and commissions include £120m (1999 £100m) in respect of foreign exchange income on customer transactions with Barclays Capital.

In 1999 net fees and commissions were 6% higher at £2,932m reflecting strong performances in all businesses.

22 Barclays PLC Annual Report 2000

Financial review
Results by nature of income and expense

## Dealing Profits

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Rates related business | 536 | 397 | 134 |
| Credit related business | 141 | 159 | (176) |
| | 677 | 556 | (42) |
| Excluding The Woolwich acquisition and former BZW businesses | 677 | 556 | (36) |

Dealing profits rose 22% with almost all the Group's dealing profits arising in Barclays Capital. The Rates businesses continued to perform well, in particular interest rate derivatives. In the Credit businesses, equity derivatives and credit repackaging made good contributions, but in the second half these were in part offset by continuing difficult market conditions in the secondary bond market due to the widening of credit spreads.

Total foreign exchange income for the year was £388m (1999 £380m) and consisted of the revenues earned from both retail and wholesale activities. The foreign exchange revenue earned by Retail Financial Services and Corporate Banking on customer transactions is reported within fees and commissions.

Dealing profits in 1999 increased by £592m as a result of stability returning to the world credit markets.

## Other operating Income

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Dividend income from equity shares | 14 | 12 | 10 |
| Profits on disposal of investment securities | 45 | 41 | 41 |
| Income from the long-term assurance business | 171 | 44 | 109 |
| Property rentals | 22 | 27 | 44 |
| Premium income on insurance underwriting | 126 | 102 | 31 |
| Other income | 19 | 32 | 63 |
| | 397 | 258 | 298 |
| Excluding The Woolwich | 388 | 258 | 298 |

Income from the long term assurance business increased £52m adjusting for the £75m provision for possible redress to personal pension customers (non priority cases), which was raised during 1999. The increase in 2000 benefited from reductions in costs charged to the funds, a net £18m increase from applying current actuarial assumptions and £5m from the inclusion of Woolwich Life. Total provisions of £226m, including £16m in The Woolwich, have been raised to date for the cost of the redress for personal pension customers for priority and non-priority cases, of which £97m remains unutilised as at 31st December 2000. The result of the long term assurance business is after charging costs borne directly in the funds of £146m (1999 £165m).

Premium income on insurance underwriting increased to £126m (1999 £102m), benefiting from improved volumes of consumer lending, overdrafts, mortgages and credit card lending.

In 1999 other operating income was £40m lower than in 1998. Increased premium income on insurance underwriting was offset by the £75m charge in respect of the possible cost of redress to personal pension customers (non-priority cases), lower property rentals and reduced other income.

## Administrative expenses – staff costs

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Salaries and accrued incentive payments | 2,559 | 2,387 | 2,211 |
| Social security costs | 178 | 190 | 173 |
| Pension costs | (31) | 38 | 37 |
| Post-retirement health care | 1 | 15 | 17 |
| UK profit sharing | 96 | 80 | 88 |
| Other staff costs | 416 | 347 | 285 |
| | 3,219 | 3,057 | 2,811 |
| Included above: | | | |
| The Woolwich | 42 | – | – |
| Integration costs | 1 | – | – |
| Restructuring charge | 171 | 192 | – |
| Former BZW businesses | – | – | 22 |
| Excluding The Woolwich, integration costs, restructuring charge and former BZW businesses | 3,005 | 2,865 | 2,789 |

Barclays PLC Annual Report 2000 23

Financial review
Results by nature of income and expense

## Staff numbers

| | 2000 | 1999 | 1998 |
| --- | --- | --- | --- |
| Retail Financial Services** | 49,900 | 46,100 | 49,100 |
| Barclaycard | 3,900 | 3,600 | 4,000 |
| Corporate Banking | 9,700 | 11,400 | 11,500 |
| Barclays Capital | 4,300 | 4,000 | 4,400 |
| Barclays Global Investors | 2,100 | 1,700 | 1,500 |
| Other operations | 4,900 | 7,100 | 7,600 |
| Head office functions | 500 | 400 | 400 |
| Businesses in Transition | – | – | 100 |
| Staff numbers (period end)* | 75,300 | 74,300 | 78,600 |

* Staff numbers do not include temporary and agency staff of 4,800 (31st December 1999 3,600, 31st December 1998 4,000) whose costs are included in staff costs.

** Staff numbers also exclude 1,000 UK regulated sales force and field sales managers (31st December 1999 1,000) and 1,100 administrative staff (31st December 1999 1,300) whose costs are borne within the long-term assurance fund.

Of the 75,300 staff at 31st December 2000, 58,200 (including 1,200 in the Channel Islands and Isle of Man) were based in the UK, 4,400 in other EU countries, 2,700 in the United States and 10,000 in the Rest of the world.

* Including 6,500 in respect of The Woolwich

## Staff costs

Staff costs excluding the restructuring charge and costs relating to The Woolwich increased 5% to £3,005m. Salaries and accrued incentive payments rose by 7% largely reflecting increased performance related payments in Barclays Capital and BGI. Excluding performance related payments, salary costs across the Group were flat compared with 1999. In Retail Financial Services, Corporate Banking and Service Provision savings from job reductions offset the impact of the annual UK pay award.

Pension costs include a £74m credit (1999 £nil) in respect of the Group's main UK schemes following a review of the assumptions relating to the surplus and the continued nil contribution.

In 1999 staff costs, excluding the restructuring charge and costs in relation to former BZW businesses, rose by 3% over 1998. The increase reflected higher performance related payments in Barclays Capital in line with improved profitability. Underlying staff costs, excluding performance related payments, were slightly below 1998 levels.

## Staff number reduction in 2000

Excluding The Woolwich, staff numbers decreased by 5,500 to 68,800, primarily as a result of continuing job reductions in the UK. The reduction in staff numbers relating to the 2000 restructuring programme amounted to 2,700 with a further 1,500 attributable to the 1999 programme where the notice process was underway at the end of 1999. The reduction in Corporate Banking staff numbers includes 700 as a result of the sale of Dial. Staff numbers also reduced by a net 600 as a result of outsourcing and other movements.

In addition to the 4,200 staff who have left the Group in 2000 under the 2000 and 1999 restructuring programmes, a further 2,100 staff were in the process of being served notice at 31st December 2000 and are covered by the 2000 restructuring charge of £171m (total jobs affected 4,800).

The increases in Barclays Capital, Barclays Global Investors and Barclaycard staff numbers reflected increased business volumes and investments in new activities.

## Administrative expenses – other

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Property and equipment expenses | | | |
| Hire of equipment | 20 | 21 | 28 |
| Property rentals | 157 | 218 | 195 |
| Other property and equipment expenses | 641 | 613 | 635 |
| | 818 | 852 | 858 |
| Other administrative expenses | | | |
| Stationery, postage and telephones | 261 | 236 | 230 |
| Advertising and market promotion | 221 | 190 | 225 |
| Travel, accommodation and entertainment | 123 | 117 | 113 |
| Subscriptions and publications | 65 | 58 | 46 |
| Securities clearing and other operational expenses | 26 | 20 | 49 |
| Sundry losses, provisions and write-offs | 115 | 78 | 53 |
| Statutory and regulatory audit and accountancy fees | 7 | 6 | 6 |
| Consultancy fees | 158 | 121 | 126 |
| Professional fees | 99 | 88 | 91 |
| Other expenses | 74 | 41 | 32 |
| | 1,967 | 1,807 | 1,829 |
| Included above: | | | |
| The Woolwich | 47 | – | – |
| Integration costs | 6 | – | – |
| Restructuring charge | 61 | 152 | – |
| Former BZW businesses | – | – | 17 |
| Excluding The Woolwich, integration costs, restructuring charge and former BZW businesses | 1,853 | 1,655 | 1,812 |

24 Barclays PLC Annual Report 2000

Financial review
Results by nature of income and expense

Administrative expenses increased by 12% to £1,853m, excluding operational costs of The Woolwich following acquisition, integration costs and restructuring costs.

Advertising and market promotion expenditure returned to pre-1999 levels; increased stationery, postage and telephone expenses was in part volume related; consultancy fees increased primarily as a result of strategic project initiatives. Increased fraud losses reflecting industry experience are reflected in sundry losses.

Administrative expenses in 1999 included £152m in respect of the 1999 restructuring programme, of which £87m related to provisions for future costs on surplus leasehold properties. Excluding this charge and the costs of the former BZW businesses in 1998, there was a fall in the costs of the ongoing businesses of £157m to £1,655m.

## Depreciation and amortisation

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Property depreciation | 85 | 93 | 88 |
| Equipment depreciation | 166 | 170 | 172 |
| Loss on sale of equipment | 4 | 4 | 5 |
| Write back of surplus properties | – | – | (2) |
| | 255 | 267 | 263 |
| Goodwill amortisation | | | |
| – The Woolwich | 38 | – | – |
| – other | 13 | 13 | 12 |
| | 306 | 280 | 275 |
| Excluding The Woolwich | 259 | 280 | 275 |

Goodwill amortisation relating to The Woolwich acquisition is based on total goodwill of £4,121m and an estimated economic life of 20 years which will result in a charge of £206m per annum, £38m for the period from 25th October 2000 to 31st December 2000.

## Provisions for bad and doubtful debts

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Credit risk provision charge/(release) | | | |
| specific | 782 | 637 | 505 |
| general | 40 | (16) | (20) |
| Country risk provision charge/(release) | | | |
| specific | (5) | (2) | (13) |
| general | – | 2 | 20 |
| | 817 | 621 | 492 |
| Excluding The Woolwich | 809 | 621 | 492 |

The net provisions charge rose 32% to £817m (including £8m relating to The Woolwich). The increase in the net specific credit risk charge reflected both an increase in new and increased provisions of £94m and a reduction in releases and recoveries of £51m.

The rise in new and increased provisions primarily relates to Retail Financial Services and Barclaycard with both experiencing increased volumes. Corporate Banking experienced new provisions in respect of two larger individual customers as well as lower releases and recoveries. £33m of the £124m charge in Corporate Banking related to overseas specific provisions. There was an increase in provisions in relation to overseas exposures in Barclays Capital.

The credit risk general provision charge was £40m compared to a release of £16m in 1999. The charge for general provision was mainly in respect of Barclays Capital and Corporate Banking.

The net provision charge for the period as a percentage of average banking loans and advances was 0.67% compared with 0.58% in 1999.

In 1999 the net charge for provisions rose by £129m to £621m largely reflecting volume growth in UK consumer lending and extended credit transactions at Barclaycard and to a lesser extent less favourable economic factors that affected the first half of 1999.

## Provisions for contingent liabilities and commitments

| 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- |
| (1) | 1 | 76 |

The charge in 1998 related to the contribution to the overall settlement to the Administrators of British and Commonwealth Holdings PLC.

## (Loss)/profit from joint ventures and associated undertakings

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Loss from joint ventures | (1) | (1) | – |
| (Loss)/Income from associated undertakings | (7) | (13) | 22 |
| | (8) | (14) | 22 |

The loss from associated undertakings in 2000 and 1999 largely arose in the Group's Brazilian associate Banco Barclays e Galicia SA.

## Loss on sale or restructuring of BZW

| 2000 £m | 1999 £m | 1998 £m |
| --- | --- | (30) | (3) |

## Profit/(loss) on disposal of other Group undertakings

| 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- |
| 214 | (108) | 4 |

The profit on disposal of other Group undertakings includes a £186m profit on the sale of Dial in June 2000 and £18m profit on the sale of Barclays Property Investment Management in October 2000.

The loss on disposal of other Group undertakings in 1999 includes a £117m loss (after £138m charge for goodwill which had been previously written off to reserves) on the sale of Merck Finck in March 1999.

Barclays PLC Annual Report 2000 25

Financial review
Results by nature of income and expense and Total assets and liabilities

## Tax

The overall tax charge is explained in the following table:

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Tax charge at average UK corporation tax rate of 30% (1999 30.25%, 1998 31%) | 1,049 | 743 | 583 |
| Deferred tax adjustments for the leasing business | – | – | (18) |
| Prior year adjustments | 9 | (44) | 18 |
| Effect of change in non-allowable general provisions | 24 | 4 | – |
| Effect of non-allowable property write-downs and depreciation | 6 | 7 | 9 |
| Net effect of differing tax rates overseas | (43) | (34) | (21) |
| Net effect of overseas losses not available for relief in the UK | (5) | – | (16) |
| Other non-allowable expenses | 16 | 9 | 11 |
| Gains covered by capital losses brought forward | (53) | – | (4) |
| Other items | (59) | (41) | (42) |
| Overall tax charge | 944 | 644 | 520 |
| Effective tax rate % | 27.0 | 26.2 | 27.6 |

The increase in the effective rate to 27.0% from 26.2% in 1999 reflects the gain on the sale of Dial being sheltered by capital gains tax losses offset by an increase in non-allowable general provisions and the effect of prior year adjustments.

## Restructuring charge

In 2000 the Group incurred a restructuring charge of £232m (1999 £344m) of which £134m related to Retail Financial Services with the remainder arising mainly in Corporate Banking and Central Services. The 1999 charge related to job reductions in the UK, principally in Retail Financial Services and Corporate Banking, and in certain international operations of Retail Financial Services.

£171m of the £232m restructuring charge is contained within staff costs (1999 £192m) and relates to some 2,700 job reductions in 2000 (1999 5,300) and a further 2,100 staff (1999 900) who were in the process of being served notice at the year end.

Administrative expenses charged in connection with the restructuring amounted to £61m (1999 £152m).

Related expenditure of £166m was incurred in the year against the provisions raised for the 1999 programme and a further £118m in respect of the 2000 programme. The accrued provision at 31st December 2000 amounted to £132m (1999 £184m).

# Total assets and liabilities

The Group's balance sheet grew £61bn, or 24%, to £316bn in 2000, and included £37bn of assets and £4.1bn of goodwill in respect of The Woolwich. This compared to a 16% increase in 1999. Weighted risk assets rose 27% to £147bn, of which £19bn (13%) relates to The Woolwich.

Retail Financial Services assets (excluding The Woolwich) grew 6% to £44.1bn, compared with a 4% increase in 1999. Weighted risk assets were 9% higher at £28.5bn. Consumer lending balances in the UK increased by 5% to £6.5bn over the year and mortgage outstandings grew by 6% to £17.7bn. Wealth Management assets have grown strongly across most business units, with particularly high growth in UK Premier Banking and Iberia.

The assets of Barclays Capital increased 8%, to £157bn (1999 £145bn). This was largely due to a £10bn increase in the holdings of debt securities across both the Rates and Credit businesses and a £2bn increase in reverse repos and stock lending assets due to increased customer financing. Total weighted risk assets increased 7% to £34bn (1999 £32bn) in line with the increase in assets.

Corporate Banking assets grew 13% to £53bn, adjusted for the sale of Dial (1999 £47bn). Weighted risk assets increased by 13% to £55bn on the same basis. UK middle market lending grew strongly, particularly to larger and higher quality customers. Lending volumes in the international business continued to grow strongly in Europe while volumes in Latin America reduced. In 2000 the sale of Dial reduced total assets by £800m.

Barclaycard assets grew £1.4bn, or 19%, to £8.7bn in 2000 reflecting strong growth in credit card outstandings in the UK and Europe. Weighted risk assets increased by 18%.

Assets of other operations fell by £1bn mainly because of lower holdings of government loan stock.

Retail life fund assets, excluding The Woolwich (£721m), reduced by £50m.

26 Barclays PLC Annual Report 2000

Financial review
Total assets and liabilities

## Repo transactions

Under a repo (sale and repurchasing agreement), an asset is sold to a counterparty with a commitment to repurchase it at a future date at an agreed price. The Group engages in repos and also in reverse repos, which are the same transaction in the opposite direction, the Group buying an asset with a fixed commitment to resell. The Group aims to earn spread and trading income from these activities as well as funding its own holdings of securities.

The following amounts were included in the balance sheet for repos and reverse repos and are reported on a net basis where permitted:

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Reverse repos (assets) | | | |
| Loans and advances to banks | 25,595 | 26,040 | 14,952 |
| Loans and advances to customers | 20,758 | 19,910 | 10,635 |
| | 46,353 | 45,950 | 25,587 |
| Repos (liabilities) | | | |
| Deposits by banks | 16,275 | 16,631 | 6,512 |
| Customer accounts | 17,053 | 17,422 | 11,200 |
| | 33,328 | 34,053 | 17,712 |

The average and maximum amount of reverse repos for 2000 were £48,952m and £60,356m (1999 £35,495m and £47,468m, 1998 £39,174m and £62,913m) respectively. The average and maximum amount of repos for 2000 were £40,462m and £52,163m (1999 £29,671m and £39,099m, 1998 £32,181m and £55,274m) respectively.

Barclays PLC Annual Report 2000 27

Financial review
Average balance sheet

## Average balance sheet and net interest income (year ended 31st December)

| | 2000 Average balance £m | 2000 Interest £m | 2000 Average rate % | 1999 Average balance £m | 1999 Interest £m | 1999 Average rate % | 1998 Average balance £m | 1998 Interest £m | 1998 Average rate % |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| **Assets** | | | | | | | | | |
| Treasury bills and other eligible bills: | | | | | | | | | |
| in offices in the UK | 4,491 | 146 | 3.3 | 3,697 | 175 | 4.7 | 2,445 | 154 | 6.3 |
| in offices outside the UK | 844 | 88 | 10.4 | 898 | 90 | 10.0 | 963 | 103 | 10.7 |
| Loans and advances to banks: | | | | | | | | | |
| in offices in the UK | 6,579 | 355 | 5.4 | 7,762 | 361 | 4.7 | 10,561 | 605 | 5.7 |
| in offices outside the UK | 6,361 | 397 | 6.2 | 8,224 | 442 | 5.4 | 11,138 | 535 | 4.8 |
| Loans and advances to customers: | | | | | | | | | |
| in offices in the UK | 83,651 | 6,810 | 8.1 | 68,752 | 5,549 | 8.1 | 62,304 | 5,757 | 9.2 |
| in offices outside the UK | 20,693 | 1,298 | 6.3 | 16,154 | 893 | 5.5 | 11,596 | 863 | 7.4 |
| Lease receivables: | | | | | | | | | |
| in offices in the UK | 4,683 | 316 | 6.7 | 5,059 | 346 | 6.8 | 5,499 | 452 | 8.2 |
| in offices outside the UK | 366 | 39 | 10.6 | 537 | 67 | 12.5 | 240 | 21 | 8.8 |
| Debt securities: | | | | | | | | | |
| in offices in the UK | 26,973 | 1,630 | 6.0 | 15,256 | 851 | 5.6 | 13,804 | 910 | 6.6 |
| in offices outside the UK | 11,559 | 709 | 6.1 | 9,928 | 546 | 5.5 | 8,846 | 552 | 6.2 |
| Average assets of banking business | 166,200 | 11,788 | 7.1 | 136,267 | 9,320 | 6.8 | 127,396 | 9,952 | 7.8 |
| Average assets of trading business | 98,156 | 4,808 | 4.9 | 67,278 | 3,655 | 5.4 | 77,599 | 3,809 | 4.9 |
| Total average interest earning assets | 264,356 | 16,596 | 6.3 | 203,545 | 12,975 | 6.4 | 204,995 | 13,761 | 6.7 |
| Provisions | (2,115) | | | (1,955) | | | (1,847) | | |
| Non-interest earning assets | 43,125 | | | 42,526 | | | 39,957 | | |
| Total average assets and interest income | 305,366 | 16,596 | 5.4 | 244,116 | 12,975 | 5.3 | 243,105 | 13,761 | 5.7 |
| Percentage of total average assets in offices outside the UK | 31.4 | | | 31.0 | | | 29.6 | | |
| Average interest earning assets and net interest income: | | | | | | | | | |
| Banking business | 166,200 | 5,161 | 3.1 | 136,267 | 4,630 | 3.4 | 127,396 | 4,352 | 3.4 |
| Trading business | 98,156 | (216) | (0.2) | 67,278 | (31) | – | 77,599 | (25) | – |
| Write-down of leases | – | – | – | – | – | – | – | (40) | – |
| Discount rate adjustment on provisions | – | (8) | – | – | (6) | – | – | (4) | – |
| Profit on redemption/repurchase of loan capital | – | 2 | – | – | 3 | – | – | 3 | – |
| Total average interest earning assets and net interest income | 264,356 | 4,939 | 1.9 | 203,545 | 4,596 | 2.3 | 204,995 | 4,286 | 2.1 |
| Total average interest earning assets related to: | | | | | | | | | |
| Interest income | | 16,596 | 6.3 | | 12,975 | 6.4 | | 13,761 | 6.7 |
| Interest expense | | (11,651) | (4.4) | | (8,376) | (4.1) | | (9,434) | (4.6) |
| Write-down of leases | | – | – | | – | – | | (40) | – |
| Discount rate adjustment on provisions | | (8) | – | | (6) | – | | (4) | – |
| Profit on redemption/repurchase of loan capital | | 2 | – | | 3 | – | | 3 | – |
| | | 4,939 | 1.9 | | 4,596 | 2.3 | | 4,286 | 2.1 |

28 Barclays PLC Annual Report 2000

# Financial review
Average balance sheet

Average balance sheet and net interest income (year ended 31st December)

| Liabilities and shareholders’ funds | 2000 Average balance £m | 2000 Interest £m | 2000 Average rate % | 1999 Average balance £m | 1999 Interest £m | 1999 Average rate % | 1998 Average balance £m | 1998 Interest £m | 1998 Average rate % |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Deposits by banks: | | | | | | | | | |
| in offices in the UK | 21,465 | 932 | 4.3 | 14,210 | 479 | 3.4 | 17,911 | 719 | 4.0 |
| in offices outside the UK | 13,736 | 545 | 4.0 | 11,506 | 460 | 4.0 | 11,726 | 505 | 4.3 |
| Customer accounts – demand deposits: | | | | | | | | | |
| in offices in the UK | 13,302 | 220 | 1.7 | 12,786 | 168 | 1.3 | 11,072 | 201 | 1.8 |
| in offices outside the UK | 1,707 | 50 | 2.9 | 1,827 | 35 | 1.9 | 2,088 | 44 | 2.1 |
| Customer accounts – savings deposits: | | | | | | | | | |
| in offices in the UK | 27,349 | 1,005 | 3.7 | 24,517 | 772 | 3.1 | 22,635 | 1,110 | 4.9 |
| in offices outside the UK | 1,312 | 62 | 4.7 | 1,307 | 55 | 4.2 | 1,120 | 63 | 5.6 |
| Customer accounts – other time deposits – retail: | | | | | | | | | |
| in offices in the UK | 28,639 | 1,634 | 5.7 | 23,998 | 1,231 | 5.1 | 22,703 | 1,574 | 6.9 |
| in offices outside the UK | 5,785 | 316 | 5.5 | 5,076 | 234 | 4.6 | 5,262 | 266 | 5.1 |
| Customer accounts – other time deposits – wholesale: | | | | | | | | | |
| in offices in the UK | 22,596 | 1,165 | 5.2 | 19,555 | 848 | 4.3 | 17,379 | 890 | 5.1 |
| in offices outside the UK | 10,005 | 553 | 5.5 | 6,067 | 306 | 5.0 | 5,904 | 307 | 5.2 |
| Debt securities in issue: | | | | | | | | | |
| in offices in the UK | 19,904 | 1,057 | 5.3 | 15,656 | 777 | 5.0 | 14,554 | 913 | 6.3 |
| in offices outside the UK | 7,279 | 457 | 6.3 | 7,130 | 379 | 5.3 | 6,181 | 340 | 5.5 |
| Dated and undated loan capital and other subordinated liabilities principally in offices in the UK | 4,643 | 335 | 7.2 | 4,092 | 263 | 6.4 | 3,372 | 244 | 7.2 |
| Internal funding of trading business | (30,355) | (1,704) | 5.6 | (29,231) | (1,317) | 4.5 | (32,682) | (1,576) | 4.8 |
| Average liabilities of banking business | 147,367 | 6,627 | 4.5 | 118,496 | 4,690 | 4.0 | 109,225 | 5,600 | 5.1 |
| Average liabilities of trading business | 98,297 | 5,024 | 5.1 | 71,535 | 3,686 | 5.2 | 79,513 | 3,834 | 4.8 |
| Total average interest bearing liabilities | 245,664 | 11,651 | 4.7 | 190,031 | 8,376 | 4.4 | 188,738 | 9,434 | 5.0 |
| Interest free customer deposits: | | | | | | | | | |
| in offices in the UK | 9,468 | | | 8,677 | | | 8,333 | | |
| in offices outside the UK | 1,858 | | | 1,597 | | | 1,278 | | |
| Other non-interest bearing liabilities | 37,637 | | | 35,190 | | | 36,652 | | |
| Minority and other interests and shareholders’ funds | 10,739 | | | 8,621 | | | 8,104 | | |
| Total average liabilities, shareholders’ funds and interest expense | 305,366 | 11,651 | 3.8 | 244,116 | 8,376 | 3.4 | 243,105 | 9,434 | 3.9 |
| Percentage of total average non-capital liabilities in offices outside the UK | 30.5 | | | 30.3 | | | 30.0 | | |

## Notes
(a) Loans and advances to customers and banks include all doubtful lendings, including non-accrual lendings. Interest receivable on such lendings has been included to the extent to which either cash payments have been received or interest has been accrued in accordance with the income recognition policy of the Group. 
(b) Average balances are based upon daily averages for most UK banking operations and monthly averages elsewhere.
(c) The average balance sheet does not include the retail life-fund assets attributable to policyholders nor the related liabilities.

Barclays PLC Annual Report 2000 29

---

# Financial review
Average balance sheet

## Changes in net interest income – volume and rate analysis

The following table allocates changes in net interest income between changes in volume and changes in interest rates for the last two years. Volume and rate variances have been calculated on the movement in the average balances and the change in the interest rates on average interest earning assets and average interest bearing liabilities. Where variances have arisen from changes in both volumes and interest rates, these have been allocated proportionately between the two.

| Interest receivable | 2000/1999 Total change £m | 2000/1999 Volume £m | 2000/1999 Rate £m | 1999/1998 Total change £m | 1999/1998 Volume £m | 1999/1998 Rate £m |
| --- | --- | --- | --- | --- | --- | --- |
| Treasury bills and other eligible bills: | | | | | | |
| in offices in the UK | (29) | 33 | (62) | 21 | 66 | (45) |
| in offices outside the UK | (2) | (6) | 4 | (13) | (7) | (6) |
| | (31) | 27 | (58) | 8 | 59 | (51) |
| Loans and advances to banks: | | | | | | |
| in offices in the UK | (6) | (59) | 53 | (244) | (143) | (101) |
| in offices outside the UK | (45) | (110) | 65 | (93) | (151) | 58 |
| | (51) | (169) | 118 | (337) | (294) | (43) |
| Loans and advances to customers: | | | | | | |
| in offices in the UK | 1,261 | 1,213 | 48 | (208) | 562 | (770) |
| in offices outside the UK | 405 | 274 | 131 | 30 | 286 | (256) |
| | 1,666 | 1,487 | 179 | (178) | 848 | (1,026) |
| Lease receivables: | | | | | | |
| in offices in the UK | (30) | (25) | (5) | (106) | (34) | (72) |
| in offices outside the UK | (28) | (19) | (9) | 46 | 34 | 12 |
| | (58) | (44) | (14) | (60) | – | (60) |
| Debt securities: | | | | | | |
| in offices in the UK | 779 | 703 | 76 | (59) | 90 | (149) |
| in offices outside the UK | 163 | 96 | 67 | (6) | 63 | (69) |
| | 942 | 799 | 143 | (65) | 153 | (218) |
| Total banking business interest receivable: | | | | | | |
| in offices in the UK | 1,975 | 1,865 | 110 | (596) | 541 | (1,137) |
| in offices outside the UK | 493 | 235 | 258 | (36) | 225 | (261) |
| | 2,468 | 2,100 | 368 | (632) | 766 | (1,398) |
| Total trading business interest receivable | 1,153 | 1,542 | (389) | (154) | (537) | 383 |
| Total interest receivable | 3,621 | 3,642 | (21) | (786) | 229 | (1,015) |

30 Barclays PLC Annual Report 2000

---

# Financial review
Average balance sheet

## Changes in net interest income – volume and rate analysis (continued)

| Interest payable | 2000/1999 Total change £m | 2000/1999 Volume £m | 2000/1999 Rate £m | 1999/1998 Total change £m | 1999/1998 Volume £m | 1999/1998 Rate £m |
| --- | --- | --- | --- | --- | --- | --- |
| Deposits by banks: | | | | | | |
| in offices in the UK | 453 | 290 | 163 | (240) | (135) | (105) |
| in offices outside the UK | 85 | 89 | (4) | (45) | (9) | (36) |
| | 538 | 379 | 159 | (285) | (144) | (141) |
| Customer accounts – demand deposits: | | | | | | |
| in offices in the UK | 52 | 7 | 45 | (33) | 28 | (61) |
| in offices outside the UK | 15 | (2) | 17 | (9) | (5) | (4) |
| | 67 | 5 | 62 | (42) | 23 | (65) |
| Customer accounts – savings deposits: | | | | | | |
| in offices in the UK | 233 | 95 | 138 | (338) | 86 | (424) |
| in offices outside the UK | 7 | – | 7 | (8) | 9 | (17) |
| | 240 | 95 | 145 | (346) | 95 | (441) |
| Customer accounts – other time deposits – retail: | | | | | | |
| in offices in the UK | 403 | 256 | 147 | (343) | 86 | (429) |
| in offices outside the UK | 82 | 35 | 47 | (32) | (9) | (23) |
| | 485 | 291 | 194 | (375) | 77 | (452) |
| Customer accounts – other time deposits – wholesale: | | | | | | |
| in offices in the UK | 317 | 143 | 174 | (42) | 104 | (146) |
| in offices outside the UK | 247 | 215 | 32 | (1) | 8 | (9) |
| | 564 | 358 | 206 | (43) | 112 | (155) |
| Debt securities in issue: | | | | | | |
| in offices in the UK | 280 | 223 | 57 | (136) | 65 | (201) |
| in offices outside the UK | 78 | 8 | 70 | 39 | 51 | (12) |
| | 358 | 231 | 127 | (97) | 116 | (213) |
| Dated and undated loan capital and other subordinated liabilities principally in offices in the UK | 72 | 38 | 34 | 19 | 48 | (29) |
| Internal funding of trading businesses | (387) | (52) | (335) | 259 | 160 | 99 |
| Total banking business interest payable: | | | | | | |
| in offices in the UK | 1,423 | 1,000 | 423 | (854) | 442 | (1,296) |
| in offices outside the UK | 514 | 345 | 169 | (56) | 45 | (101) |
| | 1,937 | 1,345 | 592 | (910) | 487 | (1,397) |
| Total trading business interest payable | 1,338 | 1,368 | (30) | (148) | (400) | 252 |
| Total interest payable | 3,275 | 2,713 | 562 | (1,058) | 87 | (1,145) |

| Movement in net interest income | Total change £m | Volume £m | Rate £m | Total change £m | Volume £m | Rate £m |
| --- | --- | --- | --- | --- | --- | --- |
| Increase/(decrease) in interest receivable | 3,621 | 3,642 | (21) | (786) | 229 | (1,015) |
| (Increase)/decrease in interest payable | (3,275) | (2,713) | (562) | 1,058 | (87) | 1,145 |
| | 346 | 929 | (583) | 272 | 142 | 130 |
| Movement in write-down of leases | – | | | 40 | | |
| Movement in profit on redemption/repurchase of loan capital | (1) | | | – | | |
| Movement in discount rate adjustment on provisions | (2) | | | (2) | | |
| | 343 | | | 310 | | |

Barclays PLC Annual Report 2000 31

---

# Financial review
Capital resources

## Capital resources

The Group continues to manage actively both its debt and equity capital. Total capital resources increased in the year by £7,725m.

| Barclays PLC Group | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Shareholders’ funds | 13,187 | 8,483 | 7,842 |
| Minority & other interests | 1,600 | 352 | 314 |
| | 14,787 | 8,835 | 8,156 |
| Undated loan capital | 2,672 | 1,749 | 1,742 |
| Dated loan capital | 3,698 | 2,848 | 1,992 |
| Total capital resources | 21,157 | 13,432 | 11,890 |

| Barclays Bank PLC Group | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Shareholders’ funds | 14,679 | 8,753 | 8,105 |
| Minority interests | 108 | 82 | 51 |
| | 14,787 | 8,835 | 8,156 |
| Undated loan capital | 2,672 | 1,749 | 1,742 |
| Dated loan capital | 3,698 | 2,848 | 1,992 |
| Total capital resources | 21,157 | 13,432 | 11,890 |

Shareholders’ funds increased by £4,687m before favourable exchange differences of £17m. This increase resulted from shares issued in respect of The Woolwich acquisition (£3,359m) and profit retentions of £1,546m, offset by share buy-backs, including costs, of £311m.

The increase in minority interests in Barclays PLC Group reflects the issue by Barclays Bank PLC of £850m (£510m) and US $1,250m (£860m) Reserve Capital Instruments on 3rd May and 19th September 2000 respectively. This increase is reflected in shareholders’ funds in Barclays Bank PLC Group. 17,920,000 outstanding Series C1 and C2 Non cumulative Dollar Denominated Preference Shares of $0.01 each were redeemed on 30th June 2000. The aggregate redemption cost was $224m (£149m).

Loan capital rose by £1,773m reflecting raisings of £861m, loan capital of The Woolwich on acquisition of £957m and exchange rate movements of £169m. This was offset by repayments of £214m.

## Capital ratios

Capital adequacy and the use of regulatory capital are monitored by the Group, employing techniques based on the guidelines developed by the Basel Committee on Banking Supervision (the Basel Committee) and European Community Directives, as implemented by the Financial Services Authority (FSA) for supervisory purposes.

These techniques include the risk asset ratio calculation, which the FSA regards as a key supervisory tool. The FSA sets ratio requirements for individual banks in the UK at or above the internationally agreed minimum of 8%. The ratio calculation involves the application of designated risk weightings to reflect an estimate of credit, market and other risks associated with broad categories of transactions and counterparties.

Regulatory guidelines define three ‘tiers’ of capital resources. Tier 1 (‘core’) capital, comprising mainly shareholders’ funds and including Reserve Capital Instruments (included in minority and other interests in Barclays PLC Group and within shareholders’ funds in Barclays Bank PLC Group) is the highest tier and can be used to meet trading and banking activity requirements. Tier 2 includes perpetual, medium-term and long-term subordinated debt, general provisions for bad and doubtful debts and fixed asset revaluation reserves. Tier 2 capital can be used to support both trading and banking activities. Tier 3 capital comprises short-term subordinated debt with a minimum original maturity of two years. The use of tier 3 capital is restricted to trading activities only and it is not eligible to support counterparty or settlement risk. The aggregate of tiers 2 and 3 capital included in the risk asset ratio calculation may not exceed tier 1 capital.

The following table analyses capital resources at 31st December 2000, as defined for regulatory purposes:

## Capital adequacy data

| Tier 1 | 2000 Barclays PLC Group £m | 2000 Barclays Bank PLC Group £m | 1999 Barclays PLC Group £m | 1999 Barclays Bank PLC Group £m |
| --- | --- | --- | --- | --- |
| Shareholders’ funds (as defined for regulatory purposes) | 8,878 | 10,370 | 8,267 | 8,537 |
| Minority interests in tier 1 | 1,669 | 177 | 429 | 159 |
| Total tier 1 capital | 10,547 | 10,547 | 8,696 | 8,696 |

| Tier 2 | 2000 £m | 1999 £m |
| --- | --- | --- |
| Fixed asset revaluation reserves | 40 | 43 |
| Qualifying undated and dated loan capital (a) | 5,819 | 4,233 |
| | 5,859 | 4,276 |
| General allowances for bad and doubtful debts | 760 | 672 |
| Total tier 2 capital | 6,619 | 4,948 |

| Tier 3 | 2000 £m | 1999 £m |
| --- | --- | --- |
| Short-term subordinated loans | 331 | 343 |
| Total tier 3 capital | 331 | 343 |

| Gross capital resources | 17,497 | 13,987 |
| Less: supervisory deductions (b) | (1,312) | (853) |
| Total net capital resources | 16,185 | 13,134 |

## Notes
(a) Dated and undated subordinated debt is included in tier 2 or 3, subject to limits laid down in the supervisory requirements. Barclays retains significant capacity to raise additional capital within these limits.
(b) Includes £820m (1999 £555m) of shareholders’ interest in the retail life-fund.

32 Barclays PLC Annual Report 2000

---

# Financial review
Capital resources and Deposits

## Capital ratios (%)

| | 2000 Barclays PLC Group % | 2000 Barclays Bank PLC Group % | 1999 Barclays PLC Group % | 1999 Barclays Bank PLC Group % |
| --- | --- | --- | --- | --- |
| Tier 1 ratio | 7.2 | 7.2 | 7.5 | 7.5 |
| Risk asset ratio | 11.0 | 11.0 | 11.3 | 11.3 |

| Weighted risk assets | 2000 £m | 1999 £m |
| --- | --- | --- |
| Banking book | | |
| on-balance sheet | 112,633 | 84,535 |
| off-balance sheet | 18,413 | 15,567 |
| associated undertakings | 783 | 1,341 |
| Total banking book | 131,829 | 101,443 |
| Trading book | | |
| market risks | 6,440 | 6,015 |
| counterparty and settlement risks | 8,771 | 8,420 |
| Total trading book | 15,211 | 14,435 |
| Total risk weighted assets | 147,040 | 115,878 |

## Deposits

| Average: year ended 31st December | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Deposits by banks | | | |
| Offices in the UK | 21,465 | 14,210 | 17,911 |
| Offices outside the UK: | | | |
| Other European Union | 3,996 | 5,025 | 4,913 |
| United States | 4,618 | 3,816 | 3,500 |
| Rest of the World | 5,122 | 2,665 | 3,313 |
| | 35,201 | 25,716 | 29,637 |
| Customer accounts | | | |
| Offices in the UK | 101,354 | 89,533 | 82,122 |
| Offices outside the UK: | | | |
| Other European Union | 5,050 | 4,991 | 5,392 |
| United States | 5,201 | 2,515 | 2,720 |
| Rest of the World | 10,416 | 8,368 | 7,540 |
| | 122,021 | 105,407 | 97,774 |

Average deposits (excluding trading balances) are analysed by type in the average balance sheet on page 29 and are based on the location of the office in which the deposits are recorded.

‘Demand deposits’ in offices in the UK are mainly current accounts with credit balances, obtained through the UK branch network.

‘Savings deposits’ in offices in the UK are also obtained through, and administered by, the UK branch network. Interest rates are varied from time to time in response to competitive conditions. These deposits are not drawn against by cheque or similar instrument.

‘Other time deposits – retail’ in offices in the UK are interest bearing and also are not drawn against by cheque or similar instrument. They are generally distinguished from savings deposits by having fixed maturity requirements and from wholesale deposits by being collected, in the main, through the UK branch network.

‘Other time deposits – wholesale’ in offices in the UK are obtained through the London money market and are booked mainly within the Group’s money market operations. These deposits are of fixed maturity and bear interest rates which relate to the London inter-bank money market rates.

‘Other time deposits’ includes commercial paper and inter-bank funds.

Although the types of deposit products offered through offices located outside the UK are broadly similar to those described above, they are tailored to meet the specific requirements of local markets.

Barclays PLC Annual Report 2000 33

---

# Financial review
Short-term borrowings

## Short-term borrowings

Short-term borrowings include Deposits by banks as reported in ‘Deposits’.

| Deposits by banks (excluding trading business) | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Year-end balance | 32,445 | 26,915 | 25,951 |
| Average balance | 35,201 | 25,716 | 29,637 |
| Maximum balance | 45,923 | 35,384 | 35,092 |
| Average interest rate during year | 4.2% | 3.7% | 4.1% |
| Year-end interest rate | 4.5% | 3.8% | 4.4% |

## Commercial paper

Commercial paper is issued by the Group, mainly in the United States, generally in denominations of not less than $100,000, with maturities of up to 270 days.

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Year-end balance | 2,209 | 1,082 | 1,098 |
| Average balance | 2,001 | 857 | 913 |
| Maximum balance | 3,668 | 2,131 | 1,546 |
| Average interest rate during year | 6.6% | 5.2% | 5.2% |
| Year-end interest rate | 6.4% | 5.3% | 5.3% |

## Negotiable certificates of deposit

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Year-end balance | 22,413 | 19,496 | 14,764 |
| Average balance | 20,918 | 19,781 | 17,971 |
| Maximum balance | 29,125 | 26,118 | 20,573 |
| Average interest rate during year | 5.2% | 5.0% | 6.2% |
| Year-end interest rate | 6.3% | 5.3% | 6.4% |

34 Barclays PLC Annual Report 2000

---

# Financial review
Securities

## Securities

The following table analyses the book value and valuation of securities

| | 2000 Book value £m | 2000 Valuation £m | 1999 Book value £m | 1999 Valuation £m | 1998 Book value £m | 1998 Valuation £m |
| --- | --- | --- | --- | --- | --- | --- |
| Investment securities | | | | | | |
| Debt securities: | | | | | | |
| UK government | 1,496 | 1,571 | 1,666 | 1,664 | 1,730 | 1,775 |
| other government | 12,117 | 12,378 | 9,315 | 9,340 | 5,937 | 6,053 |
| other public bodies | 20 | 19 | 69 | 71 | 87 | 89 |
| other issuers | 16,087 | 16,103 | 9,741 | 9,748 | 6,548 | 6,595 |
| Equity shares | 244 | 295 | 179 | 206 | 336 | 379 |
| | 29,964 | 30,366 | 20,970 | 21,029 | 14,638 | 14,891 |
| Other securities | | | | | | |
| Debt securities: | | | | | | |
| UK government | 845 | 845 | 1,278 | 1,278 | 3,621 | 3,621 |
| other government | 15,555 | 15,555 | 7,031 | 7,031 | 10,377 | 10,377 |
| other public bodies | 1,280 | 1,280 | 503 | 503 | 775 | 775 |
| bank and building society certificates of deposit | 16,682 | 16,682 | 18,005 | 18,005 | 8,677 | 8,677 |
| other issuers | 6,688 | 6,688 | 6,311 | 6,311 | 7,428 | 7,428 |
| Equity shares | 3,818 | 3,818 | 5,425 | 5,425 | 4,552 | 4,552 |
| | 74,832 | 75,234 | 59,523 | 59,582 | 50,068 | 50,321 |

Investment debt securities include government securities held as part of the Group’s treasury management portfolio for asset and liability, liquidity and regulatory purposes and are for use on a continuing basis in the activities of the Group. In addition, the Group holds as investments listed and unlisted corporate securities. Investment securities are valued at cost, adjusted for the amortisation of premiums or discounts to redemption, less any provision for diminution in value.

Other securities comprise dealing securities and short-term certificates of deposit and are principally valued at market value.

Bank and building society certificates of deposit are freely negotiable and have original maturities of up to 5 years, but are typically held for shorter periods.

A further analysis of the book value and valuation of securities is given in notes 19 and 20 to the accounts.

In addition to UK government securities shown above, at 31st December 2000 and 1999 the Group held the following government securities which exceeded 10% of shareholders’ funds:

| | 2000 Book value £m | 2000 Valuation £m | 1999 Book value £m | 1999 Valuation £m |
| --- | --- | --- | --- | --- |
| US government securities | 6,429 | 6,426 | 5,457 | 5,408 |
| Japanese government securities | 5,584 | 5,586 | 1,805 | 1,815 |
| Italian government securities | 5,266 | 5,382 | 2,827 | 2,876 |
| German government securities | 2,838 | 2,838 | 1,692 | 1,648 |
| French government securities | 1,963 | 1,968 | 1,547 | 1,567 |
| Spanish government securities* | – | – | 1,160 | 1,194 |

* Holdings did not exceed 10% of shareholders’ funds at 31st December 2000.

## Maturities and weighted average yield of investment debt securities

| | Maturing within one year: Amount £m | Maturing within one year: Yield % | Maturing after one but within five years: Amount £m | Maturing after one but within five years: Yield % | Maturing after five but within ten years: Amount £m | Maturing after five but within ten years: Yield % | Maturing after ten years: Amount £m | Maturing after ten years: Yield % | Total Amount £m | Total Yield % |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Government | 4,688 | 5.6 | 6,204 | 6.1 | 1,612 | 6.7 | 1,109 | 7.0 | 13,613 | 6.1 |
| Other public bodies | 13 | 10.9 | 3 | 5.1 | 3 | 10.9 | 1 | 2.9 | 20 | 9.7 |
| Other issuers | 4,358 | 4.9 | 7,441 | 6.0 | 881 | 7.5 | 3,407 | 6.3 | 16,087 | 5.9 |
| Total book value | 9,059 | 5.2 | 13,648 | 6.1 | 2,496 | 7.0 | 4,517 | 6.5 | 29,720 | 6.0 |
| Total valuation | 9,157 | | 13,599 | | 2,621 | | 4,694 | | 30,071 | |

The weighted average yield for each range of maturities is calculated by dividing the annualised interest income prevailing at 31st December 2000 by the book value of securities held at that date. Yields on certain US securities, which are exempt from tax, have been calculated using interest income adjusted to reflect a taxable equivalent basic.

Barclays PLC Annual Report 2000 35

---

# Financial review
Risk management

## Risk management – overview

Barclays aim in risk management is to achieve superior shareholder value through high quality risk management techniques and processes.

### Risk management governance

Barclays manages a variety of risks in the ordinary course of business. These risks are identified, measured and monitored through various control mechanisms across the Group, in accordance with the requirements of the guidance ‘Internal control: Guidance for Directors on the Combined Code’ issued by the Institute of Chartered Accountants in England and Wales.

The Board sets risk management standards and risk appetite for the Group, and is supported in this role by the Board Risk Committee, whose responsibilities include:

- Reviewing, and recommending to the Board, standards for risk management, including risk control principles, behavioural standards, and overall risk measures.
- Reviewing the overall risk appetite and profile of the Group.
- Reviewing significant changes in risk governance policy.
- Reviewing reports on specific material aspects of the Group’s risk governance and risk management processes.

The responsibility for managing risk lies with the Group Chief Executive and the Group Executive Committee. On a day to day basis, risks are managed through a number of management committees (see chart on the following page) and through a Group Risk organisation which reports to the Group Risk Director. Through this process, Barclays monitors compliance within the overall risk policy framework and ensures that the framework is kept up to date. Risk management information is provided on a regular basis to Group Executive Committee, the Board Risk Committee and the Board.

### Risk management organisation

Against a background of a rapidly changing business environment, Barclays believes that its risk organisation needs to be capable of adapting quickly to new product and business structures. During 2000, Barclays embarked on the development of a more integrated risk organisation which is both flexible in the face of changing business needs and supports the implementation of Value Based Management in Barclays.

A key feature of the new integrated risk management organisation is that it brings together both business risk functions and specialist risk teams.

Risk management in the businesses (including The Woolwich) is the responsibility of the risk business partners, who have a functional reporting line to the Group Risk Director. The key role of risk business partners is to assist the businesses to maximise value by:

- Performing high quality analysis of risks.
- Ensuring that risks are properly controlled.
- Evaluating economic trade-offs between risks.
- Designing cost-effective ways of mitigating and transferring risks.
- Generating alternative strategies regarding risk.

Specialist risk teams measure and control aggregate risk, and provide high level policies and standards within the overall corporate governance framework. Specialist areas also perform research & development and quality assurance, and provide analytical support to the businesses.

The following risks are covered by this process:

- Credit.
- Market.
- Treasury asset and liability management (comprising liquidity/funding risk and non-trading interest rate and exchange rate risk).
- Operational (comprising operational process risk, IT security risk, business continuity management, fraud risk, premises-related risk and people-related risk).
- Compliance.
- Legal.
- Tax.

Further analysis of these risks is provided in subsequent sections of the Financial Review.

36 Barclays PLC Annual Report 2000

---

# Financial review
Risk management

## Risk management committees

```mermaid
graph TD
    A[Group Chief Executive<br>Group Executive Committee] --> B[Group Treasury Committee]
    A --> C[Group Risk Management Committee]
    A --> D[Group Operating Committee]
    C --> E[Group Credit Committee]
    C --> F[Group Risk Oversight Committee]
    C --> G[Group Risk Technical Committee]

    subgraph B_desc [Group Treasury Committee]
    B1[Reviews and determines policy for liquidity and maturity transformation.]
    B2[Reviews and determines policy for structural interest rate exposure.]
    end

    subgraph C_desc [Group Risk Management Committee]
    C1[Approves high level polices and procedures for risk management and control throughout the Group.]
    C2[Reviews and recommends the overall risk appetite for the Group.]
    C3[Approves policy for asset class concentrations.]
    end

    subgraph D_desc [Group Operating Committee]
    D1[Ensures integrity of the operational, control and governance framework.]
    D2[Agrees polices and governance arrangements relating to operational management.]
    end

    subgraph E_desc [Group Credit Committee]
    E1[Sanctions large credit exposures.]
    E2[Approves revisions to country gradings.]
    E3[Sanctions large syndicated loan, bond and equity underwritings.]
    end

    subgraph F_desc [Group Risk Oversight Committee]
    F1[Approves risk limits, guidelines and triggers within high level appetite and framework agreed by Group Risk Management Committee.]
    F2[Monitors performance of business units against risk limits.]
    end

    subgraph G_desc [Group Risk Technical Committee]
    G1[Reviews and approves risk measurement and economic capital methodologies and new products with major risk implications.]
    G2[Approves the quality assurance framework to which all risk models are subject.]
    end
```

Barclays PLC Annual Report 2000 37

---

# Financial review
Credit risk management

## Credit risk management

Credit risk arises because the Bank’s customers, clients or counterparties may not be willing or able to fulfil their contractual obligations. This type of risk may be divided into a number of different categories which includes primary, trading and settlement risks.

In relation to its management of credit risk, the Group Credit Risk Unit (GCRU) has day-to-day responsibility for monitoring compliance with Group policies. GCRU also reviews portfolio management and risk concentration issues, including country exposure, sector exposure, product risking and credit grading. GCRU is headed by the Group Credit Risk Director.

### Risk Measurement

The Group uses a grading structure to show the probability of future default by borrowers. This is used to estimate levels of annualised credit losses from the overall lending portfolio (termed Risk Tendency). Risk Tendency assists in portfolio management decisions, such as setting exposure limits to any single counterparty or borrower, establishing the desired aggregate exposure levels to individual sectors, determining pricing policy and setting the level of the general provision. Gradings also provide a guide to changes in the underlying credit quality of the lending portfolio over time. A similar structure is also in place to control exposures to countries.

Credit exposure, or replacement cost, on derivative instruments represents the potential cost to replace contracts with a positive value if counterparties failed to perform their obligations. This cost is usually less than the face value of the contracts and the actual amount is monitored on an ongoing basis. To control the level of credit risk taken, the Group assesses counterparties, using the same techniques and grading structure as for lending decisions. Dealings are predominantly with counterparties of high credit quality.

### Risk Control

The Group Credit Committee is responsible for sanctioning large credit exposures to all customers and counterparties arising from lending, trading activities, derivative instruments and settlement risks.

The Group Credit Committee is supported by business line focused risk management departments (RMDs) either in or responsible to each of the Strategic Business Units. Each RMD ensures that the SBU adheres to Group Standards for Credit Risk analysis and sanctioning. The SBUs’ credit risk positions are reviewed and challenged by the Group Credit Risk Unit on a regular basis.

Retail Financial Services and Corporate Banking, which have the majority of the Group’s personal and corporate credit exposures, each operate a hierarchy of credit exposure discretions, whereby credit risk teams, overseas country offices and specialist lending departments are allocated discretionary limits. Local management are sub-allocated varying levels of discretionary limits, which vary according to their skills, experience, seniority and the quality of the borrower as measured by the credit grading structure. A similar hierarchy exists for monitoring and provisioning purposes. The application of this structure results in a large proportion of local lending portfolios being sanctioned and controlled at local and regional level.

Credit risk within Barclaycard is controlled by their Risk Management Department. Policy relating to exposures is set by this department and implemented by the Customer Management Teams. Within Customer Management, advisors are allocated discretionary limits, according to grade and experience. Any lending decision falling outside policy may only be sanctioned after reference to Risk Management.

Barclays Capital has a lesser number of credit exposures, but typically for larger individual amounts and with significant credit exposures arising from money market, foreign exchange, derivatives, securities dealing and other similar products. These trading activities, which include the use of on- and off-balance sheet instruments, result in certain credit risks. The majority are referred to the Group Credit Committee or are sanctioned within Barclays Capital’s risk management department in London or in its office in New York. Smaller credit exposures, however, are sanctioned and controlled by specialist departments and individual Barclays Capital business units under a hierarchy of credit exposure discretions.

Since Barclays Global Investors passes credit risk upon its transactions to its investor clients, it is excluded from this structure. However, the procedures for assessing such credit risk are similar to those undertaken elsewhere in the Group and fall under the overall supervision of GCRU.

Environmental Risk Management Unit, part of the credit risk management function, aims to protect the Group from material environmental risks, worldwide. These risks may be direct (lender liability) or indirect (environmental issues may impact the viability of our borrowing customers). Potential reputational risks are also addressed. These would arise through the Group’s association with companies or projects which may be perceived to be environmentally damaging.

Group Treasury is responsible for the monitoring and regulatory reporting of intra-group exposures under the EC Large Exposures Directive.

### Risk Mitigation

As the credit markets develop, Barclays is expanding the mechanisms used to manage credit risk. This includes the use of credit derivatives and securitisation, with the primary objective of reducing the uncertainty of returns from the credit portfolio. There will be greater opportunities to use these techniques as the credit markets develop. The cost of these transactions is generally treated as a deduction from the related category of income with any benefits being reflected in reduced credit risk provisions.

The Group enters into master agreements whenever possible and, when appropriate, obtains collateral. Master agreements provide that, if an event of default occurs, all outstanding transactions with the counterparty will be terminated and all amounts outstanding will be settled on a net basis. Concentrations of credit risk, which arise through the Group’s trading and non-trading activities, are presented in note 64 to the accounts.

38 Barclays PLC Annual Report 2000

# Financial review

## Analysis of loans and advances

The following sections analyse loans and advances to banks and customers. The geographical analyses of the banking business are based on the location of the office from which the lendings are made. The trading business, which is international in nature, primarily constitutes settlement and reverse repo balances and has not been analysed geographically. This business is largely carried out in the UK and the United States.

## Loans and advances to banks

The majority of loans and advances to banks are placings, amounting to £32,170m at 31st December 2000 (1999 £36,080m, 1998 £33,817m) and includes reverse repo transactions. Also included are loans to banks and building societies, balances with central banks (excluding those balances which can be withdrawn on demand), inter-bank settlement accounts and federal funds sold.

### Loans and advances to banks

| Banking business: | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| UK | 3,345 | 6,307 | 4,037 |
| Other European Union | 2,042 | 2,173 | 3,847 |
| United States | 2,056 | 2,118 | 2,230 |
| Rest of the World | 2,153 | 2,497 | 10,243 |
| Total banking business | 9,596 | 13,095 | 20,357 |
| Total trading business | 26,856 | 26,555 | 17,326 |
| Total | 36,452 | 39,650 | 37,683 |

The amounts shown are before the deduction of attributable provisions and interest in suspense.

### Maturity analysis of loans and advance to banks

| At 31st December 2000 | On demand £m | Not more than three months £m | Over three months but not more than one year £m | Over one year but not more than five years £m | Over five years £m | Total £m |
| --- | --- | --- | --- | --- | --- | --- |
| Banking business: | | | | | | |
| UK | 392 | 1,463 | 985 | 398 | 107 | 3,345 |
| Other European Union | 248 | 1,526 | 63 | 151 | 54 | 2,042 |
| United States | 26 | 880 | 874 | 276 | - | 2,056 |
| Rest of the World | 318 | 1,414 | 417 | 4 | - | 2,153 |
| Total banking business | 984 | 5,283 | 2,339 | 829 | 161 | 9,596 |
| Total trading business | 1,110 | 22,118 | 3,628 | - | - | 26,856 |
| Total | 2,094 | 27,401 | 5,967 | 829 | 161 | 36,452 |

| At 31st December 1999 | On demand £m | Not more than three months £m | Over three months but not more than one year £m | Over one year but not more than five years £m | Over five years £m | Total £m |
| --- | --- | --- | --- | --- | --- | --- |
| Banking business: | | | | | | |
| UK | 304 | 4,215 | 1,139 | 500 | 149 | 6,307 |
| Other European Union | 126 | 1,530 | 384 | 121 | 12 | 2,173 |
| United States | 40 | 816 | 960 | 295 | 7 | 2,118 |
| Rest of the World | 251 | 1,002 | 1,221 | 18 | 5 | 2,497 |
| Total banking business | 721 | 7,563 | 3,704 | 934 | 173 | 13,095 |
| Total trading business | 246 | 23,583 | 2,671 | - | 55 | 26,555 |
| Total | 967 | 31,146 | 6,375 | 934 | 228 | 39,650 |

### Interest rate sensitivity of loans and advances to banks

| At 31st December 2000 | Fixed rate £m | Variable rate £m | Total £m |
| --- | --- | --- | --- |
| Banking business: | | | |
| UK | 2,552 | 793 | 3,345 |
| Other European Union | 1,564 | 478 | 2,042 |
| United States | 2,030 | 26 | 2,056 |
| Rest of the World | 1,894 | 259 | 2,153 |
| Total banking business | 8,040 | 1,556 | 9,596 |
| Total trading business | 15,662 | 11,194 | 26,856 |
| Total | 23,702 | 12,750 | 36,452 |

## Loan and advances to customers

The Group provides lending facilities to corporate and personal customers in the form of loans, overdrafts and finance lease receivables. The amounts shown below are before deduction of attributable provisions and interest in suspense.

### Maturity analysis of loans and advances to customers

| At 31st December 2000 | On demand (a) £m | Not more than three months £m | Over three months but not more than one year £m | Over one year but not more than five years £m | Over five years £m | Total £m |
| --- | --- | --- | --- | --- | --- | --- |
| Banking business: | | | | | | |
| UK | | | | | | |
| Corporate lending | 8,041 | 5,768 | 4,281 | 10,579 | 8,887 | 37,556 |
| Other lending from UK offices (b) | 2,545 | 5,928 | 6,153 | 12,936 | 50,196 | 77,758 |
| Total UK | 10,586 | 11,696 | 10,434 | 23,515 | 59,083 | 115,314 |
| Other European Union | 920 | 1,789 | 1,485 | 2,749 | 3,260 | 10,203 |
| United States | 442 | 890 | 1,411 | 2,802 | 831 | 6,376 |
| Rest of the World | 658 | 2,783 | 3,932 | 771 | 806 | 8,950 |
| Total banking business | 12,606 | 17,158 | 17,262 | 29,837 | 63,980 | 140,843 |
| Total trading business | 846 | 22,049 | 792 | - | - | 23,687 |
| Total | 13,452 | 39,207 | 18,054 | 29,837 | 63,980 | 164,530 |

| At 31st December 1999 | On demand (a) £m | Not more than three months £m | Over three months but not more than one year £m | Over one year but not more than five years £m | Over five years £m | Total £m |
| --- | --- | --- | --- | --- | --- | --- |
| Banking business: | | | | | | |
| UK | | | | | | |
| Corporate lending | 5,882 | 5,650 | 4,099 | 9,341 | 7,345 | 32,317 |
| Other lending from UK offices (b) | 2,662 | 5,211 | 4,780 | 11,768 | 21,939 | 46,360 |
| Total UK | 8,544 | 10,861 | 8,879 | 21,109 | 29,284 | 78,677 |
| Other European Union | 748 | 1,533 | 1,140 | 1,797 | 758 | 5,976 |
| United States | 104 | 491 | 860 | 1,730 | 863 | 4,048 |
| Rest of the World | 504 | 1,018 | 5,405 | 683 | 734 | 8,344 |
| Total banking business | 9,900 | 13,903 | 16,284 | 25,319 | 31,639 | 97,045 |
| Total trading business | 3 | 21,355 | 192 | - | 12 | 21,562 |
| Total | 9,903 | 35,258 | 16,476 | 25,319 | 31,651 | 118,607 |

Notes:
(a) Overdrafts are included in the 'on demand' category.
(b) Other lending from UK offices includes finance lease receivables.

### Interest rate sensitivity of loans and advances to customers

| At 31st December 2000 | Fixed rate £m | Variable rate £m | Total £m |
| --- | --- | --- | --- |
| Banking business: | | | |
| UK | 37,210 | 78,104 | 115,314 |
| Other European Union | 3,998 | 6,205 | 10,203 |
| United States | 1,449 | 4,927 | 6,376 |
| Rest of the World | 6,005 | 2,945 | 8,950 |
| Total banking business | 48,662 | 92,181 | 140,843 |
| Total trading business | 11,291 | 12,396 | 23,687 |
| Total | 59,953 | 104,577 | 164,530 |

### Loans and advances to customers in offices in the UK - banking business

| | 2000 £m | 1999 £m | 1998 £m | 1997 £m | 1996 £m |
| --- | --- | --- | --- | --- | --- |
| Financial institutions | 1,420 | 1,552 | 1,839 | 2,258 | 2,388 |
| Agriculture, forestry and fishing | 1,689 | 1,693 | 1,612 | 1,726 | 1,768 |
| Manufacturing | 7,573 | 6,954 | 6,840 | 5,556 | 5,976 |
| Construction | 1,666 | 1,331 | 1,227 | 1,046 | 1,242 |
| Property | 5,130 | 3,689 | 3,205 | 2,927 | 3,619 |
| Energy and water | 1,120 | 613 | 668 | 586 | 863 |
| Wholesale and retail distribution and leisure | 7,531 | 6,455 | 6,778 | 5,895 | 5,553 |
| Transport | 1,353 | 1,270 | 1,164 | 875 | 1,320 |
| Postal and communication | 180 | 345 | 261 | 86 | 101 |
| Business and other services | 9,894 | 8,415 | 7,549 | 6,425 | 6,178 |
| Home loans | 47,235 | 18,316 | 16,580 | 15,937 | 14,958 |
| Other personal | 18,200 | 15,673 | 14,376 | 12,403 | 11,315 |
| Overseas customers | 7,819 | 7,277 | 3,056 | 3,421 | 2,561 |
| | 110,810 | 73,583 | 65,155 | 59,141 | 57,842 |
| Finance lease receivables | 4,504 | 5,094 | 5,279 | 5,635 | 5,825 |
| Total | 115,314 | 78,677 | 70,434 | 64,776 | 63,667 |

### Loans and advances to customers in offices in other European Union countries - banking business

| | 2000 £m | 1999 £m | 1998 £m | 1997 £m | 1996 £m |
| --- | --- | --- | --- | --- | --- |
| Financial institutions | 455 | 178 | 220 | 215 | 437 |
| Agriculture, forestry and fishing | 303 | 223 | 109 | 19 | 14 |
| Manufacturing | 1,549 | 1,322 | 975 | 964 | 966 |
| Construction | 330 | 193 | 148 | 164 | 246 |
| Property | 183 | 144 | 182 | 237 | 296 |
| Energy and water | 384 | 145 | 114 | 114 | 81 |
| Wholesale and retail distribution and leisure | 144 | 207 | 323 | 378 | 349 |
| Transport | 172 | 119 | 133 | 184 | 461 |
| Postal and communication | 83 | 37 | 9 | 11 | 39 |
| Business and other services | 1,321 | 918 | 1,433 | 980 | 864 |
| Home loans | 4,436 | 1,029 | 932 | 670 | 796 |
| Other personal | 582 | 505 | 500 | 352 | 313 |
| Overseas customers | 110 | 462 | 358 | 304 | 314 |
| | 10,052 | 5,482 | 5,436 | 4,592 | 5,176 |
| Finance lease receivables | 151 | 494 | 503 | 485 | 497 |
| Total | 10,203 | 5,976 | 5,939 | 5,077 | 5,673 |

### Loans and advances to customers in offices in the United States - banking business

| | 2000 £m | 1999 £m | 1998 £m | 1997 £m | 1996 £m |
| --- | --- | --- | --- | --- | --- |
| Financial institutions | 616 | 320 | 527 | 350 | 190 |
| Agriculture, forestry and fishing | - | 1 | 1 | 1 | 4 |
| Manufacturing | 1,123 | 727 | 592 | 325 | 337 |
| Construction | - | - | 12 | 5 | 27 |
| Property | 30 | 69 | 80 | 195 | 412 |
| Energy and water | 1,440 | 1,168 | 645 | 647 | 510 |
| Wholesale and retail distribution and leisure | 214 | 138 | 323 | 76 | 97 |
| Transport | 580 | 356 | 53 | 98 | 129 |
| Postal and communication | 88 | 166 | 383 | 240 | 115 |
| Business and other services | 2,174 | 1,000 | 1,471 | 1,138 | 929 |
| Home loans | 1 | 1 | 1 | 3 | 12 |
| Other personal | 6 | 58 | 7 | 25 | 69 |
| Overseas customers | 56 | - | 27 | 15 | 24 |
| | 6,328 | 4,004 | 4,122 | 3,118 | 2,855 |
| Finance lease receivables | 48 | 44 | 42 | 44 | 42 |
| Total | 6,376 | 4,048 | 4,164 | 3,162 | 2,897 |

### Loans and advances to customers in offices in the Rest of the World - banking business

| | 2000 £m | 1999 £m | 1998 £m | 1997 £m | 1996 £m |
| --- | --- | --- | --- | --- | --- |
| Loans and advances | 8,920 | 8,316 | 2,883 | 2,980 | 2,951 |
| Finance lease receivables | 30 | 28 | 28 | 29 | 28 |
| Total | 8,950 | 8,344 | 2,911 | 3,009 | 2,979 |

### Total loans and advances to customers

| | 2000 £m | 1999 £m | 1998 £m | 1997 £m | 1996 £m |
| --- | --- | --- | --- | --- | --- |
| Banking business | 140,843 | 97,045 | 83,448 | 76,024 | 75,216 |
| Trading business | 23,687 | 21,562 | 13,611 | 25,712 | 16,441 |
| Total | 164,530 | 118,607 | 97,059 | 101,736 | 91,657 |

### Total loans and advances to customers

Barclays lendings are widely dispersed over customer categories within the UK, the main area of operation, and are also well spread geographically outside the UK. No one concentration of lendings, with the exception of home loans and other personal lendings in the UK, accounts for more than 10% of total Group lendings. Other than the UK, the United States is the only country to account for 10% or more of total Group lendings.

In the geographical analyses of lendings shown on pages 41 and 42, overseas customers are customers resident outside the country in which the lending business is based.

In addition to the lendings categorised as postal and communications in the UK and other geographical areas, exposure to the telecommunications sector is also included in overseas customers. Total loans and advances world-wide to this sector at 31st December 2000 amounted to £1.49bn.

### Loans and advances in offices in the UK

Loans and advances within banking business activities increased by 47% to £115,314m (1999 growth of 12%). £29,810m of the increase was attributable to the acquisition of The Woolwich. There was strong growth in unsecured personal lending and credit card advances, with the mortgage business benefiting from a relatively strong housing market. The growth in corporate lending was concentrated in larger middle market customers.

### Loans and advances in offices in Other European Union countries

£3,129m of the £3,407m growth in home loans was attributable to the acquisition of The Woolwich.

### Loans and advances in offices in the United States and the Rest of the World

Business loans and advances in the United States grew by 58% with significant increases in lendings to financial institutions and manufacturing businesses. Rest of the world lendings were 7% higher than in 1999.

### Credit risk management mechanisms

Barclays has entered into securitisation and credit derivative transactions in order to reduce the uncertainty of returns from the credit portfolio. Details of the securitisation transactions are included in note 17 on page 94 while the year-end level of credit derivatives is provided in note 46 on page 119.

### Exposure to countries subject to International Monetary Fund liquidity support programmes

Amounts outstanding, net of provisions, and commitments to counterparties in countries which make significant use of International Monetary Fund liquidity support programmes were as follows:

| Asia | 2000 £bn | 1999 £bn | 1998 £bn |
| --- | --- | --- | --- |
| Indonesia | 0.1 | 0.1 | 0.1 |
| South Korea | 0.2 | 0.4 | 0.5 |
| Thailand | 0.1 | 0.1 | 0.1 |
| | 0.4 | 0.6 | 0.7 |

| Latin America | 2000 £bn | 1999 £bn | 1998 £bn |
| --- | --- | --- | --- |
| Argentina | 0.9 | * | * |
| Brazil | * | 0.8 | 0.9 |
| Mexico | * | 0.9 | 1.0 |
| | 1.3 | 2.3 | 2.6 |

\* Not reportable.

The total was broken down, as follows:

| | 2000 £bn | 1999 £bn | 1998 £bn |
| --- | --- | --- | --- |
| Banks | 0.8 | 1.3 | 1.6 |
| Governments/sovereigns | 0.1 | 0.4 | 0.5 |
| Corporates & project financings | 0.4 | 0.6 | 0.5 |
| Total | 1.3 | 2.3 | 2.6 |

The Group has a 50% shareholding in Banco Barclays e Galicia SA which in 2000 was equity accounted as an associated undertaking. As at 31st December 2000 this holding was included in the balance sheet at a value of £31m (31st December 1999 £33m, 31st December 1998 £47m).

From 1st January 2001, following the completion of management changes, the Group considers itself to exert dominant influence so that it has control over the operations of Banco Barclays e Galicia SA and consequently from that date the entity will be consolidated as a subsidiary in accordance with Financial Reporting Standard 2.

The general provision in respect of country transfer risk arising from the Group's business world wide, including exposures in these countries, was £57m as at 31st December 2000 (31st December 1999 £57m). This is in addition to £703m of general provision held against credit risk (31st December 1999 £615m).

---

## Provisions for bad and doubtful debts

It is Barclays policy to establish, through charges against profit, a provision in respect of the estimated loss inherent in the lending book. The provision raised consists of an element which is specific to individual counterparties or a homogeneous portfolio of lendings and also a general element which, while determined as reflecting losses already within the lending book, cannot be specifically applied.

Risk managers conduct a continuous review of the quality of exposures for which they are responsible based on a knowledge of the counterparty and, where applicable, the relevant industry and country of operation. A specific charge is raised when the Bank considers that the credit-worthiness of a borrower has undergone deterioration such that the recovery of the whole outstanding advance is in serious doubt. Typically, this will be done on an individual basis, although scope exists to raise specific provisions on a portfolio basis where statistical techniques permit and the portfolio comprises homogeneous assets. This applies in parts of Retail Financial Services, Barclaycard and Corporate Banking and is in keeping with Barclays policy of raising provisions as soon as impairment is identified.

General provisions are raised to cover losses which are judged to be present in loans and advances at the balance sheet date, but which have not been specifically identified as such. These provisions are adjusted at least half yearly by an appropriate charge or release of general provision based on a statistical analysis. The accuracy of this analysis is periodically assessed against actual losses. Gradings are used to rate the credit quality of borrowers. Each grade corresponds to an Expected Default Frequency and is calculated by using manual or computer driven score-sheets validated by an analysis of the Group's own historic data. This grade can be derived from different sources depending upon the borrower (e.g. internal model, credit rating agency). The general provision also takes into account the economic climate in the market in which the Group operates and the level of security held in relation to each category of counterparty. Since 1997, the general provision has included a specifically identified element to cover country transfer risk calculated on a basis consistent with the overall general provision calculation.

The aggregate specific and general provisions which are made during the year, less amounts released and recoveries of bad debts previously written off, are charged against operating profit. Impaired lendings are written off in part, or in whole, when the extent of the loss incurred has been confirmed, the decision to do so being a matter of banking judgement.

The following tables have been divided between those provisions which have been raised against the perceived credit risks and those provisions which have been raised in respect of country risk (i.e. that related to a country's difficulty in servicing its external debt, as evidenced by rescheduling or arrears of payment of principal or interest):

### Analysis of provisions for bad and doubtful debts

| As at 31st December | 2000 £m | 1999 £m | 1998 £m | 1997 £m | 1996 £m |
| --- | --- | --- | --- | --- | --- |
| Specific - credit risk* | | | | | |
| UK | 1,343 | 1,075 | 928 | 765 | 834 |
| Other European Union | 111 | 126 | 213 | 245 | 353 |
| United States | 20 | 23 | 23 | 27 | 59 |
| Rest of the World | 118 | 74 | 35 | 41 | 48 |
| | 1,592 | 1,298 | 1,199 | 1,078 | 1,294 |
| Specific - country risk | 1 | 13 | 16 | 44 | 80 |
| Total specific provisions | 1,593 | 1,311 | 1,215 | 1,122 | 1,374 |
| General provisions - credit risk | 703 | 615 | 663 | 683 | 756 |
| General provisions - country risk | 57 | 57 | 65 | 45 | - |
| Total | 2,353 | 1,983 | 1,943 | 1,850 | 2,130 |
| Average loans and advances for the year | | | | | |
| (excluding trading business) | 122,333 | 106,488 | 101,338 | 96,656 | 95,899 |
| (including trading business) | 176,938 | 147,139 | 145,749 | 136,581 | 122,503 |

\* The geographic analysis of provisions is based on location of office.

The increased specific provision balance in the UK reflects the impact of volume growth in UK unsecured lendings to both personal and small business customers and strong growth across the Barclaycard businesses, combined with record levels of customer recruitment over the last two years.

### Ratios

| As at 31st December | 2000 % | 1999 % | 1998 % | 1997 % | 1996 % |
| --- | --- | --- | --- | --- | --- |
| Provisions at end of year as a percentage of loans and advances at end of year (excluding trading business): | | | | | |
| Specific provision for credit risk | 1.06 | 1.18 | 1.16 | 1.10 | 1.41 |
| General provision for credit risk | 0.47 | 0.56 | 0.64 | 0.70 | 0.83 |
| | 1.53 | 1.74 | 1.80 | 1.80 | 2.24 |
| Specific provision for country risk | - | 0.01 | 0.01 | 0.04 | 0.09 |
| General provision for country risk | 0.04 | 0.05 | 0.06 | 0.05 | - |
| Total | 1.57 | 1.80 | 1.87 | 1.89 | 2.33 |
| Provisions at end of year as a percentage of loans and advances at end of year (including trading business): | | | | | |
| Specific provision for credit risk | 0.79 | 0.82 | 0.89 | 0.78 | 1.07 |
| General provision for credit risk | 0.35 | 0.39 | 0.49 | 0.49 | 0.63 |
| | 1.14 | 1.21 | 1.38 | 1.27 | 1.70 |
| Specific provision for country risk | - | 0.01 | 0.01 | 0.03 | 0.07 |
| General provision for country risk | 0.03 | 0.03 | 0.05 | 0.03 | - |
| Total | 1.17 | 1.25 | 1.44 | 1.33 | 1.77 |

| Year ended 31st December | 2000 % | 1999 % | 1998 % | 1997 % | 1996 % |
| --- | --- | --- | --- | --- | --- |
| Provisions as a percentage of average loans and advances for the year (excluding trading business): | | | | | |
| Specific provisions for credit risk | 0.64 | 0.60 | 0.50 | 0.28 | 0.35 |
| General provisions for credit risk | 0.03 | (0.02) | (0.02) | (0.07) | (0.06) |
| | 0.67 | 0.58 | 0.48 | 0.21 | 0.29 |
| Specific provisions for country risk | - | - | (0.01) | (0.03) | (0.06) |
| General provisions for country risk | - | - | 0.02 | 0.05 | - |
| Total | 0.67 | 0.58 | 0.49 | 0.23 | 0.23 |
| Amounts written off (net of recoveries) | 0.47 | 0.52 | 0.40 | 0.47 | 0.71 |
| Provisions as a percentage of average loans and advances for the year (including trading business): | | | | | |
| Specific provisions for credit risk | 0.44 | 0.43 | 0.35 | 0.20 | 0.28 |
| General provisions for credit risk | 0.02 | (0.01) | (0.01) | (0.05) | (0.05) |
| | 0.46 | 0.42 | 0.34 | 0.15 | 0.23 |
| Specific provisions for country risk | - | - | (0.01) | (0.02) | (0.05) |
| General provisions for country risk | - | - | 0.01 | 0.03 | - |
| Total | 0.46 | 0.42 | 0.34 | 0.16 | 0.18 |
| Amounts written off (net of recoveries) | 0.32 | 0.38 | 0.28 | 0.33 | 0.55 |

### Movements in provisions for bad and doubtful debts

| Year ended 31st December | 2000 £m | 1999 £m | 1998 £m | 1997 £m | 1996 £m |
| --- | --- | --- | --- | --- | --- |
| Provisions for credit risk | | | | | |
| Provision at beginning of year | 1,913 | 1,862 | 1,761 | 2,050 | 2,554 |
| Acquisitions and disposals | 119 | (10) | - | (14) | (24) |
| Exchange and other adjustments | 8 | (2) | 5 | (39) | (100) |
| Amounts written off: | | | | | |
| UK | (592) | (546) | (506) | (441) | (593) |
| Other European Union | (45) | (44) | (43) | (93) | (138) |
| United States | (26) | (40) | (7) | (23) | (30) |
| Rest of the World | (17) | (21) | (9) | (14) | (61) |
| | (680) | (651) | (565) | (571) | (822) |
| Recoveries (analysed below) | 113 | 93 | 176 | 126 | 165 |
| Sub total | 1,473 | 1,292 | 1,377 | 1,552 | 1,773 |
| Provisions charged against profit | | | | | |
| New and increased specific provisions: | | | | | |
| UK | 843 | 768 | 751 | 536 | 623 |
| Other European Union | 35 | 27 | 31 | 49 | 123 |
| United States | 27 | 45 | 11 | 12 | 21 |
| Rest of the World | 76 | 47 | 23 | 28 | 26 |
| | 981 | 887 | 816 | 625 | 793 |
| Releases of specific provisions: | | | | | |
| UK | (50) | (114) | (81) | (143) | (164) |
| Other European Union | (17) | (21) | (31) | (34) | (66) |
| United States | (6) | (7) | (8) | (33) | (45) |
| Rest of the World | (13) | (15) | (15) | (15) | (16) |
| | (86) | (157) | (135) | (225) | (291) |
| Recoveries: | | | | | |
| UK | (100) | (85) | (156) | (111) | (140) |
| Other European Union | (6) | (4) | (4) | (6) | (8) |
| United States | (4) | (4) | (13) | (4) | (12) |
| Rest of the World | (3) | - | (3) | (5) | (5) |
| | (113) | (93) | (176) | (126) | (165) |
| Net specific provisions charge | 782 | 637 | 505 | 274 | 337 |
| General provision releases/(charges)* | 40 | (16) | (20) | (65) | (60) |
| Net credit risk charge to profit | 822 | 621 | 485 | 209 | 277 |
| Provisions at end of year | 2,295 | 1,913 | 1,862 | 1,761 | 2,050 |
| Provisions for country risk | | | | | |
| Provision at beginning of year | 70 | 81 | 89 | 80 | 174 |
| Exchange and other adjustments | (4) | (11) | 1 | 1 | (12) |
| Amounts written off (net of recoveries) | (3) | - | (16) | (10) | (20) |
| Net specific credit: | | | | | |
| Provisions charges | - | - | 3 | 7 | 3 |
| Releases | (4) | (2) | (16) | (34) | (63) |
| Recoveries | (1) | - | - | - | (2) |
| Net specific releases | (5) | (2) | (13) | (27) | (62) |
| General provision charge* | - | 2 | 20 | 45 | - |
| Provision at end of year | 58 | 70 | 81 | 89 | 80 |
| Total provisions for bad and doubtful debts | 2,353 | 1,983 | 1,943 | 1,850 | 2,130 |

\* An analysis of the movement in general provisions is shown in note 18 to the accounts.

The geographic analysis of provisions is based on location of office. The UK charge in 1998 includes £153m raised in respect of exposure to Russian counterparties.

### Credit risk provisions

| | Net specific provision for the year | | | | | Specific provisions for credit risk at 31st December | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | 2000 £m | 1999 £m | 1998 £m | 1997 £m | 1996 £m | 2000 £m | 1999 £m | 1998 £m | 1997 £m | 1996 £m |
| UK: | | | | | | | | | | |
| Banks and other financial institutions | 7 | 10 | 11 | (3) | 6 | 7 | 9 | 14 | 5 | 6 |
| Agriculture, forestry and fishing | 6 | 4 | (5) | - | 1 | 11 | 7 | 4 | 5 | 6 |
| Manufacturing | 8 | 4 | 15 | 25 | 6 | 43 | 48 | 41 | 51 | 39 |
| Construction | 7 | 4 | (7) | 5 | 9 | 8 | 7 | 10 | 26 | 28 |
| Property | 1 | (5) | (20) | (66) | 15 | 8 | 8 | 12 | 29 | 92 |
| Energy and water | 8 | - | - | 3 | 6 | 8 | 2 | 2 | 2 | 6 |
| Wholesale and retail distribution and leisure | 21 | 34 | (10) | 12 | 13 | 42 | 42 | 18 | 10 | 50 |
| Transport | 2 | 4 | (1) | 3 | 4 | 4 | 4 | 2 | 5 | 63 |
| Postal and communication | - | - | 1 | - | - | 1 | 1 | 1 | - | - |
| Business and other services | 27 | 14 | (7) | 4 | 17 | 40 | 34 | 43 | 61 | 69 |
| Home loans | 10 | 5 | (4) | 8 | 7 | 102 | 39 | 35 | 44 | 50 |
| Other personal | 577 | 504 | 376 | 281 | 237 | 1,000 | 830 | 664 | 522 | 414 |
| Overseas customers* | 11 | (21) | 165 | 10 | (10) | 58 | 33 | 79 | 2 | 3 |
| Finance lease receivables | 8 | 12 | - | - | 8 | 11 | 11 | 3 | 3 | 8 |
| | 693 | 569 | 514 | 282 | 319 | 1,343 | 1,075 | 928 | 765 | 834 |
| Foreign | 89 | 68 | (9) | (8) | 18 | 249 | 223 | 271 | 313 | 460 |
| Total | 782 | 637 | 505 | 274 | 337 | 1,592 | 1,298 | 1,199 | 1,078 | 1,294 |

### Analysis of amounts written off and recovered - credit risk

| | Amounts written off for the year | | | | | Recoveries of amounts previously written off | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | 2000 £m | 1999 £m | 1998 £m | 1997 £m | 1996 £m | 2000 £m | 1999 £m | 1998 £m | 1997 £m | 1996 £m |
| UK: | | | | | | | | | | |
| Banks and other financial institutions | 13 | 14 | 16 | 1 | 10 | 4 | 2 | 12 | 3 | 3 |
| Agriculture, forestry and fishing | 6 | 6 | 2 | 4 | 5 | 2 | 3 | 7 | 3 | - |
| Manufacturing | 30 | 20 | 28 | 20 | 22 | 16 | 12 | 12 | 7 | 13 |
| Construction | 8 | 12 | 12 | 12 | 38 | 2 | 3 | 5 | 7 | 16 |
| Property | 5 | 9 | 17 | 28 | 61 | 3 | 7 | 22 | 31 | 29 |
| Energy and water | 2 | - | - | 8 | 3 | - | - | - | - | 1 |
| Wholesale and retail distribution and leisure | 34 | 35 | 25 | 48 | 74 | 12 | 17 | 45 | 15 | 22 |
| Transport | 3 | 4 | 2 | 63 | 17 | 1 | 1 | 1 | 3 | 3 |
| Postal and communication | - | 1 | - | - | - | - | - | - | - | - |
| Business and other services | 33 | 43 | 36 | 32 | 79 | 11 | 12 | 27 | 16 | 21 |
| Home loans | 15 | 3 | 8 | 19 | 21 | 3 | 2 | 4 | 4 | 4 |
| Other personal | 435 | 363 | 254 | 193 | 260 | 28 | 24 | 21 | 20 | 21 |
| Overseas customers* | 4 | 31 | 106 | 11 | - | 17 | 1 | - | - | 5 |
| Finance lease receivables | 4 | 5 | - | 2 | 3 | 1 | 1 | - | 2 | 2 |
| | 592 | 546 | 506 | 441 | 593 | 100 | 85 | 156 | 111 | 140 |
| Foreign | 88 | 105 | 59 | 130 | 229 | 13 | 8 | 20 | 15 | 25 |
| Total | 680 | 651 | 565 | 571 | 822 | 113 | 93 | 176 | 126 | 165 |

\* Include amounts in 1998 in respect of Russian counterparties recorded in the UK.

---

## Potential credit risk lendings

The US Securities and Exchange Commission (SEC) requires potential credit risk lendings to be analysed by categories which reflect US lending and accounting practices. These differ to some extent from those employed in the UK. In particular:

- US banks may write off problem lendings more quickly than is the practice in the UK. As a result, Barclays may report a somewhat higher level of lendings than if it had followed such US practice and also a higher level of potential credit risk lendings.
- US banks typically stop accruing interest when loans are overdue by 90 days or more, or when recovery is doubtful. In accordance with the UK Statement of Recommended Practice on Advances, Barclays continues to charge interest to a doubtful customer's account for collection purposes, but the interest is suspended and excluded from interest income in the profit and loss account. This addition of interest continues until such time as its recovery is considered to be unlikely. While such practice does not affect net income in comparison with that followed in the United States, it again has the effect of increasing the reported level of potential credit risk lendings. The amount of this difference at 31st December 2000 was £93m (1999 £80m).

The table which follows presents an analysis of potential credit risk lendings in accordance with the SEC guidelines. Additional categories of disclosure are included, however, to record lendings where interest continues to be accrued and where either interest is being suspended or specific provisions have been raised. Normal US banking practice would be to place such lendings on non-accrual status. The amounts, the geographical presentation of which is based on the location of the office recording the transaction, are stated before deduction of the value of security held, the specific provisions carried or interest suspended.

### Non-performing lendings

| | 2000 £m | 1999 £m | 1998 £m | 1997 £m | 1996 £m |
| --- | --- | --- | --- | --- | --- |
| Non-accrual lendings: | | | | | |
| UK | 1,223 | 1,007 | 985 | 911 | 1,084 |
| Foreign - credit risk | 316 | 244 | 282 | 309 | 455 |
| Accruing lendings where interest is being suspended: | | | | | |
| UK | 351 | 326 | 266 | 234 | 358 |
| Foreign - credit risk | 145 | 110 | 118 | 153 | 170 |
| Other accruing lendings against which provisions have been made: | | | | | |
| UK | 873 | 423 | 457 | 408 | 492 |
| Foreign - credit risk | 149 | 130 | 134 | 117 | 232 |
| Sub totals: | | | | | |
| UK | 2,447 | 1,756 | 1,708 | 1,553 | 1,934 |
| Foreign - credit risk | 610 | 484 | 534 | 579 | 857 |
| Accruing lendings 90 days overdue, against which no provisions have been made: | | | | | |
| UK | 296 | 343 | 309 | 388 | 473 |
| Foreign - credit risk | 18 | 18 | 19 | 14 | 20 |
| Reduced rate lendings: | | | | | |
| UK | 6 | 6 | 7 | 37 | 38 |
| Foreign - credit risk | - | 2 | - | - | - |
| Total non-performing lendings: | | | | | |
| UK | 2,749 | 2,105 | 2,024 | 1,978 | 2,445 |
| Foreign - credit risk | 628 | 504 | 553 | 593 | 877 |
| Total | 3,377 | 2,609 | 2,577 | 2,571 | 3,322 |

The increase in UK non-performing lending primarily relates to the inclusion of The Woolwich (£592m). The residual increase largely arose in Barclaycard and Barclays Capital.

Financial review
Potential credit risk lendings

# Potential problem lendings

In addition to the data above, lendings which are current as to payment of principal and interest, but where there exists serious doubt as to the ability of the borrower to comply with repayment terms in the near future (potential problem lendings), were as follows:

| | 2000 £bn | 1999 £bn | 1998 £bn | 1997 £bn | 1996 £bn |
| --- | --- | --- | --- | --- | --- |
| UK | 0.7 | 0.6 | 0.6 | 0.6 | 0.9 |
| Foreign | 0.4 | 0.1 | 0.1 | 0.1 | 0.1 |
| | 1.1 | 0.7 | 0.7 | 0.7 | 1.0 |

| | 2000 % | 1999 % | 1998 % | 1997 % | 1996 % |
| --- | --- | --- | --- | --- | --- |
| **Total provision coverage of:** | | | | | |
| credit risk non-performing lendings | 70.7 | 76.4 | 75.2 | 71.8 | 65.6 |
| total potential credit risk lendings | 53.3 | 60.0 | 59.4 | 56.3 | 50.4 |

The increase in foreign potential problems lendings reflect exposures held by both Barclays Capital and Corporate Banking.

The high level of security held against the exposures included following the acquisition of The Woolwich reduces the level of provisions required and consequently this reduces the Group's coverage ratios. Excluding balances and provisions relating to The Woolwich, the coverage would be 81.2% and 58.1% respectively.

# Interest forgone on non-performing lendings

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Interest income that would have been recognised under original contractual terms | 246 | 165 | 182 |
| Interest income included in profit | (48) | (45) | (63) |
| Interest forgone | 198 | 120 | 119 |

Barclays PLC Annual Report 2000 49

Financial review
Cross-border outstandings

# Cross-border outstandings

The world-wide operations of the Group involve significant exposures in non-local currencies. These cross-border outstandings are controlled through a well-developed system of country limits, which are frequently reviewed to avoid concentrations of transfer, economic or political risks.

Cross-border outstandings, which exclude finance provided within the Group, are based on the country of domicile of the borrower or guarantor of ultimate risk and comprise loans and advances to customers and banks (including placings), finance lease receivables, interest bearing investments, acceptances, other monetary assets and on-balance sheet amounts arising from off-balance sheet financial instruments, denominated in currencies other than the borrower's local currency.

At 31st December 2000, the countries where Barclays cross-border outstandings exceeded 1% of assets were Germany, the United States, and Japan and consisted substantially of placings with banks due within one year. In this context, assets comprise total assets, as presented in the consolidated balance sheet, and include acceptances. On this basis, assets amounted to £317,325m at 31st December 2000 (1999 £256,308m, 1998 £220,564m).

# Cross-border outstandings exceeding 1% of assets

| | As % of assets % | Total £m | Banks and other financial institutions £m | Governments and official institutions £m | Commercial industrial and other private sector £m |
| --- | --- | --- | --- | --- | --- |
| **At 31st December 2000** | | | | | |
| Germany | 2.4 | 7,505 | 6,829 | 554 | 122 |
| United States | 1.9 | 6,104 | 3,125 | 5 | 2,974 |
| Japan | 1.1 | 3,493 | 2,721 | 96 | 676 |
| **At 31st December 1999** | | | | | |
| Germany | 2.5 | 6,438 | 5,526 | 239 | 673 |
| United States | 2.1 | 5,281 | 2,036 | 11 | 3,234 |
| France | 1.6 | 4,022 | 3,274 | 202 | 546 |
| Switzerland | 1.1 | 2,756 | 2,129 | – | 627 |
| Netherlands | 1.1 | 2,740 | 1,761 | 6 | 973 |
| **At 31st December 1998** | | | | | |
| United States | 3.3 | 7,211 | 2,864 | 54 | 4,293 |
| Germany | 1.4 | 3,142 | 2,932 | 6 | 204 |
| France | 1.4 | 3,094 | 2,784 | 8 | 302 |
| Netherlands | 1.3 | 2,772 | 1,395 | 5 | 1,372 |
| Japan | 1.1 | 2,420 | 1,720 | 1 | 699 |

# Cross-border outstandings between 0.75% and 1% of assets

At 31st December 2000, The Netherlands and France had cross-border outstandings of between 0.75% and 1% of total Group assets amounting to £5,745m. At 31st December 1999, Canada and Japan had cross-border outstandings of between 0.75% and 1% of total Group assets amounting to £4,320m. At 31st December 1998, Barclays had no countries with cross-border outstandings of between 0.75% and 1% of total Group assets.

50 Barclays PLC Annual Report 2000

Financial review
Market risk management

# Market risk management

# Market risk is the risk of loss arising from changes in the level or volatility of market prices, which can occur in the interest rate, foreign exchange, equity and commodity markets. It is incurred as a result of both trading and asset/liability management activities.

The market risk management policies of the Group are determined by the Group Risk Management Committee, which also determines overall market risk appetite. The Group's policy is that exposure to market risk arising from trading activities is concentrated in Barclays Capital.

The Group's banking businesses are also subject to market risk, which arises in relation to non-trading positions, such as capital balances, demand deposits and customer originated transactions and flows. The management of market risk in this context is discussed further under Treasury asset and liability management on page 54.

# Trading activities

Trading includes both customer oriented business and positions which are taken on Barclays Capital's own account. For maximum efficiency, these two activities are managed together.

In anticipation of future customer demand, the Group maintains access to market liquidity by quoting bid and offer prices with other market makers and carries an inventory of capital market and treasury instruments including a broad range of cash, securities and derivatives. Trading positions and any offsetting hedges are established as appropriate to accommodate customer or Group requirements. Barclays Capital also takes positions in the interest rate, foreign exchange, debt, equity and commodity markets based on expectations of customer demand or a change in market conditions.

Derivatives entered into for trading purposes include swaps, forward rate agreements, futures, options and combinations of these instruments. For a description of the nature of derivative instruments, see page 53.

In Barclays Capital, the formal process for the management of risk is through the Barclays Capital Risk Management Committee. Day to day responsibility for managing exposure to market risk lies with the Chief Executive of Barclays Capital, supported by a dedicated global market risk management unit that operates independently of the business areas.

# Risk control

The Group uses a daily 'value at risk' measure as the primary mechanism for controlling market risk. Daily Value at Risk (DVAR) is an estimate, with a confidence level of 98%, of the potential loss which might arise if the current positions were to be held unchanged for one business day. Daily losses exceeding the DVAR figure are likely to occur, on average, only twice in every one hundred business days.

The Group Risk Management Committee allocates a total DVAR limit for the Group and delegates the day to day control and monitoring of market risk to the Group Market Risk Director, who sets limits for each business area. In the case of Barclays Capital, the overall limit is cascaded down to the trading business areas, subject to endorsement by the Group Market Risk Director and the Barclays Capital Risk Management Committee. Daily risk utilisation reports are produced across four main risk categories, namely interest rate (including credit spread risk), currency, equity and commodity risk.

As DVAR does not provide a direct indication of the potential size of losses that could arise in extreme conditions, Barclays Capital uses a number of complementary techniques for controlling market risk. Weekly firm-wide stress tests, based on both historical and hypothetical extreme movements of market prices, are produced. These are reviewed by the senior management of Barclays Capital at a risk meeting chaired by the Chief Executive of Barclays Capital. If the potential loss indicated by a stress test exceeds an agreed trigger level, then the positions captured by the stress test are reported to, and reviewed by, Group Risk Oversight Committee. Revenue losses are also subject to triggers, which can also lead to positions being reported to Group Risk Oversight Committee.

# Analysis of market risk exposures

There has been no significant change in overall market risk exposure in 2000, although average DVAR was slightly higher than in 1999 (see table and chart below). Year-end DVAR was £19.0m (1999 £20.2m).

# DVAR: Summary table for 2000 and 1999

| | Twelve months to 31st December 2000 | Twelve months to 31st December 1999 |
| --- | --- | --- |
| | Average £m | High* £m | Low* £m | Average £m | High* £m | Low* £m |
| Interest rate risk | 16.2 | 23.7 | 10.7 | 13.7 | 30.2 | 6.2 |
| Foreign exchange risk | 2.9 | 4.7 | 1.8 | 2.8 | 11.7 | 0.8 |
| Equities risk | 3.9 | 7.1 | 1.4 | 1.7 | 3.7 | 0.6 |
| Commodities risk | 1.4 | 3.5 | 0.9 | 1.2 | 2.2 | 0.5 |
| Diversification effect | (6.9) | | | (3.3) | | |
| Total DVAR | 17.5 | 27.7 | 11.5 | 16.1 | 32.5 | 7.7 |

* The high (and low) DVAR figures reported for each category did not necessarily occur on the same day as the high (and low) DVAR reported as a whole. A corresponding diversification effect cannot be calculated and is therefore omitted from the above table.

Barclays PLC Annual Report 2000 51

Financial review
Market risk management

# Risk measurement

Barclays Capital uses the historical simulation method for calculating DVAR. At the beginning of 2000, the length of the historical sample was increased from one to two years. This change has not had a material impact on the reported numbers. The table on page 51 includes the daily average, maximum and minimum values of DVAR, calculated using a one year sample for 1999 and a two year sample for 2000.

In August 2000, Barclays Capital introduced an enhanced methodology for calculating DVAR. The previous methodology segregated interest rate exposures into two categories: government and non-government. For risk measurement purposes, all non-government exposures were assumed to trade at LIBOR flat, and were therefore implicitly assumed to have the same price volatility as an interest rate swap.

The new methodology maps interest rate exposures into eight categories: government, interest rate swaps and six credit grades for non-government exposures. The greater definition provided allows the system to discriminate between the market risk of holding bonds with different credit qualities, for example AAA securities as against non-investment grade securities. In particular, it will better measure the effectiveness of hedging strategies such as shorting governments or swaps against non-government bond portfolios.

Since the introduction of the new method, Barclays Capital has also continued to produce DVAR estimates using the old methodology. The impact of the change has been to increase reported DVAR by an amount which has averaged £3.2m and which has ranged between £1.3m and £5.8m. It has not been possible to apply the new methodology retrospectively to daily positions prior to August 2000, and so the figures tabulated above are based on the old methodology. As at 31st December 2000, the total DVAR using the new methodology was £21.3m compared with £19.0m using the old methodology.

Barclays Capital recognises the importance of assessing the effectiveness of DVAR. The main approach employed is the technique known as back-testing, which counts the number of days when trading related losses are bigger than the estimated DVAR figure. For Barclays Capital as a whole there were no instances in 2000 of a trading revenue loss exceeding the corresponding DVAR.

52 Barclays PLC Annual Report 2000

Financial review
Derivatives

# Derivatives

The use of derivatives and their sale to customers as risk management products is an integral part of the Group's trading activities. These instruments are also used to manage the Group's own exposure to fluctuations in interest and exchange rates as part of its asset and liability management activities.

Derivative instruments are contracts whose value is derived from one or more underlying financial instruments or indices defined in the contract. They include swaps, forward rate agreements, futures, options and combinations of these instruments and primarily affect the Group's net interest income, dealing profits, commissions received and other assets and liabilities. Notional amounts of the contracts are not recorded on the balance sheet.

The Group participates both in exchange traded and 'over the counter' (OTC) derivatives markets.

# Exchange traded derivatives

The Group buys and sells exchange traded financial instruments, primarily financial futures and options on financial futures. Holders of exchange traded instruments provide margin daily with cash or other security at the exchange, to which the holders look for ultimate settlement.

# OTC traded derivatives

The Group buys and sells financial instruments that are traded over the counter, rather than on a recognised exchange. In general, the terms and conditions of these transactions are tailored to the requirements of the Group's customers, although the majority conform to normal market practice. In many cases, industry standard documentation is used, most commonly in the form of a master agreement, with individual transaction confirmations. The existence of a signed master agreement is intended to give the Group protection in situations where a counterparty is in default, including the ability to net outstanding balances where the rules of offset are legally enforceable. For further explanation of the Group's policies on netting, see page 77.

# Foreign exchange derivatives

The Group's principal exchange rate related contracts are forward foreign exchange contracts, currency swaps and currency options. Forward foreign exchange contracts are agreements to buy or sell a specified quantity of foreign currency usually on a specified future date at an agreed rate. A currency swap generally involves the exchange, or notional exchange, of equivalent amounts of two currencies and a commitment to exchange interest periodically until the principal amounts are re-exchanged on a future date.

Currency options provide the buyer with the right, but not the obligation, either to purchase or sell a fixed amount of a currency at a specified exchange rate on or before a future date. As compensation for assuming the option risk, the option writer generally receives a premium at the start of the option period.

# Interest rate derivatives

The Group's principal interest rate related contracts are interest rate swaps, forward rate agreements, caps, floors, collars, swaptions and bond options.

An interest rate swap is an agreement between two parties to exchange fixed rate and floating rate interest by means of periodic payments based upon a notional principal amount and the interest rates defined in the contract. Certain agreements combine interest rate and foreign currency swap transactions, which may or may not include the exchange of principal amounts. A basis swap is a form of interest rate swap, in which both parties exchange interest payments based on floating rates, where the floating rates are based upon different underlying reference rates.

In a forward rate agreement, two parties agree a future settlement of the difference between an agreed rate and a future interest rate, applied to a notional principal amount. The settlement, which generally occurs at the start of the contract period, is the discounted present value of the payment that would otherwise be made at the end of that period.

# Equity derivatives

The Group's principal equity related contracts are equity and stock index swaps and options (including warrants, which are options listed on an exchange).

An equity swap is an agreement between two parties to exchange periodic payments, based upon a notional principal amount, with one side paying fixed or floating interest and the other side paying based on the actual return of the stock or stock index. No principal amounts are exchanged.

An equity option provides the buyer with the right, but not the obligation, either to purchase or sell a specified stock or stock index at a specified price or level on or before a specified date.

# Commodity derivatives

The Group's commodity related contracts are mainly swaps and options on commodities such as oil price indices and precious and base metals price indices.

# Property forwards

Property index forwards are OTC contracts for differences between the contract price and the settlement price on a given date in the future of a specified property index.

# Credit derivatives

Credit derivatives are financial instruments that enable banks to manage credit risk without changing their underlying loan portfolios. The effect of a credit derivative is to transfer credit risk from one party, the protection buyer, to another party, the protection seller, who receives premium or interest related payments in return for contracting to make payments to the protection buyer. The payments are linked to the standing of a reference asset, which may be a security, a loan or an obligation on other derivative instruments. The term credit derivative may also be applied to cash instruments where repayment is linked to the credit standing of a reference asset.

Barclays PLC Annual Report 2000 53

Financial review
Treasury asset and liability management

# Treasury asset and liability management

Treasury asset and liability management involves management of liquidity, funding, interest risk and exchange rate risk arising from non-trading positions through use of both on- and off-balance sheet instruments. The Group policy is to manage the earnings volatility arising from the effects of movements in interest rates and exchange rates on the non-trading positions inherent in the Group balance sheet. The policies for Group asset and liability management are set by the Group Treasury Committee, which is chaired by the Group Finance Director. On a regular basis, the Group Treasury Committee receives reports on the non-trading interest mismatch positions of the Group and the maturity transformation of the Group's assets and liabilities. These are monitored within defined limits.

# Liquidity risk management

The management of liquidity within the Barclays Group has two principal strands. Firstly, day to day funding is managed by monitoring future cash flows to ensure that requirements can be met including the replacement of existing funds as they mature or are withdrawn to satisfy demand by customers for additional borrowings. Secondly, to maintain a stock of highly marketable assets that can easily be liquidated as protection against any unforeseen interruption to cash flow.

In order to avoid reliance on a particular group of customers or market sectors the distribution of sources and the maturity profile of deposits are actively managed. Important factors in assuring liquidity are competitive rates and the maintenance of depositors' confidence. Such confidence is based on reputation, the strength of earnings and the Group's financial position.

A substantial portion of Barclays assets in the UK, and in certain other retail banking areas, are funded with 'core retail deposits'. These important sources of liquidity are mainly current accounts and savings accounts. Although current accounts are repayable on demand and savings accounts are repayable at short notice, maintaining a broad base of customers, both numerically and by type of depositor, helps to protect against unexpected fluctuations. Such accounts form a stable deposit base for the Group's operations and liquidity needs.

Liquidity management includes control over asset maturities and the volume and quality of liquid assets and short-term funds. Additionally, in evaluating the Group's liquidity position, management takes account of undrawn lending commitments; the usage of overdraft facilities and the possible impact of certain contingent liabilities such as standby letters of credit and guarantees.

The responsibility for the Group's overall liquidity policy and control lies with Group Treasury. In order to maximise the benefits from knowledge gained in overseas domestic markets, local treasury management in each location manage day-to-day liquidity within the parameters set by Group Treasury and subject to regular reports to Group Treasury. Local asset and liability management committees comprising senior local executives also review liquidity management depending on the size and complexity of the treasury operation.

Monitoring and reporting take the form of cash flow measurement based on principles agreed by the UK Financial Services Authority. Each operation is required to maintain sufficient access to funds, in terms of maturing assets and proven capacity to borrow in the money markets. Special attention is paid to cash flow projections for the next day, the next week and the next month as these are key periods for liquidity management. These positions are scrutinised daily to prevent problems developing in the future. In addition emphasis is placed on the need to monitor unmatched medium-term assets and the level and type of undrawn commitments.

The Group's liquidity policy is designed to ensure that access to appropriate funding is maintained. In accordance with the policy the Group believes that the liquidity position was satisfactory at 31st December 2000.

# Interest rate exposure

The interest rate risk attached to the positions arising from the UK banking operations is managed by Group Treasury, which is responsible for the overall Group position. In managing the non-trading positions inherent in the Group's balance sheet, consideration is given to the substantial liabilities represented by interest free deposits, other interest free or fixed rate liabilities as well as, for these purposes, part of the Group's shareholders' funds. The positions arising from these balances are managed by the maintenance of a portfolio of assets with interest rates fixed for several years, including loans and advances to customers, debt securities and interest rate swaps and options. Similarly, mismatches of fixed rate assets and liabilities are managed through the use of interest rate swaps and other derivatives. Care is taken to ensure that the management of the portfolio is not inflexible, as market circumstances and customer requirements can rapidly change the desirable portfolio structure.

International banking operations also incur interest rate risk. Policies for managing this risk are agreed between Group Treasury and Group Risk Analysis and Policy and are applied through Asset and Liability Management Committees (ALCOs) as appropriate. Guidance on the scope and constitution of ALCOs is provided by Group Risk Analysis and Policy, who maintain regular contact with the businesses on risk management and control issues. Compliance with the applied policy is controlled via a comprehensive financial risk reporting framework including interest rate gap limits or, where more appropriate, value at risk limits issued by Group Risk Analysis and Policy. These limits enable positions, transactions and flows emanating from the banking books to be managed by local treasury operations in an orderly fashion, either through Barclays Capital managed trading outlets or, where necessary, through local markets.

54 Barclays PLC Annual Report 2000

Financial review
Treasury asset and liability management

The total Group exposure, excluding Barclays Capital trading risk, is shown for the purposes of this review in the form of an interest rate repricing table (see note 46 on page 113). This summarises the repricing profile of the Group's assets, liabilities and off-balance sheet exposures at 31st December 2000 and also reflects the non-trading hedges referred to above. This table can be used as the basis for the assessment of the sensitivity of the Group's earnings to interest rate movements, although allowance is also made for other factors such as asset and liability currency composition and customer behaviour (e.g. early prepayment of loans). It is estimated that as at 31st December 2000, the Group's earnings in 2001 would not be significantly affected either by a hypothetical immediate and sustained increase of 1% in interest rates or by a similar decrease in interest rates.

# Foreign exchange exposure

The corporate and retail banking businesses incur foreign exchange risk in the course of providing services to their customers. The part of this risk that arises in UK operations is transferred to and managed by Barclays Capital. In the case of the international operations, Group Risk Analysis and Policy allocates modest foreign exchange open position limits to facilitate the management of customer originated flows. Exposures are reported daily to Group Risk Analysis and Policy and Group Treasury. As at 31st December 2000, aggregate DVAR of these businesses for foreign exchange rate risk was £0.2m (1999 £0.2m).

# Management of foreign currency investments

Non-trading positions in foreign currencies arise from the currency investments which the Group makes in its overseas businesses. The Group's policy is to manage the currency balance of the funding, financing these investments so as to limit the effect of exchange rate movements on the Group's risk asset ratios. Management of the funding of investments in overseas branches and subsidiary and associated undertakings and joint ventures is carried out by Group Treasury, where the operation of the funding policy is frequently reviewed. Regular reports are made to Group Treasury Committee. The principal structural currency exposures of the Group are set out in note 46 on page 115.

These positions, together with the currency composition of tier 2 and tier 3 capital and minority interests in tier 1 capital, ensure that movements in exchange rates have little impact on the Group's risk asset ratios. Such movements have an impact on reserves (see exchange rate translation differences on page 84). With the positions in place at 31st December 2000, a hypothetical increase of 10% in the value of sterling against all currencies would have led to a fall of some £68m in reserves (1999 £110m).

# Hedging

Risk management activities employ interest rate swaps, currency swaps and other derivatives that are designated as hedges.

The following table provides examples of certain activities undertaken by the Group, together with the related market risks and the types of derivatives that may be used in managing such risks.

| Activity | Risk | Type of hedge |
| --- | --- | --- |
| Fixed rate lending and fixed rate investment. | Reduced earnings due to an increase in interest rates. | Pay fixed interest rate swaps and buy interest rate caps. |
| Fixed rate funding (e.g. medium-term note issuance). | Reduced earnings due to a fall in interest rates. | Receive fixed interest rate swaps and buy interest rate floors. |
| Firm foreign currency commitments (e.g. asset purchases and sales). | Reduced earnings due to changes in exchange rates between arranging a transaction and completion. | Foreign currency transactions. |
| Managing the Group's risk asset ratios. | Reduced risk asset ratio due to strengthening of foreign currency against sterling. | Currency swaps. |

The hedge transactions which are linked to these activities are centralised within Group Treasury and the exposure is then passed to the market principally via independently managed dealing units within Barclays Capital, who treat these transactions as part of their normal trading activities, and also via third parties. Risks arising in the Group's other banking operations are managed in a similar way. The disclosure that follows relates to derivative components of the Group's hedging programme transferred to the market via internal or external counterparties.

The reported figures do not take account of underlying balance sheet items being hedged, the net interest income thereon or their mark to market values.

Barclays PLC Annual Report 2000 55

Financial review
Treasury asset and liability management

For interest rate swaps and cross currency interest rate swaps that are used in the management of the non-trading exposures, the weighted average pay fixed rates and receive fixed rates by maturity date and nominal amount at 31st December 2000 were as follows in the table below:

The nominal amounts below include £5,120m and £641m, in respect of sterling and non-sterling basis swaps respectively. Basis swaps are swaps where both payable and receivable legs are variable.

In managing the non-trading exposures relating to capital balances and demand deposits, both on-balance sheet and derivative positions are held. The net effect of the derivative positions, in isolation, on net interest income resulted in a debit of £5m (1999 credit of £79m). This included debits of £70m (1999 £19m) and credits of £65m (1999 £98m) for interest rate and exchange rate derivatives respectively.

| | Sterling denominated contracts | | | | Non-sterling denominated contracts | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | Pay fixed | | Receive fixed | | Pay fixed | | Receive fixed | |
| | Nominal amount £m | Average rate % | Nominal amount £m | Average rate % | Nominal amount £m | Average rate % | Nominal amount £m | Average rate % |
| **Maturity date: Not more than three months** | 3,318 | 3.96 | 8,076 | 6.51 | 1,672 | 7.36 | 1,184 | 5.54 |
| **Over three months but not more than six months** | 2,644 | 5.79 | 2,825 | 6.55 | 5,634 | 0.96 | 1,323 | 2.98 |
| **Over six months but not more than one year** | 8,330 | 6.98 | 11,328 | 7.10 | 3,866 | 1.99 | 1,405 | 5.27 |
| **Over one year but not more than five years** | 18,364 | 6.55 | 22,191 | 6.26 | 4,668 | 3.73 | 2,377 | 5.62 |
| **Over five years** | 2,736 | 6.76 | 4,019 | 6.64 | 1,738 | 6.34 | 2,624 | 6.73 |
| | 35,392 | 6.37 | 48,439 | 6.55 | 17,578 | 3.06 | 8,913 | 5.49 |

The weighted-average receive variable and pay variable rates by reset maturity date and nominal amount at 31st December 2000 were as follows:

| | Sterling denominated contracts | | | | Non-sterling denominated contracts | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | Receive variable | | Pay variable | | Receive variable | | Pay variable | |
| | Nominal amount £m | Average rate % | Nominal amount £m | Average rate % | Nominal amount £m | Average rate % | Nominal amount £m | Average rate % |
| **Reset maturity date: Not more than three months** | 30,331 | 6.07 | 37,830 | 5.87 | 7,314 | 4.91 | 6,939 | 6.04 |
| **Over three months but not more than six months** | 10,181 | 4.95 | 15,729 | 3.81 | 10,905 | 3.85 | 2,615 | 2.22 |
| | 40,512 | 5.79 | 53,559 | 5.26 | 18,219 | 4.27 | 9,554 | 4.99 |

56 Barclays PLC Annual Report 2000

Financial review
Management of operational and other risks

# Management of operational and other risks

In addition to credit, market and treasury risks, Barclays faces a number of other risks. These risks are controlled and managed within the overall risk management framework under the leadership of the Group Risk Director.

# Operational risk management

Operational risk, which is inherent in all business activities, is the potential for financial loss, and business instability arising from failures in internal controls, operational processes or the systems that support them. It can occur in all the Group's businesses and includes errors, omissions, natural disasters and deliberate acts such as fraud.

The goal of operational risk management is to balance cost and risk within the constraints of the risk appetite of the Group and to be consistent with the prudent management required of a large financial organisation.

The Group manages this risk under an overall strategy determined by the Group Risk Management Committee supported by the Group Operational Process Risk, Group IT Security Risk, Group Business Continuity Management, Group Fraud Prevention, Group Premises Related Risk and Group People Related Risk Functions. This strategy is implemented by each business unit and monitored at Group level. Within this structure, potential risk exposures are assessed to determine the appropriate type of controls to be applied.

It is recognised that such risks can never be entirely eliminated and that the cost of controls in minimising these risks may outweigh the potential benefits. Accordingly, the Group continues to invest in risk management and mitigation such as business continuity management and incident management. Where appropriate this is supported by risk transfer mechanisms such as insurance. In reinforcement of the implementation of the Group's risk strategy by the business units, independent checks on risk issues are undertaken by the internal audit function.

# Compliance risk management

The Group is subject to a comprehensive supervisory and regulatory structure in the UK, the European Union, the USA, Asia-Pacific and in the many other countries around the world in which it operates.

Compliance risk arises from a failure or inability to comply with the laws, regulations or codes applicable to the financial services industry. Non-compliance can lead to fines, public reprimands, enforced suspension of operations or, in extreme cases, withdrawal of authorisation to operate.

Responsibility for this risk lies with the Group Chief Executive and the business heads, who are ultimately accountable to the Board. They are supported in the discharge of their responsibilities by the Group Compliance Director, the compliance directors in each of the businesses and the Group Regulatory Compliance function.

# Legal risk management

Legal risk is the risk that the business activities of the Group have unintended or unexpected legal consequences. It includes risk arising from:

- Inadequate documentation, legal or regulatory incapacity, insufficient authority of a counterparty and uncertainty about the validity or enforceability of a contract in counterparty insolvency;
- Actual or potential violations of law or regulation (including activity unauthorised for a bank and which may attract a civil or criminal fine or penalty);
- Failure to protect the Group's property (including its interest in its premises and its intellectual property such as the Barclays logo, brand names and products); and
- The possibility of civil claims (including acts or other events which may lead to litigation or other disputes).

The Group identifies and manages legal risk through effective use of its internal and external legal advisers. The Group General Counsel has ultimate responsibility for identifying, monitoring and providing support necessary to identify, manage and control legal risk across the Group.

# Tax risk management

Tax risk is the risk of loss or increased charges associated with changes in, or errors in the interpretation of, taxation rates or law. Responsibility for control of this risk lies with the Group Taxation Director.

Barclays PLC Annual Report 2000 57

Other information
Economic and monetary environment and Supervision and regulation

# Economic and monetary environment

# European Economic and Monetary Union (EMU)

The delivery of changes required to deal with the introduction of euro notes and coins, and the demise of the legacy currencies of the eurozone countries are being planned. No significant incremental costs are expected in 2001 as a result of these preparations.

Barclays incurred minimal expenditure during 2000 with respect to any decision to introduce the euro in the UK that may be made by the Government in the near future.

# Supervision and regulation

# UK

The UK government is implementing a major overhaul of the UK financial regulatory system aimed at creating a new single statutory regulator, the Financial Services Authority (FSA), for the full range of financial business, including deposit-taking business, securities and other investment business and insurance business.

The first stage of this reform programme comprised the implementation of the Bank of England Act 1998 (the 1998 Act), which came into force on 1st June 1998. Under the 1998 Act, responsibility for banking supervision in the UK was transferred from the Bank of England to the FSA. The Bank of England retains its monetary policy role and responsibility for the overall stability of the financial system.

The next step in the reform programme is the implementation of new legislation (the Financial Services and Markets Act 2000) to replace the existing legislation, including the Financial Services Act 1986 and the Banking Act 1987 (see below). The Financial Services and Markets Act received Royal Assent in June 2000 and its substantive provisions are expected to come into force, together with other necessary secondary legislation on which HM Treasury has been and is currently consulting, in the second half of 2001. From then on the FSA will become a single regulator (replacing other regulators such as the self-regulating organisations (SROs)) and have a unified handbook of rules and guidance for financial services.

The primary objective of the FSA (in its role as a bank supervisor) is to fulfil the responsibilities relating to the safety and soundness of banks placed on it by the Banking Act 1987 (the 1987 Act) with the aim of strengthening, but not ensuring, the protection of depositors. Barclays Bank PLC is an authorised institution under the 1987 Act and is subject to consolidated supervision by the FSA under that Act.

The FSA's continuing supervision of banks authorised by it is conducted through the collection of information from statistical and prudential returns, reports obtained from banks' reporting accountants at the FSA's request, visits to banks and regular meetings with management to discuss issues such as performance, risk management and strategy. Under a risk-based approach rolled out for all banks in 1998 - RATE - the starting point for the FSA's supervision of all banks is based on a systematic analysis of the risk profile of each bank. The FSA also promulgates requirements that it expects banks (and groups containing banks which are subject to consolidated supervision) to meet on matters such as capital adequacy (see Capital resources on page 32), limits on large exposures to individual entities and groups of closely connected entities, and liquidity.

UK banks are required to be members of, and to contribute to, a deposit protection scheme. This entitles depositors with a failed institution to receive 90% of their protected deposits, subject to a maximum payment to any depositor of £18,000 (or €20,000 if greater).

Most deposits made with branches of Barclays Bank PLC within the European Economic Area (EEA) which are denominated in sterling or other EEA currencies (including the euro) are covered by the scheme.

Securities and other investment business is currently regulated in the UK under the Financial Services Act 1986 (the 1986 Act). Barclays Bank PLC and certain other subsidiaries are authorised to conduct investment business in the UK through their membership of SROs which are recognised by the FSA (in its role as the regulatory body with oversight responsibilities under the 1986 Act). As part of the reform programme, the FSA, under service contracts, now carries out monitoring on behalf of the SROs and provides them with support services to enable them to fulfil their functions. The SROs regulate the conduct of investment business by their members, although to avoid duplication they do not generally impose separate capital adequacy requirements on members such as banks where the FSA acts as the lead regulator. Firms authorised to conduct investment business are also required to participate in and contribute to an investors compensation scheme to provide protection to private investors against the default of a participating firm up to a limit of £48,000 per investor.

The UK has now largely implemented the minimum requirements imposed by European Community Directives on such matters as capital adequacy and deposit and investor compensation schemes. These form part of the European single market programme, an important feature of which is the framework for mutual recognition. This is designed to enable a bank or investment firm authorised in one European Union member state to conduct banking or securities and investment business through branches or cross-border in other member states without the need for additional local authorisation.

Formal consultation is a key aspect of the UK government's reform programme and the Group has been reviewing and, where relevant, commenting upon proposals both directly and through market associations.

The Basel Committee and the European Commission have issued consultation papers designed to replace the existing framework for the allocation of regulatory capital for credit risk. They recognise that a more sophisticated approach is now required to address both financial innovation and the increasingly complex risks faced by financial services institutions. Most recently the Basel Committee and the European Commission issued in January and February 2001 respectively proposals for a new capital adequacy regime that, once finalised, will augment the 1988 Basel Capital Accord and the existing EU capital framework. The final versions of the rules are expected to be published around the end of 2001 and to be implemented in 2004.

58 Barclays PLC Annual Report 2000

Financial review
Supervision and regulation and Risk factors

# Rest of the World

In the United States, Barclays PLC, Barclays Bank PLC and certain US subsidiary undertakings, branches and agencies of the Bank are subject to a comprehensive regulatory structure, involving numerous statutes, rules and regulations, including the International Banking Act of 1978, the Bank Holding Company Act of 1956, as amended, and the Foreign Bank Supervision Enhancement Act of 1991. Such laws and regulations impose limitations on the types of businesses, and the ways in which they may be conducted, in the United States and on the location and expansion of banking business there. The securities and investment management activities conducted in the United States are also subject to a comprehensive scheme of regulation under the US federal securities laws, as enforced by the Securities and Exchange Commission.

Barclays operates in many other countries and its overseas offices and subsidiary and associated undertakings are subject to reserve and reporting requirements and controls imposed by the relevant central banks and regulatory authorities.

# Risk factors

This document contains certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act 1995 with respect to certain of the Group's plans and its current goals and expectations relating to its future financial condition and performance. The Group may also make forward-looking statements in other written materials, including other documents filed with or furnished to the SEC. In addition, the Group's senior management may make forward-looking statements orally to analysts, investors, representatives of the media and others. In particular, among other statements, certain statements in the Financial Review and Business Description with regard to management objectives, trends in results of operations, margins, costs, return on equity, risk management, and competition are forward looking in nature.

By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. The Group's actual future results may differ materially from those set out in the Group's forward-looking statements. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, operational, legal, market, liquidity, credit and other risks set out on pages 36 to 57 of the Financial review and Competition as discussed on page 11. The discussion in this report sets forth certain other risks and uncertainties that the Group believes could cause its actual future results to differ materially from expected results. However, other factors could also adversely affect the Group's results and the reader should not consider the factors discussed in this report to be a complete set of all potential risks or uncertainties.

# Business conditions and general economy

The profitability of the Group's businesses could be adversely affected by a worsening of general economic conditions in the UK or elsewhere as well as by foreign and domestic trading market conditions. Such factors could also adversely affect the credit quality of the Group's on-balance sheet and off-balance sheet assets. An economic downturn or significantly higher interest rates could increase the risk that a greater number of the Group's customers would default on their loans or other obligations to the Group, or would refrain from seeking additional borrowing.

# Government policies and economic controls

The Group's businesses and earnings are also affected by the fiscal or other policies that are adopted by various regulatory authorities of the UK, foreign governments and international agencies. The nature and impact of future changes in such policies are not predictable and are beyond the Group's control.

The UK Competition Commission is conducting an enquiry into the supply of banking services by clearing banks to small and medium sized enterprises and is due to report in June 2001. Provisional findings as to the existence of any monopoly situation and any public interest issues arising may be made during March 2001 but no final conclusions affecting Barclays will be made before the Commission completes its report.

# Credit risk

The Group's provisions for credit losses provides for risks of losses inherent in loans and advances. Estimating potential losses is inherently uncertain and depends on many factors, including general economic conditions, rating migration, structural changes within industries that alter competitive positions, and other external factors such as legal and regulatory requirements.

Barclays PLC Annual Report 2000 59

---

Directors and officers

# Directors and officers of Barclays PLC and Barclays Bank PLC

## 1 Chairman
### Sir Peter Middleton GCB

Sir Peter Middleton GCB (age 66) was appointed Group Chairman at the 1999 annual general meeting. Sir Peter joined the Board in 1991 as Deputy Chairman and Chairman of BZW. This followed a long career in HM Treasury where he was Permanent Secretary from 1983 to 1991. He became Chairman of Barclays Capital following the reorganisation of BZW in October 1997. In May 1998, he relinquished his executive responsibilities as Deputy Chairman and Chairman of Barclays Capital but remained a non-executive Director. He resumed executive responsibilities when he was appointed Group Chief Executive and reappointed Group Deputy Chairman in November 1998. He stepped down as Group Chief Executive following the appointment of Matthew Barrett on 1st October 1999. He is a non-executive Director of Bass PLC, Deputy Chairman of United Utilities PLC, Chancellor of Sheffield University and a member of the Financial Reporting Council. He is Chairman of the Board Nominations and Board Risk Committees.

## 2 Group Chief Executive
### Matthew William Barrett

Matthew William Barrett (age 56) was appointed Group Chief Executive and joined the Board on 1st October 1999. He joined Barclays from Bank of Montreal where he was Chairman and, until February 1999, Chief Executive Officer. He joined the Bank of Montreal in 1962 and during his career held a variety of senior management positions in different areas within the bank, including Retail Banking, International Banking and Treasury. He was appointed Chief Operating Officer in 1987, Chief Executive Officer in 1989 and elected Chairman of the Board in 1990. In 1994, he became an Officer of the Order of Canada, the country's highest civilian honour, and in 1995 he was awarded the title of Canada's Outstanding CEO of the Year. He has been a non-executive Director of The Molson Companies Limited since 1992 and was also a non-executive Director of The Seagram Company Limited from 1995 until 4th December 2000. He is a member of the Board Risk Committee.

## 3 Deputy Group Chief Executive and Chief Executive, Retail Financial Services
### John Morrison Stewart

John Morrison Stewart (age 51) joined the Board on 25th October 2000 on completion of the acquisition of Woolwich plc. He joined The Woolwich in 1977, initially working in the branch network. He became Insurance Services Manager in 1986 and, in 1989, started Woolwich Independent Financial Advisory Services, now one of the UK's largest IFA businesses. He was also responsible for the launch of Woolwich Unit Trust Managers and Woolwich Life Assurance Company. He was appointed to The Woolwich board in January 1995 and became its Group Chief Executive in July 1996.

60 Barclays PLC Annual Report 2000

---

## 4 Chief Executive, Corporate Banking
### Christopher John Lendrum

Christopher John Lendrum (age 54) joined the Board in 1998. He joined Barclays Bank in 1969 and has been Chief Executive of Corporate Banking since April 1998, having held a number of senior positions in the Group prior to that date. These include Deputy Managing Director of Barclays Banking Division, Regional Director, North London and Executive Vice President, Barclays Bank of New York.

## 5 Group Finance Director
### John Silvester Varley

John Silvester Varley (age 44) joined the Board in 1998 and was appointed Group Finance Director on 9th November 2000. He joined Barclays Merchant Bank in 1982 and was Chief Executive of Retail Financial Services from April 1998 to October 2000, having previously been Chairman of the Asset Management Division since 1995.

# Non-executive Directors

## 6 Deputy Chairman
### Sir Brian Garton Jenkins

Sir Brian Garton Jenkins (age 65) joined the Board on 25th October 2000 as a Deputy Chairman on completion of the acquisition of Woolwich plc. He joined The Woolwich Board as a non-executive Director in July 1994 and was appointed Deputy Chairman in January 1995. He became Chairman in May 1995 and oversaw the conversion of The Woolwich Building Society to a public limited company in July 1997. A former senior partner of Coopers & Lybrand, Chartered Accountants, Sir Brian has served as Lord Mayor of London and as President of the Institute of Chartered Accountants in England & Wales and the British Computer Society. He is a director of several companies and Chairman of the Charities Aid Foundation. He is a member of the Board Remuneration and Board Nominations Committees.

## 7 Deputy Chairman
### Sir Andrew Large

Sir Andrew Large (age 58) joined the Board in 1998 as Deputy Chairman. He was Chairman of The Securities and Investments Board from 1992 to 1997. From 1980 to 1990 he was at Swiss Bank Corporation (Board Member 1988 - 1990). He has served as a member of the Council of the London Stock Exchange and on the Panel on Takeovers and Mergers, and as a non-executive Director of several public companies. He is a member of the European Institute of Business Administration (INSEAD). He is a member of the Board Audit and Board Risk Committees.

## 8 Thomas David Guy Arculus

Thomas David Guy Arculus (age 54) joined the Board in 1997. He is the Chairman of Severn Trent plc and IPC Group Limited. His previous positions include Group Managing Director of EMAP plc and Director of United News and Media plc. He is a member of the Board Remuneration and Board Nominations Committees.

## 9 Hilary Mary Cropper CBE

Hilary Mary Cropper CBE (age 60) joined the Board in 1998. She is Executive Chairman of F.I. GROUP PLC, a leading supplier of business enabling technology services. She is a member of the Financial Reporting Council, an external adviser to the Home Civil Service Senior Appointments Selection Committee and a member of the Government's New Deal Task Force. She is a member of the Board Remuneration and Board Nominations Committees.

## 10 Peter Jack Jarvis CBE

Peter Jack Jarvis CBE (age 59) joined the Board in 1995. He is Chairman of Debenhams PLC and a non-executive Director of The Rank Group plc. He was Chief Executive of Whitbread PLC from 1985 to 1997 and non-executive Deputy Chairman of Burton Group plc until January 1998. He is Chairman of the Board Remuneration Committee and a member of the Board Nominations Committee.

## 11 Sir Nigel Mobbs

Sir Nigel Mobbs (age 63) joined the Board in 1979. He is Chairman of Slough Estates plc and his other directorships include Aims of Industry, Bovis Homes Group PLC and Howard de Walden Estates. He is Lord-Lieutenant of Buckinghamshire and Chairman of the Wembley Task Force. He is Chairman of the Board Audit Committee and a member of the Board Remuneration and Board Nominations Committees.

## 12 Sir Nigel Rudd DL

Sir Nigel Rudd DL (age 54) joined the Board in 1996. He is Chairman of Kidde PLC, non-executive Chairman of Pilkington PLC and Pendragon PLC and a non-executive Director of The Boots Company PLC. He is a member of the Board Audit and Board Risk Committees.

## 13 Stephen George Russell

Stephen George Russell (age 55) joined the Board on 25th October 2000 on completion of the acquisition of Woolwich plc. He joined The Woolwich board as a non-executive Director in 1998. He was Managing Director of Boots The Chemists Ltd from 1995 and joint Group Managing Director of The Boots Company PLC from 1997 until he became Chief Executive of The Boots Company PLC on 1st April 2000. He is a member of the Board Audit Committee.

Barclays considers that its non-executive Directors are independent as they neither represent a major shareholder group nor have any significant involvement in the day to day management of the Group.

# Executive Committee members

| Name | Appointed |
| :--- | :--- |
| Matthew Barrett - Group Chief Executive | 1999 |
| Bob Diamond - Chief Executive, Barclays Capital | 1997 |
| Gary Dibb - Chief Administrative Officer | 2000 |
| Bob Hunter - Managing Director, Wealth Management | 1999 |
| Chris Lendrum - Chief Executive, Corporate Banking | 1996 |
| Bob Potts - Chief Executive, Barclaycard | 2000 |
| Tim Shepheard-Walwyn - Group Risk Director | 2000 |
| John Stewart - Deputy Group Chief Executive and Chief Executive, Retail Financial Services | 2000 |
| John Varley - Group Finance Director | 1996 |
| David Weymouth - Chief Information Officer | 2000 |

# Officers

| Name | Appointed |
| :--- | :--- |
| Geoffrey Mitchell OBE - Chief Accountant | 1996 |
| Howard Trust - Group General Counsel and Group Secretary | 1995 |
| Alison Dillon - Joint Secretary, Barclays Bank PLC | 1998 |

Barclays PLC Annual Report 2000 61

---

Directors' report

# Directors' report

## Profit attributable

The profit attributable to shareholders for the year amounted to £2,473m, compared with £1,759m in 1999.

## Second interim dividends

Second interim dividends for the year ended 31st December 2000 of 38p per ordinary share and 10p per staff share have been approved by the Directors. The second interim dividends will be paid on 30th April 2001 in respect of the ordinary shares registered at the close of business on 23rd February 2001 and in respect of the staff shares so registered on 31st December 2000.

With the first interim dividends of 20p per ordinary share of £1 each and of 10p per staff share that were paid on 3rd October 2000, the total distribution for 2000 is 58p (1999 50p) per ordinary share and 20p (1999 20p) per staff share. The dividends for the year absorb a total of £927m (1999 £746m).

## Dividend Reinvestment Plan

Shareholders may have their dividends reinvested in Barclays PLC ordinary shares by participating in the Dividend Reinvestment Plan. The Plan is available to all shareholders provided that they do not live in, or are subject to the jurisdiction of, any country where their participation in the Plan would require Barclays or The Plan Administrator to take action to comply with local government or regulatory procedures or any similar formalities. Any shareholder wishing to obtain details of the Plan and a mandate form should contact The Plan Administrator to Barclays at PO Box 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH. Those wishing to participate for the first time in the Plan should send their completed mandate form to The Plan Administrator so as to be received by 5th April 2001 for it to be applicable to the payment of the second interim dividend on 30th April 2001. Existing participants should take no action unless they wish to alter their current mandate instructions, in which case they should contact The Plan Administrator.

## Share capital

During the year, Barclays PLC purchased in the market for cancellation 19,562,682 of its ordinary shares of £1 each at a total cost of £311m as part of its programme of returning excess capital to shareholders. These transactions represented some 1% of the issued ordinary share capital at 31st December 2000. As at 7th February 2001, the Company has an unexpired authority to repurchase further shares up to a maximum of 204,437,318 ordinary shares.

Barclays PLC issued 176,405,111 ordinary shares of £1 each to shareholders of Woolwich plc as a result of the acquisition of The Woolwich. Under the basic terms of the offer, ordinary shareholders of The Woolwich were entitled to receive 0.1175 Barclays ordinary shares and £1.64 in cash for each Woolwich plc share held.

In addition, ordinary share capital was increased by 9,912,585 shares during the year as a result of the exercise of options under the SAYE and Executive Share Option Schemes, and at 31st December 2000 totalled 1,661,643,535 shares.

Barclays PLC acquired 186,860,515 new ordinary shares of £1 each in Barclays Bank PLC during 2000, of which 176,405,111 were issued in part consideration for the transfer of The Woolwich from Barclays PLC. The remaining 10,455,404 shares were acquired at a cost of £195m.

## Group Share Schemes

The trustees of the Group's employees' benefit trusts may make purchases of Barclays PLC ordinary shares in the market at any time following the announcement of the Group's results in February 2001 for the purposes of the Group Share Schemes' current and future requirements. The total number of ordinary shares purchased would not be material in relation to the issued share capital of Barclays PLC.

## Substantial shareholdings

At 7th February 2001 the Company has not been notified of any major interests in its shares as required by sections 198 to 208 of the Companies Act 1985.

## Board membership

The membership of the Boards of Directors of Barclays PLC and Barclays Bank PLC is identical, and is set out on pages 60 and 61.

Sir Brian Jenkins, Stephen Russell and John Stewart were appointed as Directors on 25th October 2000. Sir Brian Jenkins was appointed a Deputy Chairman and John Stewart was appointed Deputy Group Chief Executive and Chief Executive, Retail Financial Services on the same date. David Allvey resigned from the Board on 9th November 2000 and John Varley was appointed Group Finance Director on the same date. Mary Baker retired from the Board on 31st December 2000.

## Retirement and re-election of Directors

One-third (or the nearest whole number below one-third) of the Directors of Barclays PLC are required to retire by rotation at each annual general meeting, together with Directors appointed by the Board since the previous annual general meeting. The retiring Directors are eligible to stand for re-election. The Directors retiring at the 2001 annual general meeting and offering themselves for re-election are Sir Peter Middleton, Chris Lendrum and Peter Jarvis. In addition, Sir Brian Jenkins, Stephen Russell and John Stewart, who were appointed as Directors since the last annual general meeting, will be offering themselves for re-election at the 2001 annual general meeting in accordance with Article 103 of the Company's Articles of Association.

## Directors' interests

Directors' interests in the shares of the Group on 31st December 2000, according to the register maintained under the Companies Act 1985, are shown on page 73. The register is available for inspection during business hours at the Group's Head Office and will be available for inspection at the 2001 annual general meeting. At no time during the year did any Director of the Company have an interest in a contract entered into by a Group company which was significant to the Group's business.

62 Barclays PLC Annual Report 2000

---

## Directors' emoluments and options

Information on emoluments and options of Directors of Barclays PLC, in accordance with the Companies Act 1985 and the Listing Rules of the Financial Services Authority, is given in the report on Corporate governance by the Board on pages 65 to 72 and in note 57 to the accounts.

For US disclosure purposes, the aggregate emoluments of all Directors and officers of Barclays PLC who held office during the year (2000 26 persons, 1999 24 persons) for the year ended 31st December 2000 amounted to £28,476,000 (1999 £22,559,000). In addition, the aggregate amount set aside, for the year ended 31st December 2000, to provide pension benefits for the Directors and officers amounted to £1,127,000 (1999 £541,000). The aggregate emoluments of all Directors and officers of Barclays Bank PLC who held office during the year (2000 27 persons, 1999 25 persons) for the year ended 31st December 2000 amounted to £28,623,000 (1999 £22,214,000). In addition, the aggregate amount set aside by the Bank and its subsidiary undertakings, for the year ended 31st December 2000, to provide pension benefits for the Directors and officers amounted to £1,132,000 (1999 £553,000).

## Activities

Barclays is a UK-based financial services group engaged primarily in banking, investment banking and asset management. The Group operates through branches and offices in the UK and overseas. The activities of the Group are described on pages 6 to 11 and developments in the Group's business during the year and an indication of future developments are analysed in the Financial review on pages 12 to 59. Both of those sections are incorporated as part of this report. Post balance sheet events are set out in note 49.

## Community involvement

The Group's community support totalled £26.3m (1999 £20.9m). This includes £3.8m in respect of secondments to the community (1999 £5.7m). Of the total £26.3m, Barclays gave £24.9m in support of the community in the UK (1999 £18.5m) and £1.4m internationally (1999 £2.4m). UK community support includes £8.9m of charitable donations (1999 £5.8m). Barclays is a member of the PerCent Club - a group of companies that undertook to donate at least 0.5% of their UK pre-tax profits to the community in 2000. The Group made no political donations in the UK during 2000.

## Employee involvement

Barclays is committed to ensuring that employees share in the success of the company and have the opportunity to share their views and provide feedback on issues which are important to them.

Employees share in the success of Barclays through the Save As You Earn share option scheme, which is very popular, with 80% of eligible employees participating. For the year 2000, a Profit Sharing Scheme was also a significant feature of sharing in success.

Barclays has begun to develop a new way of communicating with employees. This began with a series of Open Forums across the UK and abroad in which Matthew Barrett shared information and sought views on a wide range of issues. Face to face communication will continue to be the preferred way of communicating with employees but will be supported by the increasingly effective use of technology. Focus groups are also used to capture employees' opinions and views.

New ways of getting employees to buy into the spirit and culture of the organisation have been introduced. For example, the Release The Power programme is aimed at increasing employees' business awareness, improving leadership skills and ensuring all employees understand and live the Barclays brand values.

Barclays has a constructive relationship with UNIFI, its recognised trade union in the UK. This was further enhanced in April 2000 by the signing of agreed 'Partnership Principles' which govern that relationship.

## Equality and diversity

Barclays is committed to supporting work/life balance for all staff and our flexible working practices, often supported by new technology, continue to evolve to meet the changing needs of the business and the individual. There is an emerging trend for full-time staff to work a pattern that matches their home requirements with business demands, whether this be over a different set of hours, compressed days or to incorporate weekends.

Our new maternity, parental and care leave policies were reviewed in 2000 to make them amongst the most progressive in the UK. Such changes demonstrate our commitment to being a leading employer, promoting flexible working for the mutual benefit of employees and the business.

Barclays is committed to giving full and fair consideration to applications for employment from people with disabilities and to continuing the employment of staff who become disabled and arranging any appropriate training to achieve this. The Group is a core sponsor and active member of the Employers' Forum for Disability which promotes, advises and shares information across industry and commerce on the best ways of providing equality of opportunity for people with disabilities. Against a backdrop of considerable structural change in our business, we have been working very hard to provide tailored support to staff with disabilities during 2000 and will continue to do so throughout 2001.

There is still more to be done to achieve a fully diverse workforce at all levels of the organisation and across all business functions. An executive Equality & Diversity Steering Group has been established to co-ordinate this effort and in 2000, a senior executive was appointed to lead a programme of activities under the heading of equality and diversity, relating both to customers and staff. We are working with senior diversity champions, internal taskforces and many external organisations in pursuit of equality and diversity objectives, not only in employment but across the whole business spectrum. These taskforces cover the areas of gender, sexual orientation, ethnic minorities, disability and age.

Valuing diversity is clearly understood as being a key element of fully harnessing the potential of our people and our business in a rapidly changing and highly competitive global market. In 2001, we expect to see a great deal of focus on activities in this area.

Barclays PLC Annual Report 2000 63

---

## Creditors' payment policy

Barclays policy follows the DTI's Better Payment Practice Code, copies of which can be obtained from the Better Payment Practice Group's website at www.payontime.co.uk. The Code states that a company should have a clear, consistent policy, adhered to by the finance and purchasing departments that payment terms are agreed at the outset and payment procedures explained to suppliers, that bills are settled in accordance with payment terms agreed with suppliers, that complaints are dealt with quickly and that suppliers are advised of disputes. Barclays values its suppliers and acknowledges the importance of paying invoices, especially those of small businesses, promptly. Normal policy is to pay all small business purchases within 30 days. Creditor payment days are carefully monitored in the Group, using the systems which record the actual purchases and payments. Barclays estimate that for all UK supplies to Barclays Bank PLC average creditor payment days in 2000 were 34 days.

Paragraph 12(3) of Schedule 7 to the Companies Act 1985 requires disclosure of trade creditor payment days. Disclosure is required by the Company, rather than the Group. The Group's principal trading subsidiary in the UK is Barclays Bank PLC, the accounts for which are prepared under Schedule 9 of the Companies Act 1985. The components for the trade creditor calculation are not easily identified in Schedule 9. However, by identifying as closely as possible the components required by the Schedule, the trade creditor payment days for Barclays Bank PLC for 2000 were 32 days (1999 24 days). This is an arithmetical calculation which includes property rentals and payments, and does not necessarily reflect our practice, which is described above, nor the experience of any individual creditor.

## The auditors

PricewaterhouseCoopers have signified their willingness to continue in office and a resolution re-appointing them as auditors and authorising the Directors to determine their remuneration will be proposed at the 2001 annual general meeting.

## The annual general meeting

The annual general meeting will be held at The Queen Elizabeth II Conference Centre on 9th April 2001. The Notice of Meeting is included in the Annual Review and Summary Financial Statement 2000 sent to shareholders at the same time as this report.

By order of the Board
Howard Trust
Group Secretary
7th February 2001

64 Barclays PLC Annual Report 2000

---

Corporate governance
Introduction

# Corporate governance

## Introduction

Corporate governance, the system by which companies are managed and controlled, is a topic of great importance, both to the Directors of a company and its shareholders. Over the last few years, guidelines and codes have been developed culminating in the publication in June 1998 of the Combined Code - Principles of Good Governance and Code of Best Practice.

Barclays has complied with the provisions of the Combined Code for the year ended 31st December 2000 save for the formal appointment of a senior independent Director.

The Board is committed to business integrity and professionalism in all its activities. As part of this commitment, the Board supports the highest standards of corporate governance and the development of best practice. Barclays has adopted its own internal corporate governance guidelines which are available from the Group Secretary. These address the responsibilities of the Board and how they are met, the composition of the Board and selection procedures for new Directors and relationships with stakeholders.

## The Board and Board Committees

The Board consists of the Chairman, eight non-executive Directors and four executive Directors. Their details appear on pages 60 and 61. Executive Directors generally have responsibility for making and implementing operational decisions and running the Group's businesses. The non-executive Directors support the skills and experience of the executive Directors, by approving strategy and policy based on their knowledge and experience of other businesses and sectors.

The Board meets regularly and has a formal schedule of matters reserved to it. All Directors have access to the advice of the Group Secretary and independent professional advice is also available to Directors in appropriate circumstances at the Company's expense.

The roles of Chairman and Chief Executive are separate with responsibilities divided between them.

The chairmen of both the Board Remuneration and Board Audit Committees are senior non-executive Directors and the Board believes that it is therefore not necessary to nominate one individual to assume the role of senior independent director.

Following the appointment of new Directors to the Board an induction programme is arranged, including visits to the Group's businesses and meetings with senior management as appropriate, to help them quickly to get a full understanding of the Group.

At each annual general meeting one-third of the Directors retire and offer themselves for re-election. In practice, over a number of years, this has meant that every Director has stood for re-election at least once every three years.

Our Directors diligently support the work of the Board. During the year ended 31st December 2000 all of our Directors attended at least 11 of the 12 Board meetings.

## Board Committees

Specific responsibilities have been delegated to the Board committees. The four principal Board committees are:

### Board Audit Committee
* Sir Nigel Mobbs, Chairman
* Sir Andrew Large
* Sir Nigel Rudd
* Stephen Russell

The Board Audit Committee meets at least four times a year with the Group's senior management, the internal audit team and the external auditors to review, among other things, the Group's annual and interim financial statements, internal audit and compliance reports and the effectiveness of the Group's systems of internal control. It also approves and reviews the appointment and retirement of the external auditors, as well as their relationship with the Group.

### Board Remuneration Committee
* Peter Jarvis, Chairman
* David Arculus
* Hilary Cropper
* Sir Brian Jenkins
* Sir Nigel Mobbs

The Board Remuneration Committee meets at least four times a year, to consider matters relating to executive remuneration including remuneration policy for executive Directors', employee benefits and long-term incentive schemes.

### Board Nominations Committee
* Sir Peter Middleton, Chairman
* David Arculus
* Hilary Cropper
* Peter Jarvis
* Sir Brian Jenkins
* Sir Nigel Mobbs

The Board Nominations Committee is chaired by the Group Chairman, except when the Committee is considering the succession of the Group Chairman, in which case the Chairman of the Board Remuneration Committee, Peter Jarvis, also chairs the Board Nominations Committee. The Committee's other members are all non-executive Directors. The Committee considers and makes recommendations to the Board on all new Board appointments.

### Board Risk Committee
* Sir Peter Middleton, Chairman
* Matthew Barrett
* Sir Andrew Large
* Sir Nigel Rudd

The Board Risk Committee meets at least twice a year to review and recommend to the Board policies and standards for the risk governance and risk management of the Group.

Barclays PLC Annual Report 2000 65

---

Corporate governance
Barclays report on remuneration

# Barclays report on remuneration

## Introduction

Barclays seeks to ensure that reward policies are aligned with the objective of maximising shareholder value. This extends to all employees throughout the business, as well as executive Directors.

## Our reward vision and principles

Barclays is committed to using reward to reinforce a strong performance culture whereby excellence is expected at every level throughout the businesses. Our Group-wide vision reflects the commitment: "Barclays values excellence: employees can expect outstanding reward for outstanding performance".

Barclays reward vision is supported by the following principles:
* align the interests of employees and shareholders to deliver value creation;
* recognise excellent performance of Group, business and individual;
* encourage the right behaviours to achieve excellent performance;
* reward is to be commercially competitive;
* managers are to be accountable for reward decisions; and
* reward is to be transparent, well communicated and easily understood.

## Changes in 2000

The Incentive Share Option Plan (ISOP) was introduced to replace the Executive Share Option Scheme (ESOS) and the Performance Share Plan (PSP). No more awards will be made under either of these plans. Details of how the ISOP operates are set out on page 67.

Shareholder approval for the ISOP was obtained at the annual general meeting on 26th April 2000 when shareholder approval was also obtained to:
* establish a new All-Employee Share Ownership Plan (AESOP);
* renew the SAYE Share Option Scheme (SAYE); and
* introduce the Equity Ownership Plan for Barclays Global Investors.

## Changes in 2001

Building upon the reward vision and principles outlined above, it is intended that all employees should understand better what they need to do to achieve excellence and how this links to reward.

The 2001 performance bonus for the executive Directors will be explicitly linked to Group Economic Profit (EP) performance during 2001 in addition to their individual performance measured against a set of personal objectives.

The potential bonus for 2001 for superior individual performance combined with on-target EP results could trigger bonuses of 60% and 50% respectively of base salary for the Group Chief Executive and other executive Directors. Consistent with our commitment to performance based reward, bonuses could be zero if individual and/or Group performance were poor. Where an individual achieves outstanding performance and the Group exceeds its EP targets, this will be reflected in the level of bonuses. For 2001, the maximum bonus will be 150% of base salary for the Group Chief Executive and 125% for other executive Directors.

We have completed a comprehensive review of the framework for the AESOP in the context of our reward vision and principles and intend to introduce the partnership shares element of the AESOP this year. The AESOP will enable employees to invest in Barclays PLC ordinary shares.

## The reward package

The reward package for the executive Directors and other senior executives comprises:
* base salary;
* annual bonus and the Executive Share Award Scheme (ESAS);
* the ISOP; and
* pension arrangements.

## Base salary

Base salary is payable monthly in cash, recognising an individual's market worth. The policy is to review base salaries to ensure they are competitive relative to the practices of comparable organisations. Salaries for individual executive Directors are usually reviewed each year by the Board Remuneration Committee, recognising the individual's performance and experience, as well as market practice.

## Annual bonuses and ESAS

Individuals are awarded annual bonuses which drive the achievement of performance goals and reward individual and business performance. Annual awards normally comprise two components. Up to 75% of any award is paid as cash and the balance as an award of shares under ESAS see page 70 for details.

66 Barclays PLC Annual Report 2000

---

Corporate governance
Barclays report on remuneration

## ISOP

The structure of the ISOP has been designed to provide more leverage for exceptional performance creating higher shareholder value. Under the ISOP, executives can exercise options granted over Barclays PLC ordinary shares at the market price at the time of grant, dependent on Barclays performance against set performance targets.

* For most participants, the performance target is based on the growth in Economic Profit (EP). For the ISOP, EP is a measure based on profit after tax, adjusted for risk tendency and minority interests less a charge for the cost of average shareholders' funds. It is designed to encourage both profitable growth and capital efficiency.
* For the most senior participants, awards above a threshold will also be subject to an additional and tougher performance measure based on Total Shareholder Return (TSR) measured against the TSR of a financial services peer group. This comparator group comprises 11 UK and internationally based financial institutions, which have been chosen to reflect business and geographic mix.

The Board Remuneration Committee sets a target award for each participant in line with market practice for comparable positions and reflecting individual performance. Options must normally be held for three years before they can be exercised and lapse ten years after grant, if not exercised.

To ensure that growth is achieved on a sustained basis, no options will become exercisable if cumulative EP is lower than that of the previous three year period, including those options subject to the TSR performance target.

Options subject to the EP performance measure, where the cumulative EP is below the target range at the end of the three year performance period, will become exercisable over half of the target award shares. Where the cumulative EP is above the target range, the options will become exercisable over double the number of target award shares.

A relative ranking of sixth place or higher will result in those options subject to the TSR measure becoming exercisable at the third anniversary after grant. If the Company is ranked fourth, fifth or sixth in the comparator group, the options will become exercisable over the target award shares. If the Company is ranked third, second or first in the comparator group then the options will become exercisable over double, triple or quadruple the target award shares, respectively. However, if the Company is ranked below sixth after three years, there will be a retest on the fourth anniversary, over the full four year period. If the Company is not ranked sixth or higher after four years the options will lapse.

In setting the performance targets, the Board Remuneration Committee has sought to encourage excellent business performance. For the options to be fully exercisable Barclays would have to be a leading business in its sector.

See page 71 for details of executive Directors' awards made in 2000.

## Pension arrangements

Executive Directors' pension benefits, normally payable from age 60, are either a pension calculated by reference to their pensionable salary and length of service or a money purchase arrangement. See page 69 for details.

## Service contracts

The Group currently has service contracts with its Chairman, executive Directors and senior executives. The service contracts for Sir Peter Middleton, Mr Lendrum, Mr Stewart and Mr Varley, and other senior executives in the Group, provide for a notice period from the Group of one year, and normally for retirement at age 60. The unexpired term of the service contracts for Sir Peter Middleton, Mr Lendrum and Mr Stewart, who will each be seeking re-election at the annual general meeting in 2001, is 12 months. Peter Jarvis, Sir Brian Jenkins and Stephen Russell who will also be seeking re-election at the annual general meeting in 2001 do not have service contracts. Mr Barrett, who was appointed Group Chief Executive on 1st October 1999, has a service contract which provides for a notice period from the Group of two years during the first two years of the contract. The provisions give the Group the option of terminating the contract by making a pre-determined compensation payment equivalent to twice annual basic salary, pension contribution and expatriate allowance but excluding any compensation in relation to bonus. After two years, both the notice period and the pre-determined compensation reduce to one year. If Mr Barrett's contract is terminated following a change of control of Barclays, pre-determined compensation is payable equivalent to twice annual basic salary, pension contribution, bonus and other benefits. These provisions were negotiated as part of the arrangements for Mr Barrett's appointment.

The Board Remuneration Committee has considered the extent to which executive Directors' service contracts should deal with payments in the event of termination of the contract. Overall, the Committee's approach when considering payments in the event of termination is to review all the relevant circumstances, including any commitments made in a Director's service contract and the length of the notice period, and make its decision based on the information then available.

## Remuneration of non-executive Directors

Non-executive Directors do not have service contracts with the Group. Their fees are determined by the Board and reflect their individual responsibilities, including membership of Board committees. Non-executive Directors are not normally eligible for bonuses. Appointments are initially made for a term of five years and a maximum of ten years, subject to re-election at intervals of no more than three years by the shareholders at the annual general meeting.

Barclays encourages its non-executive Directors to build up a holding in the Company's shares. Fees include an amount of not less than £7,500 which, after tax, is used to buy shares in the Company for each non-executive Director with the exception of Sir Andrew Large. These shares, together with reinvested dividends, are retained on behalf of the non-executive Directors until they retire from the Board. They are included in the table of Directors' interests in ordinary shares of Barclays PLC on page 73.

Barclays PLC Annual Report 2000 67

---

Corporate governance
2000 Annual Remuneration

# 2000 Annual Remuneration$^{(a)}$

| Chairman | Salary & fees £000 | Benefits$^{(b)}$ £000 | Annual cash bonus £000 | Profit share £000 | 2000 Total £000 | 1999 Total £000 | ESAS$^{(c)}$ 2000 £000 | ESAS$^{(c)}$ 1999 £000 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Sir Peter Middleton$^{(d)}$ | 539 | 9 | - | 8 | 556 | 1,759 | - | - |
| **Executive** | | | | | | | | |
| MW Barrett | 850 | 246 | 638 | 8 | 1,742 | 1,346 | 276 | 276 |
| CJ Lendrum | 338 | 6 | 263 | 8 | 615 | 490 | 114 | 81 |
| JM Stewart$^{(e)}$ | 84 | 3 | 59 | 8 | 154 | - | - | - |
| JS Varley | 388 | 6 | 263 | 8 | 665 | 627 | 114 | 114 |
| **Non-executive**$^{(f)}$ | | | | | | | | |
| TDG Arculus | 42 | - | - | - | 42 | 47 | - | - |
| ME Baker$^{(g)}$ | 46 | - | - | - | 46 | 51 | - | - |
| HM Cropper | 41 | - | - | - | 41 | 47 | - | - |
| PJ Jarvis | 49 | - | - | - | 49 | 54 | - | - |
| Sir Brian Jenkins$^{(h)}$ | 18 | - | - | - | 18 | - | - | - |
| Sir Andrew Large | 175 | - | - | - | 175 | 227 | - | - |
| Sir Nigel Mobbs | 61 | - | - | - | 61 | 64 | - | - |
| Sir Nigel Rudd | 45 | - | - | - | 45 | 50 | - | - |
| SG Russell$^{(h)}$ | 7 | - | - | - | 7 | - | - | - |
| **Former Director** | | | | | | | | |
| DP Allvey$^{(i)}$ | 475 | 13 | 190 | 8 | 686 | 445 | - | 124 |

## Notes

$^{(a)}$ Emoluments include amounts, if any, payable by subsidiary undertakings and by other companies where services are undertaken at the Group's request.

$^{(b)}$ The Chairman and executive Directors receive benefits in kind, which may include the use of a company owned vehicle, housing allowance, medical health insurance and beneficial loans, on similar terms to other senior executives.

$^{(c)}$ The amounts shown for ESAS 2000 represent payments which are expected to be made to the trustee of ESAS to fund the provisional allocation of shares in 2001, including a maximum potential 30% bonus share element. Refer to page 70 for further details about ESAS.

$^{(d)}$ Sir Peter Middleton receives pension payments through the Barclays Bank Retirement Plan. Details of the payments are not included since the amounts do not relate to his current duties.

$^{(e)}$ Mr Stewart's salary, benefits and bonus are the amounts paid in respect of his services since his appointment as a Director on 25th October 2000.

$^{(f)}$ Fees to non-executive Directors (with the exception of Sir Andrew Large) include an amount of not less than £7,500 which, after tax, is used to buy Barclays PLC ordinary shares for each non-executive Director. Further details of the scheme are outlined on page 67.

$^{(g)}$ Mary Baker retired from the Board on 31st December 2000.

$^{(h)}$ Sir Brian Jenkins and Mr Russell's fees are the amounts paid in respect of services since their appointment as non-executive Directors on 25th October 2000.

$^{(i)}$ The Group agreed with Mr Allvey that he would resign from the Board and from his position as Finance Director on 9th November 2000 and that his employment would be terminated as at 31st December 2000. Mr Allvey received compensation in accordance with the terms of his contract of employment of £1,615,000 in respect of salary, bonus and pension contributions, plus outplacement support to a maximum of £15,000.

68 Barclays PLC Annual Report 2000

# Corporate governance
## Executive Directors' annual pension accrued

## Executive Directors' annual pension accrued assuming retirement at contractual date

| Executive | Age as at 31st December 2000 | Years of service | At 31st December 1999 (£000) | Increase for inflation (£000) | Pension accrued during 2000(c) (£000) | At 31st December 2000 (£000) | Other contributions made in 2000 (£000) |
| --- | --- | --- | --- | --- | --- | --- | --- |
| **Executive** | | | | | | | |
| MW Barrett (d) | 56 | 1 | – | – | – | – | 425 |
| CJ Lendrum (a) | 53 | 31 | 156 | 2 | 31 | 189 | – |
| JM Stewart (e) | 51 | 23 | 216 | – | 10 | 226 | – |
| JS Varley (a) | 44 | 18 | 103 | 1 | 19 | 123 | – |
| **Former Directors** | | | | | | | |
| DP Allvey (f) | 55 | 1 | – | – | – | – | 142 |

### Notes

(a) The Group’s main pension scheme is a non-contributory scheme and provides that, in the case of death before retirement, a capital sum of up to four times salary is payable, together with a spouse’s pension of approximately 50% of the member’s prospective pension at retirement. For death in retirement, a spouse’s pension of 50% of the member’s pre-commutation pension is payable. If a member, granted a deferred pension, dies before their pension becomes payable, their widow/widower will immediately be paid a pension of 50% of their deferred pension. In all circumstances, children’s allowances are payable, usually up to the age of 18. Enhanced benefits are payable if a member is unable to continue to work as a result of serious ill health. Mr Lendrum and Mr Varley are members of the main pension scheme and are entitled to enhanced benefits that will give them pensions of two-thirds of their pensionable salary at age 60.

(b) Or on appointment, if later.

(c) Pension accrued during the year represents the increase in accrued pension (excluding inflation at the prescribed rate) which occurred either during the entire year, or during that part of the year for which the executive was also a Director. All pensions are reviewed annually, with a guaranteed increase in line with retail price inflation, up to a maximum of 5%.

(d) Mr Barrett is not a member of the Group’s main pension scheme. A notional fund was accrued on his behalf outside the pension scheme. In the event of Mr Barrett’s death before retirement a capital sum of up to four times salary would be payable.

(e) Mr Stewart joined the Board on 25th October 2000. He is a member of the Woolwich Pension Fund and entitled to a pension of two-thirds of Pensionable salary at age 60 with minimum annual increases of 3% and no State Pension offset. Otherwise the Woolwich Pension Fund is similar to the Group’s main pension scheme except that employees contribute at the rate of 3% of pensionable salary.

(f) Mr Allvey was not a member of the Group’s main pension scheme. A notional fund was accrued on his behalf outside the pension scheme. In the event of Mr Allvey’s death before retirement a capital sum of up to four times salary would have been payable.

Barclays PLC Annual Report 2000 69

---

# Corporate governance
## Directors: shares provisionally allocated and shares under option under ESAS

## Directors: shares provisionally allocated and shares under option under ESAS(a)

| | Number at 1st January 2000 | During 2000 Awarded in respect of the results for 1999 | Released (b) | Market price at release date (£) | Number at 31st December 2000 | Awarded in 2001 in respect of the results for 2000 (c) |
| --- | --- | --- | --- | --- | --- | --- |
| **Chairman** | | | | | | |
| Sir Peter Middleton | 13,676 | – | (6,961) | 15.55 | 6,715 | – |
| **Executive** | | | | | | |
| MW Barrett | – | 18,127 | – | – | 18,127 | 12,327 |
| CJ Lendrum | 14,072 | 5,332 | (3,362) | 15.55 | 16,042 | 5,076 |
| JM Stewart (d) | – | – | – | – | – | – |
| JS Varley | 55,275 | 7,464 | (7,249) | 15.55 | 55,490 | 5,076 |
| **Former Directors** | | | | | | |
| DP Allvey (e) | – | 8,104 | – | – | 8,104 | – |

### Notes

(a) Awards under ESAS are granted in the form of provisional allocations over Barclays PLC ordinary shares which do not give rise to any entitlement to these shares. Normally, the trustees will permit the executive to call for the shares from the end of the third year from grant of an award by granting a right to acquire shares exercisable for two years. If the right is not exercised, the trustees may at the end of the fifth year release all of the shares, including bonus shares equal to 30% of the basic award. If the right is exercised, an executive may lose the opportunity of receiving one-third of the bonus shares. The number of shares shown in the table includes the bonus shares.

(b) The trustees may release additional shares to participants which represent accumulated net dividends in respect of shares under award. During 2000, the trustees released the following accumulated dividend shares: 1,231 shares to Sir Peter Middleton and 494 shares to Mr Lendrum. These are not awarded as part of the original award and consequently are not included in the figures in the Released column.

(c) The awards in respect of 2000 were made in February 2001. The shares awarded represent shares purchased by the trustees after 7th February 2001 at £22.41 in respect of a recommendation by the Company for an award, including a maximum potential 30% bonus shares, of £276,250 to Mr Barrett, £113,750 to Mr Lendrum and £113,750 to Mr Varley.

(d) No award was made under ESAS to Mr Stewart whose bonus for 2000 will be paid fully in cash, consistent with the practice in Woolwich plc.

(e) Under the terms agreed with Mr Allvey in respect of the termination of his employment with the Group, the Group will make a recommendation to the trustees that the trustees release to Mr Allvey the provisional allocation of shares under his award including dividend shares (but excluding all bonus shares and their related dividend shares) in line with the normal vesting timetables.

70 Barclays PLC Annual Report 2000

---

# Corporate governance
## Executive Directors: shares under option under ISOP and SAYE

## Executive Directors: shares under option under ISOP(a) (b) (c)

| | Number at 1st January 2000 | Number of Target Award Shares | Granted Maximum number which may become exercisable | Number at 31st December 2000 (d) | Exercise price per share £ | Date from which exercisable | Expiry date |
| --- | --- | --- | --- | --- | --- | --- | --- |
| **MW Barrett** | | | | | | | |
| EP | – | 10,000 | 20,000 | 20,000 | 15.63 | 18/05/03 | 17/05/10 |
| TSR | – | 54,000 | 216,000 | 216,000 | 15.63 | 18/05/03 | 17/05/10 |
| **CJ Lendrum** | | | | | | | |
| EP | – | 10,000 | 20,000 | 20,000 | 15.63 | 18/05/03 | 17/05/10 |
| TSR | – | 17,000 | 68,000 | 68,000 | 15.63 | 18/05/03 | 17/05/10 |
| **JM Stewart (d)** | | | | | | | |
| EP | – | – | – | – | – | – | – |
| TSR | – | – | – | – | – | – | – |
| **JS Varley** | | | | | | | |
| EP | – | 10,000 | 20,000 | 20,000 | 15.63 | 18/05/03 | 17/05/10 |
| TSR | – | 20,000 | 80,000 | 80,000 | 15.63 | 18/05/03 | 17/05/10 |
| **Former Director** | | | | | | | |
| **DP Allvey (e)** | | | | | | | |
| EP | – | 10,000 | 20,000 | 20,000 | 15.63 | 18/05/03 | 17/05/04 |
| TSR | – | 19,000 | 76,000 | 76,000 | 15.63 | 18/05/03 | 17/05/04 |

### Notes

(a) The Register of Directors’ Interests which shows full details of Directors’ current share awards and options, is available for inspection at the Group’s head office in London.

(b) For details of the performance targets which must be satisfied for options to become exercisable and the extent to which options will become exercisable see page 67.

(c) No options either lapsed or were exercised during the year. As there were no options exercised during the year, the table does not show the average weighted price.

(d) Mr Stewart joined the Board on 25th October 2000. He did not participate in ISOP during 2000.

(e) Mr Allvey resigned from the Board on 9th November 2000.

## SAYE

SAYE is open to all eligible UK employees who may save up to £250 per month to purchase Barclays shares at a discount. For the 2000 grant, the discount was 20% of the market value at the time the option was granted.

## Executive Directors: shares under option under SAYE(a)

| | Number at 1st January 2000 | Granted | Exercised | Number at 31st December 2000 | Exercise price per share £ | Date from which exercisable | Expiry date |
| --- | --- | --- | --- | --- | --- | --- | --- |
| MW Barrett | – | 766 | – | 766 | 12.64 | 01/11/03 | 30/04/04 |
| CJ Lendrum | 978 | – | – | 978 | 7.97 | 01/11/03 | 30/04/04 |
| JM Stewart (b) | – | 1,397 | – | 1,397 | 12.34 | 01/07/03 | 31/12/03 |
| JS Varley | 2,164 | – | – | 2,164 | 7.97 | 01/11/01 | 30/04/02 |

### Notes

(a) The Register of Directors’ Interests which shows full details of Directors’ current share awards and options is available for inspection at the Group’s head office in London.

(b) Under the Woolwich Sharesave Scheme (The Woolwich Sharesave), Mr Stewart held an option over Woolwich plc shares. This was rolled over into a new option over Barclays shares under the terms of The Woolwich Sharesave in accordance with proposals offered to all Woolwich employees participating in The Woolwich Sharesave following the acquisition of Woolwich plc.

Barclays PLC Annual Report 2000 71

---

# Corporate governance
## Closed Group incentive schemes

## Closed Group incentive schemes

In addition, executive Directors and Andrew Large continue to have interests under PSP, ESOS and the Woolwich plc 1998 Executive Share Option Plan (The Woolwich ESOP) (as indicated in the table below). No further awards will be made under these schemes. Under PSP, executives were awarded a right to acquire shares, the number of which is determined by the Company’s relative TSR performance against a FT-SE 100 index comparator group of companies. Under ESOS, market value options granted to executives are exercisable only if the growth in earnings per share of the Company over a three year period is, at least, equal to the percentage increase in the UK Retail Prices Index plus 6%, over the same period. The performance targets for the 1997 and 1998 ESOS grants have been met.

## Directors: shares under option or awarded under closed Group incentive schemes(a)

| | Number at 1st January 2000 | During the year Granted | Exercised | Lapsed | Number at 31st December 2000 | Exercise price per share £ | Weighted average exercise price £ | Date from which exercisable | Latest expiry date |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| **MW Barrett (b)** | | | | | | | | | |
| ESOS | 191,657 | – | – | – | 191,657 | 17.74 | – | 04/10/02 | 03/10/09 |
| PSP | 47,914 | – | – | – | 47,914 | N/A | – | 04/10/02 | 03/10/09 |
| **CJ Lendrum** | | | | | | | | | |
| ESOS | 15,000 | – | – | – | 15,000 | 5.50 | – | 30/08/98 | 29/08/05 |
| PSP (c) | 32,757 | – | (6,444) | (1,442) | 24,871 | N/A | 17.17 | 12/08/01 | 05/09/09 |
| **JM Stewart (d)** | | | | | | | | | |
| | – | 17,355 | – | – | 17,355 | 15.42 | – | 28/04/01 | 28/04/08 |
| | – | 17,529 | – | – | 17,529 | 16.90 | – | 25/03/02 | 24/03/09 |
| | – | 64,203 | – | – | 64,203 | 15.38 | – | 14/12/02 | 13/12/09 |
| | – | 34,926 | – | – | 34,926 | 13.17 | – | 17/02/03 | 16/02/10 |
| **JS Varley** | | | | | | | | | |
| PSP (c) | 45,132 | – | (18,819) | (1,442) | 24,871 | N/A | 17.89 | 12/08/01 | 05/09/09 |
| **Sir Andrew Large** | | | | | | | | | |
| PSP (e) | 11,201 | – | – | – | 11,201 | N/A | – | 12/08/01 | 11/08/08 |
| **Former Directors** | | | | | | | | | |
| **DP Allvey (f)** | | | | | | | | | |
| ESOS | 13,328 | – | – | – | 13,328 | 17.82 | – | 06/09/02 | 06/03/03 |
| PSP | 26,566 | – | – | – | 26,566 | N/A | – | 06/09/02 | 06/09/03 |

### Notes

(a) The register of Directors’ Interests which shows full details of Directors’ current share awards and options, is available for inspection at the Group’s head office in London.

(b) The independent trustee of the Barclays Group (PSP and ESOS) employees’ benefit trust granted Mr Barrett a share award in 1999 comprising (i) an option on similar terms to options granted under ESOS and (ii) an award on similar terms to awards granted under PSP. For convenience these are described as granted under ESOS and PSP in the above table.

(c) In accordance with the rules of PSP, a proportion of Mr Lendrum’s and Mr Varley’s 1997 awards lapsed as the performance conditions were not fully satisfied. Under PSP, a participant pays £1 to exercise an award, irrespective of the number of shares involved.

(d) Under The Woolwich ESOP, Mr Stewart held an option over Woolwich plc shares. This was rolled over into a new option over Barclays PLC shares under the terms of The Woolwich ESOP in accordance with proposals offered to all Woolwich employees participating in The Woolwich ESOP following the acquisition of Woolwich plc.

(e) The award to Sir Andrew Large was made in 1998 while he was an executive Director.

(f) Under the terms agreed with Mr Allvey in respect of the termination of his employment with the Group, the Group will make a recommendation to the trustees that Mr Allvey be allowed to exercise his PSP award (on a pro rata basis by reference to his length of service from commencement of the performance period to the date his employment terminated) subject to the satisfaction of the TSR performance criteria. If the recommendation is accepted the maximum number of shares in respect of which the trustees may permit the award to be exercised would be 13,331.

72 Barclays PLC Annual Report 2000

---

# Corporate governance
## Directors interests in ordinary shares of Barclays PLC

## Directors: interests in ordinary shares of Barclays PLC(a)

| | At 1st January 2000 (b) Beneficial | Non-beneficial | At 31st December 2000 Beneficial | Non-beneficial |
| --- | --- | --- | --- | --- |
| **Chairman** | | | | |
| Sir Peter Middleton | 34,995 | 17,000 | 34,533 | 22,900 |
| **Executive** | | | | |
| MW Barrett | 25,000 | – | 25,000 | – |
| CJ Lendrum | 35,905 | – | 36,247 | – |
| JM Stewart (c) | 270 | – | 642 | – |
| JS Varley | 20,464 | – | 33,863 | – |
| **Non-executive** | | | | |
| TDG Arculus | 1,962 | – | 2,249 | – |
| ME Baker (d) | 3,354 | – | 3,654 | – |
| HM Cropper | 1,346 | – | 1,792 | – |
| PJ Jarvis | 2,686 | – | 3,790 | – |
| Sir Brian Jenkins | 74 | – | 500 | 26,300 |
| Sir Andrew Large | 799 | – | 799 | 7,500 |
| Sir Nigel Mobbs | 10,615 | 5,000 | 10,914 | 5,000 |
| Sir Nigel Rudd | 1,224 | – | 1,511 | – |
| SG Russell | 689 | – | 1,109 | – |

### Notes

(a) Beneficial interests in the table above represent shares held by Directors, either directly or through a nominee, their spouse and children under 18. They include any interests held through the 1991 UK Profit Sharing Schemes (PSS), but do not include any awards under ESAS, ISOP, PSP, ESOP, SAYE schemes or under The Woolwich Sharesave or the Woolwich plc 2000 Sharesave Scheme (together The Woolwich SAYE), or The Woolwich ESOP. At 31st December 2000 Sir Peter Middleton, Sir Andrew Large and the executive Directors, together with other senior executives, were potential beneficiaries in respect of a total of 7,724,782 Barclays PLC ordinary shares (1st January 2000 9,055,824) held by the trustees of the Barclays Group Employees' Benefit Trusts. At 7th February 2001 a total of 7,724,689 shares were held by the trustees.

(b) Or date appointed to the Board, if later.

(c) At 31st December 2000 Mr Stewart, together with other senior executives from The Woolwich, was a potential beneficiary in respect of a total of 474,306 Barclays PLC ordinary shares held by the trustee of the Woolwich Qualifying Employee Share Ownership Trust. At 7th February 2001 a total of 470,799 shares were held by the trustee.

(d) Mary Baker retired from the Board on 31st December 2000.

There were no changes in any of the Directors' interests in shares shown above between 31st December 2000 and 7th February 2001.

Barclays PLC Annual Report 2000 73

---

# Corporate governance
## Relations with Shareholders and Accountability and Audit

## Relations with Shareholders

Meetings with Barclays principal institutional investors are held on a regular basis and the agenda and format of the annual general meeting provide a forum for questions from private shareholders.

The annual general meeting in 2001 is an opportunity for shareholders to ask questions of the Board, including the chairmen of the Board Audit, Board Remuneration and Board Nominations Committees. Voting at Barclays annual general meetings is conducted by poll so that the votes of those shareholders who cannot attend are taken into account.

## Accountability and Audit

### Going concern

The Directors confirm they are satisfied that the Group has adequate resources to continue in business for the foreseeable future. For this reason, they continue to adopt the 'going concern' basis for preparing the accounts.

### Internal control

The Directors have responsibility for maintaining an effective system of internal control and for reviewing its effectiveness. Such a system is designed to 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. Throughout the year ended 31st December 2000 and to date the Group has operated a system of internal control which provides reasonable assurance of effective and efficient operations covering all controls, including financial and operational controls and compliance with laws and regulations. Processes are in place for identifying, evaluating and managing the significant risks facing the Group in accordance with the guidance 'Internal Control: Guidance for Directors on the Combined Code' issued by the Institute of Chartered Accountants in England and Wales. The Board regularly reviews these processes through the Board committees.

The Directors review the effectiveness of the system of internal control annually. An internal control compliance certification process is conducted throughout the Group in support of this review. Quarterly risk reports are made to the Board covering all risks of Group significance including credit risk, market risk, operational risk, and legal and compliance risk. In between the full reports the Board receives a monthly update on any risk matters that need to be brought to the Board's attention. Regular reports are made to the Board Audit Committee by management, Group Internal Audit, PricewaterhouseCoopers and the compliance and legal functions covering particularly financial controls, compliance and operational controls. Separate audit committees are also established in Retail Financial Services, Corporate Banking, Barclays Capital, Barclays Global Investors and in North America and Asia Pacific. Reports covering risk measurement standards and risk appetite are made to the Board Risk Committee.

Reports to the Board and Board committees are underpinned by the executive risk infrastructure. This is overseen by the Group Risk Management Committee and Group Operating Committee. Day to day responsibility is vested in the Director Group Risk (for credit, market and operational risk) and in the Group General Counsel (for legal risk). Under this structure quantifiable risks are reported and controlled at varying levels in the risk and executive hierarchy appropriate to their magnitude. The key document for the Group's internal control processes is the Group Governance Manual which describes the Group's governance and control framework and details Group policies and processes. The Manual is reviewed and approved on behalf of the Board by the Board Risk Committee. Further details of risk management procedures are given in the Financial review on pages 36 to 57.

The system of internal financial and operational controls is also subject to regulatory supervision in the UK and overseas, as explained under Supervision and regulation on pages 58 and 59.

### Statement of Directors' responsibilities for accounts

The following statement, which should be read in conjunction with the Auditors' report set out on page 75, is made with a view to distinguishing for shareholders the respective responsibilities of the Directors and of the auditors in relation to the accounts.

The Directors are required by the Companies Act 1985 to prepare accounts for each financial year which give a true and fair view of the state of affairs of the Company and Group as at the end of the financial year and of the profit or loss for the financial year.

The Directors consider that, in preparing the accounts on pages 76 to 134 and 156 to 165, and the additional information contained on pages 68 to 73, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates, and that all accounting standards which they consider to be applicable have been followed.

The Directors have responsibility for ensuring that the Company and the Group keep accounting records which disclose with reasonable accuracy the financial position of the Company and the Group and which enable them to ensure that the accounts comply with the Companies Act 1985.

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

Signed on behalf of the Board  
Sir Peter Middleton  
7th February 2001

74 Barclays PLC Annual Report 2000

---

# Auditors' reports

## Independent Auditors' reports

### UK audit report to the members of Barclays PLC

We have audited the accounts on pages 76 to 134 which have been prepared under the historical cost convention, as modified by the revaluation of certain fixed assets, and the accounting policies set out on pages 76 to 78 and the additional information contained on pages 68 to 73.

#### Respective responsibilities of Directors and Auditors
The Directors are responsible for preparing the Annual report and accounts. As described on page 74, this includes responsibility for preparing the accounts in accordance with applicable UK accounting standards. Our responsibility is to audit the accounts in accordance with relevant legal and regulatory requirements, UK Auditing Standards issued by the Auditing Practices Board and the Listing Rules of the Financial Services Authority. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

We report to you our opinion as to whether the accounts give a true and fair view and are properly prepared in accordance with the UK Companies Act 1985. We also report to you if, in our opinion, the Directors' report is not consistent with the accounts, if the Company or Group has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law or the Listing Rules regarding Directors' remuneration and transactions is not disclosed.

We read the other information contained in the Annual Report and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the accounts.

We review whether the statement on page 65 reflects the Company's and Group's compliance with the seven provisions of the Combined Code specified for our review by the Financial Services Authority, and we report if it does not. We are not required to consider whether the Board's statements on internal control cover all risks and controls, or to form an opinion on the effectiveness of the Company's or Group's corporate governance procedures or its risk and control procedures.

The maintenance and integrity of the Barclays PLC website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

#### Basis of audit opinion
We conducted our audit in accordance with UK Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the accounts. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the accounts, and of whether the accounting policies are appropriate to the Company's and Group's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the accounts are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the accounts.

#### Opinion
In our opinion, the accounts give a true and fair view of the state of affairs of the Company and the Group at 31st December 2000 and of the profit of the Company and of the profit and cash flows of the Group for the year then ended and have been properly prepared in accordance with the UK Companies Act 1985.

**PricewaterhouseCoopers**  
Chartered Accountants and Registered Auditors  
London, England, 7th February 2001

### US audit report to the Boards of Directors and shareholders of Barclays PLC and Barclays Bank PLC

We have audited the consolidated financial statements of Barclays PLC and its subsidiary undertakings on pages 76 to 151 and Barclays Bank PLC and its subsidiary undertakings on pages 76 to 151 and 156 to 165 inclusive. These financial statements are the responsibility of the management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall accounts presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements audited by us present fairly, in all material respects, the financial position of Barclays PLC and its subsidiary undertakings and Barclays Bank PLC and its subsidiary undertakings at 31st December 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended 31st December 2000, in conformity with accounting principles generally accepted in the UK.

Accounting principles generally accepted in the UK vary in certain significant respects from accounting principles generally accepted in the United States. The application of the latter would have affected the determination of consolidated net income for each of the three years in the period ended 31st December 2000 and the determination of the consolidated shareholders' equity at 31st December 2000 and 1999 to the extent summarised in note 61 and note h to the consolidated financial statements.

**PricewaterhouseCoopers**  
Chartered Accountants and Registered Auditors  
London, England, 7th February 2001.

Barclays PLC Annual Report 2000 75

---

# Consolidated accounts Barclays PLC
## Accounting policies

## Accounting policies

### Summary of significant accounting policies

#### a Accounting convention
The accounts have been prepared under the historical cost convention, as modified by the revaluation of certain properties and investments. They are prepared in accordance with applicable accounting standards of the Accounting Standards Board (ASB) and pronouncements of its Urgent Issues Task Force (UITF) and with the Statements of Recommended Accounting Practice (SORPs) issued by the British Bankers' Association. Changes to the accounting policies described in the 1999 Annual report are set out on page 78.

#### b Consolidation and format
The consolidated accounts have been prepared in compliance with Sections 230, 255, 255A and 255B of, and Schedule 9 to, the Companies Act 1985 (the Act). The profit and loss account and balance sheet of Barclays PLC have been prepared in compliance with Section 226 of, and Schedule 4 to, the Act.

The consolidated accounts include the accounts of Barclays PLC and its subsidiary undertakings made up to 31st December. Details of the principal subsidiary undertakings are given in note 44. As the consolidated accounts include partnerships where a Group member is a partner, advantage has been taken of the exemption given by Regulation 7 of the Partnerships and Unlimited Companies (Accounts) Regulations 1993.

#### c Goodwill
Goodwill may arise on the acquisition of subsidiary and associated undertakings and joint ventures. It represents the excess of cost over fair value of the Group's share of net tangible assets acquired. In accordance with Financial Reporting Standard (FRS) 10, such goodwill is capitalised as an intangible asset and amortised against profit over its expected life, normally 20 years. Prior to FRS 10 Group accounting policy had been to write off goodwill directly to reserves. The transitional arrangements of FRS 10 allow this goodwill to remain eliminated. In the event of a subsequent disposal, any goodwill previously charged directly against reserves prior to FRS 10 will be written back and reflected in the profit or loss on disposal.

#### d Interests in associated undertakings and joint ventures
An associated undertaking is generally one in which the Group's interest is more than 20% and no more than 50% and where the Group exercises a significant influence over the entity's operating and financial policies. A joint venture is one where the Group holds an interest on a long-term basis and which is jointly controlled by the Group and one or more other venturer. Consolidated profit includes income from interests in associated undertakings and joint ventures based on accounts made up to dates not earlier than 3 months before the balance sheet date. Interests in associated undertakings and joint ventures are included in the consolidated balance sheet at the Group's share of the book value of the net tangible assets of the undertakings concerned.

#### e Shareholders' interest in the long-term assurance fund
A value is placed on the shareholders' interest in the in-force policies of the Group's long-term assurance business. This value is a prudent estimate, based on the advice of a qualified actuary, of the net present value of the profits inherent in such policies. Changes in the value are included in the profit and loss account, grossed up at the underlying rate of taxation.

#### f Bad and doubtful debts
Specific provisions are made against advances when, in the opinion of the Directors, credit risks or economic or political factors make recovery doubtful. In addition, general provisions are raised, based on an evaluation of the portfolios of advances and other exposures, in respect of losses which, although not specifically identified, are known from experience to be present in any such portfolio. The aggregate provisions which are made during the year (less amounts released and recoveries of bad debts previously written off) are charged against operating profit. If the collection of interest is considered to be doubtful, it is suspended and excluded from interest income in the profit and loss account. Bad debts are written off in part, or in whole, when a loss has been confirmed.

#### g Debt securities and equity shares
Debt securities and equity shares are stated at market value, apart from investment debt securities and equity shares, which are stated at cost less any provision for impairment. Investment securities are intended for use on a continuing basis by the Group and have been identified as such. The cost of dated investment securities is adjusted for the amortisation of premiums or discounts on purchase over periods to redemption.

#### h Depreciation
Depreciation of tangible fixed assets is provided on a straight line basis at the following annual rates:

- Freehold buildings and long-leasehold property (more than 50 years to run): 2%
- Leasehold property (less than 50 years to run): over the remaining life of the lease
- Costs of adaptation of freehold and leasehold property*: 10%
- Equipment installed in freehold and leasehold property*: 10%
- Computers and similar equipment: 20%-33%
- Fixtures and fittings and other equipment: 20%

* Where a leasehold has a remaining useful life of less than 10 years, costs of adaptation and installed equipment are depreciated over the remaining life of the lease.

76 Barclays PLC Annual Report 2000

---

# Consolidated accounts Barclays PLC
## Accounting policies

#### i Derivatives

##### Derivatives used for asset and liability management purposes
Derivatives are used to hedge interest and exchange rate exposures related to non-trading positions. Instruments used for hedging purposes include interest rate swaps, options, futures and currency swaps.

The criteria required for a derivative instrument to be classified as a designated hedge are that:

(i) the transaction must be reasonably expected to match or eliminate a significant proportion of the risk inherent in the assets, liabilities, other positions or cashflows being hedged and which results from potential movements in interest rates, exchange rates and market values; and

(ii) adequate evidence of the intention to hedge and linkage with the underlying risk inherent in the assets, liabilities, other positions or cashflows being hedged, must be established at the outset of the transaction.

Profits and losses on interest rate swaps and options entered into for specifically designated hedging purposes against assets, liabilities, other positions and cashflows measured on an accrual accounting basis are included in the related category of income and expense (in accordance with the accounting treatment of the underlying transaction) as part of the yield on the hedged transaction. Amounts paid or received over the life of futures contracts are deferred until the contract is closed; accumulated deferred amounts on futures contracts and amounts paid or received at settlement of forward contracts are accounted for as elements of the carrying value of the associated instrument, affecting the resulting yield. Foreign exchange contracts which qualify as hedges of foreign currency exposures, including positions relating to investments the Group makes in its business outside the UK, are revalued at the spot rate with any forward premium or discount recognised over the life of the contract in net interest income. Profits and losses on foreign exchange contracts which qualify as a hedge of a firm commitment are deferred and recognised as part of the measurement of the related transaction.

Profits and losses related to qualifying hedges of firm commitments and probable anticipated transactions are deferred and recognised in income or as adjustments to carrying amounts when the hedged transactions occur.

Hedging transactions which are superseded, cease to be effective or are terminated prior to the end of the life of the asset, liability position or cashflow being hedged are measured at fair value. Any profit or loss arising is deferred and amortised into interest income or expense over the remaining life of the item previously being hedged.

When the underlying asset, liability position or cashflow is terminated prior to the hedging transaction, or an anticipated transaction is no longer likely to occur, the hedging transaction is measured on a fair value accounting basis prior to being transferred to the trading portfolio. The profit or loss arising from the fair value measurement prior to the transfer to the trading portfolio is included in the category of income or expense relating to the previously hedged transaction.

##### Derivatives used for trading purposes
Derivative instruments which do not meet the criteria to be designated as a hedge are deemed to be trading transactions. Derivatives entered into for trading purposes include swaps, forward rate agreements, futures, options and combinations of these instruments.

Derivatives entered into as trading transactions, together with any associated hedging thereof, are measured at fair value, including an allowance for credit risk, and the resultant profits and losses are included in dealing profits, along with interest and dividends arising from long and short positions and funding costs relating to trading activities. Assets and liabilities resulting from gains or losses on derivative and foreign exchange contracts are reported gross in other assets or liabilities, reduced by the effects of qualifying netting agreements with counterparties. The Group establishes provisions for credit risk to the extent that the credit risk is not embedded in the fair value measurement prior to impairment. Associated costs of dealing are recognised when incurred. Where the market price may not be achievable, as a result of significant positions held or operating in illiquid markets, appropriate adjustments to the market value are made.

##### Collateral and netting
The Group enters into master agreements with counterparties whenever possible and, when appropriate, obtains collateral. Master agreements provide that, if an event of default occurs, all outstanding transactions with the counterparty will be terminated and all amounts outstanding will be settled on a net basis.

Transactions with positive fair values are netted against transactions with negative fair values where the Group has the ability to insist on net settlement which is assured beyond doubt, based on a legal right that would survive the insolvency of the counterparty.

The Group holds collateral in respect of credit related instruments where this is considered desirable, given the customer's financial position and the overall banking relationship. The collateral normally takes the form of a lien over the customer's assets and gives the Group a claim on these assets for both existing and future liabilities.

#### j Credit related instruments
The Group treats credit related instruments (other than credit derivatives) as contingent liabilities and these are not shown on the balance sheet unless and until the Group is called upon to make a payment under the instrument. Assets arising from payments to a third party where the Group is awaiting reimbursement from the customer are shown on the balance sheet, together with any necessary provision. Fees received for providing these instruments are taken to profit over the life of the instrument and reflected in fees and commissions receivable.

#### k Pensions and other post-retirement benefits
The Group's main pension scheme covers over 70% of the Group's employees and comprises a funded defined benefit scheme and a money purchase scheme for new joiners since July 1997. Staff do not make contributions for basic pensions. The pension cost relating to the defined benefit scheme is assessed in accordance with the advice of a qualified actuary, using the projected unit method. Variations from the regular cost are allocated over the expected average service lives of current employees.

Barclays PLC Annual Report 2000 77

---

# Consolidated accounts Barclays PLC
## Accounting policies

The Group also provides post-retirement health care to certain staff and pensioners, the cost of which has been accrued on a similar basis.

#### l Finance lease receivables
Finance lease receivables are included in loans and advances to customers at the cost of the equipment less amounts charged against rentals to date. Net leasing income under finance leases is taken to profit using an actuarial method which gives a constant periodic return on the net cash investment.

#### m Deferred tax
Deferred tax is provided using the liability method on timing differences between the accounting and tax treatment of income and expense where it is considered probable that a liability to tax will crystallise.

#### n Foreign currencies
Assets and liabilities in foreign currencies are expressed in sterling at rates of exchange ruling on the balance sheet date. Overseas profits and losses are expressed in sterling at average rates of exchange for the year. Profits arising in areas experiencing hyper-inflation are adjusted to recognise its effect on the worth of the working capital employed.

Translation differences arising from the application of closing rates of exchange to the opening net assets held overseas and to related foreign currency borrowings are taken directly to reserves. All other exchange profits and losses, which arise from normal trading activities, are included in operating profit.

#### o Loan fees
Fee income relating to loans and advances is recognised in the profit and loss account to match the cost of providing a continuing service, together with a reasonable profit margin, except where the fee is charged in lieu of interest when it is recognised on a level yield basis over the life of the advance.

#### p Mortgage incentives
The costs of mortgage incentives, which comprise cashbacks and interest discounts, are charged to the profit and loss account as incurred.

#### q Introducer fees
Fees paid to third parties for the introduction of loans and advances to customers are capitalised and amortised over the estimated average life of the loan.

#### r Non-credit risk provisions
Provisions are recognised for present obligations arising as consequences of past events where it is probable that a transfer of economic benefit will be necessary to settle the obligation and it can be reliably estimated. Contingent liabilities are possible obligations whose existence will be confirmed only by uncertain future events or present obligations where the transfer of economic benefit is uncertain or cannot be reliably measured. Contingent liabilities are not recognised but are disclosed unless they are remote.

### Changes in accounting policy

Changes to the Group's accounting policies have occurred following the adoption in 2000 of Financial Reporting Standard 15 'Tangible Fixed Assets' (FRS 15) and Financial Reporting Standard 16 'Current Tax' (FRS 16).

The Group has applied the transitional rules available under FRS 15. The revalued book amounts of fixed assets will be retained without subsequent revaluation subject to the requirement to test for impairment. This change has had no impact on reporting profit or shareholders' funds.

In accordance with FRS 16, incoming dividends, interest and other income now exclude taxes, such as attributable tax credits, not payable wholly on behalf of the Group. This change in policy has resulted in a reduction in restated profit before tax for 1999 of £5m with a commensurate reduction in the tax charge. Shareholders' funds are unchanged by this change in policy.

There have been no other significant changes to the accounting policies as described in the 1999 Annual report.

### Future UK accounting developments

In November and December 2000 the ASB issued FRS 17 'Retirement Benefits', FRS 18 'Accounting Policies' and FRS 19 'Deferred Tax'. FRS 18 will be effective for the year ended 31st December 2001 and its implementation is not expected to have a material impact on the Group. FRS 19 will be effective for the year ended 31st December 2002 and requires deferred tax to be recognised on most types of timing differences. Implementing the standard will require a change in accounting policy since the Group currently provides deferred tax on timing differences where it is considered probable that a liability will crystallise. FRS 17 will be fully effective for the year ended 31st December 2003 when a change in accounting policy will be necessary to recognise on the Group's balance sheet an asset or liability with respect to the surplus or deficit on the defined benefit schemes and to recognise immediately actuarial gains and losses in the statement of total recognised gains and losses. However, there are transitional requirements which will require additional disclosures in the financial statements for the years ended 31st December 2001 and 2002.

### US GAAP

Significant differences exist between accounting principles generally accepted in the UK and those generally accepted in the United States, and the approximate effect on attributable profit and shareholders' funds of Barclays PLC is set out in note 61.

78 Barclays PLC Annual Report 2000

Consolidated accounts Barclays PLC
Accounting presentation

# Accounting presentation

## Changes in accounting presentation

The Group’s share of the results of joint ventures and associated undertakings are shown separately below operating profit having previously been included in Other operating income. For the purposes of Business Group analysis the share of the results is still included in Operating profit.

There have been no other changes in accounting presentation from that reflected in the 1999 Annual report.

## Nature of business

Barclays is a UK-based financial services group engaged primarily in banking, investment banking and asset management. In terms of assets employed, Barclays is one of the largest financial services groups in the UK. The Group also operates in many other countries around the world and is a principal provider of co-ordinated global services to multinational corporations and financial institutions in the world’s main financial centres.

## Analyses by geographical segments and classes of business

The analyses by geographical segment are generally based on the location of the office recording the transaction.

In note 60, the global swaps business is included within the UK segment. Foreign UK-based comprises activities in the UK with overseas customers, including sovereign lendings, and the main foreign exchange trading business arising in the UK. Of the £22.0bn of assets reported under this heading in 2000, it is estimated that £7.9bn relates to customers domiciled in Other European Union countries and £5.0bn relates to customers domiciled in the United States.

UK includes business transacted through the Channel Islands and Isle of Man. United States includes business conducted through the Bahamas and the Cayman Islands.

The world-wide activities of Barclays are highly integrated and, accordingly, it is not possible to present geographical segment information without making internal allocations, some of which are necessarily subjective. Where appropriate, amounts for each geographical segment and class of business reflect the benefit of earnings on a proportion of shareholders’ funds, allocated generally by reference to weighted risk assets.

Note 60 to the accounts also presents an analysis of the results by classes of business based on the business groupings described on pages 6 to 11.

Total assets and total revenues are stated after elimination of intra-group assets and revenues. Intra-group transactions are undertaken on normal commercial terms.

In 2000, only the UK accounted for more than 10% of the total profit before tax or total gross income and at 31st December 2000 only the UK and the United States accounted for more than 10% of the total assets. In 1999, only the UK accounted for more than 10% of the total profit before tax or total gross income and at 31st December 1999 only the UK and the United States accounted for more than 10% of the total assets.

In 1998, only the UK and other EU accounted for more than 10% of the total profit before tax or total gross income and at 31st December 1998 only the UK and the United States accounted for more than 10% of the total assets.

## Acquisition

The acquisition of The Woolwich was completed on 25th October 2000.

## Disposals

The Group made the following significant disposals of interests in subsidiary and associated undertakings or business operations in 2000:

- Dial Group: June 2000
- Barclays Property Investment: October 2000
- Malaysian International Merchant Bankers Berhad: December 2000

The effect of these disposals on the profit for the year is reflected in note 10 to the accounts.

Barclays PLC Annual Report 2000 79

---

Consolidated accounts Barclays PLC
Consolidated profit and loss account

# Consolidated profit and loss account
## For the year ended 31st December 2000

| Interest receivable: | Note | 2000 £m | 1999 £m | 1998 £m |
| :--- | :--- | :--- | :--- | :--- |
| Interest receivable and similar income arising from debt securities | | 2,339 | 1,397 | 1,419 |
| Other interest receivable and similar income | | 9,449 | 7,923 | 8,493 |
| | | 11,788 | 9,320 | 9,912 |
| Interest payable | | 6,635 | 4,696 | 5,604 |
| Profit on redemption/repurchase of loan capital | 1 | 2 | 3 | 3 |
| Net interest income | | 5,155 | 4,627 | 4,311 |
| Fees and commissions receivable | | 3,689 | 3,207 | 3,008 |
| Less: fees and commissions payable | | (320) | (275) | (229) |
| Dealing profits | 2 | 677 | 556 | (42) |
| Other operating income | 3 | 397 | 258 | 298 |
| Operating income | | 9,598 | 8,373 | 7,346 |
| Administrative expenses - staff costs | 4 | 3,219 | 3,057 | 2,811 |
| Administrative expenses - other | 6 | 1,967 | 1,807 | 1,829 |
| Depreciation and amortisation | 7 | 306 | 280 | 275 |
| Operating expenses | | 5,492 | 5,144 | 4,915 |
| Operating profit before provisions | | 4,106 | 3,229 | 2,431 |
| Provisions for bad and doubtful debts | 18 | 817 | 621 | 492 |
| Provisions for contingent liabilities and commitments | 8 | (1) | 1 | 76 |
| Provisions | | 816 | 622 | 568 |
| Operating profit | | 3,290 | 2,607 | 1,863 |
| Loss from joint ventures | | (1) | (1) | - |
| (Loss)/income from associated undertakings | | (7) | (13) | 22 |
| Loss on sale or restructuring of BZW | 9 | - | (30) | (3) |
| Profit/(loss) on disposal of other Group undertakings | 10 | 214 | (108) | 4 |
| Write-down of fixed asset investments | | - | - | (4) |
| Profit on ordinary activities before tax | | 3,496 | 2,455 | 1,882 |
| Tax on profit on ordinary activities | 11 | 944 | 644 | 520 |
| Profit on ordinary activities after tax | | 2,552 | 1,811 | 1,362 |
| Minority interests - equity | 12 | (22) | (24) | (20) |
| Minority and other non-equity interests | 12 | (57) | (28) | (25) |
| Profit for the financial year attributable to the members of Barclays PLC (Net income) | | 2,473 | 1,759 | 1,317 |
| Dividends | 13 | (927) | (746) | (646) |
| Profit retained for the financial year | | 1,546 | 1,013 | 671 |
| Basic earnings per £1 ordinary share | 14 | 163.3p | 117.5p | 87.2p |
| Diluted earnings per £1 ordinary share | 14 | 161.7p | 115.8p | 85.9p |

Operating income and operating profit for the year ended 31st December 2000 include £170m and £64m respectively relating to The Woolwich from the date of acquisition.

For each of the years reported above, there was no material difference between profit before tax and profit retained and historical cost profits.

The Board of Directors approved the accounts set out on pages 76 to 151 on 7th February 2001.

80 Barclays PLC Annual Report 2000

---

Consolidated accounts Barclays PLC
Statement of total recognised gains and losses

# Statement of total recognised gains and losses
## For the year ended 31st December 2000

| | 2000 £m | 1999 £m | 1998 £m |
| :--- | :--- | :--- | :--- |
| Profit for the financial year attributable to the members of Barclays PLC | 2,473 | 1,759 | 1,317 |
| Exchange rate translation differences | 15 | (72) | 31 |
| Other items | 8 | 25 | - |
| Joint ventures and associated undertakings | 6 | (19) | 31 |
| Total recognised gains relating to the period | 2,502 | 1,693 | 1,379 |
| Prior period adjustment* | - | (81) | - |
| Total gains and losses recognised including prior period adjustment | 2,502 | 1,612 | 1,379 |

* The prior period adjustment relates to the adoption of FRS 12 in 1999 which resulted in the net charge to shareholders’ funds with respect to provisions made for vacant leasehold properties.

Barclays PLC Annual Report 2000 81

---

Consolidated accounts Barclays PLC
Consolidated balance sheet

# Consolidated balance sheet
## As at 31st December 2000

| Assets | Note | 2000 £m | 2000 £m | 1999 £m | 1999 £m |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Cash and balances at central banks | | | 1,243 | | 1,166 |
| Items in course of collection from other banks | | | 2,509 | | 2,492 |
| Treasury bills and other eligible bills | 15 | | 5,564 | | 7,176 |
| Loans and advances to banks - banking | | 9,570 | | 13,071 | |
| - trading | | 26,856 | | 26,555 | |
| | 16 | | 36,426 | | 39,626 |
| Loans and advances to customers - banking | | 138,423 | | 95,006 | |
| - trading | | 23,687 | | 21,562 | |
| | 17 | | 162,110 | | 116,568 |
| Debt securities | 19 | | 70,770 | | 53,919 |
| Equity shares | 20 | | 4,062 | | 5,604 |
| Interests in joint ventures - share of gross assets | | 180 | | 121 | |
| - share of gross liabilities | | (118) | | (71) | |
| | 21 | | 62 | | 50 |
| Interests in associated undertakings | 21 | | 60 | | 56 |
| Intangible fixed assets | 22 | | 4,269 | | 183 |
| Tangible fixed assets | 23 | | 2,059 | | 1,800 |
| Other assets | 25 | | 15,518 | | 15,910 |
| Prepayments and accrued income | 27 | | 2,827 | | 2,203 |
| | | | 307,479 | | 246,753 |
| Retail life-fund assets attributable to policyholders | 26 | | 8,711 | | 8,040 |
| Total assets | | | 316,190 | | 254,793 |

Sir Peter Middleton GCB Chairman  
Matthew Barrett Group Chief Executive  
John Varley Group Finance Director  

82 Barclays PLC Annual Report 2000

---

Consolidated accounts Barclays PLC
Consolidated balance sheet

# Consolidated balance sheet
## As at 31st December 2000

| Liabilities | Note | 2000 £m | 2000 £m | 1999 £m | 1999 £m |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Deposits by banks - banking | | 32,445 | | 26,915 | |
| - trading | | 17,311 | | 17,571 | |
| | 28 | | 49,756 | | 44,486 |
| Customer accounts - banking | | 140,352 | | 105,027 | |
| - trading | | 18,616 | | 18,939 | |
| | 29 | | 158,968 | | 123,966 |
| Debt securities in issue | 30 | | 31,883 | | 23,329 |
| Items in course of collection due to other banks | | | 1,176 | | 1,400 |
| Other liabilities | 31 | | 38,184 | | 35,119 |
| Accruals and deferred income | 32 | | 4,457 | | 3,290 |
| Provisions for liabilities and charges - deferred tax | 33 | | 631 | | 596 |
| Provisions for liabilities and charges - other | 34 | | 635 | | 651 |
| Dividend | 13 | | 632 | | 484 |
| Subordinated liabilities: | | | | | |
| Undated loan capital - convertible to preference shares | 35 | | 335 | | 309 |
| Undated loan capital - non-convertible | 35 | | 2,337 | | 1,440 |
| Dated loan capital - non-convertible | 36 | | 3,698 | | 2,848 |
| | | | 292,692 | | 237,918 |
| Minority and other interests and shareholders’ funds | | | | | |
| Minority interests - equity | | 108 | | 82 | |
| Minority and other interests - non-equity | | 1,492 | | 270 | |
| Total minority and other interests | 12 | | 1,600 | | 352 |
| Called up share capital | 37 | 1,662 | | 1,495 | |
| Share premium account | | 4,950 | | 1,583 | |
| Capital redemption reserve | | 227 | | 207 | |
| Other capital reserve | | 469 | | 320 | |
| Revaluation reserve | | 35 | | 37 | |
| Profit and loss account | | 5,844 | | 4,841 | |
| Shareholders’ funds - equity | 38 | | 13,187 | | 8,483 |
| | | | 14,787 | | 8,835 |
| | | | 307,479 | | 246,753 |
| Retail life-fund liabilities to policyholders | 26 | | 8,711 | | 8,040 |
| Total liabilities and shareholders’ funds | | | 316,190 | | 254,793 |

| Memorandum items | Note | 2000 £m | 1999 £m |
| :--- | :--- | :--- | :--- |
| Contingent liabilities: | 45 | | |
| Acceptances and endorsements | | 1,170 | 1,530 |
| Guarantees and assets pledged as collateral security | | 15,180 | 12,044 |
| Other contingent liabilities | | 6,503 | 5,360 |
| | | 22,853 | 18,934 |
| Commitments - standby facilities, credit lines and other | | 87,971 | 82,479 |

Barclays PLC Annual Report 2000 83

---

Consolidated accounts Barclays PLC
Consolidated statement of changes in reserves

# Consolidated statement of changes in reserves
## For the year ended 31st December 2000

| Share premium account | 2000 £m | 1999 £m | 1998 £m |
| :--- | :--- | :--- | :--- |
| At beginning of year | 1,583 | 1,381 | 1,281 |
| Premium arising on shares issued | 3,367 | 202 | 100 |
| At end of year | 4,950 | 1,583 | 1,381 |
| **Capital redemption reserve** | | | |
| At beginning of year | 207 | 179 | 150 |
| Repurchase of ordinary shares | 20 | 28 | 29 |
| At end of year | 227 | 207 | 179 |
| **Other capital reserve** | | | |
| At beginning of year | 320 | 320 | 320 |
| Repurchase of preference share | 149 | - | - |
| At end of year | 469 | 320 | 320 |
| **Revaluation reserve** | | | |
| At beginning of year | 37 | 36 | 35 |
| Exchange rate translation differences | (2) | (3) | 1 |
| Revaluation of interest in associated undertaking | - | 5 | - |
| Other items | - | (1) | - |
| At end of year | 35 | 37 | 36 |
| **Profit and loss account** | | | |
| At beginning of year | 4,841 | 4,415 | 4,241 |
| Profit retained | 1,546 | 1,013 | 671 |
| Exchange rate translation differences | 19 | (67) | 31 |
| Repurchase of ordinary shares | (291) | (476) | (472) |
| Transfer to capital redemption reserve | (20) | (28) | (29) |
| Goodwill written back on disposals | - | 138 | 10 |
| Shares issued to the QUEST in relation to SAYE | (114) | (154) | (67) |
| Transfer to other capital reserve | (149) | - | - |
| Other items | 12 | - | 30 |
| At end of year | 5,844 | 4,841 | 4,415 |
| **Total reserves** | 11,525 | 6,988 | 6,331 |

The Group operates in a number of countries subject to regulations under which a local subsidiary undertaking has to maintain a minimum level of capital. The current policy of the Group is that local capital requirements are met, as far as possible, by the retention of profit. Certain countries operate exchange control regulations which limit the amount of dividends that can be remitted to non-resident shareholders. It is not possible to determine the amount of profit retained and other reserves that is restricted by these regulations, but the net profit retained of overseas subsidiaries, associated undertakings and joint ventures at 31st December 2000 totalled £953m (1999 £789m, 1998 £732m). If such overseas reserves were to be remitted, other tax liabilities, which have not been provided for in the accounts, might arise.

Goodwill amounting to £215m (1999 £215m, 1998 £353m) has been charged directly against reserves in prior years in respect of acquisitions. This amount is net of any goodwill attributable to subsidiary undertakings disposed of prior to the balance sheet date.

In 1998 the Group established a Qualifying Employee Share Ownership Trust (QUEST) for the purposes of delivering shares on the exercise of options under the SAYE. During 2000 the Group received from the trustees of the QUEST £183m (1999 £208m 1998 £98m) on the issue of shares in respect of the exercise of options awarded under SAYE. Of the amount received from the trustees, employees paid £69m (1999 £54m 1998 £31m) and the balance of £114m (1999 £154m, 1998 £67m) comprised contribution to the QUEST from the Group.

Accumulated exchange rate translation differences included in reserves are £481m debit (1999 £498m, 1998 £428m both debit).

84 Barclays PLC Annual Report 2000

---

Consolidated accounts Barclays PLC
Consolidated cash flow statement

# Consolidated cash flow statement
## For the year ended 31st December 2000

| | Note | 2000 £m | 2000 £m | 1999 £m | 1999 £m | 1998 £m | 1998 £m |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Net cash inflow/(outflow) from operating activities | 50 | | 8,486 | | 8,923 | | (1,337) |
| Dividends received from associated undertakings | | | 1 | | 5 | | 3 |
| Returns on investments and servicing of finance: | | | | | | | |
| Interest paid on loan capital and other subordinated liabilities | | (346) | | (253) | | (220) | |
| Preference dividends paid by subsidiary undertaking | | (24) | | (28) | | (25) | |
| Payment to Reserve Capital Instrument holders | | (24) | | - | | - | |
| Dividends paid to minority shareholders | | (10) | | (9) | | (7) | |
| Net cash outflow from returns on investment and servicing of finance | | | (404) | | (290) | | (252) |
| Tax paid | | | (636) | | (636) | | (547) |
| Capital expenditure and financial investment: | | | | | | | |
| Capital expenditure | | (365) | | (224) | | (305) | |
| Sale of property and equipment | | 112 | | 58 | | 107 | |
| Purchase of investment securities | | (14,490) | | (13,094) | | (10,866) | |
| Redemption of investment securities | | 5,666 | | 2,476 | | 3,874 | |
| Sale of investment securities | | 4,115 | | 2,894 | | 9,523 | |
| Net cash (outflow)/inflow from capital expenditure and financial investment | | | (4,962) | | (7,890) | | 2,333 |
| Acquisitions and disposals | | | | | | | |
| Acquisition of subsidiary undertakings | 54 | (2,421) | | 60 | | (70) | |
| Acquisition of associated undertakings and joint ventures | | - | | - | | (43) | |
| Sale of associated undertakings | | 13 | | 8 | | 7 | |
| Sale of other group undertakings | 51 | 307 | | 174 | | 690 | |
| Net cash (outflow)/inflow from acquisitions and disposals | | | (2,101) | | 242 | | 584 |
| Equity dividend paid | | | (779) | | (676) | | (591) |
| Net cash (outflow)/inflow before financing | | | (395) | | (322) | | 193 |
| Financing: | 52 | | | | | | |
| Issue of Reserve Capital Instruments (net of expenses) | | 1,350 | | - | | - | |
| Issue of loan capital and other subordinated liabilities (net of expenses) | | 861 | | 859 | | 962 | |
| Redemption/repurchase of loan capital and other subordinated liabilities | | (212) | | (15) | | (240) | |
| Repurchase of ordinary shares | | (311) | | (504) | | (501) | |
| Issue of ordinary shares (net of contribution to the QUEST) | | 81 | | 60 | | 43 | |
| Redemption of preference shares | | (149) | | - | | - | |
| Net cash inflow from financing | | | 1,620 | | 400 | | 264 |
| Increase in cash | 53 | | 1,225 | | 78 | | 457 |

Barclays PLC Annual Report 2000 85

---

Consolidated accounts Barclays PLC
Parent company accounts

# Parent company accounts

| Profit and loss account and changes in reserves for the year ended 31st December | 2000 £m | 1999 £m | 1998 £m |
| :--- | :--- | :--- | :--- |
| Interest income | 4 | 2 | 2 |
| Operating expenses: | | | |
| Management charge from subsidiary undertaking | (4) | (2) | (2) |
| Operating profit | - | - | - |
| Dividends from subsidiary undertaking | 1,352 | 1,404 | 1,214 |
| Profit on ordinary activities before tax | 1,352 | 1,404 | 1,214 |
| Tax on profit on ordinary activities | - | - | - |
| Profit on ordinary activities after tax | 1,352 | 1,404 | 1,214 |
| Dividends | (927) | (746) | (646) |
| Profit retained by Barclays PLC | 425 | 658 | 568 |
| Profit retained by subsidiary undertakings | 1,133 | 372 | 88 |
| (Loss)/profit retained by associated undertakings and joint ventures | (12) | (17) | 15 |
| Profit retained for the financial year | 1,546 | 1,013 | 671 |
| Premium arising on shares issued | 3,367 | 202 | 100 |
| Reduction in reserves arising from repurchase of shares | (291) | (476) | (472) |
| Shares issued to the QUEST in relation to share option schemes for staff | (114) | (154) | (67) |
| Other movements in investment in Barclays Bank PLC | 29 | 72 | 72 |
| Profit and loss account and other reserves brought forward | 6,988 | 6,331 | 6,027 |
| Profit and loss account and other reserves carried forward | 11,525 | 6,988 | 6,331 |

| Balance sheet as at 31st December | Note | 2000 £m | 1999 £m |
| :--- | :--- | :--- | :--- |
| **Fixed assets** | | | |
| Investment in Barclays Bank PLC | 39 | 13,187 | 8,483 |
| **Current assets** | | | |
| Amounts falling due within one year: | | | |
| Due from subsidiary undertaking | | 632 | 484 |
| **Current liabilities** | | | |
| Amounts falling due within one year - dividend | | (632) | (484) |
| **Net current assets** | | - | - |
| **Assets less current liabilities** | | 13,187 | 8,483 |
| **Capital and reserves** | | | |
| Called up share capital | 37 | 1,662 | 1,495 |
| Share premium account | | 4,950 | 1,583 |
| Capital redemption reserve | | 227 | 207 |
| Revaluation reserve | | 5,467 | 4,317 |
| Profit and loss account | | 881 | 881 |
| Shareholders’ funds - equity | 38 | 13,187 | 8,483 |

Sir Peter Middleton GCB Chairman  
Matthew Barrett Group Chief Executive  
John Varley Group Finance Director  

86 Barclays PLC Annual Report 2000

---

Notes to the accounts
For the year ended 31st December 2000

# 1 Profit on redemption/repurchase of loan capital

In 2000, $17m of undated loan capital was repurchased at a discount of £2m (1999 discount of £3m on $30m of undated loan capital, 1998 discount of £3m on $32m of undated loan capital).

# 2 Dealing profits

| | 2000 £m | 1999 £m | 1998 £m |
| :--- | :--- | :--- | :--- |
| Rates related business | 536 | 397 | 134 |
| Credit related business | 141 | 159 | (176) |
| | 677 | 556 | (42) |

Dealing profits include the profits and losses arising both on the purchase and sale of trading instruments and from the revaluation to market value, together with the interest income earned from these instruments and the related funding cost.

Of the total dealing profit, £229m was earned on securities (1999 £252m profit, 1998 £256m loss).

Rates related business includes sales and trading relating to government bonds, money markets, foreign exchange, commodities and their related derivative instruments. Credit related business includes origination, sales and trading relating to loans, securitised assets, corporate bonds and their related derivative instruments, equity derivatives and private equity investment.

# 3 Other operating income

| | 2000 £m | 1999 £m | 1998 £m |
| :--- | :--- | :--- | :--- |
| Dividend income from equity shares | 14 | 12 | 10 |
| Profits on disposal of equity investment securities | 45 | 41 | 41 |
| Income from the long-term assurance business | 171 | 44 | 109 |
| Property rentals | 22 | 27 | 44 |
| Premium income on insurance underwriting | 126 | 102 | 31 |
| Other income | 19 | 32 | 63 |
| | 397 | 258 | 298 |

# 4 Administrative expenses - staff costs

| | 2000 £m | 1999 £m | 1998 £m |
| :--- | :--- | :--- | :--- |
| Salaries and accrued incentive payments | 2,559 | 2,387 | 2,211 |
| Social security costs | 178 | 190 | 173 |
| Pension costs | (31) | 38 | 37 |
| Post-retirement health care | 1 | 15 | 17 |
| UK profit sharing | 96 | 80 | 88 |
| Other staff costs | 416 | 347 | 285 |
| | 3,219 | 3,057 | 2,811 |

Staff costs reported above for 2000 include £171m (1999 £192m) of exceptional costs relating to staff reductions and relocations under the 1999 and 2000 restructuring plan (1998 £nil).

The following amounts relating to the regulated sales force and administration staff of Barclays Financial Management Limited, whose remuneration is reflected in the valuation of the long-term assurance fund, are not included in staff costs reported above:

| | 2000 £m | 1999 £m | 1998 £m |
| :--- | :--- | :--- | :--- |
| Salaries and accrued incentive payments | 64 | 80 | 70 |
| Social security costs | 7 | 8 | 7 |
| UK profit sharing | 3 | 3 | 3 |
| Other staff costs | 27 | 26 | 36 |
| | 101 | 117 | 116 |

## Average number of employees

The average number of persons employed by the Group worldwide during the year, excluding agency staff, was 72,300 (1999 77,000, 1998 80,200). All staff fall within a single structure. In addition, the average number of the regulated sales force and administration staff of Barclays Financial Management Limited, whose remuneration is reflected in the valuation of the long-term assurance fund, was 2,100 (1999 2,300, 1998 2,200).

Barclays PLC Annual Report 2000 87

---

Notes to the accounts
For the year ended 31st December 2000

# 5 Pensions, post-retirement benefits, profit sharing and other staff costs

## Pensions

Barclays provides pension plans for employees in most parts of the world. The majority of UK staff are members of The Barclays Bank UK Retirement Fund (the UK Fund). Other UK staff are covered by broadly comparable schemes. The assets of the UK Fund are held separately from the assets of the Group and are administered by a trustee. The UK Fund comprises two sections:

### The Retirement Investment Scheme (RIS)

A defined contribution plan for new joiners. Between 5.5% and 13.5% of pensionable pay is credited to members’ retirement accounts; precise amounts are dependent upon each member’s age and contribution decision. In addition the costs of ill-health retirements and death in service benefits are generally borne by the UK Fund.

### The 1964 Pension Scheme

Most employees recruited before July 1997 are members of this non-contributory defined benefit scheme. Pensions are calculated by reference to service and pensionable salary and are normally subject to a deduction from State pension age.

Formal actuarial valuations of the UK Fund are carried out triennially by a professionally qualified independent actuary using the attained age method. The most recent valuation was conducted as at 30th September 1998 and expresses the assets and liabilities at market values (previous valuations showed actuarially assessed values). This change did not materially affect the financial balance of the UK Fund as reported in this note. The market value of the assets attributable to the 1964 Pension Scheme at the valuation date was £9,546m and the valuation revealed a surplus of assets over the 1964 Pension Scheme accrued liabilities of 13% after allowing for expected future salary increases. This surplus was estimated to be sufficient to allow the Bank to continue its contribution holiday for both sections at least until the next valuation due in 2001. Protected Rights contributions in respect of RIS members will be paid as required by the contracting-out regulations. The principal financial assumptions underlying the valuation made allowance for the taxation changes introduced in the July 1997 Budget and were:

- Price inflation: 3.0%
- Earnings growth: 4.5%*
- Dividend growth: 3.75%
- Return on new investments: 7.25%
- Pension increases: 3.0%

* 4.0% for the first three years from the valuation date.

In calculating the surplus of assets over accrued liabilities, assets were taken at their market value and a discount rate of 6.5% p.a. was used to value the 1964 Pension Scheme accrued liabilities. This rate of 6.5% was derived by taking a weighted average of the market yields on the day, weighting by reference to the UK Fund’s strategic allocation; for the equity component allowance was made for future dividend growth. In 1999 benefit improvements were granted which increased accrued liabilities on the valuation basis by approximately 1% and added marginally to future service costs. In 2000 the assets and liabilities of the Barclays Capital Pension Scheme (final salary section) were transferred to the Fund and the transferring members joined the 1964 Pension Scheme. In view of the continuing financial health of the UK Fund no adjustment has been made to the current contribution holiday, which commenced in January 1998. The contribution holiday is still expected to continue at least until the next valuation due as at 30th September 2001. The pensions charge in the accounts will be reduced over the remaining service lives of the members to take account of the surplus.

Without the benefit of the surplus, the 1964 Pension Scheme charge would be some 16.5% of pensionable salaries (on the projected unit method) assessed using the assumption regarding return on new investments, whilst contributions to the RIS would equal the contributions described above plus the costs of ill-health and death in service benefits.

| | 2000 £m | 1999 £m | 1998 £m |
| :--- | :--- | :--- | :--- |
| The Pensions costs vary from regular costs as follows (1964 & RIS Schemes): | | | |
| Regular costs | 161 | 185 | 187 |
| Variation from regular costs (including interest) | (226) | (183) | (186) |
| | (65) | 2 | 1 |

Of the total regular cost in 2000 of £161m, £148m relates to the 1964 Pension Scheme.

88 Barclays PLC Annual Report 2000

Notes to the accounts
For the year ended 31st December 2000

# 5 Pensions, post-retirement benefits, profit sharing and other staff costs (continued)

The approach taken to calculating the pensions charge in the accounts for the 1964 Pension Scheme is to take assets and liabilities at actuarially assessed values rather than market values. The assumptions used to derive the 1964 Pension Scheme pensions charge differ from those shown above in that returns on new investments are assumed to be 8.25% p.a. which is also the rate used to value accrued liabilities, and dividend growth is assumed to be 5% p.a. (1999 4.5%). As a result of this, the assets attributable to the 1964 Pension Scheme have been valued at £8,544m for accounting purposes, producing a surplus of assets over accrued liabilities on this basis of 37%, after allowing for expected future salary increases and resulting in the variation from regular costs of £226m.

Total pension costs of the Group are summarised as follows:

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| The Barclays Bank UK Retirement Fund | (65) | 2 | 1 |
| Other UK pension schemes | 9 | 14 | 14 |
| Overseas pension schemes | 25 | 22 | 22 |
| | (31) | 38 | 37 |

For the purposes of assessing the pension charge for the Barclays Bank (1951) Pension Fund - a defined benefit scheme for overseas employees of the Bank similar in design to the 1964 Pension Scheme - the same approach and assumptions as described above for the 1964 Pension Scheme have been adopted and a credit of £9m is included in Other UK pension schemes.

Note 61 provides additional disclosures required by US Statement of Financial Accounting Standards No. 132.

## Post-retirement benefits

Some 10,500 UK and US pensioners are provided with private health care on similar terms to eligible staff. In addition, 3,500 members of staff have satisfied the qualification criteria and may therefore also become eligible for this benefit on retirement. There are a further 5,200 Barclays Bank PLC pensioners who have retired since 30th June 1999 and other employees, who are eligible for post retirement private health care benefit which is being progressively withdrawn over the period to 30th June 2008.

## Profit sharing scheme

Participants in the scheme are employees of the Bank, including executive Directors and employees of most of its UK subsidiary undertakings but excluding staff and Directors employed by Barclays Capital and Barclays Global Investors. The year 2000 will be the last year the scheme is operated. Participants can elect to take their entitlement either in cash after deduction of income tax, or in ordinary shares of Barclays PLC of the equivalent current market value up to a certain annual value (currently, £3,000 or 10% of salary, if greater, with a maximum of £8,000). If entitlements in the form of shares are held by the Trustee of the UK Profit Sharing Schemes for three years, the participant will be eligible for income tax relief in respect of their shares. Shareholders approved the introduction of the All-Employee Share Ownership Plan (AESOP) at the 2000 Annual General Meeting. In 2001, Barclays intends to introduce the partnership shares element of the AESOP.

## Other staff costs

Other staff costs comprise medical healthcare costs, social welfare taxes, staff transfer costs, redundancy payments and other sundry employee costs.

# 6 Administrative expenses - other

| Property and equipment expenses | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Hire of equipment | 20 | 21 | 28 |
| Property rentals | 157 | 218 | 195 |
| Other property and equipment expenses | 641 | 613 | 635 |
| Other administrative expenses | 1,149 | 955 | 971 |
| | 1,967 | 1,807 | 1,829 |

Other property and equipment expenses include £27m of exceptional costs relating to the restructuring in 2000 (1999 £134m, 1998 £nil). Other administration expenses include £34m of exceptional costs relating to the restructuring in 2000 (1999 £18m, 1998 £nil).

The figures shown in the narrative below relate to amounts paid either to Price Waterhouse or to Coopers & Lybrand from 1st January 1998 to 30th June 1998 and amounts paid to PricewaterhouseCoopers since 1st July 1998.

Notes to the accounts
For the year ended 31st December 2000

# 6 Administrative expenses - other (continued)

The statutory and regulatory audit and accountancy fees paid to the Group's main Auditors, PricewaterhouseCoopers and its associates (being the predecessor partnerships of Price Waterhouse and Coopers & Lybrand), comprised £4.6m (1999 £4.2m, 1998 £4.2m) in respect of the Group's audit and £16.5m (1999 £5.6m, 1998 £5.4m) relating to other accounting and regulatory work required of them. Prior to 1st July 1998, no fees were paid to Coopers & Lybrand in respect of the Group's audit and £0.3m were paid in respect of accounting and regulatory work.

Of total consultancy fees of £158m (1999 £121m, 1998 £126m) included in Other administrative expenses above, the Group's main Auditors received £10.5m (1999 £29.2m, 1998 £26.2m). Of this amount Coopers & Lybrand received £6.4m prior to 1st July 1998.

Of the total non audit fees of £27.0m (1999 £34.8m, 1998 £31.6m), fees paid to the Group's main Auditors in relation to their work in the UK was £15.6m (1999 £29.1m, 1998 £22.6m). Of this amount Coopers & Lybrand received £4.8m prior to 1st July 1998. The Group has a competitive tender policy for all consultancy projects.

# 7 Depreciation and amortisation

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Property depreciation | 85 | 93 | 88 |
| Equipment depreciation | 166 | 170 | 172 |
| Goodwill amortisation | 51 | 13 | 12 |
| Loss on sale of equipment | 4 | 4 | 5 |
| Write-back of surplus properties | - | - | (2) |
| | 306 | 280 | 275 |

# 8 Provisions for contingent liabilities and commitments

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| | (1) | 1 | 76 |

The charge in 1998 represented a contribution of some £116m to the Administrators of British & Commonwealth Holdings PLC in relation to proceedings which arose in connection with that company's acquisition of Atlantic Computers PLC in 1988, adjusted for insurance cover of £40m.

# 9 Loss on sale or restructuring of BZW

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| | - | (30) | (3) |

# 10 Profit/(loss) on disposal of other Group undertakings

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Net profit/(loss) on disposal of Group undertakings | 214 | (108) | 4 |

The net profit on disposal of Group undertakings comprised profits on disposal of £222m (1999 £20m, 1998 £14m) and losses on disposal of £8m (1999 £128m 1998 £10m).

Goodwill previously written off to reserves on these disposals amounted to £nil (1999 £138m, 1998 £10m). No tax credit is attributable to the losses on disposal in 2000 (1999 £nil, 1998 £2m). No tax was payable on the 2000 gains (1999 £nil, 1998 £3m).

Up to the date of sale, the businesses sold in 2000 contributed £10m to Group profit before tax (1999 £24m, 1998 £nil).

Notes to the accounts
For the year ended 31st December 2000

# 11 Tax

The charge for tax assumes an effective UK corporation tax rate of 30% (1999 30.25%, 1998 31%) and comprises:

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Current tax: | | | |
| UK | 719 | 427 | 374 |
| Overseas | 219 | 271 | 162 |
| Total current tax | 938 | 698 | 536 |
| Deferred tax charge/(credit): | | | |
| UK | 14 | (19) | (24) |
| Overseas | (7) | (33) | 4 |
| Total deferred tax | 7 | (52) | (20) |
| Associated undertakings and joint ventures, including overseas tax of £2m (1999 £2m, 1998 £3m) | (1) | (2) | 4 |
| Total charge | 944 | 644 | 520 |

| Analysis of deferred tax charge/(credit): | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Leasing transactions | 14 | 4 | 10 |
| Short-term and other timing differences | (7) | (56) | (30) |
| | 7 | (52) | (20) |

Current tax includes tax of £48m (1999 £7m, 1998 £25m) on the shareholders' interest in the long-term assurance fund.

Comparative figures have been restated for the adoption of FRS 16.

Available overseas tax credits of £194m (1999 £118m, 1998 £17m) have been applied to reduce UK tax in accordance with UK legislation.

Further information is provided in the tax section on page 26 of the Financial review.

# 12 Minority and other interests - Barclays PLC

Equity minority interests in the balance sheet represent the interests of third parties in the equity shares of the Group subsidiary undertakings.

Non-equity minority interests in the balance sheet comprise non-cumulative dollar-denominated preference shares issued by Barclays Bank PLC of £142m (1999 £270m). Other non-equity interests comprise Reserve Capital Instruments issued by Barclays Bank PLC (RCIs) of £1,350m (1999 £nil). Further details of the rights of holders of preference shares are given in note (a) to the accounts of Barclays Bank PLC on page 162. Further details relating to RCIs are given in note (b) to the accounts of Barclays Bank PLC.

Total minority equity and non-equity interests as at 31st December 2000 were £250m (1999 £352m).

# 13 Dividends - Barclays PLC

| Dividends per ordinary share | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| First interim | 295 | 262 | 232 |
| Second interim | 632 | 484 | 414 |
| | 927 | 746 | 646 |

| | (pence per share) | | |
| --- | --- | --- | --- |
| First interim | 20.00 | 17.50 | 15.50 |
| Second interim | 38.00 | 32.50 | 27.50 |
| | 58.00 | 50.00 | 43.00 |

Dividends amounting to £0.2m are payable on the staff shares, which carry a fixed dividend of 20% per annum unless no dividend is paid for the year on the ordinary shares.

Notes to the accounts
For the year ended 31st December 2000

# 14 Earnings per £1 ordinary share - Barclays PLC

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Basic and diluted earnings | 2,473 | 1,759 | 1,317 |

| | 2000 | 1999 | 1998 |
| --- | --- | --- | --- |
| Basic weighted average number of shares | 1,514 | 1,497 | 1,510 |
| Add potential ordinary shares | 15 | 22 | 23 |
| Diluted weighted average number of shares | 1,529 | 1,519 | 1,533 |

Basic and diluted earnings are based upon the results after deducting tax, profit attributable to minority interests and dividends on staff shares.

Certain incentive plan shares have been excluded from the calculation of earnings per share in line with UITF 13, on the grounds that the trustee has waived all dividend and voting rights.

The recognition of potential ordinary shares for the purposes of calculating diluted EPS is in accordance with FRS 14 'Earnings per Share'.

See note 61 for approximate earnings per £1 ordinary share calculated in accordance with the accounting principles generally accepted in the United States.

# 15 Treasury bills and other eligible bills

| | 2000 £m | 1999 £m |
| --- | --- | --- |
| Treasury bills | 4,154 | 5,529 |
| Other eligible bills | 1,410 | 1,647 |
| | 5,564 | 7,176 |

| Treasury bills and other eligible bills comprise: | 2000 £m | 1999 £m |
| --- | --- | --- |
| Banking business | 2,941 | 4,511 |
| Trading business | 2,623 | 2,665 |
| | 5,564 | 7,176 |

Treasury bills and other eligible bills are mainly short term in maturity with a book value not materially different from market value.

The total amount of treasury bills and other eligible bills included above, which are subject to sale and repurchase agreements, was £49m at 31st December 2000 (1999 £11m).

Notes to the accounts
For the year ended 31st December 2000

# 16 Loans and advances to banks

| Repayable | 2000 £m | 1999 £m |
| --- | --- | --- |
| on demand | 2,094 | 967 |
| not more than three months | 27,401 | 31,146 |
| over three months but not more than one year | 5,967 | 6,375 |
| over one year but not more than five years | 829 | 934 |
| over five years | 161 | 228 |
| | 36,452 | 39,650 |
| Less: | | |
| Provisions (including country risk) | (26) | (24) |
| | 36,426 | 39,626 |

| By geographical area | 2000 £m | 1999 £m |
| --- | --- | --- |
| Banking business: | | |
| UK | 3,345 | 6,307 |
| Other European Union | 2,042 | 2,173 |
| United States | 2,056 | 2,118 |
| Rest of the World | 2,153 | 2,497 |
| Total banking business | 9,596 | 13,095 |
| Total trading business | 26,856 | 26,555 |
| | 36,452 | 39,650 |

At 31st December 2000, there were loans and advances to banks of £55m (1999 £61m) outstanding from associated undertakings and joint ventures.

The Group is required to maintain balances with central banks and other regulatory authorities and these amounted to £646m at 31st December 2000 (1999 £454m).

Additional analyses are provided within the loans and advances, provisions for bad and doubtful debts and potential credit risk lendings sections on pages 39 to 49 of the Financial review.

The geographic analysis of the banking business is based on the location of the office from which the lendings are made. The trading business, which is largely carried out in the UK, the United States and Japan is more international in nature and has not been analysed geographically. It primarily constitutes settlement and reverse repo balances.

Notes to the accounts
For the year ended 31st December 2000

# 17 Loans and advances to customers

| Repayable | 2000 £m | 1999 £m |
| --- | --- | --- |
| on demand | 13,452 | 9,903 |
| not more than three months | 39,207 | 35,258 |
| over three months but not more than one year | 18,054 | 16,476 |
| over one year but not more than five years | 29,837 | 25,319 |
| over five years | 63,980 | 31,651 |
| | 164,530 | 118,607 |
| Less: | | |
| Provisions | (2,327) | (1,959) |
| Interest in suspense | (93) | (80) |
| | (2,420) | (2,039) |
| | 162,110 | 116,568 |

| By geographical area | 2000 £m | 1999 £m |
| --- | --- | --- |
| Banking business: | | |
| UK | 115,314 | 78,677 |
| Other European Union | 10,203 | 5,976 |
| United States | 6,376 | 4,048 |
| Rest of the World | 8,950 | 8,344 |
| Total banking business | 140,843 | 97,045 |
| Total trading business | 23,687 | 21,562 |
| | 164,530 | 118,607 |

At 31st December 2000, there were loans and advances to customers of £614m (1999 £738m) outstanding from associated undertakings and joint ventures.

Banking business loans and advances to customers include finance lease receivables of £4,733m (1999 £5,660m) which are stated in the balance sheet after deducting £2,950m (1999 £3,979m) of unearned charges and interest. Mortgage incentive costs of £22m (1999 (£4m) 1998 £8m) have been charged/(credited) to net interest income.

Assets acquired in the year for letting under finance leases amounted to £335m (1999 £781m).

Additional analyses are provided within the loans and advances, provisions for bad and doubtful debts and potential credit risk lendings sections on pages 39 to 49 of the Financial review.

The geographical analysis of the banking business is based on the location of the office from which the lendings are made. The trading business, which is largely carried out in the UK, the United States and Japan is more international in nature and has not been analysed geographically. It primarily constitutes settlement and reverse repo balances.

## Securitisation transactions

Loans and advances to customers include balances which have been securitised. In accordance with Financial Reporting Standard 5 (FRS 5), 'Reporting the Substance of Transactions', these balances are either accounted for on the basis of linked presentation or separate recognition of the gross assets and related funding.

### Linked presentation

Banking business loans and advances to customers include loans subject to non-recourse finance arrangements which at 31st December 2000 and 1999 comprised portfolios of mortgage loans. The principal benefits of these loans were acquired from the Bank by special purpose securitisation companies which were funded primarily through the issue of floating rate notes. No gain or loss was recognised on the transfer.

Barclays PLC and its subsidiary undertakings are not obliged to support any losses that may be suffered by the floating rate noteholders and do not intend to provide such support. Additionally, the floating rate notes were issued on the basis that noteholders are only entitled to obtain payment, as to both principal and interest, to the extent that the securitisation companies' respective available resources, including funds due from customers in respect of the securitised loans, are sufficient and that noteholders have no recourse whatsoever to the Group.

The securitisation companies involved are Gracechurch Mortgage Finance (No. 2) PLC, Gracechurch Mortgage Finance (No. 3) PLC and Millshaw SAMS (No. 1) Limited. All the shares in Gracechurch Mortgage Finance (No. 2) PLC and Gracechurch Mortgage Finance (No. 3) PLC are held beneficially by Gracechurch Mortgage (Holdings) Limited. All the shares in Millshaw SAMS (No. 1) Limited are held beneficially by Millshaw SAMS Holdings Limited. All the shares in Gracechurch Mortgage (Holdings) Limited and Millshaw SAMS Holdings Limited are held by Royal Exchange Trust Company Limited. The Group does not own, directly or indirectly, any of the share capital of the securitisation companies or their parent companies.

Notes to the accounts
For the year ended 31st December 2000

# 17 Loans and advances to customers (continued)

The Bank has made an interest bearing subordinated loan to each of the Gracechurch Mortgage Finance securitisation companies repayable on final redemption of the floating rate notes. The Bank receives payments from the securitisation companies in respect of fees for loan administration services, and also under the terms of interest rate swaps written between the Bank and the Gracechurch Mortgage Finance securitisation companies to hedge their respective exposures to movements in interest rates arising from these transactions. In each case the effect of the interest rate swaps between the Bank and the securitisation companies, in conjunction with certain interest rate swaps with third parties, is that the securitisation companies swap all or part of the interest flows receivable from customers in respect of the securitised loans into variable rate interest flows which are designed broadly to match the interest payable to floating rate noteholders.

The Bank has no right to repurchase the benefit of any of the securitised loans and no obligation to do so, other than in certain circumstances where the Bank is in breach of warranty.

The personal mortgage loans subject to non-recourse finance are as follows:

| | Outstanding at 31st December 2000 | | | Outstanding at 31st December 1999 | | |
| --- | --- | --- | --- | --- | --- | --- |
| | Customer loans £m | Non-returnable finance £m | Funding provided by the Bank* £m | Customer loans £m | Non-returnable finance £m | Funding provided by the Bank* £m |
| | 297 | 286 | 11 | 333 | 268 | 65 |

* Funding provided by the Bank includes £11m (1999 £11m) of subordinated loans.

Linked presentation has been applied for these loans and the net of the loans and finance is included within loans and advances to customers on the balance sheet.

### Gross assets presentation

During 1999 the Barclaycard credit and charge card receivables portfolio in the UK was securitised. The noteholders in this securitisation have a proportionate interest in each balance in the portfolio and at 31st December 2000 the sterling equivalent of this interest was £607m (1999 £607m). This securitisation does not qualify for linked presentation under Financial Reporting Standard 5 and therefore the total portfolio is included within gross loans. The funding giving rise to the noteholders interest is included within Debt securities in issue (note 30 on page 102).

# 18 Provisions for bad and doubtful debts

| Movements in provisions for bad and doubtful debts | 2000 Specific £m | 2000 General £m | 2000 Total £m | 1999 Specific £m | 1999 General £m | 1999 Total £m |
| --- | --- | --- | --- | --- | --- | --- |
| Provisions at beginning of year | 1,311 | 672 | 1,983 | 1,215 | 728 | 1,943 |
| Acquisitions and disposals | 71 | 48 | 119 | (2) | (8) | (10) |
| Exchange and other adjustments | 4 | - | 4 | 21 | (34) | (13) |
| | 1,386 | 720 | 2,106 | 1,234 | 686 | 1,920 |
| Provision for the year | 777 | 40 | 817 | 635 | (14) | 621 |
| Amounts written off, net of recoveries of £114m (1999 £93m) | (570) | - | (570) | (558) | - | (558) |
| Provisions at end of year | 1,593 | 760 | 2,353 | 1,311 | 672 | 1,983 |

| Provisions at 31st December | 2000 £m | 1999 £m |
| --- | --- | --- |
| Specific provisions - credit risk: | | |
| UK | 1,343 | 1,075 |
| Other European Union | 111 | 126 |
| United States | 20 | 23 |
| Rest of the World | 118 | 74 |
| | 1,592 | 1,298 |
| Specific provisions - country risk | 1 | 13 |
| | 1,593 | 1,311 |
| General provisions - credit risk | 703 | 615 |
| - country risk | 57 | 57 |
| | 2,353 | 1,983 |

Notes to the accounts
For the year ended 31st December 2000

# 19 Debt securities

| Investment securities: | 2000 Balance Sheet £m | 2000 Gross unrealised gains £m | 2000 Gross unrealised losses £m | 2000 Valuation £m | 1999 Balance Sheet £m | 1999 Gross unrealised gains £m | 1999 Gross unrealised losses £m | 1999 Valuation £m |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| UK government | 1,496 | 76 | (1) | 1,571 | 1,666 | 4 | (6) | 1,664 |
| other government | 12,117 | 350 | (89) | 12,378 | 9,315 | 128 | (103) | 9,340 |
| other public bodies | 20 | 3 | (4) | 19 | 69 | 2 | - | 71 |
| other issuers | 16,087 | 44 | (28) | 16,103 | 9,741 | 32 | (25) | 9,748 |
| | 29,720 | 473 | (122) | 30,071 | 20,791 | 166 | (134) | 20,823 |
| Other debt securities: | | | | | | | | |
| UK government | 845 | - | - | 845 | 1,278 | - | - | 1,278 |
| other government | 15,555 | - | - | 15,555 | 7,031 | - | - | 7,031 |
| other public bodies | 1,280 | - | - | 1,280 | 503 | - | - | 503 |
| bank and building society certificates of deposit | 16,682 | - | - | 16,682 | 18,005 | - | - | 18,005 |
| other issuers | 6,688 | - | - | 6,688 | 6,311 | - | - | 6,311 |
| | 70,770 | 473 | (122) | 71,121 | 53,919 | 166 | (134) | 53,951 |

| Debt securities comprise: | 2000 Balance Sheet £m | 2000 Valuation £m | 1999 Balance Sheet £m | 1999 Valuation £m |
| --- | --- | --- | --- | --- |
| Banking business | 38,368 | 38,719 | 30,164 | 30,196 |
| Trading business | 32,402 | 32,402 | 23,755 | 23,755 |
| | 70,770 | 71,121 | 53,919 | 53,951 |

| Movements in Investment securities | 2000 Cost £m | 2000 Provisions £m | 2000 Balance Sheet £m |
| --- | --- | --- | --- |
| At beginning of year | 20,820 | (29) | 20,791 |
| Acquisition and disposal of Group undertakings | 2,150 | - | 2,150 |
| Exchange adjustments | 867 | - | 867 |
| Acquisitions and transfers | 15,568 | - | 15,568 |
| Redemption of Investment securities | (5,666) | - | (5,666) |
| Sale of Investment securities | (3,947) | - | (3,947) |
| Provisions raised | - | (8) | (8) |
| Write-offs | (9) | 9 | - |
| Amortisation of discounts and premiums | (35) | - | (35) |
| At end of year | 29,748 | (28) | 29,720 |

The total value of debt securities at 31st December 2000 includes securities which are subject to sale and repurchase agreements of £2,944m (1999 £913m), and unamortised net premium on investment securities of £39m (1999 £61m). The value of securities due within one year at 31st December 2000 was £20,449m (1999 £18,787m). The Group had no holdings of securities issued by associated undertakings or joint ventures at 31st December 2000 or 31st December 1999.

During 1999 the Group securitised a portfolio of investment debt securities. Linked presentation under FRS 5 is not available and therefore the portfolio with a sterling equivalent book value of £747m at 31st December 2000 (1999 £1,049m) is included within the total above. The funding from this transaction is reported in Other liabilities (note 31 on page 103).

Barclays PLC holds, as an investment, British government stock with a book value of £0.1m (1999 £0.1m). As part of its normal market making activities, Barclays Capital holds positions in Barclays Bank PLC's loan capital.

Gross gains of £6m (1999 £2m) and gross losses of £9m (1999 £10m) were realised on the sale and redemption of investment securities. Other debt securities comprise dealing securities and short-term certificates of deposit. Other debt securities are marked to market and all profits and losses are deemed realised.

The cost of Other debt securities is not available and would be unreasonably expensive to obtain.

Notes to the accounts
For the year ended 31st December 2000

# 19 Debt securities (continued)

Of the total debt securities disclosed above, £47,798m (1999 £27,063m) were listed on a recognised exchange. These listed debt securities had a market value of £48,212m (1999 £27,116m).

Under US GAAP all Investment securities are classified as 'available for sale' and Other debt securities are classified as 'trading securities'.

See page 35 of the Financial review for the valuation and maturity analysis of Investment securities.

# 20 Equity shares

| | 2000 Balance Sheet £m | 2000 Valuation £m | 1999 Balance Sheet £m | 1999 Valuation £m |
| --- | --- | --- | --- | --- |
| Investment securities | 244 | 295 | 179 | 206 |
| Other securities | 3,818 | 3,818 | 5,425 | 5,425 |
| | 4,062 | 4,113 | 5,604 | 5,631 |

| Movements in Investment securities | 2000 Cost £m | 2000 Provisions £m | 2000 Balance Sheet £m |
| --- | --- | --- | --- |
| At beginning of year | 193 | (14) | 179 |
| Exchange adjustments | 5 | (1) | 4 |
| Acquisitions | 179 | - | 179 |
| Sale of Investment securities | (122) | 4 | (118) |
| Provisions written off | (7) | 7 | - |
| At end of year | 248 | (4) | 244 |

Gross unrealised gains on equity shares amounted to £51m (1999 £27m). There were no unrealised losses in either year.

Gross gains of £54m (1999 £58m) and gross losses of £1m (1999 £nil) were realised on the sale of Investment securities.

Investment securities represent those equity shares held within the banking business.

Other securities, comprising the Group's trading business, are marked to market and all profits and losses are deemed realised.

The cost of Other securities is not available and would be unreasonably expensive to obtain.

As part of its normal operations, the equity derivatives business of Barclays Capital holds shares in Barclays PLC.

Of the total equity securities disclosed above, £3,863m (1999 £5,466m) were listed on a recognised exchange. These listed equity securities had a market value of £3,875m (1999 £5,479m).

Notes to the accounts
For the year ended 31st December 2000

# 21 Interests in associated undertakings and joint ventures

| Share of net assets | Associates 2000 £m | Associates 1999 £m | Joint Ventures 2000 £m | Joint Ventures 1999 £m |
| --- | --- | --- | --- | --- |
| At beginning of year | 56 | 99 | 50 | 51 |
| Exchange and other adjustments | 3 | 7 | 4 | - |
| New investments | 7 | - | 3 | - |
| Increase resulting from The Woolwich acquisition | 11 | - | 6 | - |
| Disposals | (6) | (9) | - | - |
| Transfers | - | (25) | - | - |
| Loss retained | (11) | (16) | (1) | (1) |
| At end of year | 60 | 56 | 62 | 50 |

Associated undertakings included £31m in respect of banks (1999 £37m). Dividend income from associated undertakings amounted to £4m (1999 £7m). On an historical cost basis, the Group's interests in associated undertakings at 31st December 2000 amounted to £37m (1999 £20m). Of the above interests in associates, £nil (1999 £nil) are listed on a recognised exchange.

The table below provides summarised financial information of associated undertakings and joint ventures, in which the Group has an interest (the entities' entire financial position and results of operations are presented, not Barclays share).

| | Associates Banco Barclays e Galicia £m | Associates Other* £m | Joint Ventures £m | Total £m |
| --- | --- | --- | --- | --- |
| Fixed assets | 1 | 32 | 292 | 325 |
| Debt and equity securities | 342 | 54 | - | 396 |
| Loans to banks and customers | 146 | 244 | 4 | 394 |
| Other assets | 65 | 45 | 63 | 173 |
| Total assets | 554 | 375 | 359 | 1,288 |
| Deposits from banks and customers | 155 | 125 | - | 280 |
| Other liabilities | 336 | 142 | 246 | 724 |
| Shareholders' funds | 63 | 108 | 113 | 284 |
| Total liabilities | 554 | 375 | 359 | 1,288 |
| Loss before tax | (10) | (4) | (2) | (16) |
| Taxation | 3 | - | - | 3 |
| Loss after tax | (7) | (4) | (2) | (13) |

* The amounts included above are based on accounts made up to 31st December 2000 with the exception of certain undertakings included within the Other Associates category for which the amounts are based on accounts made up to dates not earlier than 3 months before the balance sheet date.

At 31st December 2000 the Group's interest in the equity capital of Banco Barclays e Galicia amounted to 50% (1999 50%). The associated undertaking, which is primarily engaged in banking, will be consolidated from 1st January 2001, the date management control is deemed to have passed to the Group.

# 22 Intangible fixed assets

| Goodwill | 2000 £m | 1999 £m |
| --- | --- | --- |
| At beginning of year | 183 | 196 |
| Additions | 4,121 | 10 |
| Disposals | - | (16) |
| Amortisation charge for year | (51) | (13) |
| Exchange and other adjustments | 16 | 6 |
| At end of year | 4,269 | 183 |

Accumulated amortisation at 31st December 2000 was £96m (1999 £45m).

Goodwill is amortised against profit over a period of 20 years, the expected life of the assets.

The addition in 2000 represents the goodwill arising on the acquisition of The Woolwich as set out in note 55.

Barclays PLC Annual Report 2000 99

Notes to the accounts
For the year ended 31st December 2000

# 23 Tangible fixed assets

| Cost or valuation | Total £m | Property £m | Equipment £m | Total £m | Property £m | Equipment £m |
| --- | --- | --- | --- | --- | --- | --- |
| At beginning of year | 3,438 | 2,040 | 1,398 | 3,614 | 2,155 | 1,459 |
| Acquisitions and disposals of Group undertakings | 565 | 251 | 314 | (4) | 8 | (12) |
| Exchange and other adjustments | (16) | (9) | (7) | (33) | (18) | (15) |
| Additions at cost | 350 | 101 | 249 | 242 | 106 | 136 |
| Sale of assets | (261) | (48) | (213) | (323) | (201) | (122) |
| Fully depreciated assets written off | (35) | (6) | (29) | (58) | (10) | (48) |
| At end of year | 4,041 | 2,329 | 1,712 | 3,438 | 2,040 | 1,398 |

| Accumulated depreciation and diminution in value | Total £m | Property £m | Equipment £m | Total £m | Property £m | Equipment £m |
| --- | --- | --- | --- | --- | --- | --- |
| At beginning of year | 1,638 | 660 | 978 | 1,675 | 701 | 974 |
| Acquisitions and disposals of Group undertakings | 301 | 65 | 236 | (8) | - | (8) |
| Exchange and other adjustments | (20) | (14) | (6) | (14) | (4) | (10) |
| Charge for year | 251 | 85 | 166 | 263 | 93 | 170 |
| Sale of assets | (153) | (15) | (138) | (220) | (120) | (100) |
| Fully depreciated assets written off | (35) | (6) | (29) | (58) | (10) | (48) |
| At end of year | 1,982 | 775 | 1,207 | 1,638 | 660 | 978 |

| At valuation | Total £m | Property £m | Equipment £m | Total £m | Property £m | Equipment £m |
| --- | --- | --- | --- | --- | --- | --- |
| 1979 to 1993 | 878 | 878 | - | 887 | 887 | - |
| At cost | 3,163 | 1,451 | 1,712 | 2,551 | 1,153 | 1,398 |
| | 4,041 | 2,329 | 1,712 | 3,438 | 2,040 | 1,398 |
| Accumulated depreciation | (1,982) | (775) | (1,207) | (1,638) | (660) | (978) |
| Net book value | 2,059 | 1,554 | 505 | 1,800 | 1,380 | 420 |

| Balance sheet value of property | 2000 £m | 1999 £m |
| --- | --- | --- |
| Freehold | 1,241 | 1,022 |
| Leasehold over 50 years unexpired | 59 | 69 |
| Leasehold up to 50 years unexpired | 224 | 231 |
| Assets in the course of construction | 30 | 58 |
| | 1,554 | 1,380 |

| Historical cost of property | 2000 £m | 1999 £m |
| --- | --- | --- |
| At cost | 2,040 | 1,732 |
| Accumulated depreciation and diminution in value | (759) | (629) |
| Net book value | 1,281 | 1,103 |

The net book value of property occupied by the Group for its own use was £1,502m at 31st December 2000 (1999 £1,353m).
The net book value of property at 31st December 2000 included £339m (1999 £296m) in respect of land.

# 24 Commitments for capital expenditure not provided in these accounts

At 31st December 2000, commitments for capital expenditure under contract amounted to £2m (1999 £7m).

Barclays PLC Annual Report 2000 100

Notes to the accounts
For the year ended 31st December 2000

# 25 Other assets

| | 2000 £m | 1999 £m |
| --- | --- | --- |
| Own shares | 5 | 5 |
| Balances arising from off-balance sheet financial instruments | 12,100 | 13,390 |
| Shareholders' interest in the long-term assurance fund | 820 | 555 |
| London Metal Exchange warrants and other metals trading positions | 1,001 | 331 |
| Sundry debtors | 1,592 | 1,629 |
| | 15,518 | 15,910 |

Own shares represent Barclays PLC shares held in employee benefit trusts that have not yet been expensed.

# 26 Long-term assurance funds

The increase in the shareholders interest in the long-term assurance funds is calculated as follows:

| | 2000 £m | 1999 £m |
| --- | --- | --- |
| Value of the shareholders interest at beginning of year | 555 | 530 |
| Increase resulting from The Woolwich acquisition | 148 | - |
| Value of the shareholders interest at end of year | 820 | 555 |
| Increase in value for the year after tax | 117 | 25 |
| Increase in value before tax | 165 | 32 |

In addition to the increase in the shareholders' interest in the long-term assurance funds detailed above, a further £6m (1999 £12m) of other income from the long-term assurance business has been recognised in the year.

The principal economic assumptions used in calculating the value of the shareholders' interest were as follows:

| | 2000 % | 1999 % |
| --- | --- | --- |
| Risk discount rate (net of tax) | 9.5 | 10.0 |
| Gross equities returns for unit linked business* | 7.7 | 8.0 |
| Gross fixed interest returns for unit linked business | 4.7 | 5.0 |
| Renewal expense inflation | 4.5 | 5.0 |

* The assumption used for UK equities is 7.7% (1999 8.0%) less the irrecoverable tax credit of 0.5% (1999 0.6%), derived as 20% (1999 20%) of the assumed dividend yield of 2.7% (1999 3%).

The retail life-fund assets attributable to policy holders comprise:

| | 2000 £m | 1999 £m |
| --- | --- | --- |
| Assets: | | |
| Investments | 8,640 | 8,051 |
| Group undertakings | 27 | 12 |
| Other debtors | 130 | 58 |
| | 8,797 | 8,121 |
| Current liabilities | (86) | (81) |
| | 8,711 | 8,040 |

# 27 Prepayments and accrued income

| | 2000 £m | 1999 £m |
| --- | --- | --- |
| Accrued interest and commission | 2,482 | 2,008 |
| Prepayments | 345 | 195 |
| | 2,827 | 2,203 |

Barclays PLC Annual Report 2000 101

Notes to the accounts
For the year ended 31st December 2000

# 28 Deposits by banks

| Repayable | 2000 £m | 1999 £m |
| --- | --- | --- |
| on demand | 2,826 | 1,720 |
| not more than three months | 41,059 | 37,728 |
| over three months but not more than six months | 1,358 | 1,748 |
| over six months but not more than one year | 1,333 | 1,600 |
| over one year but not more than five years | 1,788 | 656 |
| over five years | 1,392 | 1,034 |
| | 49,756 | 44,486 |

| By geographical area | | |
| --- | --- | --- |
| Banking business: | | |
| UK | 18,965 | 15,457 |
| Other European Union | 3,820 | 2,575 |
| United States | 3,893 | 4,178 |
| Rest of the World | 5,767 | 4,705 |
| Total banking business | 32,445 | 26,915 |
| Total trading business | 17,311 | 17,571 |
| | 49,756 | 44,486 |

There were no balances due to associated undertakings and joint ventures at 31st December 2000 or 31st December 1999.
Deposits by banks are mostly over £50,000.

A further analysis of Deposits by banks is given within the Deposits section on page 33 of the Financial review.

# 29 Customer accounts

| Repayable | 2000 £m | 1999 £m |
| --- | --- | --- |
| on demand | 61,174 | 44,997 |
| not more than three months | 82,435 | 71,216 |
| over three months but not more than six months | 4,005 | 2,135 |
| over six months but not more than one year | 4,624 | 1,728 |
| over one year but not more than five years | 5,257 | 2,128 |
| over five years | 1,473 | 1,762 |
| | 158,968 | 123,966 |

| By geographical area | | |
| --- | --- | --- |
| Banking business: | | |
| UK | 121,565 | 90,204 |
| Other European Union | 4,884 | 4,394 |
| United States | 4,084 | 2,323 |
| Rest of the World | 9,819 | 8,106 |
| Total banking business | 140,352 | 105,027 |
| Total trading business | 18,616 | 18,939 |
| | 158,968 | 123,966 |

102 Barclays PLC Annual Report 2000

Notes to the accounts
For the year ended 31st December 2000

# 29 Customer accounts (continued)

| By type | 2000 £m | 1999 £m |
| --- | --- | --- |
| In offices in the UK: | | |
| current and demand accounts – interest free | 10,928 | 9,727 |
| current and demand accounts – interest bearing | 16,785 | 13,601 |
| savings accounts | 35,761 | 27,014 |
| other time deposits – retail | 36,224 | 22,726 |
| other time deposits – wholesale | 24,492 | 20,406 |
| In offices outside the UK: | | |
| current and demand accounts – interest free | 1,557 | 1,600 |
| current and demand accounts – interest bearing | 1,903 | 1,988 |
| savings accounts | 1,326 | 1,267 |
| other time deposits | 29,992 | 25,637 |
| | 158,968 | 123,966 |

At 31st December 2000, there were customer accounts of £12m (1999 £13m) due to associated undertakings and joint ventures.

Deposits in offices in the UK received from non-residents amounted to £11,754m (1999 £11,242m).

Other time deposits in the UK and the United States are mostly over £50,000.

A further analysis of customer accounts is provided within the Deposits section on page 33 of the Financial review.

# 30 Debt securities in issue

| | 2000 £m | 1999 £m |
| --- | --- | --- |
| Bonds and medium-term notes repayable: | | |
| within one year | 540 | 117 |
| one year and over | 4,428 | 1,482 |
| | 4,968 | 1,599 |
| Other debt securities in issue repayable: | | |
| not more than three months | 18,738 | 16,070 |
| over three months but not more than one year | 3,135 | 4,341 |
| over one year but not more than five years | 4,893 | 1,318 |
| over five years | 149 | 1 |
| | 31,883 | 23,329 |

Debt securities in issue at 31st December 2000 included certificates of deposit of £22,413m (1999 £19,496m) and commercial paper of £2,209m (1999 £1,082m). There were no balances due to associated undertakings and joint ventures at 31st December 2000 or 31st December 1999.

Debt securities in issue at 31st December 2000 and 31st December 1999 include £607m raised from the securitisation of credit and charge card receivables (see note 17).

Barclays PLC Annual Report 2000 103

Notes to the accounts
For the year ended 31st December 2000

# 31 Other liabilities

| | 2000 £m | 1999 £m |
| --- | --- | --- |
| Obligations under finance leases payable: | | |
| not more than one year | 24 | 16 |
| over one year but not more than five years | 126 | 107 |
| over five years | 112 | 125 |
| | 262 | 248 |
| Less: future finance charges | 103 | 108 |
| | 159 | 140 |
| Balances arising from off-balance sheet financial instruments | 11,971 | 13,619 |
| Short positions in securities | 21,201 | 16,813 |
| Cash receipts from securitisation | 747 | 1,049 |
| Current tax | 642 | 462 |
| Sundry creditors | 3,464 | 3,036 |
| | 38,184 | 35,119 |

| Short positions in securities comprise: | | |
| --- | --- | --- |
| Treasury bills and other eligible bills | 2,831 | 1,375 |
| Debt securities – government | 14,322 | 11,362 |
| Debt securities – other public sector | 415 | 141 |
| Debt securities – other | 2,576 | 3,054 |
| Equity shares | 1,057 | 881 |
| | 21,201 | 16,813 |

Of the total short positions disclosed above, £17,895m (1999 £13,669m) were listed on a recognised exchange.

Cash receipts from securitisation are in respect of a portfolio of investment debt securities (see note 19) which did not qualify for linked presentation under FRS 5.

# 32 Accruals and deferred income

| | 2000 £m | 1999 £m |
| --- | --- | --- |
| Accrued interest and commission | 2,317 | 1,565 |
| Other accruals and deferred income | 2,140 | 1,725 |
| | 4,457 | 3,290 |

# 33 Deferred tax

Deferred tax is provided using the liability method on timing differences where it is considered probable a liability to tax will crystallise. The movements on deferred tax during the year were:

| | 2000 £m | 1999 £m |
| --- | --- | --- |
| At beginning of year | 596 | 702 |
| Exchange and other adjustments | 28 | (54) |
| Charge/(credit) to profit and loss account | 7 | (52) |
| At end of year | 631 | 596 |

| Deferred tax at 31st December: | | |
| --- | --- | --- |
| Leasing transactions | 715 | 731 |
| Other timing differences | (84) | (135) |
| | 631 | 596 |

Potential tax liabilities not provided in the accounts in respect of leasing transactions are computed at estimated future tax rates and amounted to £228m (1999 £229m). No tax is provided on capital gains which might arise on the disposal of Group subsidiaries or associated undertakings at their balance sheet amounts. Furthermore, no provision is made for tax on capital gains which might arise on the disposal of properties at their balance sheet amounts, as the Directors are of the opinion that, in view of the substantial number of properties involved and the law relating to rollover relief, the likelihood of any such material tax liability arising is remote and no useful purpose would be served by attempting to quantify it.

104 Barclays PLC Annual Report 2000

Notes to the accounts
For the year ended 31st December 2000

# 34 Other provisions for liabilities and charges

| | Employee pension and post retirement benefit contributions £m | Onerous contracts £m | Customer loyalty provisions £m | Redundancy and restructuring £m | Sundry provisions £m | Total £m |
| --- | --- | --- | --- | --- | --- | --- |
| At 1st January 2000 | 167 | 95 | 77 | 192 | 120 | 651 |
| Acquisitions and disposals of Group undertakings | 12 | 5 | - | - | 7 | 24 |
| Exchange | - | - | - | (1) | 1 | - |
| Additions | 48 | 3 | - | 220 | 79 | 350 |
| Amounts used | (21) | (51) | (8) | (253) | (19) | (352) |
| Unused amounts reversed | (12) | - | (3) | (11) | (20) | (46) |
| Amortisation of discount | - | 4 | - | - | 4 | 8 |
| | 194 | 56 | 66 | 151 | 168 | 635 |
| At 1st January 1999 | 173 | 100 | 64 | 108 | 206 | 651 |
| Exchange and other adjustments | (24) | 7 | - | 3 | 6 | (8) |
| Additions | 22 | 5 | 22 | 358 | 53 | 460 |
| Amounts used | (4) | (22) | (9) | (272) | (131) | (438) |
| Unused amounts reversed | - | - | - | (5) | (14) | (19) |
| Amortisation of discount | - | 5 | - | - | - | 5 |
| | 167 | 95 | 77 | 192 | 120 | 651 |

### Employee pension and post retirement benefits obligations
The Group operates various defined benefit pension schemes. Provisions for pensions arise when the profit and loss charge exceeds the contribution to the scheme as a result of actuarial valuations. The provision will be eliminated over the estimated service life of the employees in line with SSAP 24. The Group operates various unfunded post retirement benefit plans and has a provision to cover the expected cost.

### Onerous contracts
The Group has a number of leasehold properties where unavoidable costs exceed anticipated income. Under FRS 12 a provision is required for such properties. This provision has been discounted due to the long-term nature of the cashflows.

### Customer loyalty provisions
The Group operates customer loyalty bonus schemes. A provision is made for future claims on redemption under the schemes.

### Redundancy and restructuring
It is anticipated that the majority of the remaining provision will be utilised in 2001.

### Sundry provisions
Other provisions are incurred in the course of business. Included within Sundry provisions are provisions for commission clawbacks, warranties and litigation claims.

Barclays PLC Annual Report 2000 105

Notes to the accounts
For the year ended 31st December 2000

# 35 Undated loan capital

Undated loan capital, issued by the Bank for the development and expansion of the Group's business and to strengthen the capital base and by The Woolwich for the general purposes of its business, comprised:

| | Notes | 2000 £m | 1999 £m |
| --- | --- | --- | --- |
| Convertible to preference shares | | | |
| The Bank | | | |
| 8% Convertible Capital Notes Series E ($500m) | (h, s) | 335 | 309 |
| Non-convertible | | | |
| The Bank | | | |
| Junior Undated Floating Rate Notes ($121m, 1999 $138m) | (a, j) | 81 | 85 |
| Undated Floating Rate Primary Capital Notes Series 1 ($358m) | (a, k) | 240 | 221 |
| Undated Floating Rate Primary Capital Notes Series 2 ($442m) | (a, k) | 297 | 273 |
| Undated Floating Rate Primary Capital Notes Series 3 | (a, k) | 145 | 145 |
| 9.875% Undated Subordinated Notes | (b, l) | 300 | 300 |
| 9% Permanent Interest Bearing Capital Bonds | (h, q) | 100 | 100 |
| 7.875% Undated Subordinated Notes | (c, r) | 100 | 100 |
| 7.125% Undated Subordinated Notes | (d, n) | 275 | - |
| 6.875% Undated Subordinated Notes | (e, o) | 400 | - |
| 6.5% Undated Subordinated Notes (FFr 1,000m) | (f, m) | 95 | 95 |
| 5.03% Reverse Dual Currency Undated Subordinated Notes (Yen 8,000m) | (g, p) | 47 | 48 |
| 5% Reverse Dual Currency Undated Subordinated Notes (Yen 12,000m) | (g, p) | 70 | 73 |
| The Woolwich | | | |
| 9.25% Perpetual Subordinated Bonds | (i, t) | 187 | - |
| | | 2,337 | 1,440 |

### Security and subordination
None of the undated loan capital of the Bank or The Woolwich is secured.

The Junior Undated Floating Rate Notes (the "Junior Notes") rank behind the claims against the Bank of depositors and other unsecured unsubordinated creditors and holders of dated loan capital. All other issues of the Bank's undated loan capital rank *pari passu* with each other and behind the claims of the holders of the Junior Notes. The 9.25% Perpetual Subordinated Bonds rank behind the claims against The Woolwich of its depositors and other unsecured unsubordinated creditors and holders of its dated loan capital.

### Interest

#### Notes
(a) These Notes bear interest at rates fixed periodically in advance based on London interbank rates.

(b) These Notes bear a fixed rate of interest until 2008. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of 5 years.

(c) These Notes bear a fixed rate of interest until 2003. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of 10 years.

(d) These Notes bear a fixed rate of interest until 2020. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of 5 years.

(e) These Notes bear a fixed rate of interest until 2015. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of 5 years.

(f) These Notes bear a fixed rate of interest until 2009. After that date, in the event that the Notes are not redeemed, the Notes will bear interest at rates fixed periodically in advance based on European interbank rates.

(g) These Notes bear a fixed rate of interest until 2028 based on a U.S. dollar principal amount, but the coupons have been swapped, resulting in a Yen interest rate payable which is fixed periodically in advance based on London interbank rates. After that date, in the event that the Notes are not redeemed, the Notes will bear Yen interest at rates fixed periodically in advance based on London interbank rates.

106 Barclays PLC Annual Report 2000

Notes to the accounts
For the year ended 31st December 2000

# 35 Undated loan capital (continued)

(h) The interest rates on these Notes are fixed for the life of those issues.

(i) These Notes bear a fixed rate of interest until 2021. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of 5 years.

The Bank is not obliged to make a payment of interest on its undated loan capital (other than the Junior Notes) if, in the preceding six months, a dividend has not been declared or paid on any class of shares of Barclays PLC or, in certain cases, any class of preference shares of the Bank. The Woolwich is not obliged to make a payment of interest on its undated loan capital if, in the immediately preceding interest period, a dividend has not been paid on any class of its share capital. Interest not so paid becomes payable if such a dividend is subsequently paid or in certain other circumstances.

No payment of principal or any interest may be made unless the Bank or The Woolwich, as appropriate, satisfies a specified solvency test.

Interest payable on undated loan capital amounted to £143m (1999 £125m, 1998 £127m).

### Repayment and conversion

#### Notes
(j) These Notes are repayable, at the option of the Bank, in whole or in part on any interest payment date.

(k) These Notes are repayable in each case, at the option of the Bank, in whole on any interest payment date.

(l) These Notes are repayable, at the option of the Bank, in whole in 2008, or on any fifth anniversary thereafter.

(m) These Notes are repayable, at the option of the Bank, in whole in 2009, or on any fifth anniversary thereafter.

(n) These Notes are repayable, at the option of the Bank, in whole in 2020, or on any fifth anniversary thereafter.

(o) These Notes are repayable, at the option of the Bank, in whole in 2015, or on any fifth anniversary thereafter.

(p) These Notes are repayable, at the option of the Bank, in whole in 2028, or on any fifth anniversary thereafter.

(q) These Bonds are repayable, at the option of the Bank, in whole at any time.

(r) These Notes are repayable, at the option of the Bank, in whole at any time up to and including October 2003, or on any tenth anniversary thereafter.

(s) These Notes are repayable at par, at the option of the Bank, in whole on any interest payment date falling in or after April 2003 and are convertible on any interest payment date, at the option of the Bank, into 40,000,000 non-cumulative dollar-denominated preference shares of the Bank.

(t) These Bonds are repayable, at the option of The Woolwich, in whole in 2021, or on any fifth anniversary thereafter.

In addition, each issue of undated loan capital is repayable, at the option of the Bank or The Woolwich, as appropriate, in whole for certain tax reasons, either at any time, or on an interest payment date. There are no events of default except non-payment of principal or mandatory interest. Any repayments require the prior approval of the Financial Services Authority.

The Series E Notes have been registered under the US Securities Act of 1933. The other issues of undated loan capital, which were made in the eurocurrency market, have not been so registered.

During the year a subsidiary of the Bank purchased $17m of Junior Notes (1999 $30m) at a discount of $3m (£2m) (1999 $4m (£3m)).

Barclays PLC Annual Report 2000 107

Notes to the accounts
For the year ended 31st December 2000

# 36 Dated loan capital - non-convertible

Dated loan capital, issued by the Bank and its finance subsidiaries for the development and expansion of the Group's business and to strengthen its capital base and by The Woolwich for the general purposes of its business, comprised:

| | Notes | 2000 £m | 1999 £m |
| --- | --- | --- | --- |
| The Bank | | | |
| Floating Rate Subordinated Notes 2000 (1999 $100m) | | - | 62 |
| 5.875% Subordinated Notes 2000 (1999 $225m) | | - | 140 |
| 5.95% Subordinated Notes 2001 ($225m) | (g, h, i) | 140 | 140 |
| 9.5% Subordinated Redeemable Bonds 2001 (FFr 350m) | (h) | 33 | 33 |
| 5.5% Subordinated Notes 2002 (€200m) | (g, h, i) | 119 | - |
| Floating Rate Subordinated Notes 2002 (€115m) | (a, i) | 72 | - |
| Floating Rate Unsecured Capital Loan Stock 2006 | (a, k, l) | 4 | 4 |
| Floating Rate Subordinated Notes 2006 (DM 350m) | (a, k) | 112 | 111 |
| Floating Rate Subordinated Notes 2006 (Yen 20,000m) | (a, k) | 117 | 121 |
| 16% Unsecured Capital Loan Stock 2002/07 | (h, k) | 100 | 100 |
| 4.875% Step-up Callable Subordinated Notes 2008 (FFr 1,000m) | (b, k) | 95 | 95 |
| Floating Rate Subordinated Notes 2008 (ITL 250,000m) | (a, k) | 80 | 80 |
| Subordinated Floating Rate Notes 2008 ($250m) | (a, g, k) | 171 | 155 |
| Subordinated Floating Rate Notes 2009 ($60m) | (a, k) | 40 | 37 |
| Floating Rate Subordinated Step-up Callable Notes 2009 ($550m) | (a, k) | 369 | 340 |
| Floating Rate Subordinated Step-up Callable Notes 2009 ($115m) | (a, k) | 77 | 71 |
| 7.4% Subordinated Notes 2009 ($400m) | (h) | 268 | 248 |
| Subordinated Fixed to CMS-Linked Notes 2009 (€31m) | (a) | 19 | 19 |
| Floating Rate Subordinated Step-up Callable Notes 2009 (€150m) | (a, k) | 94 | 93 |
| Variable Floating Rate Subordinated Notes 2009 (Yen 5,000m) | (a, k) | 29 | 30 |
| 12% Unsecured Capital Loan Stock 2010 | (h) | 25 | 25 |
| Floating Rate Unsecured Capital Loan Stock 2010 | (a, k, l) | 1 | 1 |
| Fixed/Floating Rate Subordinated Notes 2011 (Yen 5,000m) | (c, k) | 29 | 30 |
| Floating Rate Subordinated Notes 2012 | (a, k) | 299 | 298 |
| 5.5% Subordinated Notes 2013 (DM 500m) | (d, k) | 160 | 159 |
| Floating Rate Subordinated Notes 2019 (€50m) | (a) | 31 | 31 |
| 5.4% Reverse Dual Currency Subordinated Notes 2027 (Yen 15,000m) | (e) | 88 | 91 |
| 6.33% Subordinated Notes 2032 | (h) | 50 | 50 |
| Barclays Overseas Investment Company B.V. (BOIC) | | | |
| Guaranteed Notes 2007 (Yen 15,000m) | (f, k) | 88 | 91 |
| Barclays North American Capital Corporation (BNACC) | | | |
| 9¾% Guaranteed Capital Notes 2021 ($311m) | (h, k) | 209 | 193 |
| The Woolwich | | | |
| 11.625% Subordinated Notes 2001 | (h) | 99 | - |
| 5.25% Subordinated Notes 2011 (€250m) | (h) | 142 | - |
| Step-up Callable Floating Rate Subordinated Bonds 2012 | (a, k) | 145 | - |
| 10.125% Subordinated Notes 2017 | (j, k) | 125 | - |
| 9.5% Subordinated Bonds 2021 | (h) | 268 | - |
| | | 3,698 | 2,848 |

| Repayable | 2000 £m | 1999 £m |
| --- | --- | --- |
| not more than one year | 277 | 207 |
| over one year but not more than two years | 191 | 173 |
| over five years | 3,230 | 2,468 |
| | 3,698 | 2,848 |

None of the Group's dated loan capital is secured. The debt obligations of the Bank, BOIC, BNACC and The Woolwich rank ahead of the interests of holders of their equity. Dated loan capital of the Bank and The Woolwich has been issued on the basis that the claims thereunder are subordinated to the respective claims of their depositors and other unsecured unsubordinated creditors. Loan capital issued by BOIC and BNACC carries the guarantee of the Bank, which is subordinated on a similar basis. All loan capital issued by BOIC and BNACC has been on-lent to the Bank on a subordinated basis.

108 Barclays PLC Annual Report 2000

Notes to the accounts
For the year ended 31st December 2000

# 36 Dated loan capital - non-convertible (continued)

### Interest

#### Notes
(a) These Notes bear interest at rates fixed periodically in advance based on London or European interbank rates.

(b) These Notes bear a fixed rate of interest until 2003. After that date, in the event that the Notes are not redeemed, the Notes will bear interest at rates fixed periodically in advance based on European interbank rates.

(c) These Notes bear a fixed rate of interest until 2006. After that date, in the event that the Notes are not redeemed, the Notes will bear interest at rates fixed periodically in advance based on London interbank rates.

(d) These Notes bear a fixed rate of interest until 2008. After that date, in the event that the Notes are not redeemed, the Notes will bear interest at rates fixed periodically in advance based on London interbank rates.

(e) These Notes bear a fixed rate of interest based on a U.S. dollar principal amount, but the coupons have been swapped, resulting in a Yen interest rate payable which is fixed periodically in advance based on London interbank rates.

(f) The coupons on these Notes have been swapped until 2002, resulting in a Yen interest rate payable until then which is fixed periodically in advance based on London interbank rates. After that date, in the event that the Notes are not redeemed, the Notes will bear interest at rates fixed periodically in advance based on London interbank rates.

(g) The Bank has swapped the proceeds of these Notes for sterling under three swaps the durations of which will match the respective terms of the Notes. The payment obligations of the Bank under these three swaps are subordinated so that the claims against the Bank in respect of the swaps rank *pari passu* with claims against the Bank in respect of its dated loan capital. The sterling values of these Notes in the figures set out above take into account these subordinated swaps.

(h) The interest rates on these Notes are fixed for the life of those issues.

(i) The Bank may defer the payment of interest and principal on these Notes in the event that the Financial Services Authority has required or requested the Bank to make such a deferral.

(j) These Notes bear a fixed rate of interest until 2012. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of 5 years.

Interest payable on loan capital with a final maturity within five years amounted to £16m (1999 £23m, 1998 £16m).

The notes issued by BNACC, the 5.95% Subordinated Notes 2001 (the '5.95% Notes') and the 7.4% Subordinated Notes 2009 (the '7.4% Notes') issued by the Bank have been registered under the US Securities Act of 1933. All other issues of dated loan capital by the Bank, BOIC, and The Woolwich, which were made in non-US markets, have not been so registered. With respect to the 5.95% Notes and the 7.4% Notes, the Bank is not obliged to make (i) a payment of interest on any interest payment date unless a dividend is paid on any class of share capital and (ii) a payment of principal until six months after the respective maturity date with respect to such Notes.

### Repayment terms
Unless otherwise indicated, the Group's dated loan capital outstanding at 31st December 2000 is redeemable only on maturity subject, in particular cases, to provisions allowing an early redemption in the event of certain changes in tax law.

#### Notes
(k) Repayable at the option of the issuer, prior to maturity, on conditions governing the respective debt obligations, some in whole or in part, and some only in whole.

(l) Holders of these Notes have certain rights to call for the redemption of their holdings.

Any repayments prior to maturity require the prior approval of the Financial Services Authority.

There are no committed facilities in existence at the balance sheet date which permit the refinancing of debt beyond the date of maturity.

Notes to the accounts
For the year ended 31st December 2000

# 37 Called up share capital

The authorised share capital of Barclays PLC is £2,000m (1999 £2,000m), comprising 1,999m (1999 1,999m) ordinary shares of £1 each and 1m (1999 1m) staff shares of £1 each.

| | 2000 £m | 1999 £m |
| --- | --- | --- |
| **Called up share capital, allotted and fully paid** | | |
| **Ordinary shares:** | | |
| At beginning of year | 1,494 | 1,510 |
| Issued to staff under the SAYE Share Option Scheme | 11 | 11 |
| Issued under Executive Share Option Scheme | - | 1 |
| Issued to acquire The Woolwich | 176 | - |
| Repurchase of shares | (20) | (28) |
| At end of year | 1,661 | 1,494 |
| Staff shares | 1 | 1 |
| | **1,662** | **1,495** |

At 31st December 2000 35.0m (1999 40.8m) options were outstanding under the terms of the SAYE Share Option Scheme, 1.6m options were outstanding under the terms of The Woolwich SAYE Scheme, 3.6m (1999 3.9m) options were outstanding under the terms of the Executive Share Option Scheme, 3.0m options were outstanding under the terms of The Woolwich ESOP and 3.8m (1999 nil) options were outstanding under the terms of the Incentive Share Option Plan, enabling certain Directors and members of staff to subscribe for ordinary shares between 2001 and 2010 at prices ranging from 445p to 1,782p.

In addition, under the terms of The Woolwich SAYE 0.7m options were outstanding and 1.3m options were outstanding under the terms of The Woolwich ESOP enabling certain Directors and members of staff to subscribe for Woolwich plc ordinary shares between 2001 and 2010 at prices ranging from 268p to 367p. Upon exercise of an option over Woolwich plc shares, the option holder will receive £1.64 in cash and 0.1175 ordinary shares for each Woolwich share available under the option.

In 2000, the Company repurchased ordinary shares with a nominal value of £20m at a total cost of £311m. In 1999, ordinary shares with a nominal value of £28m were repurchased at a total cost of £504m.

# 38 Shareholders’ funds

| | 2000 | | | 1999 | | |
| --- | --- | --- | --- | --- | --- | --- |
| | Consolidated £m | Barclays PLC £m | Associated undertakings and joint ventures £m | Consolidated £m | Barclays PLC £m | Associated undertakings and joint ventures £m |
| At beginning of year | 8,483 | 8,483 | 36 | 7,842 | 7,842 | 72 |
| Proceeds of shares issued (net of expenses) | 3,554 | 3,554 | - | 214 | 214 | - |
| Exchange rate translation differences | 17 | - | 2 | (70) | - | 2 |
| Repurchase of ordinary shares | (311) | (311) | - | (504) | (504) | - |
| Goodwill written back on disposals | - | - | - | 138 | - | - |
| Revaluation of investment in subsidiary undertaking | - | 1,150 | - | - | 427 | - |
| Shares issued to the QUEST in relation to SAYE share option scheme | (114) | (114) | - | (154) | (154) | - |
| Other items | 12 | - | 4 | 4 | - | (21) |
| Profit/(loss) retained | 1,546 | 425 | (12) | 1,013 | 658 | (17) |
| At end of year | **13,187** | **13,187** | **30** | **8,483** | **8,483** | **36** |

The revaluation reserve of Barclays PLC arises from the revaluation of the investment in Barclays Bank PLC.

The increase in consolidated shareholders’ funds of £17m (1999 decrease £70m) arising from exchange rate translation differences is net of a related tax credit of £35m (1999 credit £8m).

Barclays PLC Annual Report 2000 109

Notes to the accounts
For the year ended 31st December 2000

# 39 Investment in Barclays Bank PLC

The investment in Barclays Bank PLC is stated in the balance sheet at Barclays PLC’s share of the book value of the net assets of Barclays Bank PLC including unamortised goodwill. The net increase of £4,704m during the year comprised the cost of additional shares of £3,554m and an increase of £1,150m in other net assets of Barclays Bank PLC. The cost of the investment was £7,271m (1999 £3,717m).

Details of principal subsidiary undertakings, held through Barclays Bank PLC, are shown in note 44.

# 40 Leasing activities

Aggregate amounts received and receivable during the year under finance leases were £598m (1999 £1,070m, 1998 £1,031m), including interest income of £355m (1999 £413m, 1998 £474m).

# 41 Assets and liabilities denominated in sterling and foreign currencies

| | 2000 £m | 1999 £m |
| --- | --- | --- |
| Denominated in sterling | 166,699 | 117,178 |
| Denominated in currencies other than sterling | 149,491 | 137,615 |
| **Total assets** | **316,190** | **254,793** |
| Denominated in sterling | 173,235 | 130,371 |
| Denominated in currencies other than sterling | 142,955 | 124,422 |
| **Total liabilities** | **316,190** | **254,793** |

# 42 Assets pledged to secure liabilities

At 31st December 2000, the amount of assets pledged to secure liabilities was £9,848m (1999 £6,813m). The secured liabilities outstanding amounted to £10,653m (1999 £9,330m).

# 43 Future rental commitments under operating leases

At 31st December 2000, the Group held various leases on land and buildings, many for extended periods, and other leases for equipment.

| | 2000 | | 1999 | |
| --- | --- | --- | --- | --- |
| | Property £m | Equipment £m | Property £m | Equipment £m |
| **Annual commitments under non-cancellable operating leases expiring:** | | | | |
| not more than one year | 12 | - | 4 | 1 |
| over one year but not more than five years | 19 | 1 | 21 | 1 |
| over five years | 121 | - | 111 | - |
| | **152** | **1** | **136** | **2** |

The following aggregate rental payments outstanding at 31st December 2000 fall due as follows:

| | Year ended 31st December | | | | | | Total thereafter £m |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | 2001 £m | 2002 £m | 2003 £m | 2004 £m | 2005 £m | thereafter £m | |
| Aggregate rental payments | 153 | 150 | 143 | 132 | 132 | 1,296 | |

The rentals for leasehold land, buildings and equipment, included in operating expenses for the year ended 31st December 2000, amounted to £176m (1999 £239m, 1998 £204m).

110 Barclays PLC Annual Report 2000

Notes to the accounts
For the year ended 31st December 2000

# 44 Principal subsidiary undertakings

| Country of registration or incorporation | Company name | Nature of Business | Percentage of equity capital held % |
| --- | --- | --- | --- |
| England | Barclays Bank PLC – ordinary shares | Banking, holding company | 100* |
| England | Barclays Private Bank Limited | Banking | 100* |
| England | Barclays Mercantile Business Finance Limited | Commercial finance, holding company, leasing | 100 |
| England | Barclays Global Investors UK Holdings Limited | Holding company | 100 |
| England | Barclays Life Assurance Company Limited | Life and pensions business | 100 |
| England | Barclays Funds Limited | Provider of savings related investment products | 100 |
| England | Barclays Bank Trust Company Limited | Banking, securities industries and trust services | 100 |
| England | Barclays Stockbrokers Limited | Stockbroking | 100 |
| England | Barclays Capital Securities Limited | Securities dealing | 100 |
| England | Barclays Global Investors Pensions Management Limited | Investment management | 100* |
| England | Woolwich plc | Banking, holding company | 100 |
| England | First Plus Financial Group PLC | Consumer finance | 100* |
| England | Woolwich Independent Financial Advisory Services Limited | Financial advisory services | 100* |
| Guernsey | Barclays Finance Company (Guernsey) Limited | Banking | 100 |
| Jersey | Barclays Bank Finance Company (Jersey) Limited | Banking | 100 |
| Jersey | Barclays Private Bank and Trust Limited | Banking, holding company | 100* |
| Isle of Man | Barclays Finance Company (Isle of Man) Limited | Investment company | 100 |
| Spain | Barclays Bank SA | Banking | 99.7 |
| Botswana | Barclays Bank of Botswana Limited | Banking | 74.9 |
| Egypt | Cairo Barclays Bank SAE | Banking | 60 |
| Ghana | Barclays Bank of Ghana Limited | Banking | 90 |
| Kenya | Barclays Bank of Kenya Limited | Banking | 68.5 |
| Zimbabwe | Barclays Bank of Zimbabwe Limited | Banking | 64.7* |
| USA | Barclays Capital Inc. | Securities dealing | 100* |
| USA | Barclays Global Investors, NA | Investments and securities industry business | 100* |
| Switzerland | Barclays Bank (Suisse) SA | Banking and trust services | 100* |
| Cayman Islands | Barclays Capital Japan Limited | Securities dealing | 100 |
| Italy | Banca Woolwich SpA | Banking | 100* |
| France | Banque Woolwich SA | Banking | 100* |

In accordance with Section 231(5) of the Companies Act 1985 the above information is provided solely in relation to principal subsidiary undertakings. Full information on all subsidiaries will be included with the Annual Return.

With the exception of Barclays Capital Japan Limited which operates in Japan, the country of registration or incorporation is also the principal area of operation for each of the above undertakings. Investments in these undertakings are held directly by Barclays Bank PLC except where marked \*. Barclays Bank PLC also has in issue 17,000,000 (1999 34,920,000) non-cumulative dollar-denominated preference shares of $0.01 each, none of which are held by Barclays PLC.

# 45 Contingent liabilities and commitments

In common with other banks, the Group conducts business involving acceptances, guarantees, performance bonds and indemnities. The majority of these facilities are offset by corresponding obligations of third parties. In addition, there are other off-balance sheet financial instruments, including swaps, futures, forwards and option contracts or combinations thereof (all commonly known as derivatives) the nominal amounts of which are not reflected in the consolidated balance sheet.

Following internationally accepted banking supervisory practice for the calculation of the credit risk associated with such off-balance sheet items, for the purpose of this note the contract or underlying principal amounts are initially converted to credit risk equivalents by applying specified conversion factors.

# Nature of instruments

For a description of the nature of derivative financial instruments, see page 53 of the Financial review.

An acceptance is an undertaking by a bank to pay a bill of exchange drawn on a customer. The Group expects most acceptances to be presented, but reimbursement by the customer is normally immediate. Endorsements are residual liabilities of the Group in respect of bills of exchange which have been paid and subsequently rediscounted.

Guarantees and assets pledged as collateral security are generally written by a bank to support the performance of a customer to third parties. As the Group will only be required to meet these obligations in the event of the customer’s default, the cash requirements of these instruments are expected to be considerably below their nominal amounts.

Barclays PLC Annual Report 2000 111

Notes to the accounts
For the year ended 31st December 2000

# 45 Contingent liabilities and commitments (continued)

Other contingent liabilities include transaction related customs and performance bonds and are, generally, short-term commitments to third parties which are not directly dependent on the customer’s credit worthiness.

Commitments to lend are agreements to lend to a customer in the future, subject to certain conditions. Such commitments are either made for a fixed period, or have no specific maturity but are cancellable by the lender subject to notice requirements.

Documentary credits commit the Group to make payments to third parties, on production of documents, which are usually reimbursed immediately by customers.

The following table summarises the nominal principal amount of contingent liabilities and commitments with off-balance sheet risk as at 31st December 2000.

| | 2000 Contract or underlying principal amount £m | 1999 Contract or underlying principal amount £m |
| --- | --- | --- |
| **Contingent liabilities** | | |
| Acceptances and endorsements | 1,170 | 1,530 |
| Guarantees and assets pledged as collateral security | 15,180 | 12,044 |
| Other contingent liabilities | 6,503 | 5,360 |
| **Off-balance sheet credit risk** | **22,853** | **18,934** |
| **Commitments** | | |
| **Other commitments:** | | |
| Documentary credits and other short-term trade related transactions | 446 | 489 |
| Forward asset purchases and forward forward deposits placed | 10 | 418 |
| Undrawn note issuance and revolving underwriting facilities | 28 | 47 |
| Undrawn formal standby facilities, credit lines and other commitments to lend: | | |
| Over one year | 20,550 | 17,048 |
| In one year or less | 66,937 | 64,477 |
| **Off-balance sheet credit risk** | **87,971** | **82,479** |

As an active participant in international banking markets, the Group has a significant concentration of off-balance sheet items with financial institutions, as shown in note 64.

# Accounting for derivatives and credit related instruments

The Group’s policies for accounting for derivatives and credit related instruments are set out on page 77.

# Risks

Credit exposure or replacement cost of derivative instruments represents the cost to replace contracts with a positive value and is usually a small fraction of the notional amount of the contracts. Credit risk exposures, however, relate to accounting losses that would be recognised if counterparties failed completely to perform their obligations. Options written do not expose the Group to credit risk (apart from unremitted premiums), except to the extent of the underlying risk in the financial instrument that the Group may be obligated to acquire under certain written put options. The risk that counterparties to both derivative and cash instruments might default on their obligations is monitored on an ongoing basis. To control the level of credit risk taken, the Group assesses counterparties using the same techniques and corporate grading structure as for lending decisions, in order to deal predominantly with counterparties of high credit quality.

# Cash requirements

The cash requirement of a credit related instrument has the same features as the risk set out above.

For a further description of the nature and management of credit risks and market risks, see Risk management on pages 36 to 57 of the Financial review.

112 Barclays PLC Annual Report 2000

Notes to the accounts
For the year ended 31st December 2000

# 46 Derivatives and other financial instruments

The Group’s objectives and policies in managing the risks that arise in connection with the use of financial instruments are set out on pages 36 to 57 of the Financial review under the headings ‘Risk management’; ‘Market risk management’ and ‘Treasury asset and liability management’. Short-term debtors and creditors are included in the following interest rate repricing and non-trading currency risk tables. All other disclosures in note 46 exclude these short-term balances.

# Interest rate sensitivity gap analysis

The table below summarises the repricing profiles of the Group’s non-trading book as at 31st December 2000. Items are allocated to time bands by reference to the earlier of the next contractual interest rate repricing date and the maturity date.

# Interest rate repricing – as at 31st December 2000

| | Not more than three months £m | Over three months but not more than six months £m | Over six months but not more than one year £m | Over one year but not more than three years £m | Over three years but not more than five years £m | Over five years but not more than ten years £m | Over ten years £m | Non-interest bearing £m | Trading balances £m | Total £m |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| **Assets:** | | | | | | | | | | |
| Treasury bills and other eligible bills | 275 | 88 | 143 | 9 | - | - | - | - | 5,049 | 5,564 |
| Loans & advances to banks | 3,323 | 438 | 68 | 66 | 39 | 8 | 1 | 289 | 32,194 | 36,426 |
| Loans & advances to customers | 83,377 | 4,792 | 4,576 | 14,478 | 6,597 | 3,961 | 1,058 | 539 | 42,732 | 162,110 |
| Debt securities & equity shares | 1,308 | 224 | 1,484 | 1,806 | 943 | 1,123 | 492 | 140 | 67,312 | 74,832 |
| Other assets | 768 | 1 | - | - | - | - | - | 10,176 | 17,602 | 28,547 |
| **Total assets** | **89,051** | **5,543** | **6,271** | **16,359** | **7,579** | **5,092** | **1,551** | **11,144** | **164,889** | **307,479** |
| **Liabilities:** | | | | | | | | | | |
| Deposits by banks | 3,976 | 400 | 72 | 296 | 184 | 505 | - | 654 | 43,669 | 49,756 |
| Customer accounts | 103,521 | 3,332 | 2,969 | 2,493 | 189 | 4 | 157 | 11,866 | 34,437 | 158,968 |
| Debt securities in issue | 6,265 | 599 | 84 | 231 | 791 | 429 | 101 | - | 23,383 | 31,883 |
| Other liabilities | - | - | - | - | - | - | - | 6,815 | 38,900 | 45,715 |
| Loan capital & other subordinated liabilities | 2,405 | 46 | 286 | 402 | - | 978 | 2,044 | - | 209 | 6,370 |
| Minority & other interests & shareholders’ funds | - | - | - | - | - | - | - | 14,787 | - | 14,787 |
| Internal funding of trading business | (17,892) | 996 | 110 | (261) | 81 | 278 | - | (7,603) | 24,291 | - |
| **Total liabilities** | **98,275** | **5,373** | **3,521** | **3,161** | **1,245** | **2,194** | **2,302** | **26,519** | **164,889** | **307,479** |
| Off-balance sheet items | (4,580) | 935 | (1,741) | (3,177) | 6,020 | 737 | 1,806 | - | - | - |
| **Interest rate repricing gap** | **(13,804)** | **1,105** | **1,009** | **10,021** | **12,354** | **3,635** | **1,055** | **(15,375)** | **-** | **-** |
| **Cumulative gap** | **(13,804)** | **(12,699)** | **(11,690)** | **(1,669)** | **10,685** | **14,320** | **15,375** | **-** | **-** | **-** |

Total assets and liabilities exclude retail life-fund assets and liabilities. These are not relevant in considering the interest rate risk of the Group.

Trading balances for the purposes of this table are those where the risk is managed by DVAR (see pages 51 and 52).

Barclays PLC Annual Report 2000 113

Notes to the accounts
For the year ended 31st December 2000

# 46 Derivatives and other financial instruments (continued)

# Interest rate repricing – as at 31st December 1999

| | Not more than three months £m | Over three months but not more than six months £m | Over six months but not more than one year £m | Over one year but not more than three years £m | Over three years but not more than five years £m | Over five years but not more than ten years £m | Over ten years £m | Non-interest bearing £m | Trading balances £m | Total £m |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| **Assets:** | | | | | | | | | | |
| Treasury bills and other eligible bills | 445 | 109 | 94 | 3 | - | - | - | 6,525 | 7,176 | |
| Loans & advances to banks | 2,534 | 596 | 186 | 7 | 63 | - | - | 255 | 35,985 | 39,626 |
| Loans & advances to customers | 52,329 | 3,308 | 3,361 | 8,932 | 5,833 | 3,262 | 774 | 284 | 38,485 | 116,568 |
| Debt securities & equity shares | 430 | 143 | 148 | 2,887 | 1,508 | 1,234 | 17 | 176 | 52,980 | 59,523 |
| Other assets | 853 | - | - | - | - | - | - | 7,220 | 15,787 | 23,860 |
| **Total assets** | **56,591** | **4,156** | **3,789** | **11,829** | **7,404** | **4,496** | **791** | **7,935** | **149,762** | **246,753** |
| **Liabilities:** | | | | | | | | | | |
| Deposits by banks | 2,606 | 99 | 23 | 231 | 176 | 634 | - | 310 | 40,407 | 44,486 |
| Customer accounts | 80,515 | 2,480 | 1,474 | 1,080 | 166 | 2 | 188 | 11,208 | 26,853 | 123,966 |
| Debt securities in issue | 651 | 22 | 8 | 180 | 560 | 412 | 61 | - | 21,435 | 23,329 |
| Other liabilities | - | - | - | - | - | - | - | 7,136 | 34,404 | 41,540 |
| Loan capital & other subordinated liabilities | 2,093 | 86 | 140 | 264 | 195 | 931 | 696 | - | 192 | 4,597 |
| Minority & other interests & shareholders’ funds | - | - | - | - | - | - | - | 8,835 | - | 8,835 |
| Internal funding of trading business | (21,473) | 29 | 361 | 62 | 6 | 91 | 176 | (5,723) | 26,471 | - |
| **Total liabilities** | **64,392** | **2,716** | **2,006** | **1,817** | **1,103** | **2,070** | **1,121** | **21,766** | **149,762** | **246,753** |
| Off-balance sheet items | (1,349) | (3,906) | 1,831 | (3,925) | 7,261 | 105 | (17) | - | - | - |
| **Interest rate repricing gap** | **(9,150)** | **(2,466)** | **3,614** | **6,087** | **13,562** | **2,531** | **(347)** | **(13,831)** | **-** | **-** |
| **Cumulative gap** | **(9,150)** | **(11,616)** | **(8,002)** | **(1,915)** | **11,647** | **14,178** | **13,831** | **-** | **-** | **-** |

114 Barclays PLC Annual Report 2000

Notes to the accounts
For the year ended 31st December 2000

# 46 Derivatives and other financial instruments (continued)

# Non-trading currency risk

Non-trading currency risk exposure arises principally from the Group’s investments in overseas branches and subsidiary and associated undertakings, principally in the United States, Japan and Europe.

The Group’s structural currency exposures at 31st December 2000 were as follows:

| | Net investments in overseas operations | | Borrowings which hedge the net investments | | Remaining structural currency exposures | |
| --- | --- | --- | --- | --- | --- | --- |
| Functional currency of the operation involved | 2000 £m | 1999 £m | 2000 £m | 1999 £m | 2000 £m | 1999 £m |
| US dollar | 628 | 627 | 619 | 620 | 9 | 7 |
| Yen | 109 | 87 | - | 56 | 109 | 31 |
| Euro | 3,090 | 2,752 | 2,671 | 2,264 | 419 | 488 |
| Other non-sterling | 480 | 394 | 129 | 48 | 351 | 346 |
| **Total** | **4,307** | **3,860** | **3,419** | **2,988** | **888** | **872** |

In accordance with Group policy, as at 31st December 2000 and 31st December 1999 there were no material net currency exposures in the non-trading book relating to transactional (or non-structural) positions that would give rise to net currency gains and losses recognised in the profit and loss account. Instruments used in hedging non-trading exposures are described in the Financial review on pages 54 and 55.

# Daily value at risk

The Daily Value at Risk (DVAR) methodology of estimating potential losses arising from the Group’s exposure to market risk is explained on pages 51 and 52. The models used in estimating potential losses are based on past movements and may not be indicative of future market conditions.

The following table shows an analysis of the trading market risk related DVAR for the Group as an average for the year and the high and low during the year.

| | Year to 31st December 2000 | | | Year to 31st December 1999 | | |
| --- | --- | --- | --- | --- | --- | --- |
| | Average £m | High* £m | Low* £m | Average £m | High* £m | Low* £m |
| Interest rate risk | 16.2 | 23.7 | 10.7 | 13.7 | 30.2 | 6.2 |
| Foreign exchange risk | 2.9 | 4.7 | 1.8 | 2.8 | 11.7 | 0.8 |
| Equities risk | 3.9 | 7.1 | 1.4 | 1.7 | 3.7 | 0.6 |
| Commodities risk | 1.4 | 3.5 | 0.9 | 1.2 | 2.2 | 0.5 |
| Diversification effect | (6.9) | - | - | (3.3) | - | - |
| **Total DVAR** | **17.5** | **27.7** | **11.5** | **16.1** | **32.5** | **7.7** |

\* The high (and low) DVAR figures reported for each category did not necessarily occur on the same day as the high (and low) DVAR reported as a whole. A corresponding diversification effect cannot be calculated and is therefore omitted from the above table.

The DVAR at 31st December 2000 was £19.0m, (1999 £20.2m).

# Hedging

Non-trading derivatives are measured on an accruals basis, consistent with the assets, liabilities or positions being hedged. The gains and losses on these instruments (arising from changes in fair value) are not recognised in the profit and loss account immediately as they arise. Instead, they are either not recognised at all or are recognised and carried forward in the balance sheet. When the hedged transaction occurs, the gain or loss is recognised in the profit and loss account at the same time as the hedged item.

Barclays PLC Annual Report 2000 115

Notes to the accounts
For the year ended 31st December 2000

# 46 Derivatives and other financial instruments (continued)

The tables below summarise, firstly, the unrecognised gains and losses on hedges at 31st December 2000 and 31st December 1999 and the movements therein during the year, and, secondly, the deferred gains and losses on hedges carried forward in the balance sheet at 31st December 2000 and 31st December 1999, pending their recognition in the profit and loss account.

| | Gains | | Losses | | Total net gains/(losses) | |
| --- | --- | --- | --- | --- | --- | --- |
| | 2000 £m | 1999 £m | 2000 £m | 1999 £m | 2000 £m | 1999 £m |
| **Unrecognised gains and losses on hedges** | | | | | | |
| At 1st January | 655 | 1,406 | (989) | (1,210) | (334) | 196 |
| (Gains)/losses arising in previous years that were recognised in 2000/1999 | (194) | (767) | 279 | 496 | 85 | (271) |
| Brought forward gains/(losses) not recognised in 2000/1999 | 461 | 639 | (710) | (714) | (249) | (75) |
| Gains/(losses) arising in 2000/1999 that were not recognised in 2000/1999 | 1,294 | 16 | (999) | (275) | 295 | (259) |
| **At 31st December** | **1,755** | **655** | **(1,709)** | **(989)** | **46** | **(334)** |
| **Of which:** | | | | | | |
| Gains/(losses) expected to be recognised in 2001/2000 | 669 | 218 | (633) | (298) | 36 | (80) |
| Gains/(losses) expected to be recognised in 2002/2001 or later | 1,086 | 437 | (1,076) | (691) | 10 | (254) |
| **Deferred gains and losses on hedges carried forward in the balance sheet** | | | | | | |
| At 1st January | 44 | 65 | (64) | (100) | (20) | (35) |
| Deferred (gains)/losses brought forward that were recognised in income in 2000/1999 | (42) | (51) | 38 | 56 | (4) | 5 |
| Brought forward deferred gains/(losses) not recognised in 2000/1999 | 2 | 14 | (26) | (44) | (24) | (30) |
| Gains/(losses) that became deferred in 2000/1999 | 18 | 30 | (55) | (20) | (37) | 10 |
| **At 31st December** | **20** | **44** | **(81)** | **(64)** | **(61)** | **(20)** |
| **Of which:** | | | | | | |
| Gains/(losses) expected to be recognised in income in 2001/2000 | 11 | 36 | (40) | (28) | (29) | 8 |
| Gains/(losses) expected to be recognised in income in 2002/2001 or later | 9 | 8 | (41) | (36) | (32) | (28) |

Where a non-trading derivative no longer represents a hedge because the underlying non-trading asset, liability or position has been de-recognised or transferred into a trading portfolio, it is restated at fair value and any resultant gains or losses taken directly to the profit and loss account. No such gains or losses were recognised in the year to 31st December 2000 (1999 £nil).

The disclosure of the fair value of financial instruments as required by FRS 13 is provided in note 47 on pages 122 to 124.

116 Barclays PLC Annual Report 2000

Notes to the accounts
For the year ended 31st December 2000

# 46 Derivatives and other financial instruments (continued)

# Derivatives held or issued for trading purposes

The tables set out below analyse the notional principal amounts and fair values (which, after netting, are the book values) of trading instruments entered into with third parties.

| | 2000 | | | | |
| --- | --- | --- | --- | --- | --- |
| | Contract or underlying principal amount £m | Year-end positive fair value £m | Year-end negative fair value £m | Average positive fair value £m | Average negative fair value £m |
| **Foreign exchange derivatives** | | | | | |
| Forward foreign exchange | 235,015 | 4,690 | 4,345 | 3,969 | 3,686 |
| Currency swaps | 109,342 | 3,929 | 4,362 | 3,656 | 4,193 |
| OTC options bought and sold | 78,298 | 892 | 978 | 823 | 836 |
| **OTC derivatives** | **422,655** | **9,511** | **9,685** | **8,448** | **8,715** |
| Exchange traded futures – bought and sold | 15,010 | - | - | - | - |
| Exchange traded options – bought and sold | 9,706 | - | - | - | - |
| **Total** | **447,371** | **9,511** | **9,685** | **8,448** | **8,715** |
| **Interest rate derivatives** | | | | | |
| Swaps | 1,140,887 | 18,528 | 18,023 | 14,825 | 14,818 |
| Forward rate agreements | 31,778 | 25 | 26 | 19 | 25 |
| OTC options bought and sold | 377,094 | 3,414 | 3,180 | 2,874 | 2,629 |
| Other interest rate contracts | 7 | - | - | - | - |
| **OTC derivatives** | **1,549,766** | **21,967** | **21,229** | **17,718** | **17,472** |
| Exchange traded futures – bought and sold | 460,158 | - | - | - | - |
| Exchange traded options – bought and sold | 71,701 | - | - | - | - |
| **Total** | **2,081,625** | **21,967** | **21,229** | **17,718** | **17,472** |
| **Equity and stock index derivatives** | | | | | |
| OTC options bought and sold | 21,791 | 1,115 | 1,754 | 1,153 | 1,386 |
| Equity swaps and forwards | 1,757 | 182 | 196 | 149 | 147 |
| **OTC derivatives** | **23,548** | **1,297** | **1,950** | **1,302** | **1,533** |
| Exchange traded futures – bought and sold | 414,305 | - | - | - | - |
| Exchange traded options – bought and sold | 41,556 | - | - | - | - |
| **Total** | **479,409** | **1,297** | **1,950** | **1,302** | **1,533** |
| **Commodity derivatives** | | | | | |
| OTC options bought and sold | 1,874 | 20 | 96 | 14 | 20 |
| Commodity swaps and forwards | 5,995 | 354 | 389 | 268 | 243 |
| **OTC derivatives** | **7,869** | **374** | **485** | **282** | **263** |
| Exchange traded futures – bought and sold | 13,398 | 141 | 147 | 235 | 243 |
| Exchange traded options – bought and sold | 452 | 5 | 6 | 6 | 6 |
| **Total** | **21,719** | **520** | **638** | **523** | **512** |
| **Total trading derivatives** | | **33,295** | **33,502** | | |
| Effect of netting | | (20,748) | (20,748) | | |
| Allowable offset – cash collateral | | (447) | (783) | | |
| **Balances arising from off-balance sheet financial instruments (see Other assets/Other liabilities, notes 25 and 31)** | | **12,100** | **11,971** | | |

The contract or underlying principal amount for interest rate swaps includes £6,891m relating to credit derivatives (1999 £3,816m).

Collateral held that reduced credit risk in respect of derivative instruments at 31st December 2000, but did not meet the offset criteria amounted to £267m (1999 £557m).

Barclays PLC Annual Report 2000 117

Notes to the accounts
For the year ended 31st December 2000

# 46 Derivatives and other financial instruments (continued)

| | 1999 | | | | |
| --- | --- | --- | --- | --- | --- |
| | Contract or underlying principal amount £m | Year-end positive fair value £m | Year-end negative fair value £m | Average positive fair value £m | Average negative fair value £m |
| **Foreign exchange derivatives** | | | | | |
| Forward foreign exchange | 221,681 | 3,286 | 3,271 | 3,775 | 4,018 |
| Currency swaps | 82,350 | 3,261 | 3,812 | 2,756 | 3,301 |
| OTC options bought and sold | 55,675 | 631 | 500 | 699 | 772 |
| **OTC derivatives** | **359,706** | **7,178** | **7,583** | **7,230** | **8,091** |
| Exchange traded futures – bought and sold | 9,883 | - | - | - | - |
| Exchange traded options – bought and sold | 219 | - | - | - | - |
| **Total** | **369,808** | **7,178** | **7,583** | **7,230** | **8,091** |
| **Interest rate derivatives** | | | | | |
| Swaps | 882,871 | 13,587 | 13,338 | 14,717 | 14,383 |
| Forward rate agreements | 40,471 | 30 | 36 | 47 | 54 |
| OTC options bought and sold | 265,898 | 2,543 | 2,216 | 2,311 | 2,147 |
| Other interest rate contracts | 14 | - | - | - | - |
| **OTC derivatives** | **1,189,254** | **16,160** | **15,590** | **17,075** | **16,584** |
| Exchange traded futures – bought and sold | 234,586 | - | - | - | - |
| Exchange traded options – bought and sold | 36,848 | - | - | - | - |
| **Total** | **1,460,688** | **16,160** | **15,590** | **17,075** | **16,584** |
| **Equity and stock index derivatives** | | | | | |
| OTC options bought and sold | 24,447 | 1,882 | 2,350 | 1,617 | 2,045 |
| Equity swaps and forwards | 3,797 | 183 | 30 | 236 | 93 |
| **OTC derivatives** | **28,244** | **2,065** | **2,380** | **1,853** | **2,138** |
| Exchange traded futures – bought and sold | 34,920 | - | - | - | - |
| Exchange traded options – bought and sold | 71,749 | 154 | 238 | 277 | 422 |
| **Total** | **134,913** | **2,219** | **2,618** | **2,130** | **2,560** |
| **Commodity derivatives** | | | | | |
| OTC options bought and sold | 653 | 14 | 17 | 11 | 16 |
| Commodity swaps and forwards | 5,075 | 261 | 222 | 190 | 156 |
| **OTC derivatives** | **5,728** | **275** | **239** | **201** | **172** |
| Exchange traded futures – bought and sold | 10,634 | 364 | 398 | 329 | 339 |
| Exchange traded options – bought and sold | 753 | 14 | 11 | 6 | 6 |
| **Total** | **17,115** | **653** | **648** | **536** | **517** |
| **Total trading derivatives** | | **26,210** | **26,439** | | |
| Effect of netting | | (12,820) | (12,820) | | |
| **Balances arising from off-balance sheet financial instruments** | | **13,390** | **13,619** | | |

118 Barclays PLC Annual Report 2000

Barclays PLC Annual Report 2000 119

Notes to the accounts

For the year ended 31st December 2000

## 46 Derivatives and other financial instruments (continued)

Derivative financial instruments held for the purpose of managing non-trading exposures

The following table, which includes only the derivative components of the Group's hedging programme, summarises the nominal values, fair values and book values of derivatives held for the purpose of managing non-trading exposures. Included in the amounts below were £17,956m (1999 £6,998m) contract amount of foreign exchange derivatives and £92,680m (1999 £98,112m) of interest rate derivatives which were made for asset and liability management purposes with independently managed dealing units of the Group.

| 2000 | 1999 |
| --- | --- |

| Contract or underlying principal amount £m | Year-end positive fair value £m | Year-end negative fair value £m | Year-end positive book value £m | Year-end negative book value £m | Contract or underlying principal amount £m | Year-end Positive fair value £m | Year-end Negative fair value £m |
| --- | --- | --- | --- | --- | --- | --- | --- |
| **Foreign exchange derivatives** | | | | | | | |
| Forward foreign exchange | 5,420 | 128 | 68 | 16 | 101 | 3,837 | 28 | 17 |
| Currency swaps | 16,470 | 640 | 277 | 531 | 123 | 6,103 | 386 | 25 |
| OTC options bought and sold | 2,589 | 43 | 1 | 43 | 1 | 25 | – | – |
| OTC derivatives | 24,479 | 811 | 346 | 590 | 225 | 9,965 | 414 | 42 |
| Exchange traded options – bought and sold | – | – | – | – | 1 | – | – | – |
| **Total** | 24,479 | 811 | 346 | 590 | 225 | 9,966 | 414 | 42 |
| **Interest rate derivatives** | | | | | | | |
| Swaps | 106,818 | 2,319 | 1,870 | 1,210 | 710 | 92,849 | 798 | 1,162 |
| Forward rate agreements | 8,161 | 8 | 10 | 3 | 2 | 9,106 | 12 | 8 |
| OTC options bought and sold | 471 | – | – | – | – | 187 | – | – |
| OTC derivatives | 115,450 | 2,327 | 1,880 | 1,213 | 712 | 102,142 | 810 | 1,170 |
| Exchange traded futures – bought and sold | 2,013 | – | – | – | 1,759 | – | – | – |
| Exchange traded options – bought and sold | 1,678 | – | – | – | – | 15 | – | – |
| **Total** | 119,141 | 2,327 | 1,880 | 1,213 | 712 | 103,916 | 810 | 1,170 |
| **Equity, stock index and commodity derivatives** | 8 | 2 | – | 2 | – | 44 | 4 | – |

The contract or underlying principal amount for interest rate swaps includes £7,205m relating to credit derivatives (1999 £4,082m).

At 31st December 1999 the total positive book value of derivatives held for the purposes of managing non-trading exposures was £1,008m. The total negative book value of such contracts at 31st December 1999 was £658m.

The nominal amounts of OTC foreign exchange derivatives held to manage the non-trading exposure of the Group analysed by currency and final maturity are as follows:

| 2000 | 1999 |
| --- | --- |

| One year or less £m | Over one year but not more than five years £m | Over five years £m | Total £m | One year or less £m | Over one year but not more than five years £m | Over five years £m | Total £m |
| --- | --- | --- | --- | --- | --- | --- | --- |
| £/euro | 2,323 | 2,127 | 396 | 4,846 | 387 | 3,034 | 497 | 3,918 |
| £/Yen | 5,934 | 1,640 | 32 | 7,606 | 822 | 1,534 | 124 | 2,480 |
| £/US Dollar | 1,442 | 1,654 | 341 | 3,437 | 399 | 237 | 133 | 769 |
| US Dollar/euro | 204 | 6 | – | 210 | 548 | 10 | – | 558 |
| US Dollar/Yen | 238 | 3,505 | 191 | 3,934 | 55 | 44 | 188 | 287 |
| US Dollar/South African Rand | 502 | – | – | 502 | 393 | – | – | 393 |
| US/Australian Dollar | 340 | – | – | 340 | – | – | – | – |
| Yen/euro | 996 | 1,473 | – | 2,469 | 34 | – | – | 34 |
| Other | 974 | 134 | 27 | 1,135 | 1,370 | 77 | 79 | 1,526 |
| **Total** | 12,953 | 10,539 | 987 | 24,479 | 4,008 | 4,936 | 1,021 | 9,965 |

---

120 Barclays PLC Annual Report 2000

Notes to the accounts

For the year ended 31st December 2000

## 46 Derivatives and other financial instruments (continued)

Maturity of notional principal amounts as at 31st December 2000

At 31st December 2000 the notional principal amounts, by residual maturity, of the Group's trading and non-trading derivatives were as follows:

| One year or less £m | Over one year but not more than five years £m | Over five years £m | Total £m |
| --- | --- | --- | --- |
| **Foreign exchange derivatives** | | | |
| Forward foreign exchange | 231,374 | 8,569 | 492 | 240,435 |
| Currency swaps | 32,233 | 61,514 | 32,065 | 125,812 |
| OTC options bought and sold | 70,755 | 9,640 | 492 | 80,887 |
| **OTC derivatives** | 334,362 | 79,723 | 33,049 | 447,134 |
| Exchange traded futures – bought and sold | 15,010 | – | – | 15,010 |
| Exchange traded options – bought and sold | 9,706 | – | – | 9,706 |
| **Total** | 359,078 | 79,723 | 33,049 | 471,850 |
| **Interest rate derivatives** | | | |
| Swaps | 276,652 | 550,647 | 420,406 | 1,247,705 |
| Forward rate agreements | 32,884 | 7,055 | – | 39,939 |
| OTC options bought and sold | 108,792 | 188,503 | 80,270 | 377,565 |
| Other interest rate contracts | – | 7 | – | 7 |
| **OTC derivatives** | 418,328 | 746,212 | 500,676 | 1,665,216 |
| Exchange traded futures – bought and sold | 357,147 | 105,024 | – | 462,171 |
| Exchange traded options – bought and sold | 73,379 | – | – | 73,379 |
| **Total** | 848,854 | 851,236 | 500,676 | 2,200,766 |
| **Equity and stock index derivatives** | | | |
| OTC options bought and sold | 8,934 | 12,605 | 260 | 21,799 |
| Equity swaps and forwards | 1,757 | – | – | 1,757 |
| **OTC derivatives** | 10,691 | 12,605 | 260 | 23,556 |
| Exchange traded futures – bought and sold | 353,062 | 61,243 | – | 414,305 |
| Exchange traded options – bought and sold | 36,021 | 5,535 | – | 41,556 |
| **Total** | 399,774 | 79,383 | 260 | 479,417 |
| **Commodity derivatives** | | | |
| OTC options bought and sold | 1,612 | 252 | 10 | 1,874 |
| Commodity swaps and forwards | 4,928 | 1,061 | 6 | 5,995 |
| **OTC derivatives** | 6,540 | 1,313 | 16 | 7,869 |
| Exchange traded futures – bought and sold | 11,425 | 1,973 | – | 13,398 |
| Exchange traded options – bought and sold | 452 | – | – | 452 |
| **Total** | 18,417 | 3,286 | 16 | 21,719 |

---

Barclays PLC Annual Report 2000 121

Notes to the accounts

For the year ended 31st December 2000

## 46 Derivatives and other financial instruments (continued)

Maturity of notional principal amounts as at 31st December 1999

| One year or less £m | Over one year but not more than five years £m | Over five years £m | Total £m |
| --- | --- | --- | --- |
| **Foreign exchange derivatives** | | | |
| Forward foreign exchange | 222,068 | 3,450 | – | 225,518 |
| Currency swaps | 22,113 | 46,231 | 20,109 | 88,453 |
| OTC options bought and sold | 54,226 | 1,340 | 134 | 55,700 |
| **OTC derivatives** | 298,407 | 51,021 | 20,243 | 369,671 |
| Exchange traded futures – bought and sold | 9,883 | – | – | 9,883 |
| Exchange traded options – bought and sold | 220 | – | – | 220 |
| **Total** | 308,510 | 51,021 | 20,243 | 379,774 |
| **Interest rate derivatives** | | | |
| Swaps | 237,848 | 437,404 | 300,468 | 975,720 |
| Forward rate agreements | 45,319 | 4,258 | – | 49,577 |
| OTC options bought and sold | 69,359 | 147,262 | 49,464 | 266,085 |
| Other interest rate contracts | 14 | – | – | 14 |
| **OTC derivatives** | 352,540 | 588,924 | 349,932 | 1,291,396 |
| Exchange traded futures – bought and sold | 210,360 | 25,985 | – | 236,345 |
| Exchange traded options – bought and sold | 36,863 | – | – | 36,863 |
| **Total** | 599,763 | 614,909 | 349,932 | 1,564,604 |
| **Equity and stock index derivatives** | | | |
| OTC options bought and sold | 9,599 | 14,779 | 113 | 24,491 |
| Equity swaps and forwards | 3,084 | 39 | 674 | 3,797 |
| **OTC derivatives** | 12,683 | 14,818 | 787 | 28,288 |
| Exchange traded futures – bought and sold | 34,782 | 138 | – | 34,920 |
| Exchange traded options – bought and sold | 70,561 | 388 | 800 | 71,749 |
| **Total** | 118,026 | 15,344 | 1,587 | 134,957 |
| **Commodity derivatives** | | | |
| OTC options bought and sold | 392 | 210 | 51 | 653 |
| Commodity swaps and forwards | 4,335 | 735 | 5 | 5,075 |
| **OTC derivatives** | 4,727 | 945 | 56 | 5,728 |
| Exchange traded futures – bought and sold | 10,038 | 596 | – | 10,634 |
| Exchange traded options – bought and sold | 742 | 11 | – | 753 |
| **Total** | 15,507 | 1,552 | 56 | 17,115 |

---

122 Barclays PLC Annual Report 2000

Notes to the accounts

For the year ended 31st December 2000

## 46 Derivatives and other financial instruments (continued)

Maturity and counterparty analyses of net replacement cost

The fair value of a derivative contract represents the amount at which that contract could be exchanged in an arm's length transaction, calculated at market rates current at the balance sheet date. The totals of positive and negative fair values arising on trading derivatives at the balance sheet date have been netted where the Group has a legal right of offset with the relevant counterparty. The total positive fair value after permitted netting equates to net replacement cost.

The residual maturity and counterparty analyses of the net replacement cost of OTC and non-margined exchange traded derivatives held for trading and non-trading purposes at 31st December 2000 and 31st December 1999 are as follows:

| 2000 | 1999 |
| --- | --- |

| Not more than one year £m | Over one year but not more than five years £m | Over five years £m | Total £m | Not more than one year £m | Over one year but not more than five years £m | Over five years £m | Total £m |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Foreign exchange derivatives | 3,806 | 1,384 | 576 | 5,766 | 3,196 | 901 | 480 | 4,577 |
| Interest rate derivatives | 267 | 2,298 | 3,071 | 5,636 | 602 | 2,180 | 3,228 | 6,010 |
| Equity and stock index derivatives | 339 | 311 | 3 | 653 | 870 | 1,331 | 21 | 2,222 |
| Commodity derivatives | 375 | 42 | 3 | 420 | 576 | 46 | 2 | 624 |
| | 4,787 | 4,035 | 3,653 | 12,475 | 5,244 | 4,458 | 3,731 | 13,433 |

Net replacement cost analysed by counterparty as follows:

| Central banks | 758 | 734 |
| --- | --- | --- |
| Banks, building societies and other financial institutions | 7,969 | 9,340 |
| Other corporate and public bodies | 3,748 | 3,359 |
| | 12,475 | 13,433 |

## 47 Fair values of financial instruments

Financial instruments include both financial assets and financial liabilities and also derivatives. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Wherever possible, the Group has estimated fair value using market prices or data available for instruments with characteristics either identical or similar to those of the instruments held by the Group. In certain cases, however, including loans and advances to customers, no ready markets currently exist in the UK wherein exchanges between willing parties occur. Accordingly, various techniques have been developed to estimate what the approximate fair value of such instruments might be.

These estimation techniques are necessarily subjective in nature and involve several assumptions. There have been no significant changes in the estimation techniques or the methodology used compared with that used at 31st December 1999 with the exception of the methods employed to calculate the fair value of loans and advances to customers, as described in note (d) to the following table.

Because a variety of estimation techniques are employed and significant estimates made, comparisons of fair values between financial institutions may not be meaningful. Readers of these accounts are thus advised to use caution when using this data to evaluate the Group's financial position.

Fair value information is not provided for items that do not meet the definitions of a financial instrument. These items include short terms debtors and creditors, intangible assets such as the value of the Group's branch network, the long-term relationships with depositors (core deposit intangibles), premises and equipment and shareholders' equity. These items are material and accordingly the fair value information presented does not purport to represent, nor should it be construed to represent, the underlying value of the Group as a going concern at 31st December 2000.

The following table shows the carrying amount and the fair value of the Group's financial instruments analysed between trading and non-trading assets and liabilities.

---

Barclays PLC Annual Report 2000 123

Notes to the accounts

For the year ended 31st December 2000

## 47 Fair values of financial instruments (continued)

| Note | 2000 Carrying amount £m | 2000 Fair value £m | 1999 Carrying amount £m | 1999 Fair value £m |
| --- | --- | --- | --- | --- |
| **Trading** | | | | |
| **Assets** | | | | |
| Treasury bills and other eligible bills | (a) | 2,623 | 2,623 | 2,665 | 2,665 |
| Loans and advances to banks (including reverse repurchase agreements) | (a) | 26,856 | 26,856 | 26,555 | 26,555 |
| Loans and advances to customers (including reverse repurchase agreements) | (a) | 23,687 | 23,687 | 21,562 | 21,562 |
| Debt securities | (a) | 32,402 | 32,402 | 23,755 | 23,755 |
| Equity shares | (a) | 3,818 | 3,818 | 5,425 | 5,425 |
| Derivatives (see analysis in note 46) | (b) | 12,100 | 12,100 | 13,390 | 13,390 |
| London Metal Exchange warrants and other metals trading positions (see note 25) | (a) | 1,001 | 1,001 | 331 | 331 |
| **Liabilities** | | | | |
| Deposits by Banks and customers accounts (including repurchase agreements) | (a) | 35,927 | 35,927 | 36,510 | 36,510 |
| Short positions in securities (see note 31) | (a) | 21,201 | 21,201 | 16,813 | 16,813 |
| Derivatives (see analysis in note 46) | (b) | 11,971 | 11,971 | 13,619 | 13,619 |
| **Non trading** | | | | |
| **Assets** | | | | |
| Cash and balances at central banks | (a) | 1,243 | 1,243 | 1,166 | 1,166 |
| Items in course of collection from other banks | (a) | 2,509 | 2,509 | 2,492 | 2,492 |
| Treasury bills and other eligible bills | (a) | 2,941 | 2,941 | 4,511 | 4,511 |
| Loans and advances to banks | (c) | 9,570 | 9,600 | 13,071 | 13,100 |
| Loans and advances to customers | (d) | 138,423 | 139,000 | 95,006 | 95,800 |
| Debt securities | (e) | 38,368 | 38,719 | 30,164 | 30,196 |
| Equity shares | (e) | 244 | 295 | 179 | 206 |
| Derivatives (see analysis in note 46) | (b) | 1,805 | 3,140 | 1,008 | 1,228 |
| **Liabilities** | | | | |
| Deposits by Banks and customers accounts | (f) | 172,797 | 172,700 | 131,942 | 131,900 |
| Debt securities in issue | (g) | 31,883 | 31,971 | 23,329 | 23,334 |
| Items in course of collection due to other banks | (a) | 1,176 | 1,176 | 1,400 | 1,400 |
| Undated loan capital | (h) | 2,672 | 2,661 | 1,749 | 1,669 |
| Dated loan capital | (h) | 3,698 | 3,701 | 2,848 | 2,869 |
| Non-equity minority and other interests and shareholders' funds | (i) | 1,492 | 1,554 | 270 | 277 |
| Derivatives (see analysis in note 46) | (b) | 937 | 2,226 | 658 | 1,212 |

Notes:

(a) Financial assets and financial liabilities where fair value approximates carrying value because they are either (i) carried at market value or (ii) have minimal credit losses and are either short-term in nature or repriced frequently.

(b) Derivatives held for trading purposes are carried at fair value. Derivatives held for non-trading purposes are accounted for in accordance with the accounting treatment of the underlying transaction or transactions being hedged. The fair value of these instruments is estimated using market prices or pricing models consistent with the methods used for valuing similar instruments used for trading purposes.

(c) Within this calculation, the fair value for placings to banks was estimated using discounted cash flows, applying either market rates, where practicable, or rates currently offered by other financial institutions for placings with similar characteristics.

(d) The Group provides lending facilities of varying rates and maturities to corporate and personal customers. In estimating the fair value of such instruments, the fair value of personal and corporate loans subject to variable interest rates is considered to approximate the carrying value, in view of the unrestricted ability to prepay. The fair value of such instruments subject to fixed interest rates was estimated by discounting cash flows at appropriate rates and making adjustments for credit risks, servicing costs and cost of capital.

---

Notes to the accounts

For the year ended 31st December 2000

## 47 Fair values of financial instruments (continued)

(e) The valuation of listed securities and investments is at mid-market prices and that of unlisted securities and investments is based on the Directors' estimate, which takes into consideration discounted cash flows, price earnings ratios and other suitable valuation techniques.

(f) Fair values of deposit liabilities payable on demand (interest free, interest bearing and savings deposits) approximate to their carrying value. The fair value of all other deposits and other borrowings was estimated using discounted cash flows, applying either market rates, where practicable, or rates currently offered by the Group for deposits of similar remaining maturities.

(g) Fair values of short-term debt securities in issue are approximately equal to their carrying amount. Fair values of other debt securities in issue are based on quoted prices where available, or where these are unavailable, are estimated using other valuation techniques.

(h) The estimated fair values for dated and undated convertible and non-convertible loan capital were based upon quoted market rates for the issue concerned or equivalent issues with similar terms and conditions.

(i) The fair value of non-equity minority and other interests and shareholders' funds was calculated using quoted market prices.

## 48 Legal proceedings

Barclays is party to various legal proceedings, the ultimate resolution of which is not expected to have a material adverse effect on the financial position of the Group.

## 49 Post balance sheet events

On 16th January 2001 Barclays PLC and Legal & General Group Plc (Legal & General) announced their intention to form a strategic alliance under which Barclays Bank PLC would, subject to regulatory approval, sell Legal & General branded life, pension and investment products through its UK distribution network.

As a result it is intended that:

- From 6th April 2001 and subject to the implementation of the FSA's proposals to relax the current polarisation regime, Legal & General will make available to Barclays for distribution to its customers, a stakeholder pension product, along with certain non-regulated group life and related products for business customers.
- Within the next 18 months, the administration and unit trust management of the existing Barclays Funds unit trusts (including the b2 funds but excluding the Barclays Global Investors branded funds) will be transferred to Legal & General, subject to regulatory and trustee approval.
- In the second half of 2001 and subject to FSA approval, Barclays intends to offer its customers the full range of Legal & General's life, pension and fund products.
- Barclays Life, Barclays Funds and b2 will cease to seek new customers in the second half of 2001.
- Barclays Life's existing business will be retained and managed as a closed book. Existing customers of Barclays Life will still be able to make contributions to their Barclays Life pension policy, which will continue to be managed on their behalf.

From 1st January 2001, following the completion of management changes, the Group considers itself to exert dominant influence so that it has control over the operations of Banco Barclays e Galicia SA and consequently from that date the entity will be consolidated as a subsidiary in accordance with Financial Reporting Standard 2.

124 Barclays PLC Annual Report 2000

---

Notes to the accounts

For the year ended 31st December 2000

## 50 Reconciliation of operating profit to net cash flow from operating activities

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Operating profit | 3,290 | 2,607 | 1,863 |
| Provisions for bad and doubtful debts | 817 | 621 | 492 |
| Depreciation and amortisation | 302 | 276 | 270 |
| Net increase/(decrease) in accrued expenditure and prepayments | 188 | (149) | (719) |
| Provisions for contingent liabilities and commitments | (1) | 1 | 76 |
| Other provisions for liabilities and charges | 313 | 445 | 79 |
| Interest on dated and undated loan capital | 335 | 263 | 244 |
| Increase in shareholders' interest in the long-term assurance fund | (165) | (32) | (95) |
| Profit on redemption/repurchase of loan capital | (2) | (3) | (3) |
| Net decrease/(increase) in net interest and commission receivable | 369 | 691 | (23) |
| Net profit on disposal of investments and fixed assets | (60) | (51) | (106) |
| Other non-cash movements | 35 | 7 | 53 |
| | 5,421 | 4,676 | 2,131 |
| Net change in items in course of collection | (241) | 96 | (311) |
| Net increase/(decrease) in other credit balances | 1,857 | 516 | (4,253) |
| Net (increase)/decrease in loans and advances to banks and customers | (7,942) | (23,862) | 8,652 |
| Net increase/(decrease) in deposits and debt securities in issue | 13,611 | 32,100 | (14,958) |
| Net decrease/(increase) in other assets | 1,235 | (307) | 3,215 |
| Net (increase)/decrease in debt securities and equity shares | (7,079) | (1,922) | 3,642 |
| Net decrease/(increase) in treasury and other eligible bills | 1,676 | (2,462) | 777 |
| Other non-cash movements | (52) | 88 | (232) |
| Net cash inflow/(outflow) from operating activities | 8,486 | 8,923 | (1,337) |

## 51 Sale of Group undertakings during the year

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Goodwill written off | – | 154 | 12 |
| Advances and other accounts | 949 | 1,549 | 1,561 |
| Deposits and other borrowings | (849) | (1,400) | (829) |
| Net assets disposed of | 100 | 303 | 744 |
| Net profit/(loss) on disposal | 207 | (138) | (51) |
| | 307 | 165 | 693 |
| Amounts not yet settled (including deferred consideration) | – | 9 | (3) |
| Settled by net cash received | 307 | 174 | 690 |

Barclays PLC Annual Report 2000 125

---

Notes to the accounts

For the year ended 31st December 2000

## 52 Changes in financing during the year

The following table does not include a further £291m paid in respect of the repurchase of 20m ordinary shares.

| | Undated loan capital £m | Dated loan capital £m | Ordinary shares £m | Barclays Bank PLC preference shares £m | Share premium £m | Barclays Bank PLC reserve capital instruments £m |
| --- | --- | --- | --- | --- | --- | --- |
| **Barclays PLC** | | | | | | |
| At beginning of year | 1,749 | 2,848 | 1,495 | 270 | 1,583 | – |
| Exchange rate and other movements | 73 | 96 | – | 21 | – | – |
| Profit on redemption/repurchase of loan capital | (2) | – | – | – | – | – |
| Acquisition of The Woolwich | 187 | 770 | 177 | – | 3,182 | – |
| Net cash (outflow)/inflow from financing | 665 | (16) | (10) | (149) | 185 | 1,350 |
| At end of year | 2,672 | 3,698 | 1,662 | 142 | 4,950 | 1,350 |

## 53 Analysis of cash balances

| | 31.12.00 £m | Change £m | 31.12.99 £m | Change £m | 31.12.98 £m | Change £m | 31.12.97 £m |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Cash and balances at central bank | 1,243 | 77 | 1,166 | 224 | 942 | 192 | 750 |
| Loans and advances to other banks repayable on demand | 2,094 | 1,127 | 967 | (207) | 1,174 | 266 | 908 |
| | 3,337 | 1,204 | 2,133 | 17 | 2,116 | 458 | 1,658 |

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Balance at beginning of year | 2,133 | 2,116 | 1,658 |
| Net increase in cash before the effect of exchange rate movements | 1,225 | 78 | 457 |
| Effect of exchange rate movements | (21) | (61) | 1 |
| | 1,204 | 17 | 458 |
| Balance at end of year | 3,337 | 2,133 | 2,116 |

## 54 Analysis of the net outflow/(inflow) of cash in respect of the acquisition of subsidiary undertakings

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Cash consideration, including acquisition expenses | 2,494 | 66 | 74 |
| Cash at bank and in hand acquired | (73) | (126) | (4) |
| Net outflow/(inflow) of cash in respect of the purchase of subsidiary undertakings | 2,421 | (60) | 70 |

126 Barclays PLC Annual Report 2000

---

Notes to the accounts

For the year ended 31st December 2000

## 55 Acquisitions

The Group made the following significant acquisitions of subsidiary undertakings in 2000 which are accounted for on an acquisition basis:

| | % Acquired | Date |
| --- | --- | --- |
| Woolwich plc | 100 | 25th October 2000 |

The assets and liabilities of Woolwich plc at the date of acquisition and the total consideration paid are set out in the following table:

| Woolwich plc | Book Value £m | Revaluations £m | Accounting policy alignments £m | Other adjustments £m | Fair value £m |
| --- | --- | --- | --- | --- | --- |
| **Assets** | | | | | |
| Cash and balances at central banks | 73 | – | – | – | 73 |
| Loans and advances to banks | 916 | – | – | – | 916 |
| Loans and advances to customers | 31,952 | 136 | – | – | 32,088 |
| Debt securities | 2,010 | 140 | – | – | 2,150 |
| Investment in joint ventures: | | | | | |
| – share of gross assets | 12 | – | – | – | 12 |
| – share of gross liabilities | (6) | – | – | – | (6) |
| Interests in associates | 11 | – | – | – | 11 |
| Intangible fixed assets | 33 | – | – | (33) | – |
| Tangible fixed assets | 320 | (10) | (46) | – | 264 |
| Other assets | 258 | (2) | – | – | 256 |
| Prepayments and accrued income | 344 | 76 | (78) | – | 342 |
| | 35,923 | 340 | (124) | (33) | 36,106 |
| Long term assurance policy holders' assets | 730 | – | – | – | 730 |
| | 36,653 | 340 | (124) | (33) | 36,836 |
| **Liabilities** | | | | | |
| Deposits by banks | 2,487 | – | – | – | 2,487 |
| Customer accounts | 21,279 | 12 | – | – | 21,291 |
| Debt securities in issue | 8,316 | (5) | – | – | 8,311 |
| Other liabilities | 257 | 33 | (12) | – | 278 |
| Accruals and deferred income | 854 | 56 | – | – | 910 |
| Provisions for liabilities and charges | 26 | 122 | (27) | – | 121 |
| Subordinated liabilities | 833 | 124 | – | – | 957 |
| Less minority interests – equity | 19 | – | – | – | 19 |
| | 34,071 | 342 | (39) | – | 34,374 |
| Long term assurance policy holders' liabilities | 730 | – | – | – | 730 |
| | 34,801 | 342 | (39) | – | 35,104 |
| **Net assets** | 1,852 | (2) | (85) | (33) | 1,732 |
| **Satisfied by:** | | | | | |
| **Consideration** | | | | | |
| Cash | | | | | 2,462 |
| Shares (a) | | | | | 3,359 |
| Acquisition expenses | | | | | 32 |
| | | | | | 5,853 |
| **Goodwill arising (b)** | | | | | 4,121 |

(a) The value of the 176.4m new Barclays ordinary shares issued to The Woolwich ordinary shareholders, based on the closing price on the London Stock Exchange on 25th October 2000, the day the offer for The Woolwich became effective, was 1,904p per Barclays ordinary share.

(b) The goodwill arising on acquisition is being amortised over its estimated economic life of 20 years, resulting in a charge of £206m per annum.

Barclays PLC Annual Report 2000 127

---

Notes to the accounts

For the year ended 31st December 2000

## 55 Acquisitions (continued)

Included in the balance sheet above were £1m of provisions for reorganisation costs and restructuring costs in the period up to 25th October 2000.

The fair value adjustments in the above table principally represent the following:

- Revaluations resulting from adjusting financial instruments to a fair value based on quoted market prices or discounted cashflow methodologies, recording the liability for the deficit on The Woolwich pension scheme and any related current or deferred tax adjustments.
- Accounting policy alignments, resulting from applying Barclays PLC Group accounting policies on mortgage incentives and software costs and any related current or deferred tax adjustments. The Woolwich previously capitalised and amortised such costs, they are now expensed as incurred.
- Other adjustment relating to elimination of goodwill present in The Woolwich's consolidated accounts.

Pre acquisition activities

The table below sets out the summarised profit and loss account and statement of total recognised gains and losses of The Woolwich for the period 1st January to 24th October 2000 prepared using the accounting policies described in its 1999 Annual Report amended for the change in policy for accounting for introducer commissions described in the 2000 interim results.

| Summarised profit and loss account | 1st January to 24th October 2000 £m |
| --- | --- |
| Interest receivable and similar income arising from debt securities | 105 |
| Other interest receivable and similar income | 1,827 |
| Interest receivable | 1,932 |
| Interest payable | (1,371) |
| Net interest income | 561 |
| Fees and commissions receivable | 251 |
| Fees and commissions payable | (27) |
| Other operating income | 47 |
| Operating income | 832 |
| Administrative expenses – staff costs | (144) |
| Administrative expenses – other | (230) |
| Depreciation and amortisation | (41) |
| Operating profit before provisions | 417 |
| Provisions for bad and doubtful debts | (35) |
| Operating profit | 382 |
| Share of operating loss in joint ventures | (2) |
| Profit before taxation | 380 |
| Tax | (103) |
| Profit after tax | 277 |
| Minority interests | (3) |
| Profit attributable to the members of Woolwich plc | 274 |

Operating profit is after charging costs of £28m relating to the acquisition by Barclays.

| Statement of total recognised gains and losses | 1st January to 24th October 2000 £m |
| --- | --- |
| Profit for the period attributable to the members of Woolwich plc | 274 |
| Exchange rate translation differences | (8) |
| Total recognised gains and losses for the period | 266 |
| Prior year adjustment | 6 |
| Total gains recognised since 31st December 1999 | 272 |

Profit after tax and minority interests for The Woolwich as reported in the audited consolidated accounts for the year ended 31st December 1999 was £351m.

128 Barclays PLC Annual Report 2000

Notes to the accounts
For the year ended 31st December 2000

# 55 Acquisitions (continued)

## Post acquisitions results

The impact of the acquisition of The Woolwich on the operating profits of the Group was as follows:

| Summarised profit and loss account | 25th October to 31st December 2000 £m |
| :--- | ---: |
| Interest receivable and similar income arising from debt securities | 21 |
| Other interest receivable and similar income | 433 |
| Interest receivable | 454 |
| Interest payable | (335) |
| Net interest income | 119 |
| Fees and commissions receivable | 63 |
| Fees and commissions payable | (14) |
| Other operating income | 9 |
| Operating income | 177 |
| Administrative expenses – staff costs | (42) |
| Administrative expenses – other | (47) |
| Depreciation and amortisation | (10) |
| Operating profit before provisions | 78 |
| Provisions for bad and doubtful debts | (8) |
| Operating profit | 70 |
| Amortisation of fair value adjustments | (6) |
| Operating profit after fair value amortisation | 64 |

The amortisation of fair value adjustments comprise £7m operating income and £1m depreciation and amortisation (net £6m).

## Proforma results of the Barclays Group (including The Woolwich)

Assuming the acquisition occurred on 1st January 2000 (for 1999 on 1st January 1999), and on the basis of Barclays Group accounting policies and estimates, making adjustments to reflect 

(i) the removal of business disposals during the relevant reporting period, 

(ii) the net interest forgone if the cash element of the acquisition and the cash proceeds of disposals had been paid/received at the start of the relevant reporting period,

(iii) amortisation of the goodwill balance of £4,121m over its estimated economic life of 20 years,

(iv) the exclusion of incremental costs incurred by The Woolwich in relation to the acquisition,

the Barclays Group would have reported operating income of £10,248m (1999 £9,091m), operating profit and profit before tax of £3,313m (1999 £2,695m) and a basic earnings per share figure of 134.7p (1999 111.6p).

The earnings per share figure assumes the shares issued in relation to the acquisition were issued on 1st January 2000 (for 1999 on 1st January 1999).

Barclays PLC Annual Report 2000 129

---

# 56 Related party transactions

## a) Subsidiary undertakings

Details of the principal subsidiary undertakings are shown in note 44. In accordance with FRS 8, transactions or balances between Group entities that have been eliminated on consolidation are not reported.

## b) Associated undertakings and joint ventures

The Group provides certain banking and financial services for associated undertakings and joint ventures. These are conducted on similar terms to third party transactions and are not material to the Group’s results. Details of lendings to associated undertakings and joint ventures are set out in note 21.

Edotech Limited, an associated undertaking, has provided printing services to the Group from May 2000. The cost of these services provided in the year was £10.7m. There were no balances outstanding at the year end.

Intelligent Processing Systems Limited (IPSL) is a joint venture between the Group, Lloyds TSB Bank PLC and Unisys Limited. The Bank has outsourced its cheque processing services to IPSL. The cost of these core services to the Barclays Group in the UK provided in the year was £9.5m. There were no balances outstanding at the year end.

The Group has provided IndigoSquare Limited, a Barclaycard branded internet shopping portal joint venture launched on 11th October 2000, with administrative services. The cost of transactions and the outstanding balances at the year end included in sundry debtors are £4.9m. IndigoSquare has a licensing agreement with the Bank that permits the use of certain trademarks owned by Barclays with the prior approval of the Bank.

Gresham Insurance Company Limited (Gresham) became an associated undertaking following the acquisition of The Woolwich. The arrangement enables Gresham to underwrite major household insurances provided to customers of The Woolwich. Underwriting payments made to Gresham during the year were £49.3m and balances outstanding of £9.3m are included in sundry creditors.

Global Home Loans Limited (GHL) became a joint venture following the acquisition of The Woolwich. The Woolwich is engaged in transactions where the origination and processing activities of its mortgages are outsourced to GHL and its subsidiaries. The fees payable to GHL during the year were £40.4m after taking into account payments made by The Woolwich as agent of GHL for salaries and other expenses £4.5m was owed by GHL at the year end and is included in sundry debtors.

## c) Pension funds, unit trusts and investment funds

The Group provides a number of normal banking and financial services for the Barclays Bank pension funds (principally the UK Retirement Fund), and also for unit trusts and investment funds managed by Group companies which are conducted on similar terms to third party transactions and are not material to the Group.

## d) Directors

Details of Directors’ emoluments are set out in note 57 and in the Corporate governance section on pages 68 to 72. Details of transactions between Directors and the Group are set out in note 59.

In the ordinary course of business the Bank makes loans to companies where a Director or officer is also a Director of Barclays. These loans are made on substantially the same criteria and terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons. In addition, F.I GROUP PLC, of which Hilary Cropper CBE is Executive Chairman, provides software support and development resource capability to the Group. The total value of these transactions for the years ending 31 December 2000, 1999 and 1998 was £15.5m, £10.3m and £9.9m respectively.

130 Barclays PLC Annual Report 2000

---

# 57 Directors' emoluments and other benefits

The aggregate emoluments and other benefits of the Directors of Barclays PLC set out below are disclosed in accordance with Part I of Schedule 6 to the Companies Act 1985.

| | 2000 £000 | 1999 £000 |
| :--- | ---: | ---: |
| Aggregate emoluments | 5,406 | 7,372 |
| Gains made on the exercise of share options | – | 1,369 |
| Amounts paid under long-term incentive schemes | 447 | 1,006 |
| Compensation for loss of office | 1,630 | – |
| Notional pension contributions to money purchase schemes (2000 2 Directors and 1999 3 Directors) | 567 | 179 |

3 Directors are accruing retirement benefits under a defined benefit scheme (1999 2 directors). In addition, pensions in respect of management services of former Directors amount to £nil (1999 £45,017).

Of the figures in the table above, the amounts attributable to the highest paid Director (2000 Matthew Barrett, 1999 Sir Peter Middleton) are as follows:

| | 2000 £000 | 1999 £000 |
| :--- | ---: | ---: |
| Aggregate emoluments | 2,018 | 1,759 |
| Notional pension contribution to money purchase schemes | 425 | – |

Further information on Directors’ emoluments, shareholdings, options and awards is given in the Corporate governance section on pages 66 to 73.

# 58 Directors' and officers' shareholding and options

Details of Directors’ share interests and options are given in the Corporate governance section on pages 70 to 73.

The beneficial ownership of the ordinary share capital of Barclays PLC by all Directors and officers of Barclays PLC (involving 22 persons) and Barclays Bank PLC (involving 23 persons) at 31st December 2000 amounted to 304,204 ordinary shares of £1 each (0.01% of ordinary share capital outstanding).

Executive Directors and officers of Barclays PLC as a group (involving 13 persons) held, at 31st December 2000, options to purchase 1,515,777 Barclays PLC ordinary shares of £1 each at prices ranging from 628p to 1,426p under the SAYE Share Option Scheme, and ranging from 704p to 1,782p and 1,563p under the Executive Share Option Scheme and Incentive Share Option Plan, respectively, and ranging from 1,317p to 1,690p under The Woolwich ESOP, exercisable in the period from 2001 to 2010.

# 59 Contracts with Directors and connected persons and with senior executives

The aggregate amounts outstanding at 31st December 2000 under transactions, arrangements and agreements made by authorised institutions within the Group for persons who are, or were during the year, Directors of Barclays PLC and persons connected with them and for senior executives, within the meaning of the Banking Act 1987, of Barclays Bank PLC were:

| | Number of Directors or Senior executives | Number of connected persons | Amount £000 |
| :--- | :--- | :--- | :--- |
| **Directors** | | | |
| Loans | 4 | 1 | 40 |
| Quasi-loans and credit card accounts | 11 | 5 | 360 |
| **Senior executives** | | | |
| Loans | 29 | – | 4,048 |
| Quasi-loans and credit card accounts | 35 | – | 153 |

There are no transactions, arrangements or agreements with Barclays PLC or its subsidiary undertakings in which Directors, or persons connected with them, or senior executives of Barclays Bank PLC had a material interest and which are disclosable under the relevant provisions of the Companies Act 1985, other than options to subscribe for Barclays PLC ordinary shares as described in note 58.

Barclays PLC Annual Report 2000 131

---

# 60 Segmental analysis

| By geographical segments (a, b) | 2000 £m | 2000 % | 1999 £m | 1999 % | 1998 £m | 1998 % |
| :--- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Interest receivable** | | | | | | |
| UK | 8,567 | 73 | 6,808 | 73 | 7,150 | 72 |
| Foreign UK-based | 689 | 6 | 474 | 5 | 645 | 7 |
| Other European Union | 770 | 7 | 732 | 8 | 832 | 8 |
| United States | 1,001 | 8 | 702 | 8 | 653 | 7 |
| Rest of the World | 761 | 6 | 604 | 6 | 632 | 6 |
| | 11,788 | 100 | 9,320 | 100 | 9,912 | 100 |
| **Fees and commissions receivable** | | | | | | |
| UK | 2,540 | 69 | 2,298 | 72 | 2,168 | 72 |
| Foreign UK-based | 54 | 1 | 87 | 2 | 104 | 3 |
| Other European Union | 262 | 7 | 226 | 7 | 227 | 8 |
| United States | 461 | 13 | 347 | 11 | 281 | 9 |
| Rest of the World | 372 | 10 | 249 | 8 | 228 | 8 |
| | 3,689 | 100 | 3,207 | 100 | 3,008 | 100 |
| **Dealing profits** | | | | | | |
| UK | 534 | 79 | 381 | 68 | 11 | (26) |
| Foreign UK-based | 65 | 10 | 70 | 13 | (70) | 166 |
| Other European Union | 1 | – | (6) | (1) | (5) | 12 |
| United States | 28 | 4 | 81 | 15 | – | – |
| Rest of the World | 49 | 7 | 30 | 5 | 22 | (52) |
| | 677 | 100 | 556 | 100 | (42) | 100 |
| **Other operating income** | | | | | | |
| UK | 211 | 54 | 83 | 32 | 176 | 59 |
| Foreign UK-based | 16 | 4 | 1 | – | 16 | 5 |
| Other European Union | 152 | 38 | 156 | 61 | 73 | 25 |
| United States | 9 | 2 | 2 | 1 | 27 | 9 |
| Rest of the World | 9 | 2 | 16 | 6 | 6 | 2 |
| | 397 | 100 | 258 | 100 | 298 | 100 |
| **Gross income (f)** | | | | | | |
| UK | 11,852 | 72 | 9,570 | 72 | 9,505 | 72 |
| Foreign UK-based | 824 | 5 | 632 | 5 | 695 | 5 |
| Other European Union | 1,185 | 7 | 1,108 | 8 | 1,127 | 9 |
| United States | 1,499 | 9 | 1,136 | 8 | 961 | 7 |
| Rest of the World | 1,191 | 7 | 895 | 7 | 888 | 7 |
| | 16,551 | 100 | 13,341 | 100 | 13,176 | 100 |
| **Profit/(loss) on ordinary activities before tax** | | | | | | |
| UK | 2,720 | 78 | 1,625 | 66 | 1,543 | 82 |
| Foreign UK-based | 47 | 1 | 247 | 10 | (64) | (3) |
| Other European Union | 395 | 11 | 313 | 13 | 232 | 13 |
| United States | 105 | 3 | 131 | 5 | 67 | 3 |
| Rest of the World | 229 | 7 | 139 | 6 | 104 | 5 |
| | 3,496 | 100 | 2,455 | 100 | 1,882 | 100 |
| **Attributable profit/(loss)** | | | | | | |
| UK | 2,136 | 86 | 1,207 | 69 | 1,107 | 84 |
| Foreign UK-based | (93) | (4) | 156 | 9 | (71) | (5) |
| Other European Union | 271 | 11 | 262 | 15 | 213 | 16 |
| United States | 25 | 1 | 71 | 4 | 21 | 2 |
| Rest of the World | 134 | 6 | 63 | 3 | 47 | 3 |
| | 2,473 | 100 | 1,759 | 100 | 1,317 | 100 |

132 Barclays PLC Annual Report 2000

---

# 60 Segmental analysis (continued)

| | 2000 £m | 2000 % | 1999 £m | 1999 % | 1998 £m | 1998 % |
| :--- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Total assets** | | | | | | |
| UK | 212,115 | 67 | 154,977 | 61 | 140,428 | 64 |
| Foreign UK-based | 21,984 | 7 | 16,795 | 7 | 14,018 | 6 |
| Other European Union | 20,009 | 6 | 17,017 | 7 | 18,490 | 9 |
| United States | 38,662 | 12 | 39,536 | 15 | 24,886 | 11 |
| Rest of the World | 23,420 | 8 | 26,468 | 10 | 21,672 | 10 |
| | 316,190 | 100 | 254,793 | 100 | 219,494 | 100 |
| **Net assets** | | | | | | |
| UK | 11,954 | 81 | 6,720 | 76 | 6,128 | 75 |
| Foreign UK-based | 415 | 3 | 390 | 5 | 440 | 5 |
| Other European Union | 540 | 4 | 458 | 5 | 468 | 6 |
| United States | 1,236 | 8 | 902 | 10 | 758 | 9 |
| Rest of the World | 642 | 4 | 365 | 4 | 362 | 5 |
| | 14,787 | 100 | 8,835 | 100 | 8,156 | 100 |
| **By class of business (a), (b), (g)** | | | | | | |
| **Net interest income** | | | | | | |
| Retail Financial Services | 2,761 | 54 | 2,471 | 53 | 2,390 | 55 |
| Barclaycard | 548 | 11 | 488 | 11 | 435 | 10 |
| Corporate Banking (e) | 1,324 | 26 | 1,252 | 27 | 1,174 | 27 |
| Barclays Capital | 483 | 9 | 400 | 9 | 417 | 10 |
| Barclays Global Investors | 10 | – | 6 | – | 9 | – |
| Businesses in transition | – | – | – | – | (1) | – |
| Other (c) | 29 | – | 10 | – | (113) | (2) |
| | 5,155 | 100 | 4,627 | 100 | 4,311 | 100 |
| **Non interest income** | | | | | | |
| Retail Financial Services (e) | 1,759 | 40 | 1,487 | 40 | 1,437 | 48 |
| Barclaycard | 521 | 12 | 480 | 13 | 456 | 15 |
| Corporate Banking | 746 | 17 | 691 | 18 | 616 | 20 |
| Barclays Capital | 979 | 22 | 752 | 20 | 162 | 5 |
| Barclays Global Investors | 434 | 9 | 319 | 8 | 278 | 9 |
| Businesses in transition | – | – | – | – | 31 | 1 |
| Other (c) | 6 | – | 143 | 4 | 162 | 5 |
| Inter business class income included above | (2) | – | (126) | (3) | (107) | (3) |
| | 4,443 | 100 | 3,746 | 100 | 3,035 | 100 |
| **Total income (f)** | | | | | | |
| Retail Financial Services (e) | 4,520 | 47 | 3,958 | 47 | 3,827 | 52 |
| Barclaycard | 1,069 | 11 | 968 | 12 | 891 | 12 |
| Corporate Banking (e) | 2,070 | 22 | 1,943 | 23 | 1,790 | 24 |
| Barclays Capital | 1,462 | 15 | 1,152 | 14 | 579 | 8 |
| Barclays Global Investors | 444 | 5 | 325 | 4 | 287 | 4 |
| Businesses in transition | – | – | – | – | 30 | – |
| Other (c) | 35 | – | 153 | 2 | 49 | 1 |
| Inter business class income included above | (2) | – | (126) | (2) | (107) | (1) |
| | 9,598 | 100 | 8,373 | 100 | 7,346 | 100 |

Barclays PLC Annual Report 2000 133

---

# 60 Segmental analysis (continued)

| | 2000 £m | 2000 % | 1999 £m | 1999 % | 1998 £m | 1998 % |
| :--- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Profit/(loss) on ordinary activities before tax** | | | | | | |
| Retail Financial Services (e) | 1,710 | 49 | 1,312 | 53 | 1,142 | 61 |
| Barclaycard | 418 | 11 | 401 | 16 | 334 | 18 |
| Corporate Banking (e) | 1,070 | 31 | 947 | 39 | 951 | 50 |
| Barclays Capital | 403 | 12 | 311 | 13 | (281) | (15) |
| Barclays Global Investors | 65 | 2 | 43 | 2 | 51 | 3 |
| Businesses in transition | – | – | – | – | 15 | 1 |
| Other (c) | (94) | (3) | (64) | (3) | (239) | (13) |
| Unallocated items (d) | (76) | (2) | (495) | (20) | (91) | (5) |
| | 3,496 | 100 | 2,455 | 100 | 1,882 | 100 |
| **Total assets** | | | | | | |
| Retail Financial Services | 80,128 | 25 | 41,383 | 16 | 39,955 | 18 |
| Barclaycard | 8,705 | 3 | 7,343 | 3 | 6,195 | 3 |
| Corporate Banking | 52,869 | 17 | 47,422 | 19 | 45,341 | 21 |
| Barclays Capital | 156,869 | 50 | 144,807 | 57 | 114,706 | 52 |
| Barclays Global Investors | 259 | – | 232 | – | 183 | – |
| Businesses in transition | – | – | – | – | 554 | – |
| Other (c) | 4,380 | 1 | 5,383 | 2 | 5,279 | 3 |
| Goodwill | 4,269 | 1 | 183 | – | 196 | – |
| Retail life-fund attributable to policy holders | 8,711 | 3 | 8,040 | 3 | 7,085 | 3 |
| | 316,190 | 100 | 254,793 | 100 | 219,494 | 100 |
| **Net assets** | | | | | | |
| Retail Financial Services | 6,756 | 45 | 2,244 | 25 | 2,159 | 26 |
| Barclaycard | 475 | 3 | 372 | 4 | 327 | 5 |
| Corporate Banking | 3,193 | 22 | 2,614 | 30 | 2,379 | 29 |
| Barclays Capital | 2,884 | 20 | 2,485 | 28 | 2,315 | 29 |
| Barclays Global Investors | 334 | 2 | 344 | 4 | 254 | 3 |
| Businesses in transition | – | – | – | – | 35 | – |
| Other (c) | 1,145 | 8 | 776 | 9 | 687 | 8 |
| | 14,787 | 100 | 8,835 | 100 | 8,156 | 100 |

## Notes

(a) The analyses above are for Barclays PLC. Figures for attributable profit differ for Barclays Bank PLC and are shown on page 164.

(b) Basis of geographical and class of business analysis - see Analyses by geographical segments and classes of business on page 79.

(c) The term 'Other' covers (i) Other operations and (ii) Head office functions.

(d) 'Unallocated items' in 2000 consist of (i) Goodwill amortisation £51m (1999 £13m, 1998 £12m), (ii) Profit/(loss) on disposal of Group undertakings £214m (1999 (£108m), 1998 £4m), (iii) Restructuring charge £232m (1999 £344m, 1998 £nil), (iv) Integration costs £7m (1999 and 1998 £nil), (v) settlement of Atlantic litigation £nil (1999 £nil, 1998 £76m), (vi) Loss on sale or restructuring of BZW £nil (1999 £30m, 1998 £3m) and (vii) write-down of fixed asset investments £nil (1999 £nil, 1998 £4m).

(e) Figures for Retail Financial Services and Corporate Banking include respectively the life-fund charge and write-down of leases arising from the relevant 1997 and 1998 Finance Acts.

(f) Gross income for geographical disclosure includes interest receivable, fees and commissions receivable, dealing profits and other operating income. Total income for class of business disclosure analyses operating income from the profit and loss account.

(g) From 1st January 2000, Barclaycard became a separate business unit to reflect the fact that the business was managed as a separate element from that date. Its results and assets were previously reported within Retail Financial Services.

134 Barclays PLC Annual Report 2000

---

# 61 Differences between UK GAAP and US GAAP accounting principles

The accounts presented in this report have been prepared in accordance with accounting principles generally accepted in the UK (UK GAAP). Such principles vary in significant respects from those generally accepted in the United States (US GAAP). Preparing the financial statements requires the use of management's estimates. The significant differences applicable to the Group's accounts are summarised below.

| UK GAAP | US GAAP |
| :--- | :--- |
| **Goodwill**<br>Goodwill arising on acquisitions of subsidiary and associated undertakings and joint ventures is capitalised and amortised through income over its expected life (with a maximum of 20 years). Capitalised goodwill is written off when judged to be irrecoverable. There is therefore no UK/US GAAP difference for goodwill arising since the introduction of FRS 10 during 1998 except to the extent the value of goodwill calculated under the two regimes differs. However, in the event of a subsequent disposal, any goodwill previously charged directly against reserves under Statement of Standard Accounting Practice (SSAP 22) will be written back and reflected in the profit or loss on disposal. | Goodwill is capitalised and amortised through income over the period estimated to benefit. In Barclays case, a period of 20 years has been used. Goodwill is periodically evaluated for impairment and written off when judged to be irrecoverable. |
| | US GAAP can require the recognition of certain assets and liabilities that would either not be recognised or have a different measurement value under UK GAAP. |
| **Core deposit intangibles**<br>Under UK GAAP the value of depositor relationships is not considered to be a separately identifiable asset. | In relation to the acquisition of a deposit taking institution, a separate intangible asset covering depositor relationships is recognised. To the extent that such an asset is recognised there is a commensurate reduction in the amount of recorded goodwill. The value ascribed is amortised to net income over the average life of the depositor relationships in question. |
| **Pension cost**<br>In respect of defined benefit schemes, pension fund assets are assessed actuarially at the present value of the expected future investment income, which is consistent with SSAP 24. Most liabilities are discounted at a long-term interest cost and variations from regular cost are spread over the average remaining service lives of current employees. | In respect of defined benefit schemes, the same basic actuarial method is used under Statement of Financial Accounting Standards (SFAS) No. 87 as under UK GAAP, but certain assumptions differ, assets are assessed at fair value and liabilities are assessed at current settlement rates. Certain variations from regular cost are allocated in equal amounts over the average remaining services lives of current employees. |
| For defined contribution schemes the net pension cost for a period is the contribution called for in that period in accordance with SSAP 24. | For defined contribution schemes SFAS No. 87 provides for the same treatment as under UK GAAP. |
| **Post-retirement benefits**<br>Post-retirement health care liabilities are assessed actuarially on a similar basis to pension liabilities under SSAP 24 and are discounted at a long-term rate. Variations from regular cost are expressed as a percentage of payroll and spread over the average remaining service lives of current eligible employees. | Under SFAS No. 106, there are certain differences in the actuarial method used and variations in the computation of regular cost as compared with UK GAAP. |

Barclays PLC Annual Report 2000 135

---

# 61 Differences between UK GAAP and US GAAP accounting principles (continued)

| UK GAAP | US GAAP |
| :--- | :--- |
| **Leasing – lessor**<br>Finance lease income is recognised in proportion to the funds invested in the lease using a method which results in a level rate of return on the net cash investment. | Application of SFAS No. 13 gives rise to a level rate of return on the investment in the lease, but without taking into account tax payments and receipts. This results in income being recognised in different periods than under UK GAAP |
| **Leasing – lessee**<br>In accordance with FRS 5 and SSAP 21, leases are categorised as finance leases when the substance of the agreement is that of a financing transaction and the lessee assumes substantially all of the risks and benefits relating to the asset. All other leases are categorised as operating leases. | Leases are classified as capital leases when any of certain criteria are met as outlined under SFAS No. 13. All other leases are classified as operating leases. |
| **Deferred tax**<br>Deferred tax is provided using the liability method on timing differences where it is considered probable that a liability to tax will crystallise.<br><br>No deferred tax asset is created in respect of the general provision for bad and doubtful debts which is not deductible in arriving at UK taxable profits. | Under SFAS No. 109, a liability method is also used, but deferred tax assets and liabilities are calculated for all temporary differences, including the general provision for bad and doubtful debts. A valuation allowance is raised against a deferred tax asset where it is more likely than not that some portion of the deferred tax asset will not be realised. |
| **Property depreciation**<br>Depreciation is charged on the cost or revalued amounts of freehold and long leasehold properties over their estimated useful economic lives. | Freehold and long-leasehold property is depreciated based on the historical cost. |
| **Revaluation of property**<br>Property is carried either at original cost or at subsequent valuation less related depreciation (as described in Accounting policies), calculated on the revalued amount where applicable. Revaluation surpluses are taken directly to shareholders' funds, while deficits below cost, less any related depreciation, are included in attributable profit.<br><br>With effect from 1st January 2000 the Group has applied the transitional rules available under FRS15. The revalued book amounts will be retained without subsequent revaluation subject to the requirement to test for impairment. | Revaluations of property are not permitted in the accounts under US GAAP. As a result, when a revalued property is disposed of, a greater profit or lower loss is generally recorded under US GAAP than under UK GAAP. |
| **Shareholders' interest in the long-term assurance fund**<br>The shareholders' interest in the in-force life assurance and pensions policies of the long-term assurance fund is valued at the net present value of the profits inherent in such policies. | The net present value of the profits inherent in the in-force life and pensions policies of the long-term assurance fund is not recognised by the Group under US GAAP. An adjustment is made for the amortisation of acquisition costs and fees in accordance with SFAS No. 97. |
| **Disposal of investments**<br>Exchange rate translation differences, which arise in respect of foreign currency denominated investments, are included in the carrying value of the investment and are also accumulated in the reserves in the consolidated accounts. The profit or loss on any disposal is calculated by comparing the net proceeds with the then carrying value of the investment. | SFAS No. 52 requires similar treatment of exchange rate translation differences, except that, on disposal, cumulative exchange rate translation differences, which have previously been taken to reserves, are reversed and reported as part of the profit or loss on sale of the investment. |
| **Share compensation schemes**<br>Where shares are purchased, the difference between the purchase price and any contribution made by the employee is charged to the profit and loss account in the period to which it relates. Where shares are issued, or options granted, the charge made to the profit and loss account is the difference between the fair value at the time the award is made and any contribution made by the employee. | SFAS No. 123 encourages the adoption of accounting for share compensation schemes, based on their estimated fair values at the date of the grant. Accordingly, the Group charges this fair value to the profit and loss account over the period to their vesting dates. |

136 Barclays PLC Annual Report 2000

---

# 61 Differences between UK GAAP and US GAAP accounting principles (continued)

| UK GAAP | US GAAP |
| :--- | :--- |
| **Net unrealised gain/loss on investment securities**<br>Investment debt securities and equity shares are stated at amortised cost less provision for diminution in value. Investment securities are those intended for use on a continuing basis by the Group. | SFAS No. 115 requires that certain securities which are intended for use on a continuing basis be recorded at fair value with unrealised gains and losses recorded in shareholders' equity. The securities so treated are debt securities which are 'available for sale' – the absence of intent and ability to hold them to maturity – and certain marketable equity securities. |
| **Mortgage incentives**<br>Incentives in the form of cashbacks and discounts are written off as incurred as permitted by the SORP on Advances. | SFAS 91 requires incremental direct costs of loan origination to be deferred and amortised over the life of the loan as an adjustment to interest income. |
| **Provision for credit losses**<br>The Group establishes, through charges or credits against profit, sufficient specific provision to cover the estimated loss as soon as the recovery of a lending is identified as doubtful. General provisions are raised to cover losses which are judged to be present in the loan portfolio, but have not been specifically identified as such. This provision is adjusted by an appropriate charge or release. | SFAS No. 114 requires the overall credit risk provision of impaired loans to be determined based on the present value of expected future cash flows, discounted at the loan's effective interest rate, or, as a practical expedient, on the loan's observable market value, or the fair value of collateral if the loan is collateral dependent. A corresponding charge or credit for bad debt provisions should accompany any adjustment in the credit risk provision. Smaller balance homogeneous consumer loans that are collectively evaluated for impairment are outside the scope of SFAS No. 114, as are debt securities and leases. |
| **Dividend payable**<br>Dividends declared after the period end are recorded in the period to which they relate. | Dividends are recorded in the period in which they are declared. |
| **Taxation**<br>Profit before tax and the tax charge for the year includes tax at the effective rate on the shareholders' interest in the long-term fund. | Income before tax and the tax charge do not include such adjustments for tax. |
| **Acceptances**<br>Acceptances are not recorded within the balance sheet. | Acceptances and the related customer liabilities are recorded within the balance sheet. |
| **Transfer and servicing of financial assets**<br>Under FRS 5 where a transaction involving a previously recognised asset transfers to others (a) all significant rights or other access to benefits relating to that asset and (b) all significant exposure to the risks inherent in those benefits, the entire asset should cease to be recognised. | Under SFAS No. 125 control passes where the following criteria are met: (a) the assets are isolated from the transferor (the seller) i.e. they are beyond the reach of the transferor, even in bankruptcy or other receivership, (b) the transferee (the buyer) has the right – free of any conditions that constrain it from taking advantage of the right – to pledge or exchange the assets, and (c) the transferor does not maintain effective control over the transferred assets. |

Barclays PLC Annual Report 2000 137

---

# 61 Differences between UK GAAP and US GAAP accounting principles (continued)

| UK GAAP | US GAAP |
| :--- | :--- |
| **Extinguishment of liabilities**<br>Under FRS 5, a liability is extinguished if an entity's obligation to transfer economic benefits is satisfied or removed. Satisfaction would encompass an 'in-substance' defeasance transaction where liabilities are satisfied from the cash flows arising from essentially risk free assets transferred by the debtor to an irrecoverable defeasance trust. | Under SFAS No. 125 a debtor may de-recognise a liability if and only if either (a) the debtor pays the creditor and is relieved of its obligation for the liability, or (b) the debtor is legally released from being the primary obligor under the liability either financially or by the creditor. SFAS No. 125 does not allow for the de-recognition of a liability by means of an 'in-substance' defeasance transaction. |
| **Offset**<br>Under FRS 5 items should be aggregated into a single item where there is a right to insist on net settlement and the debit balance matures no later than credit balance. | Under FIN 41, repurchase and reverse repurchase agreements may only be netted where they have the same explicit settlement date specified at the inception of the agreement. |
| **Restructuring of business provisions**<br>In accordance with FRS 3 and FRS 12, provisions have been made for any direct costs and net future operating losses arising from a business that management is committed to restructure, sell or terminate, has a detailed formal plan for exit, and has raised a valid expectation of carrying out the restructuring plan. | The application of Emerging Issues Task Force (EITF) 94-3 has created recognition timing differences in respect of certain of the termination provisions. EITF 94-3 sets out specific conditions which must be met to enable liabilities relating to restructuring, sale or involuntary terminations to be recognised in the period management approve the termination plan. In respect of costs other than employee termination benefits, the basic requirements for recognition at the date of commitment to the plan to terminate are that they are not associated with, or do not benefit, activities that will be continued. |
| **Computer software developed or obtained for internal use**<br>All computer software costs are expensed in the year of purchase unless the cost of the computer program cannot be separated from the hardware cost. | AICPA SOP 98-1 requires certain costs incurred in respect of software for internal use to be capitalised and subsequently amortised. The SOP was applied prospectively. |
| **Internal hedging**<br>The hedging of derivatives undertaken with an independently managed trading unit of the Group may be accrual accounted by the hedging entity. | US GAAP requires a direct linkage between the internal transaction and a transaction with the external market by the trading unit in order for hedge accounting to be used. If this does not exist, then the internal derivative must be fair valued by the hedging entity. |
| **Special purpose vehicles**<br>Entities should be consolidated when they are under the control of the reporting entity. | Consolidation of an entity by its sponsor, the party at whose initiative the entity is activated, is required if the entity's activities are not strictly limited and less than 3% of its equity is held by parties other than the sponsor. |

Notes to the accounts
For the year ended 31st December 2000

138 Barclays PLC Annual Report 2000

Notes to the accounts
For the year ended 31st December 2000

# 61 Differences between UK GAAP and US GAAP accounting principles (continued)

## Developments in US GAAP

### Implementation of SFAS 133

From 1st January 2001 the Group will adopt the requirements of Statement of Financial Accounting Standard 133 (SFAS 133), ‘Accounting for Derivative Instruments and Hedging Activities’ as amended by SFAS 138. SFAS 133 sets out strict requirements in relation to the management and measurement of hedging relationships and where these are not met the derivatives must be treated as trading transactions and marked to market. It requires an entity to recognise all derivatives as either assets or liabilities measured at fair value. The accounting for changes in the fair value of a derivative depends on the use of the derivative. The Group does not intend to make changes to its hedging policies and procedures specifically to comply with the requirements of SFAS 133 and therefore from 1st January 2001, for US GAAP purposes, many hedging derivatives will be treated as trading items and marked to market. For UK GAAP reporting the Group will continue to hold a significant portfolio of derivative transactions designed to eliminate or significantly reduce the risk in relation to assets, liabilities or cash flows and these will be hedge accounted in accordance with UK GAAP.

SFAS 133 contains transitional rules with specific requirements dependent upon the nature of the hedge deemed to exist before the adoption of SFAS 133. The Group has a significant portfolio of derivatives to hedge the fair value of fixed rate balances and in accordance with the transitional rules the fair value of the derivatives and the related underlying positions will be taken to income as of 1st January 2001. The net adjustment arising from this will not be material. The Group also has derivatives designed to hedge future cash flows and under the transitional rules the impact on the fair value of £344m at 31st December 2000 will be credited to Other Comprehensive income and amortised to net income in accordance with the underlying cash flows.

The implementing of SFAS 133 will mean that the Group’s earnings under US GAAP may be subject to increased volatility. The adoption of SFAS 133 will also impact assets and liabilities recorded on the balance sheet.

### Implementation of SFAS 140

As of 31st December 2000 the Group adopted the transitional provisions of SFAS 140 ‘Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities’. Under SFAS 140, the Group is required to reclassify the market value of collateral pledged to counterparties under stock lending agreements and securities sold under agreements to repurchase, in which the counterparty has the right to sell or repledge the security, from Securities owned to Securities owned pledged to counterparties. SFAS 140 also requires the disclosure of the market value of collateral received under stock borrowing agreements and securities purchased under agreements to resell which it has the ability to sell or repledge. Securities purchased under such agreements to resell are no longer recognised as assets and prior periods have been restated accordingly.

Barclays PLC Annual Report 2000 139

---

Notes to the accounts
For the year ended 31st December 2000

# 61 Differences between UK GAAP and US GAAP accounting principles (continued)

| | Note | 2000 £m | 1999 £m | 1998 £m |
| --- | :---: | ---: | ---: | ---: |
| Attributable profit of Barclays PLC Group (UK GAAP) | | 2,473 | 1,759 | 1,317 |
| Goodwill | (a) | (12) | 123 | (78) |
| Core deposit intangible | (b) | (12) | – | – |
| Pension cost | (c) | (193) | (176) | 154 |
| Post-retirement benefits | (c) | (15) | (4) | (5) |
| Leasing – lessor | (d) | (14) | (16) | 84 |
| Leasing – lessee | (e) | 3 | (2) | 3 |
| Onerous leases | (f) | – | (100) | 23 |
| Deferred tax | (g) | (162) | 130 | 35 |
| Property depreciation | | 3 | 4 | 4 |
| Share compensation schemes | (h) | (44) | (30) | (19) |
| Shareholders’ interest in the long-term assurance fund | | (77) | (50) | (55) |
| Property revaluation differences | | 1 | 21 | 18 |
| Disposal of investments | | (12) | (43) | (9) |
| Restructuring of business provisions | (n) | 15 | (19) | (17) |
| Internal use software | (p) | 123 | 95 | – |
| Internal hedging | (q) | 148 | (94) | – |
| Mortgage incentives | (r) | 17 | – | – |
| Fair value amortisation charge | (a) | 1 | – | – |
| Non-qualifying special purpose vehicles | (s) | (72) | – | – |
| Tax effect on the above UK/US GAAP reconciling items | | 24 | 97 | (85) |
| Approximate net income (US GAAP) | | 2,195 | 1,695 | 1,370 |

| Barclays PLC Group | Note | p | p | p |
| :--- | :---: | ---: | ---: | ---: |
| Basic earnings per £1 ordinary share | (i) | 145.0 | 113.2 | 90.8 |
| Diluted earnings per £1 ordinary share | (i) | 143.6 | 111.3 | 89.4 |

| | Note | 2000 £m | 1999 £m |
| :--- | :---: | ---: | ---: |
| Equity shareholders’ funds (UK GAAP) | | 13,187 | 8,483 |
| Goodwill | (a) | 66 | 78 |
| Core deposit intangible | (b) | (12) | – |
| Pension cost | (c) | (259) | (66) |
| Post-retirement benefits | (c) | (15) | – |
| Leasing – lessor | (d) | (168) | (154) |
| Leasing – lessee | (e) | 13 | 10 |
| Deferred tax | (g) | – | 162 |
| Property depreciation | | (41) | (44) |
| Share compensation schemes | (h) | (110) | (66) |
| Shareholders’ interest in the long-term assurance fund | | (751) | (674) |
| Revaluation of property | (k) | (273) | (278) |
| Net unrealised gain on investment securities | (j) | 322 | 68 |
| Dividend payable | | 632 | 484 |
| Own shares | (v) | (5) | (5) |
| Restructuring of business provisions | (n) | 15 | – |
| Internal use software | (p) | 218 | 95 |
| Internal hedging | (q) | 54 | (94) |
| Mortgage incentives | (r) | 17 | – |
| Fair value amortisation charge | (a) | 1 | – |
| Non-qualifying special purpose vehicles | (s) | (72) | – |
| Tax effect on the above UK/US GAAP reconciling items | | 210 | 263 |
| Approximate shareholders’ equity (US GAAP) | | 13,029 | 8,262 |

Selected financial data, adjusted from UK GAAP to reflect the main differences from US GAAP, is given on page 167.

140 Barclays PLC Annual Report 2000

---

Notes to the accounts
For the year ended 31st December 2000

# 61 Differences between UK GAAP and US GAAP accounting principles (continued)

## SFAS 130 – Comprehensive income

The following tables detail the approximate comprehensive income and accumulated other comprehensive income under US GAAP.

| | 2000 £m | 1999 £m | 1998 £m |
| :--- | ---: | ---: | ---: |
| Barclays PLC – Approximate net income (US GAAP) | 2,195 | 1,695 | 1,370 |
| Net exchange translation differences * | (14) | (26) | 40 |
| Net unrealised gains on investment securities** | 177 | (111) | 7 |
| Barclays PLC – Approximate comprehensive income (US GAAP) | 2,358 | 1,558 | 1,417 |
| Net exchange translation differences | (336) | (322) | (296) |
| Net unrealised gains on investment securities** | 225 | 48 | 159 |
| Accumulated other comprehensive income | (111) | (274) | (137) |

* Including reclassification to net income on disposal of investments.
** Net of tax effect of £77m (1999 £(51m), 1998 £2m).

## a) Goodwill

In relation to the acquisition of The Woolwich, US GAAP requires the recognition of certain assets that may not be recognised under UK GAAP, namely mortgage incentives and software developed for internal use. Additionally the calculated fair value of the pension fund and liabilities under share option schemes differed under the respective requirements. These fair value adjustments are amortised over the expected life of the relevant asset/liability and resulted in an additional charge of £1m under US GAAP. The net effect of the separate classification of core deposit intangibles and the different fair value adjustments under US GAAP is to decrease the goodwill amortisation charge under US GAAP by £4m.

The credit adjustment in 1999 arises from the difference between the UK GAAP charge to profit and loss on provisions for disposals and that under US GAAP. In 1998 the charge included an amount of £83m charged following a review undertaken of purchased goodwill which had been written off against reserves under UK GAAP.

| b) Core deposit intangible | 2000 £m | 1999 £m |
| :--- | ---: | ---: |
| Recognised on acquisition of The Woolwich | 450 | – |
| Amortisation charged to profit and loss | (12) | – |
| Balance carried forward | 438 | – |

The value inherent in the deposit relationship held by The Woolwich at the time of acquisition has been calculated to be £450m and this is held as a separate intangible asset with a consequent decrease in goodwill as compared to UK GAAP. The core deposit intangibles is being amortised over seven years being the estimated average life of the depositor relationships in question.

## c) Pension cost and post-retirement benefits

The measurement of US GAAP pension expense and post-retirement benefits charge is undertaken in accordance with the requirements of SFAS No. 87 ‘Employers’ Accounting for Pensions’, and SFAS No. 106 ‘Employers’ Accounting for Post-retirement Benefits other than Pensions’ respectively. The disclosures below reflect the amendments to the requirements of the two statements arising from SFAS No. 132 ‘Employers’ Disclosures about Pensions and Other Post-retirement Benefits’.

In accordance with SFAS No. 87 the excess of pension plan assets over the projected benefit obligation, as at the transition date, is recognised as a reduction of pension expense on a prospective basis over approximately 15 years.

The provisions of US GAAP have only been applied to the main UK pension scheme, the UK Retirement Fund (previously known as the Barclays Bank (1964) Pension Fund) and The Woolwich Pension Fund. The following analysis relates to the UK Retirement Fund (1964 Pension Scheme and retirement investment scheme) and The Woolwich pension fund which makes up approximately 90% of all the Group’s schemes in terms of assets and actuarial liabilities. The impact on income of applying US GAAP on the other Group schemes is considered to be immaterial.

Barclays PLC Annual Report 2000 141

---

Notes to the accounts
For the year ended 31st December 2000

# 61 Differences between UK GAAP and US GAAP accounting principles (continued)

## c) Pension cost and post-retirement benefits (continued)

The components of the pension and post-retirements expense which arise under US GAAP are estimated to be as follows:

| | 2000 | | 1999 | | 1998 | |
| :--- | ---: | ---: | ---: | ---: | ---: | ---: |
| | Pensions £m | Post-retirement benefits £m | Pensions £m | Post-retirement benefits £m | Pensions £m | Post-retirement benefits £m |
| **Components of net periodic benefit cost** | | | | | | |
| Service cost | 352 | 1 | 302 | 2 | 235 | 4 |
| Interest cost | 591 | 9 | 506 | 10 | 465 | 12 |
| Expected return on plan assets | (88) | – | (607) | – | (692) | – |
| Amortisation of prior service cost | (23) | 2 | (25) | 2 | (25) | 6 |
| Recognised net actuarial gain/(deficit) | – | 4 | – | 5 | (137) | – |
| Net periodic benefit/(cost) | 132 | 16 | 176 | 19 | (154) | 22 |

For measurement purposes, the calculation assumes a 10% and 6.5% annual rate of increase in the per capita cost of covered medical benefits and dental benefits respectively for pensioners in schemes in the US. These rates are further assumed to reduce steadily each year to 6% in 2004 and 2001 respectively and remain at that level thereafter.

For pensioners in schemes in the UK a 3% annual rate of increase in the per capita cost of covered medical benefits was assumed, reflecting the agreement to cap average increases at this level.

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one percentage point change in assumed health care trend rates would have the following effects for 2000.

| | 1% increase £m | 1% decrease £m |
| :--- | ---: | ---: |
| Effect on total of service and interest cost components | 1 | (1) |
| Effect on post-retirement benefit obligation | 18 | (17) |

The following table presents the estimated funded status of the Pension scheme and post-retirement benefits (the latter are unfunded) under US GAAP:

| | 2000 | | 1999 | | 1998 | |
| :--- | ---: | ---: | ---: | ---: | ---: | ---: |
| | Pensions £m | Post-retirement benefits £m | Pensions £m | Post-retirement benefits £m | Pensions £m | Post-retirement benefits £m |
| **Change in benefit obligation** | | | | | | |
| Benefit obligation at beginning of year | 10,872 | 176 | 10,277 | 243 | 7,311 | 184 |
| Adjustment for RIS | 74 | – | – | – | – | – |
| Plan amendment – reduction in obligation | – | – | (58) | – | – | – |
| Service cost | 352 | 1 | 302 | 2 | 235 | 4 |
| Interest cost | 591 | 9 | 506 | 10 | 465 | 12 |
| Plan participants’ contributions | 4 | – | – | – | – | – |
| Actuarial loss/(gain) | 1,846 | 9 | 122 | (10) | 2,578 | 52 |
| Benefits paid | (378) | (11) | (335) | (11) | (312) | (9) |
| Benefit obligation at end of year | 13,361 | 184 | 10,872 | 176 | 10,277 | 243 |
| **Change in plan assets** | | | | | | |
| Fair value of plan assets at beginning of year | 11,337 | – | 9,493 | – | 10,026 | – |
| Adjustment for RIS | 74 | – | – | – | – | – |
| Actual return on plan assets | 1,414 | – | 2,162 | – | (192) | – |
| Employer contribution/transfers | 1,001 | – | 17 | – | (29) | – |
| Plan participants’ contributions | 4 | – | – | – | – | – |
| Benefits paid | (378) | – | (335) | – | (312) | – |
| Fair value of plan assets at end of year | 13,452 | – | 11,337 | – | 9,493 | – |
| Funded status | 91 | (184) | 465 | (176) | (784) | (243) |
| Unrecognised transition amount | (57) | 19 | (90) | 19 | (115) | 80 |
| Unrecognised net actuarial (gain)/loss | (371) | 57 | (440) | 56 | 1,010 | 71 |
| (Accrued)/prepaid benefit cost | (337) | (108) | (65) | (101) | 111 | (92) |

142 Barclays PLC Annual Report 2000

---

Notes to the accounts
For the year ended 31st December 2000

# 61 Differences between UK GAAP and US GAAP accounting principles (continued)

Employer contribution/transfers includes the assets from The Woolwich pension scheme and the transfer in of assets to the UK Retirement Fund from the defined benefit element of the Barclays Capital scheme during 2000. The actuarial loss/(gain) reflects the obligations relating to The Woolwich and Barclays Capital schemes.

Pension plan assets are invested primarily in equities, fixed interest securities and property.

Further details of the post-retirement health care expense under UK GAAP are given in note 5 to the accounts.

In accordance with US GAAP requirements the actuaries for the pensions plan used the following assumptions on a weighted average basis; discount rate of 5.0% (1999 5.25%, 1998 5.0%), rate of compensation increase of 4.5% (1999 4.5%, 1998 4.0%), and expected long-term rate of return on plan assets of 6.5% (1999 6.75%, 1998 6.5%).

In accordance with the US GAAP requirements the accounting for the post-retirement benefits charge assumed a discount rate of 5.0% (1999 5.5%, 1998 5.0%) for UK benefits and 7.5% (1999 7.25%, 1998 6.75%) for US benefits, on a weighted average basis.

## d) Leasing – lessor

The leasing adjustment is dependent upon the value and average age of the leasing portfolio at each period end.

## e) Leasing – lessee

Under US GAAP, provisions are made for losses arising on subleases of certain operating leases which are treated as finance leases under UK GAAP.

## f) Onerous leases

The charge in the year to 31st December 1999 arose as a result of a review of leasehold properties and related to those where unavoidable costs exceeded anticipated income. The credit in the year to 31st December 1998 related to the reversal of the prior year adjustment recorded under UK GAAP on the implementation in 1999 of Financial Reporting Standard 12.

## g) Deferred tax

In accordance with SFAS No. 109 ‘Accounting for Income Taxes’, the components of the net US GAAP deferred tax liability are as follows:

| | 2000 £m | 1999 £m |
| :--- | ---: | ---: |
| **Deferred tax liabilities:** | | |
| Leasing transactions | (943) | (960) |
| Capital allowances | (9) | (31) |
| Other | (114) | (14) |
| Total deferred tax liabilities | (1,066) | (1,005) |
| **Deferred tax assets:** | | |
| Specific allowances | 36 | 30 |
| General allowance | 209 | 192 |
| Tax losses | 162 | 337 |
| Other | 184 | 158 |
| Total deferred tax assets before valuation allowance | 591 | 717 |
| Less: valuation allowance | (156) | (146) |
| Deferred tax assets less valuation allowance | 435 | 571 |
| Net deferred tax liability under US GAAP | (631) | (434) |

(i) The main components of the tax charge attributable to continuing operations are shown in note 11 to the accounts.
(ii) A reconciliation of tax payable at the UK standard corporation tax rate and Barclays effective tax rate is shown on page 26 in the Financial review.
(iii) The valuation allowance relates to the Group’s capital losses and unrelieved overseas tax losses. These assets will be recognised in the future when it becomes likely that they will be utilised.

Barclays PLC Annual Report 2000 143

---

Notes to the accounts
For the year ended 31st December 2000

# 61 Differences between UK GAAP and US GAAP accounting principles (continued)

## h) Share compensation schemes

With effect from 1st January 1996, the Group adopted SFAS No. 123 ‘Accounting for Stock-Based Compensation’.

SFAS No. 123 encourages the adoption of accounting for share compensation schemes based on their estimated fair value at the date of grant. The requirements are only applicable to options and other awards granted from 1st January 1995 onwards and, in the initial phase-in period, the amounts reported will not be representative of the effect on reported net income for future years. The SFAS No. 123 charge for the fair value of options granted since 1995 is £44m (1999 £30m, 1998 £19m).

The ESOS, SAYE, ISOP, the BGI Equity Ownership Plan, The Woolwich ESOP and The Woolwich SAYE scheme fall within the scope of SFAS No. 123.

Analysis of the movement in the number and weighted average exercise price of options are set out below:

| Executive Share Option Scheme (1) | Number (000’s) | | | | Weighted av. ex. price (£) | | | |
| :--- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| | 2000 | 1999 | 2000 | 1999 | 2000 | 1999 | 2000 | 1999 |
| Outstanding at beginning of year | 3,784 | 3,119 | – | – | 15.12 | 12.82 | – | – |
| Granted in the year | 176 | 1,209 | – | – | 14.44 | 17.82 | – | – |
| Exercised in the year | (242) | (507) | – | – | 8.24 | 7.57 | – | – |
| Less: Forfeited in the year | (130) | (37) | – | – | 14.92 | 12.55 | – | – |
| Outstanding at end of year | 3,588 | 3,784 | – | – | 15.56 | 15.12 | – | – |

| SAYE Share Option Scheme (1) | Number (000’s) | | | | Weighted av. ex. price (£) | | | |
| :--- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| | 2000 | 1999 | 2000 | 1999 | 2000 | 1999 | 2000 | 1999 |
| Outstanding at beginning of year | 36,204 | 31,393 | – | – | 10.75 | 9.67 | – | – |
| Granted in the year | 6,817 | 8,047 | – | – | 12.64 | 14.26 | – | – |
| Exercised in the year | (7,023) | (1,950) | – | – | 7.79 | 8.02 | – | – |
| Less: Forfeited in the year | (2,883) | (1,286) | – | – | 11.93 | 10.48 | – | – |
| Outstanding at end of year | 33,115 | 36,204 | – | – | 11.66 | 10.75 | – | – |

| Incentive Share Option Plan (1) | Number (000’s) | | | | Weighted av. ex. price (£) | | | |
| :--- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| | 2000 | 1999 | 2000 | 1999 | 2000 | 1999 | 2000 | 1999 |
| Outstanding at beginning of year | – | – | – | – | – | – | – | – |
| Granted in the year | 3,769 | – | – | – | 15.63 | – | – | – |
| Exercised in the year | – | – | – | – | – | – | – | – |
| Less: Forfeited in the year | (13) | – | – | – | 15.63 | – | – | – |
| Outstanding at end of year | 3,756 | – | – | – | 15.63 | – | – | – |

| BGI Equity ownership plan (2) | Number (000’s) | | | | Weighted av. ex. price (£) | | | |
| :--- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| | 2000 | 1999 | 2000 | 1999 | 2000 | 1999 | 2000 | 1999 |
| Outstanding at beginning of year | – | – | – | – | – | – | – | – |
| Granted in the year | 5,585 | – | – | – | 6.11 | – | – | – |
| Exercised in the year | – | – | – | – | – | – | – | – |
| Less: Forfeited in the year | (50) | – | – | – | 6.11 | – | – | – |
| Outstanding at end of year | 5,535 | – | – | – | 6.11 | – | – | – |

| The Woolwich ESOP rollover (1) | Number (000’s) | | | | Weighted av. ex. price (£) | | | |
| :--- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| | 2000 | 1999 | 2000 | 1999 | 2000 | 1999 | 2000 | 1999 |
| Outstanding at beginning of year | – | – | – | – | – | – | – | – |
| Granted in the year | 3,088 | – | – | – | 15.20 | – | – | – |
| Exercised in the year | (82) | – | – | – | 14.62 | – | – | – |
| Less: Forfeited in the year | – | – | – | – | – | – | – | – |
| Outstanding at end of year | 3,006 | – | – | – | 15.20 | – | – | – |

| The Woolwich SAYE rollover (1) | Number (000’s) | | | | Weighted av. ex. price (£) | | | |
| :--- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| | 2000 | 1999 | 2000 | 1999 | 2000 | 1999 | 2000 | 1999 |
| Outstanding at beginning of year | – | – | – | – | – | – | – | – |
| Granted in the year | 1,566 | – | – | – | 12.64 | – | – | – |
| Exercised in the year | – | – | – | – | – | – | – | – |
| Less: Forfeited in the year | – | – | – | – | – | – | – | – |
| Outstanding at end of year | 1,566 | – | – | – | 12.64 | – | – | – |

| The Woolwich ESOP (3) | Number (000’s) | | | | Weighted av. ex. price (£) | | | |
| :--- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| | 2000 | 1999 | 2000 | 1999 | 2000 | 1999 | 2000 | 1999 |
| Outstanding upon acquisition | 19,528 | – | – | – | 3.28 | – | – | – |
| Rolled over into Barclays options or cancelled for cash | (14,570) | – | – | – | 3.30 | – | – | – |
| Exercised in the period 25.10.00 – 31.12.00 | (3,658) | – | – | – | 3.23 | – | – | – |
| Less: Forfeited in the period 25.10.00 – 31.12.00 | – | – | – | – | – | – | – | – |
| Outstanding at end of year | 1,300 | – | – | – | 3.27 | – | – | – |

| The Woolwich SAYE scheme (3) | Number (000’s) | | | | Weighted av. ex. price (£) | | | |
| :--- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| | 2000 | 1999 | 2000 | 1999 | 2000 | 1999 | 2000 | 1999 |
| Outstanding upon acquisition | 8,881 | – | – | – | 2.76 | – | – | – |
| Rolled over into Barclays options or cancelled for cash | (7,741) | – | – | – | 2.75 | – | – | – |
| Exercised in the period 25.10.00 – 31.12.00 | (218) | – | – | – | 2.73 | – | – | – |
| Less: Forfeited in the period 25.10.00 – 31.12.00 | (249) | – | – | – | 2.77 | – | – | – |
| Outstanding at end of year | 673 | – | – | – | 2.93 | – | – | – |

(1) Options granted over Barclays PLC shares
(2) Options granted over BGI UK Holdings Limited shares
(3) Options granted over Woolwich plc shares

144 Barclays PLC Annual Report 2000

---

Notes to the accounts
For the year ended 31st December 2000

# 61 Differences between UK GAAP and US GAAP accounting principles (continued)

## h) Share compensation schemes (continued)

The disclosures of options outstanding only relate to those granted from 1995 onwards.

The range of exercise prices, weighted average fair values at the date of grant and the weighted average remaining contractual life for options outstanding at the balance sheet date are as follows:

| | 2000 | | | | 1999 | | | |
| :--- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| | Exercise price range £ | Weighted average exercise price £ | Weighted average fair value £ | Weighted average remaining life Years | Exercise price range £ | Weighted average exercise price £ | Weighted average fair value £ | Weighted average remaining life Years |
| Executive Share Option Scheme (1) | 7.04–17.82 | 15.56 | 4.78 | 7 | 7.04–17.82 | 15.12 | 4.53 | 5 |
| SAYE Share Option Scheme (1) | 6.28–14.26 | 11.66 | 5.31 | 3 | 6.28–14.26 | 10.75 | 4.46 | 3 |
| Incentive Share Option Plan (1) | 15.63–16.88 | 15.63 | 7.13 | 9 | – | – | – | – |
| BGI Equity Ownership Plan (2) | 6.11 | 6.11 | 2.20 | 9 | – | – | – | – |
| The Woolwich SAYE scheme (1) | 12.34–13.49 | 12.64 | 9.35 | 2 | – | – | – | – |
| The Woolwich ESOP (1) | 13.17–16.90 | 15.20 | 10.66 | 9 | – | – | – | – |
| The Woolwich SAYE scheme (3) | 2.68–3.13 | 2.93 | 1.59 | 0 | – | – | – | – |
| The Woolwich ESOP (3) | 2.86–3.67 | 3.27 | 1.84 | 0 | – | – | – | – |

Fair values for the ISOP, ESOS, SAYE, The Woolwich ESOP and The Woolwich SAYE are calculated at the date of grant using a binomial model which produces similar results to the Black-Scholes model. The significant weighted average assumptions used to estimate the fair value of the options granted in 2000 are as follows:

| | ISOP | ESOS | SAYE | Woolwich ESOP (1) rollover | Woolwich ESOP (3) | Woolwich Sharesave (1) rollover | Woolwich Sharesave (3) |
| :--- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Risk-free interest rate | 6.18% | 6.33% | 6.23% | 5.92% | 5.92% | 5.92% | 5.92% |
| Expected life (years) | 10 | 10 | 5 | 9 | 0 | 2 | 0 |
| Expected volatility | 35% | 45% | 35% | 45% | 45% | 45% | 45% |

The fair values for the BGI EOP are calculated using a formula based on an earnings multiple.

The range, weighted average exercise price, weighted average remaining contractual life and number of options outstanding, including those exercisable at year end (see page 146), are as follows:

| Executive Price Range | Weighted average exercise price £ | Weighted average remaining life Years | Number of options outstanding |
| :--- | ---: | ---: | ---: |
| **Executive Share Option Scheme** | | | |
| £6.00 – £9.99 | 8.19 | 4 | 212,500 |
| £10.00 – £13.99 | 13.88 | 5 | 780,000 |
| £14.00 – £17.99 | 15.69 | 7 | 2,595,644 |
| **SAYE Share Option Scheme (1)** | | | |
| £6.00 – £9.99 | 7.62 | 1 | 8,327,669 |
| £10.00 – £13.99 | 12.54 | 3 | 17,877,119 |
| £14.00 – £17.99 | 14.26 | 3 | 6,909,853 |
| **BGI Equity Ownership Plan (2)** | | | |
| £6.00 – £9.99 | 6.11 | 9 | 5,585,000 |
| **Incentive Share Option Plan (1)** | | | |
| £14.00 – £17.99 | 15.63 | 9 | 3,756,000 |
| **The Woolwich ESOP (1)** | | | |
| £10.00 – £13.99 | 13.17 | 9 | 553,238 |
| £14.00 – £17.99 | 15.66 | 9 | 2,452,809 |
| **The Woolwich SAYE scheme (1)** | | | |
| £10.00 – £13.99 | 12.64 | 2 | 1,565,662 |
| **The Woolwich ESOP (3)** | | | |
| £0.00 – £5.99 | 3.27 | 0 | 1,300,153 |
| **The Woolwich SAYE scheme (3)** | | | |
| £0.00 – £5.99 | 2.93 | 0 | 673,417 |

(1) Options granted over Barclays PLC shares
(2) Options granted over BGI UK Holdings Limited shares
(3) Options granted over Woolwich plc shares

Barclays PLC Annual Report 2000 145

---

Notes to the accounts
For the year ended 31st December 2000

# 61 Differences between UK GAAP and US GAAP accounting principles (continued)

## h) Share compensation schemes (continued)

The range, weighted average exercise price and number of options exercisable at the year end are as follows:

| Exercise Price Range | Weighted average exercise price £ | Number of options |
| :--- | ---: | ---: |
| **Executive Share Option Scheme** | | |
| £6.00 – £9.99 | 8.19 | 212,500 |
| £10.00 – £13.99 | 13.88 | 780,000 |
| **SAYE Share Option Scheme** | | |
| £6.00 – £9.99 | 6.28 | 185,238 |
| £10.00 – £13.99 | 12.67 | 37,597 |
| **The Woolwich ESOP** | | |
| £0.00 – £5.99 | 3.27 | 1,300,153 |
| **The Woolwich SAYE** | | |
| £0.00 – £5.99 | 2.93 | 673,417 |

The expected dividends for all schemes are assumed to grow in line with the expected increases in share prices for the industry sector until exercise.

The ESOS is a long-term incentive scheme and is currently available by invitation to certain senior executives of the Group with grants usually made annually. Options are issued at the market price at the date of the grant without any discount, calculated in accordance with the rules of the Scheme, and are normally exercisable between three and ten years from that date. No further awards will be made under ESOS.

Eligible employees in the UK may participate in the SAYE. Under this Scheme, employees may enter into contracts to save up to £250 per month and, at the expiry of a fixed term of three, five or seven years, have the option to use these savings to acquire shares in the Company at a discount, calculated in accordance with the rules of the scheme. The discount is currently 20% of the market price at the date the options were granted.

The ISOP has been introduced to replace the ESOS. It is open by invitation to the employees and Directors of Barclays PLC options are granted at the market price at the date of grant calculated in accordance with the rules of the Plan, and are normally exercisable between three and ten years from that date. The final number of shares over which the option may be exercised will be determined by reference to set performance criteria. The number of shares under option represents the maximum possible number that may be exercised.

The BGI Equity Ownership Plan is extended to senior employees of BGI. The exercise price of the options are determined by formula at the date of grant and is not less than the market value of the share at the time of grant. The options are granted over shares in BGI Holdings UK Ltd, a subsidiary of Barclays Bank PLC. Options are normally not exercisable until vesting, with a third of the options held becoming exercisable at each anniversary of grant. Options lapse ten years after grant. At 31st December, 5.5m (1999 nil) options were outstanding under the terms of the BGI Equity Ownership Plan enabling certain members of staff to subscribe for shares in Barclays Global Investors UK Holdings Limited between 2001 and 2010 and at a price of £6.11.

The Woolwich ESOP and SAYE schemes have similar terms to the Barclays ESOS and SAYE schemes described above, issuing options over shares in Woolwich plc. No further awards will be made under either of these schemes. Following the acquisition of The Woolwich by Barclays PLC holders of options under these two schemes were able to rollover the options for an option on the same terms, except for the withdrawal of the performance criteria, over Barclays shares, obtain a cash payment in exchange for cancellation of the options or choose to exercise the options at any time up to 24th April 2001. Upon exercise of an option over Woolwich plc shares, the option holder will receive £1.64 in cash and 0.1175 Barclays shares for each Woolwich share available under the option.

## i) Earnings per share

Basic earnings per share under US GAAP differs from UK GAAP (see note 14) only to the extent that income calculated under US GAAP differs from that under UK GAAP.

Diluted EPS measures the effect that existing options would have on the basic EPS if they were to be exercised, by increasing the number of ordinary shares.

Under US GAAP, the number of those increased shares are reduced by the number of shares that could be bought (using the average market price in the year) with the assumed exercise proceeds (actual proceeds arising on exercise plus unamortised compensation costs, where appropriate). Any options that are antidilutive are excluded from this calculation. (An option is antidilutive when the value of the deemed proceeds is greater than the market price used in the above calculation).

146 Barclays PLC Annual Report 2000

---

Notes to the accounts
For the year ended 31st December 2000

# 61 Differences between UK GAAP and US GAAP accounting principles (continued)

## i) Earnings per share (continued)

| | 2000 | | | 1999 | | | 1998 | | |
| :--- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| | Income £m | Weighted average Share no. (in millions) | Per-Share amount Pence | Income £m | Weighted average Share no. (in millions) | Per-Share amount Pence | Income £m | Weighted average Share no. (in millions) | Per-Share amount Pence |
| **Basic EPS** | | | | | | | | | |
| Approximate net income (US GAAP) available to ordinary shareholders | 2,195 | 1,514 | 145.0 | 1,695 | 1,497 | 113.2 | 1,370 | 1,510 | 90.8 |
| **Effect of dilutive securities** | | | | | | | | | |
| Employee share options | | 13 | | | 21 | | | 19 | |
| Other schemes | | 2 | | | 5 | | | 4 | |
| **Diluted EPS** | 2,195 | 1,529 | 143.6 | 1,695 | 1,523 | 111.3 | 1,370 | 1,533 | 89.4 |

Of the total number of employees’ share options existing at the year end, the following were not included in the dilution calculation above because they were antidilutive:

| | 2000 in millions | 1999 in millions | 1998 in millions |
| :--- | ---: | ---: | ---: |
| Number of options | 17 | 3 | 15 |

Certain incentive plan shares have been excluded from the calculation of the basic EPS as the trustee has waived all dividend and voting rights. These shares are subsequently brought into the diluted earnings per share calculation (called ‘Other schemes’) above.

## j) Net unrealised gain on investment securities

Unlisted investment equity securities are outside the scope of SFAS No. 115 ‘Accounting for Certain Investments in Debt and Equity Securities’ and continued to be carried at cost of £175m at 31st December 2000 (1999 £124m). The estimated fair value of these securities was £214m (1999 £136m).

All quoted Investment securities are classified as being ‘available for sale’ and Other debt securities are classified as trading securities (see note 19).

There were no material gross gains or gross losses realised on the transfer of debt and equity securities from the available for sale category into the trading category in 2000 or 1999.

## k) Revaluation of property

In 1990 £449m of property revaluation reserve was capitalised by the issue of bonus shares.

## l) Loan impairment

SFAS No. 114 applies only to impaired loans, the measurement of which is primarily based upon the present value of expected future cash flows discounted at the loan’s effective interest rate. In certain instances this measurement may reflect the loan’s observable market value, or the fair value of the collateral if the loan is collateral dependent. Smaller balance homogeneous consumer loans that are collectively evaluated for impairment are outside the scope of SFAS No. 114, as are debt securities and leases. At 31st December 2000, the element of impaired loans outside the scope of SFAS No. 114 amounted to £2,525m (1999 £1,808m).

In accordance with SFAS No. 114, the Group’s total impaired loans are those reported as non-performing on page 48, less impaired loans outside the scope of SFAS No. 114, and amount to £852m at 31st December 2000 (1999 £801m). Credit risk provisions of £474m, estimated in accordance with SFAS No. 114, were held against these loans (1999 £416m). The average level of such impaired lendings in 2000 was approximately £782m (1999 £892m).

Having compared the value of the impaired loan portfolio calculated in accordance with SFAS No. 114 with the carrying value under UK GAAP, no adjustment was required to either shareholders’ equity at 31st December 2000 or 31st December 1999, or to net income for these years.

Where cash received represents the realisation of security, or there is doubt regarding the recovery of a loan, such receipts are treated as repayments of the loan principal. Otherwise, cash received in respect of impaired loans is recognised as interest income. Estimated interest income which was recognised in 2000 on impaired loans within the scope of SFAS No. 114 was £25m (1999 £6m).

SFAS No. 114 modifies the accounting for in-substance foreclosure, in that only collateralised loans where the Group takes physical possession of the collateral, regardless of formal insolvency procedures, would be reclassified as ‘other real estate owned’ under US GAAP. At 31st December 2000, other real estate owned including borrowings which would be classified as in-substance foreclosure, amounted to approximately £19m (1999 £4m) and are recorded at the lower of cost or market value.

Barclays PLC Annual Report 2000 147

---

Notes to the accounts
For the year ended 31st December 2000

# 61 Differences between UK GAAP and US GAAP accounting principles (continued)

## m) Impairment of long-lived assets

With effect from 1st January 1996, the Group adopted SFAS No. 121 ‘Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of’. At 31st December 2000 having compared the value of long-lived assets calculated in accordance with SFAS No. 121 with the carrying value under UK GAAP, no adjustment to net income or shareholders’ funds was required.

## n) Restructuring

During both 1999 and 2000 the Group has implemented programmes to reduce the workforce primarily in Retail Financial Services and Corporate Banking and, for 2000, Service Provision. This restructuring largely focused on activities within the UK involving a reshaping of the Group’s operations through the centralisation of core processes and the application of new technologies. The Retail Financial Services programmes also include a reduction in the workforce in its international operations.

During 2000 a restructuring charge of £232m was booked, reflecting severance and other termination related costs (£171m) costs in connection with planned disposition of certain facilities (£27m) and other related costs (£34m).

The 1999 restructuring charge of £344m, reflected severance and other termination related costs (£192m), costs in connection with planned disposition of certain facilities (£134m) and other related costs (£18m).

In the year ended 31st December 1997 a restructuring charge, excluding goodwill, of £340m was raised under UK GAAP in relation to the reorganisation of the Group’s investment banking and trading businesses. Under US GAAP some £304m of this charge would have been recognised in 1997. In 1999 the remaining £19m of the residual UK GAAP charge of £36m became effective for US GAAP purposes.

## o) Other EITF 94-3 disclosures

For exit plans which meet the conditions of EITF 94-3 as clarified by SAB 100, the US GAAP balance sheet liability at 31st December 2000 would have been £117m (1999 £184m) of which £64m (1999 £89m) was in respect of staff reduction costs covering 2,000 employees (1999 2,400), £49m (1999 £94m) in respect of the planned disposition of certain facilities and £4m (1999 £1m) covering other related costs. Costs paid in the year to 31st December 2000 amounted to £180m (1999 £103m) in respect of staff reduction 4,800 employees (1999 3,500), £72m (1999 £40m) relating to disposition of facilities and £32m, (1999 £17m) for other related costs.

| p) Internal use software | 2000 £m | 2000 £m | 1999 £m | 1999 £m |
| :--- | ---: | ---: | ---: | ---: |
| Additional US GAAP shareholders’ funds brought forward | | 95 | | – |
| Expenditure to be capitalised under US GAAP | 185 | | 116 | |
| Amortisation | (62) | | (21) | |
| Credit to US GAAP net income | | 123 | | 95 |
| Additional US GAAP shareholders’ funds carried forward | | 218 | | 95 |

## q) Internal hedging

The US GAAP adjustment arises from marking to market internal hedging transactions involving derivatives, entered into from 1st January 1999, that have not been passed directly to the market. Under UK GAAP, these transactions are measured as hedges on an accrual accounting basis in accordance with the accounting treatment of the transactions being hedged. These activities are described more fully in pages 54 to 56.

## r) Mortgage incentives

The US GAAP adjustment arises from deferring costs relating to cashbacks and discounts given and amortising these over the expected life of the loan.

## s) Special purpose vehicles

Group entities have sponsored vehicles that do not meet the consolidation criteria of quasi-subsidiaries under FRS 5 but nevertheless fall to be consolidated under US GAAP and a resultant pre-tax US GAAP adjustment has been made to recharacterise net income from the vehicle as intra-group for US purposes, and to increase total assets by £3,754m.

148 Barclays PLC Annual Report 2000

Notes to the accounts
For the year ended 31st December 2000

# 61 Differences between UK GAAP and US GAAP accounting principles (continued)

## t) Transfer and servicing of financial assets and extinguishment of liabilities

With effect from 1st January 1997, the Group adopted SFAS No. 125 'Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities'. At 31st December 2000, the application of this standard resulted in an addition to US GAAP total assets of £256m in respect of funded loan participations which did not meet the SFAS requirements for derecognition. At 31st December 1999 the addition to US GAAP total assets amounted to £128m in respect of funded loan participations which did not meet the SFAS requirements for derecognition. No adjustment to net income or shareholders' funds was required for 2000 or 1999.

The Group enters into Reverse Repos (see page 27) and stock borrowing transactions which are accounted for as collateralised loans. It is the Group's policy to seek collateral at the outset equal to 100% to 105% of the loan amount. The level of collateral held is monitored daily and further calls made to bring the level of cash held and the market value of collateral in line with the loan balance.

Under certain Reverse Repo and stock borrowing transactions the Group is allowed to sell or repledge the collateral held. At 31st December 2000, the fair value of such collateral was £64bn, of which £51bn related to items that have been sold or repledged.

The Group also enters into repos (see page 27) and stock lending transactions which are accounted for as secured borrowings. At 31st December 2000, the Group had given £56bn of collateral in respect of these transactions. Of the total collateral given £47bn was on terms which gave the recipient the right to sell or repledge comprising debt securities of £40bn and equity securities of £7bn. The residual £9bn was on terms by which the counterparty cannot sell or repledge related to debt securities.

For the pledge of collateral to secure on-balance sheet liabilities see note 42 and in relation to contingent liabilities generally in support of the performance of a customer to third parties see note 45.

## u) Provisions for bad and doubtful debts

The UK GAAP specific provision charge in 2000 included a £nil release (1999 £13m release) in respect of credit losses in derivatives. No element of the year end specific provisions related to credit losses in derivatives (1999 £nil).

At 31st December 2000 some £29m of the general provision (December 1999 some £30m) was held in respect of off balance sheet exposures (including derivatives).

Specific provisions for contingent liabilities and commitments are accounted for separately (see note 34).

## v) Own shares

In accordance with ARB No. 51, Barclays PLC shares shown for UK GAAP within Other assets in note 25 have been netted against US GAAP shareholders' equity.

## w) Total assets

In addition to the adjustments to total assets arising from the GAAP differences dealt with in the tables on page 140, and notes s), t), v) and y), there are other adjustments resulting from differences in GAAP including the treatment of acceptances. At 31st December 2000 the increase in total assets under US GAAP from these other adjustments amounted to £511m (1999 £2,637m).

## x) Profit and loss account presentation

There are certain differences in the presentation of the profit and loss account between UK GAAP and US GAAP. For example, profits or losses on redemption of loan capital (2000 £2m, 1999 £3m, 1998 £3m) would be classified as an extraordinary item under US GAAP rather than as a component of net interest income, while profit on disposal of Group undertakings (2000 £214m profit, 1999 £138m loss, 1998 £1m profit) would be classified as operating income or expense under US GAAP rather than being shown separately. Under US GAAP, net interest paid 2000 £216m (1999 £31m, 1998 £25m) relating to trading activities would be shown within net interest revenue, rather than included in dealing profits.

## y) Offset

Certain repurchase and reverse repurchase transactions have been netted in the UK as required under FRS 5. To the extent these arrangements do not satisfy the requirement of FIN 41 total assets have been increased by £6,900m.

Barclays PLC Annual Report 2000 149

---

Notes to the accounts
For the year ended 31st December 2000

# 62 Consolidated statement of cash flows - discussion of differences between FRS 1 (revised) and SFAS No. 95 (as amended by SFAS No. 104)

There are many similarities between SFAS No. 95, as amended by SFAS No. 104, and the UK FRS 1 (revised), which was implemented by Barclays in 1997.

The two statements differ with regard to the classification of items within the cash flow statement and with regard to the definition of cash.

| Classification under FRS 1 (revised) | Classification under SFAS No. 95 |
| --- | --- |
| Dividends received | Returns on investment and servicing of finance | Operating activities |
| Dividends paid - equity | Equity dividends paid | Financing activities |
| Tax paid | Taxation | Operating activities |
| Net change in loans and advances, including finance lease receivables | Operating activities | Investing activities |
| Net change in deposits and debt securities in issue | Operating activities | Financing activities |

Under FRS 1 (revised), cash is defined as cash and balances at central banks and loans and advances to banks repayable on demand. SFAS No. 95 defines cash as being inclusive of cash equivalents which are short-term highly liquid investments that are both readily convertible into known amounts of cash and that are so near to maturity that they present insignificant risk of changes in value because of changes in interest rates.

Under FRS 1 (revised), transactions undertaken to hedge another transaction are reported under the same classification as that which is the subject of the hedge.

Interest paid in the year, including amounts relating to trading activities, was £10,888m (1999 £8,194m, 1998 £9,463m).

Set out below, for illustrative purposes, is a summary consolidated statement of cash flows presented on a US GAAP basis

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Net cash provided by operating activities | 4,318 | 3,792 | 1,092 |
| Net cash (used in)/provided by investing activities | (17,768) | (40,547) | 20,832 |
| Net cash provided by/(used in) financing activities | 14,394 | 31,787 | (15,317) |
| Effect of exchange rate changes on cash and due from banks | (977) | 393 | (1,305) |
| Net (decrease)/increase in cash and cash equivalents | (33) | (4,575) | 5,302 |
| Cash and cash equivalents at beginning of year | 35,612 | 40,187 | 34,885 |
| Cash and cash equivalents at end of year | 35,579 | 35,612 | 40,187 |

# 63 Regulatory capital requirements

Capital adequacy and the use of regulatory capital are monitored by the Group, employing techniques based on the guidelines developed by the Basel Committee on Banking Regulations and Supervisory Practices (the Basel Committee) and European Community Directives, as implemented by the Financial Services Authority (FSA) for supervisory purposes. The FSA regards the risk asset ratio calculation originally developed by the Basel Committee as a key supervisory tool and sets individual minimum ratio requirements for banks in the UK at or above the minimum of 8%. The ratio calculation involves the aggregation of risk weighted assets across both banking and trading activities. Weightings reflect an estimate of relative risks associated with broad categories of transactions and counterparties. The concept of risk weighting and the basis for calculating eligible capital resources are described under Capital ratios on page 32.

The following tables analyse capital resources and capital ratios, as defined for regulatory purposes:

| Barclays PLC Group and Barclays Bank PLC Group As at 31st December 2000 | Amount £m | Ratio % |
| --- | --- | --- |
| Total net capital resources | 16,185 | 11.0 |
| Tier 1 capital resources | 10,547 | 7.2 |

| Barclays PLC Group and Barclays Bank PLC Group As at 31st December 1999 | Amount £m | Ratio % |
| --- | --- | --- |
| Total net capital resources | 13,134 | 11.3 |
| Tier 1 capital resources | 8,696 | 7.5 |

150 Barclays PLC Annual Report 2000

---

Notes to the accounts
For the year ended 31st December 2000

# 64 Significant Group concentration of credit risk

SFAS No. 105 defines a concentration of credit risk as an exposure to a number of counterparties engaged in similar activities and having similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. Barclays exposure to credit risk is concentrated in the UK where the majority of the Group's activities are conducted. As one of the largest UK banks, Barclays accounts for a significant share of credit exposure to almost all sectors of the economy and the Group is therefore significantly affected by the general economic conditions in the UK. Following the acquisition of The Woolwich, lending in respect of home loans represents 37% of the total banking book lending to customers. However, credit risk is well spread over a diversity of both personal and commercial customers, reflecting the Group's risk management policy of imposing limits on exposure to any one single counterparty (see Financial review - Potential credit risk lendings and Risk management). Outside the UK, the Group's geographical spread ensures a wide variety of counterparties in the main areas of operation in Europe, the United States and other areas of the world. As an active participant in the international banking markets, the Group has a significant concentration of credit risk with financial institutions. In total, credit risk exposure to financial institutions at 31st December 2000 was estimated to have amounted to £76bn (1999 £80bn) of which £49bn (1999 £54bn) consisted of placings and negotiable certificates of deposit and £9bn (1999 £10bn) of mark to market balances in respect of exchange and interest rate contracts. The remaining credit risk exposure is largely related to letters of credit and guarantees. Within the overall exposure, the Group maintains relationships with some 1,150 (1999 1,100) banking groups in countries all over the world.

See Financial review - Loans and advances to banks and customers, Securities and Market risk management.

Barclays PLC Annual Report 2000 151

---

Notes to the accounts
For the year ended 31st December 2000

# 65 Ratio of earnings to fixed charges and preference share dividends

| Ratio of earnings to fixed charges | 2000 | 1999 | 1998 | 1997 | 1996 |
| --- | --- | --- | --- | --- | --- |
| UK GAAP: | | | | | |
| Excluding interest on deposits | 1.51 | 1.48 | 1.35 | 1.37 | 1.78 |
| Including interest on deposits | 1.30 | 1.29 | 1.20 | 1.20 | 1.33 |
| US GAAP: | | | | | |
| Excluding interest on deposits | 1.49 | 1.42 | 1.37 | 1.42 | 1.76 |
| Including interest on deposits | 1.29 | 1.26 | 1.21 | 1.23 | 1.32 |

| Ratio of earnings to combined fixed charges and preference share dividends* | 2000 | 1999 | 1998 | 1997 | 1996 |
| --- | --- | --- | --- | --- | --- |
| UK GAAP: | | | | | |
| Excluding interest on deposits | 1.49 | 1.47 | 1.34 | 1.36 | 1.76 |
| Including interest on deposits | 1.29 | 1.29 | 1.19 | 1.19 | 1.32 |
| US GAAP: | | | | | |
| Excluding interest on deposits | 1.47 | 1.41 | 1.36 | 1.41 | 1.74 |
| Including interest on deposits | 1.28 | 1.25 | 1.21 | 1.22 | 1.31 |

* Preference share dividends includes appropriations made in respect of Reserve Capital Instruments.

152 Barclays PLC Annual Report 2000

---

Barclays PLC Annual Report 2000 153

# SEC Form 20-F cross reference and other information

## SEC Form 20-F cross reference and other information

| Form 20-F item number | Page reference in this document | Form 20-F item number | Page reference in this document |
| --- | --- | --- | --- |
| 1 | Identity of Directors, Senior Management and Advisors | Not applicable | 10 | Additional Information | Memorandum and Articles of Association | 172 |
| | | | | Shareholder information - taxation | 173 |
| | | | | Exchange controls and other limitations affecting security holders | 174 |
| 2 | Offer Statistics and Expected Timetable | Not applicable | 11 | Quantitative and qualitative disclosure about market risk | Risk management - overview | 36 |
| 3 | Key Information | Risk factors | 59 | | Credit risk management | 38 |
| | Currency of presentation | 154 | | Analysis of loans and advances | 39 |
| | Selected financial data | 4/167 | | Provisions for bad and doubtful debts | 44 |
| | Dividends | 168 | | Potential credit risk lendings | 48 |
| 4 | Information on the Company | Presentation of information | 2 | | Cross border outstandings | 50 |
| | Business description | 6 | | Market risk management | 51 |
| | Economic and monetary environment | 58 | | Treasury asset and liability management | 54 |
| | Supervision and regulation | 58 | | Note 46 | 113 |
| | Note 23 | 99 | 12 | Description of Securities Other than Equity Securities | 35 |
| | Note 43 | 110 | | Not applicable | |
| | Note 44 | 111 | 13 | Defaults, Dividends Arrearages and Delinquencies | Not applicable |
| | Note 49 | 124 | 14 | Material Modifications to the Rights of Security Holders and Use of Proceeds | Not applicable |
| | Segmental analysis. Note 60 | 132 | 15 | RESERVED | |
| 5 | Operating and Financial Review and Prospects | Financial review | 12 | 16 | RESERVED | |
| | Other information | 58 | 17 | Financial Statements | Not applicable |
| 6 | Directors, Senior Management and Employees | Administrative expenses - staff costs | 23 | 18 | Financial statements | Accounting policies | 76 |
| | Directors and Officers | 60 | | Consolidated financial statements: - Barclays PLC | 80 |
| | Directors' report | 62 | | - Barclays Bank PLC | 156 |
| | Corporate governance report | 65 | 19 | Exhibits | Not included |
| | Note 4 | 87 | | | |
| | Note 5 | 88 | | | |
| | Note 56 | 130 | | | |
| | Note 57 | 131 | | | |
| | Note 58 | 131 | | | |
| | Note 59 | 131 | | | |
| 7 | Major Shareholders and Related Party Transactions | Presentation of information | 2 | | |
| | Directors' report | 62 | | | |
| | Note 56 | 130 | | | |
| | Trading market for ordinary shares of Barclays PLC | 169 | | | |
| | Trading market for preference shares of Barclays Bank PLC | 170 | | | |
| 8 | Financial Information | Note 48 | 124 | | |
| 9 | The Offer and Listing | Trading market for ordinary shares of Barclays PLC | 169 | | |
| | Trading market for preference shares of Barclays Bank PLC | 170 | | | |

---

154 Barclays PLC Annual Report 2000

SEC Form 20-F cross reference and other information
Currency of presentation

# Currency of presentation

In this report, unless otherwise specified, all amounts are expressed in pounds sterling. For the months indicated, the high, low and average noon buying rates in New York City for cable transfers in pounds sterling, as certified for customs purposes by the Federal Reserve Bank of New York (the Noon Buying Rate), were:

| | (US dollars per pound sterling) | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| | December | November | October | September | August | July |
| High | 1.50 | 1.45 | 1.48 | 1.48 | 1.51 | 1.52 |
| Low | 1.44 | 1.40 | 1.43 | 1.40 | 1.45 | 1.49 |

For the years indicated, the average of the Noon Buying Rates on the last day of each month were:

| | (US dollars per pound sterling) | | | | |
| --- | --- | --- | --- | --- | --- |
| | 2000 | 1999 | 1998 | 1997 | 1996 |
| Average | 1.52 | 1.62 | 1.66 | 1.64 | 1.56 |

On 20th February 2001, the Noon Buying Rate was $1.44 per pound sterling. No representation is made that pounds sterling amounts have been, or could have been, or could be, converted into US dollars at that rate or at any of the above rates. For the purpose of presenting financial information in this report, exchange rates other than those shown above may have been used.

Barclays PLC Annual Report 2000

---

Barclays PLC Annual Report 2000 155

SEC Form 20-F cross reference and other information
Glossary

# Glossary

| Term used in annual report | US equivalent or brief description |
| --- | --- |
| Accounts | Financial statements |
| Advance corporation tax | No direct US equivalent. Tax paid on company distributions recoverable from UK taxes due on income |
| Allotted | Issued |
| Attributable profit | Net income |
| Called-up share capital | Ordinary shares, issued and fully paid |
| Capital allowances | Tax term equivalent to US tax depreciation allowances |
| Cash at bank and in hand | Cash |
| Class of business | Industry segment |
| Fees and commissions receivable | Fee and commission income |
| Fees and commissions payable | Fee and commission expense |
| Finance lease | Capital lease |
| Freehold | Ownership with absolute rights in perpetuity |
| Interest receivable | Interest income |
| Interest payable | Interest expense |
| Loans and advances | Lendings |
| Loan capital | Long-term debt |
| Net asset value | Book value |
| Profit | Income |
| Profit and loss account | Income statement |
| Profit and loss account reserve | Retained earnings |
| Provisions | Allowances |
| Revaluation reserve | No direct US equivalent. Represents the increase in the valuation of certain assets as compared with historical cost |
| Share capital | Ordinary shares, capital stock or common stock issued and fully paid |
| Shareholders' funds | Shareholders' equity |
| Share premium account | Additional paid-up capital or paid-in surplus (not distributable) |
| Shares in issue | Shares outstanding |
| Tangible fixed assets | Property and equipment |
| Write-offs | Charge-offs |

---

Consolidated accounts Barclays Bank PLC
Consolidated profit and loss account

# Consolidated profit and loss account
## For the year ended 31st December 2000

| | Note | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- | --- |
| Interest receivable: | | | | |
| Interest receivable and similar income arising from debt securities | | 2,339 | 1,397 | 1,419 |
| Other interest receivable and similar income | | 9,449 | 7,923 | 8,493 |
| | | 11,788 | 9,320 | 9,912 |
| Interest payable | | 6,635 | 4,696 | 5,604 |
| Profit on redemption/repurchase of loan capital | 1 | 2 | 3 | 3 |
| Net interest income | | 5,155 | 4,627 | 4,311 |
| Fees and commissions receivable | | 3,689 | 3,207 | 3,008 |
| Less: fees and commissions payable | | (320) | (275) | (229) |
| Dealing profits | 2 | 677 | 556 | (42) |
| Other operating income | 3 | 397 | 258 | 298 |
| Operating income | | 9,598 | 8,373 | 7,346 |
| Administrative expenses - staff costs | 4 | 3,219 | 3,057 | 2,811 |
| Administrative expenses - other | 6 | 1,967 | 1,807 | 1,829 |
| Depreciation and amortisation | 7 | 306 | 280 | 275 |
| Operating expenses | | 5,492 | 5,144 | 4,915 |
| Operating profit before provisions | | 4,106 | 3,229 | 2,431 |
| Provisions for bad and doubtful debts | 18 | 817 | 621 | 492 |
| Provisions for contingent liabilities and commitments | 8 | (1) | 1 | 76 |
| Provisions | | 816 | 622 | 568 |
| Operating profit | | 3,290 | 2,607 | 1,863 |
| Loss from joint ventures | | (1) | (1) | - |
| (Loss)/income from associated undertakings | | (7) | (13) | 22 |
| Loss on sale or restructuring of BZW | 9 | - | (30) | (3) |
| Profit/(loss) profit on disposal of other Group undertakings | 10 | 214 | (108) | 4 |
| Write-down of fixed asset investments | | - | - | (4) |
| Profit on ordinary activities before tax | | 3,496 | 2,455 | 1,882 |
| Tax on profit on ordinary activities | 11 | 944 | 644 | 520 |
| Profit on ordinary activities after tax | | 2,552 | 1,811 | 1,362 |
| Minority interests - equity | | (22) | (24) | (20) |
| Profit for the financial year attributable to the members of Barclays Bank PLC (Net income) | | 2,530 | 1,787 | 1,342 |
| Dividends payable to Barclays PLC | d | (1,352) | (1,404) | (1,214) |
| Dividends payable to preference shareholders | d | (24) | (28) | (25) |
| Payments to RCI holders | | (33) | - | - |
| Profit retained for the financial year | | 1,121 | 355 | 103 |

The note numbers refer to the notes on pages 87 to 152, whereas the note letters refer to those on pages 162 to 165.

For each of the years reported above, there was no material difference between profit before tax and profit retained, and historical cost profits.

156 Barclays PLC Annual Report 2000

---

Consolidated accounts Barclays Bank PLC
Statement of total recognised gains and losses

# Statement of total recognised gains and losses
## For the year ended 31st December 2000

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Profit for the financial year attributable to the members of Barclays Bank PLC | 2,530 | 1,787 | 1,342 |
| Exchange rate translation differences | 36 | (65) | 29 |
| Other items | 8 | 25 | - |
| Joint ventures and associated undertakings | 6 | (19) | 31 |
| Total recognised gains relating to the period | 2,580 | 1,728 | 1,402 |
| Prior period adjustment* | - | (81) | - |
| Total gains and losses recognised including prior period adjustment | 2,580 | 1,647 | 1,402 |

* The prior period adjustment relates to the adoption of FRS 12 in 1999 which resulted in the net charge to shareholders' funds with respect to provisions made for vacant leasehold properties.

Barclays PLC Annual Report 2000 157

---

Consolidated accounts Barclays Bank PLC
Consolidated balance sheet

# Consolidated balance sheet
## As at 31st December 2000

| | Note | 2000 £m | 2000 £m | 1999 £m | 1999 £m |
| --- | --- | --- | --- | --- | --- |
| Assets | | | | | |
| Cash and balances at central banks | | | 1,243 | | 1,166 |
| Items in course of collection from other banks | | | 2,509 | | 2,492 |
| Treasury bills and other eligible bills | 15 | | 5,564 | | 7,176 |
| Loans and advances to banks - banking | | 9,570 | | 13,071 | |
| - trading | | 26,856 | | 26,555 | |
| | 16 | | 36,426 | | 39,626 |
| Loans and advances to customers - banking | | 138,423 | | 95,006 | |
| - trading | | 23,687 | | 21,562 | |
| | 17 | | 162,110 | | 116,568 |
| Debt securities | 19 | | 70,770 | | 53,919 |
| Equity shares | 20 | | 4,062 | | 5,604 |
| Interests in joint ventures - share of gross assets | | 180 | | 121 | |
| - share of gross liabilities | | (118) | | (71) | |
| | 21 | | 62 | | 50 |
| Interests in associated undertakings | 21 | | 60 | | 56 |
| Intangible fixed assets | 22 | | 4,269 | | 183 |
| Tangible fixed assets | 23 | | 2,059 | | 1,800 |
| Other assets | 25 | | 15,518 | | 15,910 |
| Prepayments and accrued income | 27 | | 2,827 | | 2,203 |
| | | | 307,479 | | 246,753 |
| Retail life-fund assets attributable to policyholders | 26 | | 8,711 | | 8,040 |
| Total assets | | | 316,190 | | 254,793 |

The note numbers refer to the notes on pages 87 to 152.

158 Barclays PLC Annual Report 2000

# Consolidated accounts Barclays Bank PLC

## Consolidated balance sheet

### As at 31st December 2000

| Liabilities | Note | 2000 £m | 2000 £m | 1999 £m | 1999 £m |
| --- | --- | --- | --- | --- | --- |
| Deposits by banks - banking | | 32,445 | | 26,915 | |
| - trading | | 17,311 | | 17,571 | |
| | 28 | | 49,756 | | 44,486 |
| Customer accounts - banking | | 140,352 | | 105,027 | |
| - trading | | 18,616 | | 18,939 | |
| | 29 | | 158,968 | | 123,966 |
| Debt securities in issue | 30 | | 31,883 | | 23,329 |
| Items in course of collection due to other banks | | | 1,176 | | 1,400 |
| Other liabilities | 31 | | 38,184 | | 35,119 |
| Balances due to Barclays PLC | | | 632 | | 484 |
| Accruals and deferred income | 32 | | 4,457 | | 3,290 |
| Provisions for liabilities and charges - deferred tax | 33 | | 631 | | 596 |
| Provisions for liabilities and charges - other | 34 | | 635 | | 651 |
| Subordinated liabilities: | | | | | |
| Undated loan capital - convertible to preference shares | 35 | | 335 | | 309 |
| Undated loan capital - non-convertible | 35 | | 2,337 | | 1,440 |
| Dated loan capital - non-convertible | 36 | | 3,698 | | 2,848 |
| | | | **292,692** | | **237,918** |
| Minority interests and shareholders' funds | | | | | |
| Minority interests - equity | | | 108 | | 82 |
| Called up share capital | a | 2,275 | | 2,088 | |
| Share premium account | | 5,269 | | 1,881 | |
| Revaluation reserve | 35 | | | 37 | |
| Other shareholders' funds | b | 1,350 | | - | |
| Profit and loss account | | 5,750 | | 4,747 | |
| Shareholders' funds - equity and non-equity | c | 14,679 | | 8,753 | |
| | | | **14,787** | | **8,835** |
| | | | **307,479** | | **246,753** |
| Retail life-fund liabilities to policyholders | 26 | | 8,711 | | 8,040 |
| Total liabilities and shareholders' funds | | | **316,190** | | **254,793** |

| Memorandum items | Note | 2000 £m | 1999 £m |
| --- | --- | --- | --- |
| Contingent liabilities: | 45 | | |
| Acceptances and endorsements | | 1,170 | 1,530 |
| Guarantees and assets pledged as collateral security | | 15,180 | 12,044 |
| Other contingent liabilities | | 6,503 | 5,360 |
| | | **22,853** | **18,934** |
| Commitments - standby facilities, credit lines and other | | **87,971** | **82,479** |

The note numbers refer to the notes on pages 87 to 152, whereas the note letters refer to those on pages 162 to 165.

Barclays PLC Annual Report 2000 159

---

# Consolidated accounts Barclays Bank PLC

## Consolidated statement of changes in reserves

### As at 31st December 2000

| Share premium account | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| At beginning of year | 1,881 | 1,672 | 1,574 |
| Premium arising on shares issued | 3,367 | 202 | 100 |
| Exchange rate translation differences | 21 | 7 | (2) |
| At end of year | **5,269** | **1,881** | **1,672** |
| **Revaluation reserve** | | | |
| At beginning of year | 37 | 36 | 35 |
| Exchange rate translation differences | (2) | (3) | 1 |
| Revaluation of interest in associated undertaking | - | 5 | - |
| Other items | - | (1) | - |
| At end of year | **35** | **37** | **36** |
| **Other shareholders' funds** | | | |
| At beginning of year | - | - | - |
| Issued (net of discount) | 1,350 | - | - |
| At end of year | **1,350** | **-** | **-** |
| **Profit and loss account** | | | |
| At beginning of year | 4,747 | 4,321 | 4,147 |
| Profit retained | 1,121 | 355 | 103 |
| Redemption of preference shares | (149) | - | - |
| Exchange rate translation differences | 19 | (67) | 31 |
| Goodwill written back on disposals | - | 138 | 10 |
| Other items | 12 | - | 30 |
| At end of year | **5,750** | **4,747** | **4,321** |
| **Total reserves** | **12,404** | **6,665** | **6,029** |

The Group operates in a number of countries subject to regulations under which a local subsidiary undertaking has to maintain a minimum level of capital. The current policy of the Group is that local capital requirements are met, as far as possible, by the retention of profit. Certain countries operate exchange control regulations which limit the amount of dividends that can be remitted to non-resident shareholders. It is not possible to determine the amount of profit retained and other reserves that is restricted by these regulations, but the net profit retained of overseas subsidiaries, associated undertakings and joint ventures at 31st December 2000 totalled £953m (1999 £789m, 1998 £732m). If such overseas reserves were to be remitted, other tax liabilities, which have not been provided for in the accounts, might arise.

Accumulated exchange rate translation differences are £440m debit (1999 £478m debit, 1998 £415m debit).

Goodwill amounting to £215m (1999 £215m, 1998 £353m) has been charged directly against reserves in the current and prior years in respect of acquisitions. This amount is net of any goodwill attributable to subsidiary undertakings disposed of prior to the balance sheet date.

160 Barclays PLC Annual Report 2000

---

# Consolidated accounts Barclays Bank PLC

## Consolidated cash flow statement

### For the year ended 31st December 2000

| | Note | 2000 £m | 2000 £m | 1999 £m | 1999 £m | 1998 £m | 1998 £m |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Net cash inflow/(outflow) from operating activities | e | | 8,499 | | 8,917 | | (1,674) |
| Dividends received from associated undertakings | | | 1 | | 5 | | 3 |
| Returns on investments and servicing of finance: | | | | | | | |
| Interest paid on loan capital and other subordinated liabilities | | (346) | | (253) | | (220) | |
| Preference dividends paid | | (24) | | (28) | | (25) | |
| Payment to Reserve Capital Instrument holders | | (24) | | - | | - | |
| Dividends paid to minority shareholders | | (10) | | (9) | | (7) | |
| Net cash outflows from returns on investment and servicing of finance | | | (404) | | (290) | | (252) |
| Tax paid | | | (636) | | (636) | | (547) |
| Capital expenditure and financial investment: | | | | | | | |
| Capital expenditure | | (365) | | (224) | | (305) | |
| Sale of property and equipment | | 112 | | 58 | | 107 | |
| Purchase of investment securities | | (14,490) | | (13,094) | | (10,866) | |
| Redemption of investment securities | | 5,666 | | 2,476 | | 3,874 | |
| Sale of investment securities | | 4,115 | | 2,894 | | 9,523 | |
| Net cash (outflow)/inflow from capital expenditure and financial investment | | | (4,962) | | (7,890) | | 2,333 |
| Acquisitions and disposals: | | | | | | | |
| Acquisition of subsidiary undertakings | 54 | (2,421) | | 60 | | (70) | |
| Acquisition of associated undertakings and joint ventures | | - | | - | | (43) | |
| Sale of associated undertakings | | 13 | | 8 | | 7 | |
| Sale of other group undertakings | 51 | 307 | | 174 | | 690 | |
| Net cash (outflow)/inflow from acquisitions and disposals | | | (2,101) | | 242 | | 584 |
| Equity dividend paid: | | | (1,217) | | (1,328) | | (822) |
| Net cash (outflow) before financing | | | (820) | | (980) | | (375) |
| Financing: | f | | | | | | |
| Issue of Reserve Capital Instruments (net of expenses) | | 1,350 | | - | | - | |
| Issue of loan capital and other subordinated liabilities (net of expenses) | | 861 | | 859 | | 962 | |
| Redemption/repurchase of loan capital and other subordinated liabilities | | (212) | | (15) | | (240) | |
| Issue of ordinary shares | | 195 | | 214 | | 110 | |
| Redemption of preference shares | | (149) | | - | | - | |
| Net cash inflow from financing | | | 2,045 | | 1,058 | | 832 |
| Increase in cash | 53 | | 1,225 | | 78 | | 457 |

The note numbers refer to the notes on pages 87 to 152, whereas the note letters refer to those on pages 162 to 165.

Barclays PLC Annual Report 2000 161

---

# Consolidated accounts Barclays Bank PLC

## Notes to the accounts

### a Called up share capital

#### Ordinary shares
The authorised ordinary share capital of the Bank, at 31st December 2000, was 2,500m (1999 2,500m) ordinary shares of £1 each.

| | 2000 £m | 1999 £m |
| --- | --- | --- |
| **Called up share capital, allotted and fully paid** | | |
| At beginning of year | 2,088 | 2,076 |
| Issued to acquire The Woolwich | 177 | - |
| Issued for cash | 10 | 12 |
| At end of year | **2,275** | **2,088** |

#### Preference shares
The authorised preference share capital of the Bank is 150m (1999 150m) shares of $0.01 each. At 31st December 2000, 17m (1999 34.92m) preference shares were outstanding and had been issued for a consideration of $212.5m which the nominal value was $170,000 and the balance was share premium.

| | Number of shares issued | Nominal value per share $ | Premium per share $ | Liquidation value per share $ | Earliest redemption date |
| --- | --- | --- | --- | --- | --- |
| Series D1 | 8,500,000 | 0.01 | 19.99 | 20.00 | 29th March 2001 |
| Series D2 | 8,500,000 | 0.01 | 4.99 | 5.00 | 29th March 2001 |

The Series D1 and D2 Preference Shares are redeemable, at the option of the Bank, as a whole at their liquidation values, together with accrued and unpaid dividends for the current quarterly dividend period to the date of redemption.

In the event of a winding up, the holders of preference shares will be entitled to receive, before any distribution of assets is made to holders of ordinary shares of Barclays Bank PLC, liquidating distributions in the amounts of Series D1, $20; and Series D2, $5 per share plus an amount equal to accrued and unpaid dividends for the current quarterly dividend period to the date of commencement of the winding up.

The holders of preference shares are not entitled to receive notice of, or to attend or vote at, any general meeting of Barclays Bank PLC, except where there has been a failure to pay the equivalent of six consecutive quarterly dividends (in which case they may appoint two additional Directors), or where a resolution is proposed for adoption by shareholders providing for the winding up of the Bank. However, Series D1 Preference shareholders may receive notice of and attend the general meeting called for the purpose and vote on that resolution.

During the year 17,920,000 series C1 and C2 preference shares were redeemed.

In the event of the conversion of the Series E Notes (see page 105), the rights of the Series E1 and E2 Preference Shares are the same as those for Series D1 and D2 respectively. The Series E Preference Shares issued on conversion are redeemable, at the option of the Bank, in full on or after 30th April 2003.

### b Other shareholders' funds

Other shareholders' funds are represented by Reserve Capital Instruments (RCIs) of €850m (1999 €nil) and US$1,250m (1999 US$nil). RCIs are perpetual securities and have no maturity date. However, the RCIs are redeemable in whole, but not in part, at the option of the Bank subject to the prior approval of the FSA and the Auditors of the Bank having reported to the Trustee within the previous six months that a solvency condition is met, at their principal amount together with any outstanding payments on 15th December 2010, in respect of the euro RCIs, and 15th June 2011, in respect of the US dollar RCIs, or any respective coupon payment date thereafter.

The euro RCIs bear coupons at a rate of 7.50% per annum from (and including) 3rd May 2000 to (but excluding) 15th December 2010 and thereafter at a rate, reset quarterly, of 2.95%, per annum above the euro-zone interbank offered rate for three month euro deposits. The US dollar RCIs bear coupons at a rate of 8.55% per annum from (and including) 19th September 2000 to (but excluding) 15th June 2011 and thereafter at a rate, reset quarterly, of 3.00% per annum above the London interbank offered rate for three month US dollar deposits.

The rights and claims of the RCI holders are subordinated to the claims of unsubordinated creditors and subordinated creditors which hold any of the Bank's loan capital. Upon any winding up of the Bank, the holder of each RCI will rank pari passu with the holders of the most senior class or classes of preference shares (if any) of the Bank then in issue and in priority to all other Bank shareholders.

162 Barclays PLC Annual Report 2000

---

# Consolidated accounts Barclays Bank PLC

## Notes to the accounts

### c Shareholders' funds

Shareholders' funds at 31st December 2000 include £142m (1999 £270m) of non-equity share premium (see Preference shares in note a above) and £1,350m (1999 £nil) of other shareholders' funds (see note b above). All other shareholders' funds represent equity interests.

### d Dividends

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| **On ordinary shares** | | | |
| Interim dividends | 733 | 918 | 804 |
| Final interim dividend | 619 | 486 | 410 |
| | **1,352** | **1,404** | **1,214** |

These dividends are paid to enable Barclays PLC to fund its dividends to its shareholders and, in 2000, to fund the repurchase by Barclays PLC of 19.6m of its ordinary shares at a total cost of £310.5m (1999 27.8m at a total cost of £504m), and to fund contributions of £114m (1999 £154m) made by Barclays PLC to the QUEST (see page 84) to enable the purchase of new Barclays PLC ordinary shares on the exercise of options under the SAYE Share Option Scheme.

Dividends on the preference shares are paid quarterly at such rates as will, including the UK associated tax credit and before deduction of UK withholding tax (see Taxation), result in annual dividends to holders, expressed as percentages of the liquidation values of the relevant preference shares, of 11.25% on Series C1 and Series C2 Preference Shares (prior to their redemption on 30th June 2000) and 11.5% on Series D1 and Series D2 Preference Shares. Preference dividends paid totalled $35m (£24m) in 2000, $40m (£28m) in 1999 and $40m (£25m) in 1998.

In the event of the conversion of the Series E Notes, the annual dividends, expressed as a percentage of the liquidation values, on the Series E1 and E2 Preference Shares would be 9.25%.

### e Reconciliation of operating profit to net cash flow from operating activities

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Net cash inflow/(outflow) from operating activities of Barclays PLC (see note 50) | 8,486 | 8,923 | (1,337) |
| Increase/(decrease) in balance due by Barclays Bank PLC to Barclays PLC | 13 | (6) | (337) |
| Net cash inflow/(outflow) from operating activities of Barclays Bank PLC | **8,499** | **8,917** | **(1,674)** |

### f Changes in financing during the year

| | Undated loan capital £m | Dated loan capital £m | Ordinary shares £m | Share premium £m | Reserve Capital Instruments £m |
| --- | --- | --- | --- | --- | --- |
| **Barclays Bank PLC** | | | | | |
| At beginning of year | 1,749 | 2,848 | 2,088 | 1,881 | - |
| Exchange rate and other movements | 73 | 96 | - | 21 | - |
| Profit on redemption/repurchase of loan capital | (2) | - | - | - | - |
| Acquisition of The Woolwich | 187 | 770 | 177 | 3,182 | - |
| Net cash inflow/(outflow) from financing | 665 | (16) | 10 | 185 | 1,350 |
| At end of year | **2,672** | **3,698** | **2,275** | **5,269** | **1,350** |

Series C1 and C2 preference shares were redeemed in the year. The redemption cost was charged to the profit and loss reserve and has not been included in the table above.

Barclays PLC Annual Report 2000 163

---

# Consolidated accounts Barclays Bank PLC

## Notes to the accounts

### g Segmental analysis

| | 2000 £m | 2000 % | 1999 £m | 1999 % | 1998 £m | 1998 % |
| --- | --- | --- | --- | --- | --- | --- |
| **By geographical segments (a)** | | | | | | |
| **Attributable profit** | | | | | | |
| UK | 2,136 | 84 | 1,207 | 67 | 1,107 | 82 |
| Foreign UK-based | (36) | (1) | 184 | 10 | (46) | (3) |
| Other European Union | 271 | 11 | 262 | 15 | 213 | 16 |
| United States | 25 | 1 | 71 | 4 | 21 | 2 |
| Rest of the World | 134 | 5 | 63 | 4 | 47 | 3 |
| | **2,530** | **100** | **1,787** | **100** | **1,342** | **100** |

Note:
(a) For the basis of the geographical analysis, see Analyses by geographical segments and classes of business on page 134.

### h Differences between UK and US accounting principles - Barclays Bank PLC

The following table summarises the significant adjustments to consolidated attributable profit (net income under US GAAP) and shareholders' funds (shareholders' equity under US GAAP) which would result from the application of US GAAP instead of UK GAAP.

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Approximate net income (US GAAP) of Barclays PLC Group (from page 140) | 2,195 | 1,695 | 1,370 |
| Preference share dividends and other appropriations of Barclays Bank PLC | 57 | 28 | 25 |
| **Approximate net income (US GAAP) of Barclays Bank PLC Group** | **2,252** | **1,723** | **1,395** |

| | Note | 2000 £m | 1999 £m |
| --- | --- | --- | --- |
| Shareholders' funds (UK GAAP) of Barclays Bank PLC Group | | 14,679 | 8,753 |
| Goodwill | (a) | 66 | 78 |
| Core deposit intangible | (b) | (12) | - |
| Pension cost | (c) | (259) | (66) |
| Post-retirement benefits | (c) | (15) | - |
| Leasing - lessor | (d) | (168) | (154) |
| Leasing - lessee | (e) | 13 | 10 |
| Deferred tax | (g) | - | 162 |
| Property depreciation | | (41) | (44) |
| Share compensation schemes | (h) | (110) | (66) |
| Shareholders' interest in the long-term assurance fund | | (751) | (674) |
| Revaluation of property | (k) | (273) | (278) |
| Net unrealised gain on investment securities | (i) | 322 | 68 |
| Dividend payable | | 619 | 484 |
| Restructuring of business provisions | | 15 | - |
| Internal use software | (p) | 218 | 95 |
| Internal hedging | (q) | 54 | (94) |
| Mortgage incentives | (r) | 17 | - |
| Fair value amortisation charge | (q) | 1 | - |
| Non-qualifying special purpose vehicles | (s) | (72) | - |
| Tax effect on the above UK/US GAAP reconciling items | | 210 | 263 |
| **Approximate shareholders' equity (US GAAP) of Barclays Bank PLC Group** | | **14,513** | **8,537** |

The note numbers refer to the notes on pages 141 to 149.

164 Barclays PLC Annual Report 2000

---

# Consolidated accounts Barclays Bank PLC

## Notes to the accounts

### h Differences between UK and US accounting principles - Barclays Bank PLC (continued)

#### SFAS 130 - Comprehensive income
The following table details the approximate comprehensive income and accumulated other income under US GAAP.

| | 2000 £m | 1999 £m | 1998 £m |
| --- | --- | --- | --- |
| Barclays Bank PLC - Approximate net income (US GAAP) | 2,252 | 1,723 | 1,395 |
| Net exchange translation differences * | 7 | (19) | 38 |
| Net unrealised gains on investment securities ** | 177 | (111) | 7 |
| **Barclays Bank PLC - Approximate comprehensive income (US GAAP)** | **2,436** | **1,593** | **1,440** |
| Net exchange translation differences | (286) | (293) | (274) |
| Net unrealised gains on investment securities ** | 225 | 48 | 159 |
| **Accumulated other comprehensive income** | **(61)** | **(245)** | **(115)** |

* including reclassification to net income on disposal of investments.
** net of tax effect of £77m (1999 £(51m), 1998 £2m).

Barclays PLC Annual Report 2000 165

---

# Financial data Barclays Bank PLC

| Selected financial statistics | 2000 % | 1999 % | 1998 % | 1997 % | 1996 % |
| --- | --- | --- | --- | --- | --- |
| Attributable profit as a percentage of: | | | | | |
| average total assets (note (a)) | 0.83 | 0.73 | 0.55 | 0.54 | 0.91 |
| average shareholders' funds | 23.75 | 20.88 | 16.67 | 14.98 | 22.37 |
| Average shareholders' funds as a percentage of average total assets (note (a)) | 3.49 | 3.50 | 3.31 | 3.60 | 4.07 |

| Selected profit and loss account data | 2000 £m | 1999 £m | 1998 £m | 1997 £m | 1996 £m |
| --- | --- | --- | --- | --- | --- |
| Interest receivable | 11,788 | 9,320 | 9,912 | 9,127 | 8,730 |
| Interest payable | 6,635 | 4,696 | 5,604 | 5,095 | 4,825 |
| Profit on redemption/repurchase of loan capital | 2 | 3 | 3 | 2 | 32 |
| Non interest income | 4,443 | 3,746 | 3,035 | 3,515 | 3,526 |
| Operating expenses | 5,492 | 5,144 | 4,915 | 5,193 | 5,097 |
| Provisions - bad and doubtful debts | 817 | 621 | 492 | 227 | 215 |
| - contingent liabilities and commitments | (1) | 1 | 76 | 4 | 9 |
| Loss from joint ventures | (1) | (1) | - | - | - |
| (Loss)/income from associated undertakings | (7) | (13) | 22 | 16 | 23 |
| Loss on sale or termination of BZW businesses | - | (30) | (3) | (469) | - |
| Profit/(loss) on disposal of other Group undertakings | 214 | (108) | 4 | 44 | 70 |
| Write-down of fixed asset investments | - | - | (4) | (19) | - |
| Profit before tax | 3,496 | 2,455 | 1,882 | 1,697 | 2,235 |
| Attributable profit | 2,530 | 1,787 | 1,342 | 1,157 | 1,655 |

| Selected balance sheet data | 2000 £m | 1999 £m | 1998 £m | 1997 £m | 1996 £m |
| --- | --- | --- | --- | --- | --- |
| Shareholders' funds | 14,679 | 8,753 | 8,105 | 7,822 | 7,456 |
| Dated and undated loan capital | 6,370 | 4,597 | 3,734 | 2,868 | 3,031 |
| Deposits by banks, customer accounts and debt securities in issue | 240,607 | 191,781 | 161,049 | 173,283 | 142,554 |
| Loans and advances to banks and customers | 198,536 | 156,194 | 132,722 | 136,706 | 118,441 |
| Total assets | 316,190 | 254,793 | 219,494 | 232,429 | 185,161 |

Note:
(a) For the purposes of this summary, the retail life-fund assets attributable to policyholders have been excluded from average total assets.

166 Barclays PLC Annual Report 2000

---

# US GAAP financial data

## US GAAP financial data

The following financial information has been adjusted from data prepared under UK GAAP to reflect significant differences from accounting principles generally accepted in the United States (US GAAP). See note 61 for an explanation of these differences.

### Selected financial statistics

| | 2000(b) ¢ | 2000 p | 1999 p | 1998 p | 1997 p | 1996 p |
| --- | --- | --- | --- | --- | --- | --- |
| **Barclays PLC Group** | | | | | | |
| Earnings per £1 ordinary share | 216.1 | 145.0 | 113.2 | 90.8 | 83.9 | 98.2 |
| Dividends per £1 ordinary share | 78.2 | 52.5 | 45.0 | 39.0 | 33.5 | 28.0 |
| Book value per £1 ordinary share | 1,168 | 784 | 553 | 515 | 487 | 460 |

| | 2000 % | 1999 % | 1998 % | 1997 % | 1996 % |
| --- | --- | --- | --- | --- | --- |
| Net income as a percentage of: | | | | | |
| average total assets | 0.69 | 0.67 | 0.55 | 0.58 | 0.83 |
| average shareholders' equity | 22.72 | 20.82 | 17.84 | 17.38 | 21.89 |
| Dividends as a percentage of net income | 35.49 | 39.88 | 43.13 | 40.27 | 28.35 |
| Average shareholders' equity as a percentage of average total assets | 3.02 | 3.22 | 3.06 | 3.32 | 3.79 |
| **Barclays Bank PLC Group** | | | | | |
| Net income as a percentage of: | | | | | |
| average total assets | 0.70 | 0.68 | 0.56 | 0.59 | 0.84 |
| average shareholders' equity | 21.37 | 20.43 | 17.85 | 17.78 | 22.22 |
| Average shareholders' equity as a percentage of average total assets | 3.29 | 3.33 | 3.11 | 3.31 | 3.79 |

### Selected financial statement data

| | 2000 $m | 2000 £m | 1999 £m | 1998 £m | 1997 £m | 1996 £m |
| --- | --- | --- | --- | --- | --- | --- |
| **Net income (note (a)):** | | | | | | |
| Barclays PLC Group | 3,271 | 2,195 | 1,695 | 1,370 | 1,274 | 1,545 |
| Barclays Bank PLC Group | 3,355 | 2,252 | 1,723 | 1,395 | 1,298 | 1,570 |
| **Shareholders' equity (note (a)):** | | | | | | |
| Barclays PLC Group | 19,413 | 13,029 | 8,262 | 7,781 | 7,409 | 7,082 |
| Barclays Bank PLC Group | 21,624 | 14,513 | 8,537 | 8,083 | 7,377 | 7,056 |
| **Total assets (note (a)):** | | | | | | |
| Barclays PLC Group | 488,133 | 327,606 | 256,644 | 220,698 | 234,104 | 185,090 |
| Barclays Bank PLC Group | 488,140 | 327,611 | 256,649 | 220,741 | 234,147 | 185,090 |

Notes:
(a) Net income and shareholders' equity have been adjusted to reflect significant differences between UK and US GAAP, as shown on page 140 to the accounts. Total assets have been adjusted to reflect such differences together with adjustments set out in footnotes s), t), v) and y) to note 61.
(b) The dollar financial information has been translated for convenience at the rate of $1.49 to £1, the Noon Buying Rate for cable transfers in New York City, payable in pounds sterling, at 31st December 2000.

Barclays PLC Annual Report 2000 167

---

# Shareholder information

## Shareholder information

### Dividends on the ordinary shares of Barclays PLC

Barclays PLC has paid dividends on its ordinary shares every year without interruption since its incorporation in 1896.

The dividends declared for each of the last five years were:

#### Pence per £1 ordinary share

| | 2000 | 1999 | 1998 | 1997 | 1996 |
| --- | --- | --- | --- | --- | --- |
| First interim | 20.00 | 17.50 | 15.50 | 13.50 | 11.50 |
| Second interim (1999 and 1998 second interim, other comparative years final) | 38.00 | 32.50 | 27.50 | 23.50 | 20.00 |
| | **58.00** | **50.00** | **43.00** | **37.00** | **31.50** |

#### US Dollars per £1 ordinary share

| | 2000 | 1999 | 1998 | 1997 | 1996 |
| --- | --- | --- | --- | --- | --- |
| First interim | 0.29 | 0.29 | 0.26 | 0.22 | 0.19 |
| Second interim (1999 and 1998 second interim, other comparative years final) | 0.55 | 0.51 | 0.44 | 0.39 | 0.33 |
| | **0.84** | **0.80** | **0.70** | **0.61** | **0.52** |

The gross dividends applicable to an American Depositary Share (ADS) representing four ordinary shares, before deduction of withholding tax, but including the UK imputed tax credit for dividends paid before 6th April 1999 (see Taxation of US holders (page 174)) are as follows.

#### US Dollars per American Depositary Shares

| | 2000 | 1999 | 1998 | 1997 | 1996 |
| --- | --- | --- | --- | --- | --- |
| First interim | 1.16 | 1.16 | 1.32 | 1.09 | 0.93 |
| Second interim (1999 and 1998 second interim, other comparative years final) | 2.20 | 2.03 | 1.77 | 1.95 | 1.63 |
| | **3.36** | **3.19** | **3.09** | **3.04** | **2.56** |

Dividends expressed in dollars are translated at the noon buying rates in New York City for cable transfers in pounds sterling as certified for customs purposes by the Federal Reserve Bank of New York (the 'Noon Buying Rate') for the days on which dividends are paid, except for the 2000 second interim dividend, payable in the UK on 30th April 2001, which is translated at Noon Buying Rate applicable on 20th February 2001, the latest practical date for inclusion in this report. No representation is made that pounds sterling amounts have been, or could have been, or could be, converted into dollars at these rates.

### Dividends on the preference shares of Barclays Bank PLC

Dividends on the preference shares are paid quarterly at such rates as will, including the UK associated tax credit if any and before deduction of UK withholding tax (see Taxation), result in annual dividends to holders of 11.5% on the aggregate liquidation values of Series D1 and Series D2 Preference Shares.

168 Barclays PLC Annual Report 2000

# Shareholder information

## Trading market for ordinary shares of Barclays PLC

The nominal capital of Barclays PLC is divided into 1,999,000,000 ordinary shares of £1 each (ordinary shares) and 1,000,000 staff shares of £1 each (staff shares). At the close of business on 31st December 2000 1,661,643,535 £1 ordinary shares and 875,000 staff shares were outstanding.

The principal trading market for Barclays PLC ordinary shares is the London Stock Exchange. Ordinary share listings were also obtained on the Tokyo Exchange with effect from 1st August 1986 and the New York Stock Exchange (NYSE) with effect from 9th September 1986.

Trading on the NYSE is in the form of ADSs under the symbol 'BCS'. Each ADS represents four £1 ordinary shares and is evidenced by an ADR. The ADR depositary is Morgan Guaranty Trust Company of New York. Details of trading activity are published in the stock tables of leading daily newspapers in the United States.

There were 545 recorded holders of ordinary shares, including those holding ADRs, with US addresses at 31st December 2000, whose shareholdings represented approximately 0.12% of total outstanding ordinary shares on that date. Since certain of the ordinary shares and ADRs were held by brokers or other nominees, the number of recorded holders in the US may not be representative of the number of beneficial holders or of their country of residence.

The following table shows the high and low sales prices for the £1 ordinary shares during the periods indicated, based on mid-market prices at close of business on the London Stock Exchange and the high and low sale prices for ADSs as reported on the NYSE composite tape.

| £1 ordinary shares | | American Depositary Shares | |
| --- | --- | --- | --- |
| High | Low | High | Low |
| p | p | US$ | US$ |

**2000**

**By month**

| December | 2,113 | 1,924 | 128 3/4 | 115 |
| November | 2,010 | 1,860 | 118 1/4 | 106 3/16 |
| October | 1,972 | 1,672 | 118 1/8 | 99 7/8 |
| September | 1,872 | 1,697 | 110 9/16 | 97 |
| August | 1,803 | 1,543 | 110 | 93 1/2 |
| July | 1,650 | 1,469 | 101 | 90 7/8 |

**By quarter**

| Fourth quarter | 2,113 | 1,672 | 128 3/4 | 99 7/8 |
| Third quarter | 1,872 | 1,469 | 110 9/16 | 90 7/8 |
| Second quarter | 1,828 | 1,539 | 116 | 94 15/16 |
| First quarter | 1,693 | 1,344 | 115 1/2 | 91 |

**1999**

| Fourth quarter | 1,996 | 1,617 | 129 1/2 | 105 1/2 |
| Third quarter | 1,934 | 1,605 | 123 1/2 | 104 |
| Second quarter | 2,011 | 1,724 | 129 1/2 | 114 |
| First quarter | 1,893 | 1,288 | 124 | 86 |

| 1998 | 1,949 | 838 | 130 7/8 | 58 3/8 |
| 1997 | 1,750 | 980 | 115 5/8 | 63 3/4 |
| 1996 | 1,036 | 688 | 70 | 41 1/4 |

Barclays PLC Annual Report 2000 169

---

# Shareholder information

## Trading market for preference shares of Barclays Bank PLC

At 31st December 2000, Barclays Bank PLC had outstanding 17,000,000 non-cumulative dollar-denominated preference shares, issued in 1991, with a nominal value of $0.01 each. Currently, the only trading market for these shares is the NYSE where they are traded in the form of ADSs, each ADS representing one preference share and being evidenced by an ADR. The Series D1 and Series D2 Preference Share ADSs are traded on the NYSE as Series D Preference Share ADS Units and each such Unit comprises one Series D1 Preference Share ADS and one Series D2 Preference Share ADS. The ADR depositary is Morgan Guaranty Trust Company of New York. At 31st December 2000, the Series D Preference Share ADR Units were held by 849 recorded holders, all with US addresses.

The following table shows the high and low sale prices for the Series D Preference Share ADS Units during the periods indicated, as reported on the NYSE composite tape.

| American Depositary Shares Series D | |
| --- | --- |
| High | Low |
| US$ | US$ |

**2000**

**By month**

| December | 25 9/16 | 25 1/8 |
| November | 25 5/16 | 25 1/16 |
| October | 26 | 25 1/8 |
| September | 25 3/4 | 25 7/16 |
| August | 25 11/16 | 25 5/16 |
| July | 26 1/16 | 25 3/8 |

**By quarter**

| Fourth quarter | 26 | 25 1/16 |
| Third quarter | 26 1/16 | 25 5/16 |
| Second quarter | 26 3/16 | 25 3/8 |
| First quarter | 26 3/16 | 25 5/16 |

**1999**

| Fourth quarter | 26 3/4 | 25 3/4 |
| Third quarter | 27 1/4 | 26 1/4 |
| Second quarter | 27 3/4 | 26 1/2 |
| First quarter | 28 1/4 | 27 3/16 |

| 1998 | 29 1/8 | 26 3/4 |
| 1997 | 29 1/4 | 27 15/16 |
| 1996 | 29 1/2 | 27 3/8 |

The Series D1 and Series D2 Preference Share ADSs were issued during 1991.

### Note

This section incorporates information on the prices at which securities of Barclays PLC and Barclays Bank PLC have traded. It is emphasised that past performance cannot be relied upon as a guide to future performance.

170 Barclays PLC Annual Report 2000

---

# Shareholder information

## Shareholdings at 31st December 2000

| Classification of shareholders | Shareholders Number | Percentage of total holders | Number (millions) | Shares held Percentage of called up ordinary shares |
| --- | --- | --- | --- | --- |
| Personal holders | 432,818 | 93.83 | 172.5 | 10.38 |
| Banks and nominee companies | 22,802 | 4.94 | 1,371.1 | 82.52 |
| Other companies | 5,169 | 1.12 | 70.3 | 4.23 |
| Insurance companies | 449 | 0.10 | 32.8 | 1.98 |
| Pension funds | 40 | 0.01 | 14.8 | 0.89 |
| Totals | 461,278 | 100.00 | 1,661.5 | 100.00 |

| Shareholding range | | | | |
| --- | --- | --- | --- | --- |
| 1-100 | 249,892 | 54.17 | 14.3 | 0.86 |
| 101-250 | 94,018 | 20.38 | 14.2 | 0.86 |
| 251-500 | 41,999 | 9.10 | 14.5 | 0.87 |
| 501-1,000 | 28,505 | 6.18 | 20.8 | 1.25 |
| 1,001-5,000 | 38,546 | 8.36 | 82.1 | 4.94 |
| 5,001-10,000 | 4,597 | 1.00 | 31.5 | 1.90 |
| 10,001-25,000 | 1,765 | 0.38 | 26.1 | 1.57 |
| 25,001-50,000 | 552 | 0.12 | 19.5 | 1.17 |
| 50,001 and over | 1,404 | 0.31 | 1,438.5 | 86.58 |
| Totals | 461,278 | 100.00 | 1,661.5 | 100.00 |

Barclays PLC Annual Report 2000 171

---

# Shareholder information

## Memorandum and Articles of Association

The Company was incorporated in England and Wales on 20th July 1896 under the Companies Acts 1862 to 1890 as a company limited by shares and was re-registered in 1982 as a public limited company under the Companies Acts 1948 to 1980. The Company is registered under company number 48839. The Company was re-registered as Barclays PLC on 1st January 1985.

The objects of the Company are set out in full in clause 4 of its memorandum of association which provides, among other things, that the Company's objects are to carry on the business of an investment and holding company in all respects.

## Directors

A Director may not vote or count towards the quorum on any resolution concerning any proposal in which he (or any person connected with him) has a material interest (other than by virtue of his interest in securities of the Company) or if he has a duty which conflicts or may conflict with the interests of the Company, unless the resolution relates to any proposal:

(i) to indemnify a Director in respect of any obligation incurred for the benefit of the Company (or any other member of the Group);

(ii) to indemnify a third party in respect of any obligation for which the Director has personally assumed responsibility;

(iii) to indemnify a Director for any liability which he may incur in the performance of his duties or to obtain insurance against such a liability;

(iv) involving the acquisition by a Director of any securities of the Company pursuant to an offer to existing holders of securities or to the public;

(v) that the Director underwrite any issue of securities of the Company (or any of its subsidiaries);

(vi) concerning any other company in which the Director is interested as an officer or creditor or shareholder, but only if he owns less than 1% of either the issued equity share capital or of the voting rights of that company;

(vii) concerning any superannuation fund or retirement, death or disability benefits scheme or employees share scheme, so long as any such fund or scheme does not give additional advantages to the Directors which are not granted to the employees who are in the fund or scheme; and

(viii) concerning any other arrangement for the benefit of employees of the Company or any other member of the Group under which the Director benefits in a similar manner to the employees concerned and which does not give the Director any advantage which the employees to whom the arrangement relates would not receive.

A Director may not vote or be counted in the quorum on any resolution which concerns his own employment with the Company or any other company in which the Company is interested.

The Directors may exercise all the powers of the Company to borrow money.

A Director must retire from office at the conclusion of the first annual general meeting after he reaches the age of 70.

A Director is required to hold an interest in ordinary shares having a nominal value of at least £500. A Director may act before acquiring those shares but must acquire the qualification shares within two months after his or her appointment.

At each annual general meeting one-third of the Directors for the time being (rounded down if necessary) are required to retire from office.

## Classes of share

The Company has two classes of shares, ordinary shares and staff shares, to which the provisions set out below apply.

### (a) Dividends

Under English law, dividends are payable on the Company's ordinary shares only out of profits available for distribution, as determined in accordance with accounting principles generally accepted in the UK and by the Companies Act 1985. The Company in general meeting may declare dividends by ordinary resolution, but such dividend may not exceed the amount recommended by the Directors. The Directors may pay interim dividends if it appears they are justified by the Company's financial position.

The profits which are resolved to be distributed in respect of any financial period are applied first in payment of a fixed dividend of 20% per annum on the staff shares and then in payment of dividends on the ordinary shares.

If a dividend is not claimed after 12 years of it becoming payable, it is forfeited and reverts to the Company.

The Directors may, with the approval of an ordinary resolution of the Company, offer shareholders the right to chose to receive an allotment of new ordinary shares credited as fully paid instead of cash in respect of all or part of any dividend.

### (b) Voting

Every member who is present in person or represented at any general meeting of the Company and who is entitled to vote has one vote on a show of hands. On a poll every member who is present or represented has one vote for every share held.

If any sum remains unpaid in relation to a member's shareholding that member is not entitled to vote that share unless the board otherwise determines.

If any member, or any other person appearing to be interested in any shares in the Company, is served with a notice under Section 212 of the Companies Act 1985 and does not supply the Company with the information required in the notice, then the board, in its absolute discretion, may direct that that member shall not be entitled to attend or vote at any meeting of the company.

### (c) Liquidation

In the event of any return of capital on liquidation the ordinary shares and the staff shares rank equally in proportion to the amounts paid up or credited as paid up on the shares of each class, except that in the event of a winding up of the company the holders of the staff shares are only entitled to participate in the surplus assets available for distribution up to the amount paid up on the staff shares plus 10%.

172 Barclays PLC Annual Report 2000

---

# Shareholder information

### (d) Redemption provisions

Subject to the Companies Act 1985, any share may be issued on terms that it is, at the option of the Company or the holder of such share, redeemable. The Company has no redeemable shares in issue.

### (e) Calls on capital

The Directors may make calls upon the members in respect of any monies unpaid on their shares. A person upon whom a call is made remains liable even if the shares in respect of which the call is made have been transferred.

## Variation of rights

The rights attached to any class of shares may be varied with the sanction of an extraordinary resolution passed at a separate meeting of the holders of the shares of that class.

## Annual and extraordinary general meetings

The Company is required to hold a general meeting each year as its annual general meeting in addition to other meetings (called extraordinary general meetings) as the Directors think fit. The type of the meeting will be specified in the notice calling it. Not more than 15 months may elapse between the date of one annual general meeting and the next.

In the case of an annual general meeting or a meeting for the passing of a special resolution (requiring the consent of a 75% majority) 21 clear days' notice is required. In other cases 14 clear days' notice is required. The notice must specify the place, the date and the hour of the meeting, and the general nature of the business to be transacted.

Subject as noted in (b) above, all shareholders are entitled to attend and vote at general meetings. The articles of association do, however, provide that arrangements may be made for simultaneous attendance at a general meeting at a place other than that specified in the notice of meeting, in which case some shareholders may be excluded from the specified place.

## Limitations on foreign shareholders

There are no limitations imposed by English law or the Company's memorandum or articles of association on the right of non-residents or foreign persons to hold or vote the Company's ordinary shares other than the limitations that would generally apply to all of the Company's shareholders.

# Taxation

The following is a summary of the principal tax consequences for holders of ordinary shares of Barclays PLC, preference shares of the Bank, ADRs representing such ordinary shares or preference shares and loan capital guaranteed by the Bank, who are citizens or residents of the UK or United States, or otherwise who are subject to UK tax or US federal income tax on a net income basis in respect of such securities. It is not, however, a comprehensive analysis of all the potential tax consequences for such holders and investors are advised to consult their tax advisers regarding the tax implications of their particular holdings, including the consequences under applicable state and local law. Unless otherwise noted, the statements of tax laws set out below are based on the laws in force as at 7th February 2001 and are subject to any subsequent changes in UK or US law, in particular any announcements made in the Chancellor's UK Budget on 7th March 2001, or in any double tax convention between the United States and the UK. An announcement that this was being re-negotiated was made on 1st October 1998. In addition, this section is based in part upon the representations of the ADR Depositary and the assumption that each obligation of the Deposit Agreement and any related agreement will be performed in accordance with its terms.

For the purposes of the current US-UK double tax conventions relating to income tax (the Income Tax Convention) and estate and gift tax (the Estate Tax Convention) and for the purposes of the US Internal Revenue Code of 1986, as amended (the Code), the holders of ADRs are treated as owners of the underlying ordinary shares or preference shares, as the case may be.

## Taxation of UK holders

### Taxation of dividends

In accordance with UK law, Barclays PLC and the Bank pay dividends on ordinary shares and preference shares without any deduction or withholding tax in respect of any taxes imposed by the UK government or any UK taxing authority.

If the shareholder is a UK resident individual liable to income tax only at the basic rate or the lower rate, then there will be no further tax liability in respect of the dividend received. If, however, the individual shareholder is subject to income tax at the higher rate (currently 40%,) there will be a further liability to tax. Higher rate taxpayers are taxable on dividend income at a special rate of (currently 32.5%) against which can be offset a tax credit of one-ninth of the dividend paid. Tax credits are no longer repayable to shareholders with no tax liability.

### Taxation of shares under the Dividend Reinvestment Plan

Where a shareholder elects to purchase shares using their cash dividend, the individual will be liable for income tax on dividends reinvested in the Plan on the same basis as if they had received the cash and arranged the investment themselves. They should accordingly include the dividend received in their annual tax return in the normal way. The tax consequences for a UK individual are the same as described in 'Taxation of dividends' above.

### Taxation of capital gains

Where shares are disposed of by open market sale, a capital gain may result if the disposal proceeds exceed the sum of the base cost of the shares sold and any other allowable deductions such as share dealing costs, indexation relief (up to 5th April 1998) and taper relief (generally on shares held at 16th March 1998 and subsequent acquisitions). To arrive at the total base cost of any Barclays PLC shares held, the amount subscribed for rights taken up in 1985 and 1988 must be added to the cost of all other shares held. For this purpose, current legislation permits the market valuation at 31st March 1982 to be substituted for the original cost of shares purchased before that date.

The calculations required to compute chargeable capital gains, particularly taper and indexation reliefs, may be complex. Capital gains may also arise from the gifting of shares to connected parties such as relatives (although not spouses) and family trusts. Shareholders are advised to consult their personal financial adviser if further information regarding a possible tax liability in respect of their holdings of Barclays PLC shares is required.

### Stamp duty

On the purchase of shares, stamp duty or stamp duty reserve tax at the rate of 1/2% is normally payable on the purchase price of the shares.

Barclays PLC Annual Report 2000 173

---

# Shareholder information

## Inheritance tax

An individual may be liable to inheritance tax on the transfer of ordinary shares or preference shares. Where an individual is liable, inheritance tax may be charged on the amount by which the value of his or her estate is reduced as a result of any transfer by way of gift or other gratuitous transaction made by them or treated as made by them.

## Taxation of US holders

### Taxation of dividends

Under the Income Tax Convention, a beneficial owner of ordinary shares or preference shares who is a resident of the United States and not a resident of the UK, whose holding is not effectively connected with a permanent establishment or fixed base in the UK and who is not subject to special rules (such as those that apply to US tax-exempt entities and certain investment or holding companies, 25% of the capital of which is held directly or indirectly by persons that are not individual residents or nationals of the United States (a US holder)) has generally been entitled to receive a refund from the UK Inland Revenue, in addition to any dividend paid by Barclays PLC or the Bank, of an amount equal to the tax credit available to UK resident individuals, less a withholding tax equal to 15% of the aggregate of the tax credit and the dividend.

For dividends paid on or after 6th April 1999, the tax credit has been reduced to one-ninth of the dividend paid, although the withholding rate remains at 15% (but not to exceed the amount of the tax credit). Thus, US holders generally are no longer entitled to a refund of the tax credit as of that date or are entitled only to a residual refund equal to less than 1% of the amount of the dividend. In respect of dividends paid after 6th April 1999 any US holder entitled to such refund must, in order to obtain it, file a claim for payment in the manner, and at the time, specified by the procedures established by the UK Inland Revenue. Dividends received by a US holder will be foreign source income for US federal income tax purposes in the amount equal to the US dollar value of the payment (including the related tax credit amount if the benefit of the Income Tax convention is claimed), on the date of such payment. Dividends generally will not be eligible for the 'dividends received' deduction allowed to US corporations under the Code. Subject to certain limitations, UK tax withheld from payments will be available as a credit against US tax (assuming such US holder claims the benefits of the Income Tax Convention with respect to such dividends).

### Taxation of capital gains

Generally, US holders will not be subject to UK tax, but will be subject to US tax on capital gains realised on the sale or other disposition of ordinary shares, preference shares or ADRs (assuming such shares are held as capital assets).

### Taxation of premium on redemption or purchase of shares

No refund of tax will be available under the Income Tax Convention in respect of any premium paid on a redemption of preference shares by the Bank or on a purchase by Barclays PLC of its own shares.

For US tax purposes, redemption premium generally will be treated as an additional amount realised in the calculation of gain or loss.

### Stamp duty

No UK stamp duty is payable on the transfer of an ADR, provided that the separate instrument of transfer is not executed in, and remains at all times outside, the UK.

### Estate and gift tax

Under the Estate Tax Convention, a US holder generally is not subject to UK inheritance tax.

### Payments under loan capital guarantees

It is unclear whether, under current UK law and Inland Revenue practice, the Bank would be required to deduct or withhold UK income tax from any payment of interest made to residents of the United States in respect of the guarantees given by the Bank in relation to the long-term debt issue by Barclays North American Capital Corporation. However, the terms of such guarantees impose a grossing up obligation on the Bank, subject to limited exceptions, in regard to any payment thereunder which is subject to any such deduction or withholding.

## Exchange controls and other limitations affecting security holders

Other than certain emergency restrictions which may be in force from time to time, there are currently no UK laws, decrees or regulations which would affect the transfer of capital or remittance of dividends, interest and other payments to holders of Barclays securities who are not residents of the UK. There are also no restrictions under the Articles of Association of either Barclays PLC or the Bank, or under current UK laws, which limit the right of non-resident or foreign owners, to hold Barclays securities or, when entitled to vote, to do so.

174 Barclays PLC Annual Report 2000

---

# Shareholder information

## Shareholder enquiries

Investors who have any questions about their investment in Barclays, or about Barclays in general, may write to:

Head of Investor Relations,
Barclays PLC,
54 Lombard Street,
London EC3P 3AH

or, in the United States of America,

The Corporate Communications Department,
Barclays Bank PLC,
222 Broadway,
New York, NY 10038, USA.

Registered and Head office:
54 Lombard Street,
London EC3P 3AH.
Tel: 020 7699 5000

Registrar:
The Registrar to Barclays PLC,
PO Box 82,
The Pavilions,
Bridgwater Road,
Bristol BS99 7NH.
Tel: 0870 702 0196

ADR depositary:
Morgan Guaranty Trust Company of New York,
c/o EquiServe JP Morgan Service Centre,
PO Box 842006,
Boston,
MA 022842006, USA.

Tel: (781) 575 4328
Fax: (781) 575 4082

Barclays PLC Annual Report 2000 175

---

# Group senior management and principal offices

## Group senior management and principal offices

### Barclays Bank PLC
54 Lombard Street
London
EC3P 3AH
Tel: 020 7699 5000

Sir Peter Middleton GCB Chairman
Matthew Barrett Group Chief Executive
John Stewart Deputy Group Chief Executive and Chief Executive, Retail Financial Services
Chris Lendrum Chief Executive, Corporate Banking
John Varley Group Finance Director

### Group Central Functions
54 Lombard Street
London
EC3P 3AH
Tel: 020 7699 5000

Allan Barr Director, Solutions
Andrew Bruce Group Credit Risk Director
Leigh Bruce Communications Director
John Cotton Group Property Services Director
Gary Dibb Group Chief Administrative Officer
Peter Gallant Group Treasurer
Peter Herbert Group VBM Director
Richard Meddings Group Financial Controller
Ian Menzies-Conacher Group Taxation Director
Geoffrey Mitchell OBE Chief Accountant
Tim Shepheard-Walwyn Group Risk Director
David Storey Director, Group Internal Audit
Howard Trust Group General Counsel and Group Secretary

### Service Provision
54 Lombard Street
London
EC3P 3AH
Tel: 020 7699 5000

David Weymouth Managing Director and Chief Information Officer Barclays Group
Toby Broome Group Purchasing Director
David Cartwright Managing Director, Service Delivery
David Curd Risk Director/Group IT Risk Director
Allan Hodges Finance Director
David Postings Managing Director, Strategy Performance & Client Services
Christian Torkington Managing Director, Service Integration
Sue Turner Human Resources Director

### Retail Financial Services
Murray House
1 Royal Mint Court
London
EC3N 4HH
Tel: 020 7977 7000

John Stewart Chief Executive
John Eaton* Managing Director, UK Retail Products
Gary Hoffman Managing Director, Strategic Marketing & Distribution
Bob Dench* Managing Director, Investment Management
Jane Platt* Managing Director, Stockbrokers
Lynne Peacock* Chief Executive, Woolwich
Bob Hunter Managing Director, Wealth Management
Eduardo Arbizu* Chief Executive Officer and Group Country Manager, Iberia
Michael Pinder* Managing Director, Offshore Services
Charles Middleton* Managing Director, Caribbean
William Oullin* Managing Director, Private Banking
John Church* Managing Director, UK Premier Banking
Henri-Paul Pellegrino* Country Manager, France
Ian Poston Chief of Staff
Mark Clarke Finance Director
Imelda Walsh Human Resources Director

### Barclaycard
1234 Pavilion Drive
Northampton
NN4 7SG
Tel: 01604 234 234

Bob Potts Barclaycard Chief Executive Officer
Peter Crook* Managing Director Barclaycard UK
Mark Evans* Managing Director Barclaycard Corporate
Barry Fergus* Managing Director Barclaycard International
Richard Sommers Finance Director
Phillip Barr Director Human Resources

### Business Banking
54 Lombard Street
London
EC3P 3AH
Tel: 020 7699 5000

David Roberts* Chief Executive
Peter Harvey Managing Director, Larger Business and Europe
Alastair Camp Managing Director, Medium Business and Agriculture
Mike Rogers Managing Director, Small Business, Start-ups and Direct
Robert East Managing Director, Product and Marketing Services
Andy Simmonds Business Risk Director
Mark Wells Director, Human Resources
Chris Willford Finance Director
Martin Turner Servicing & Transformation Director

### Barclays B2B.com
Fleetway House
25 Farringdon Street
London
EC4A 4LP

Alison Hutchinson* Chief Executive Officer

### Barclays Africa
Murray House,
1 Royal Mint Court,
London
EC3N 4HH
Tel: 020 7977 3000

Dominic Bruynseels* Managing Director, Barclays Africa

176 Barclays PLC Annual Report 2000
\*Strategic Business Unit head

---

# Group senior management and principal offices

### Barclays Capital
5 The North Colonnade,
Canary Wharf
London E14 4BB
Tel: 020 7623 2323

Hans-Joerg Rudloff Chairman
Robert E Diamond Jr. Chief Executive
Sir Leonard Appleyard KCMG Vice Chairman
Cyrus Ardalan Vice Chairman
Euan Harkness Vice Chairman
Roger Davis Chairman and Chief Executive, Asia Pacific
Jerry Del Missier* Managing Director
Paul Idzik Chief Administrative Officer
Roger Jenkins* Managing Director
Thomas L Kalaris* Chief Executive, Americas
Naguib Kheraj* Global Head of Investment Banking
Gerard LaRocca Chief Financial Officer
Robert Morrice* Managing Director

### Barclays Global Investors
45 Fremont Street
San Francisco
CA 94105 USA
Tel: (00 1) 415 597 2000

Patricia Dunn* Global Chief Executive
Garrett Bouton Chief Executive, Global Individual Investor, Canada, Australia and SEA
Alison Davis Chief Financial Officer and Head of Corporate Development
Blake Grossman Chief Investment Officer, Advanced Active Investments
John Martinez Co-Head, Global Index Markets Group
Kazihusa Okamoto Chief Executive, Japan
Andrew Skirton Chief Investment Officer, Co-Head, Global Index and Markets Group
Paul Stevens Head of Global Technology
Lindsay Tomlinson Chief Executive, Europe
Andrea Zulberti Head of Global Operations and Global Chief Administrative Officer
Jean Hinrichs Global Risk Director
Jeff Seretan Head of Global Human Resources

### Barclays Bank of Botswana Limited, Botswana
PO Box 478, Gaborone, Botswana
Tel: (00 267) 352 041

Duncan Mlazie Managing Director

### Barclays Bank PLC, Caribbean
PO Box 180, Rendezvous
Christchurch
Barbados, W.I.
Tel: (00 246) 431 5300

Charles Middleton Senior Caribbean Director

### Cairo Barclays Bank SAE, Egypt
PO Box 110
Maglis EL Shaab
Cairo
Egypt
Tel: (0020) 2 366 2700

Wagdi Rabbat Managing Director

### Barclays Bank PLC and Barclays Capital, France
183 Avenue Daumesnil
75575 Paris Cedex 12
France
Tel: (00 33) 1 55 78 78 78

Henri-Paul Pellegrino General Manager
Jean Barbizet Managing Director

### Barclays Bank PLC and Barclays Capital, Germany
Brockenheimer Landstrasse 38-40,
D60323, Frankfurt am Main, Germany
Tel: (00 49) 69 71 61 00

Dr Rainer Stephan Managing Director

### Barclays Bank of Ghana Limited, Ghana
PO Box 2949
Accra, Ghana
Tel: (00 233) 21 664 901/665 382

Kobina Quansah Managing Director

### Barclays Bank PLC, Gibraltar
PO Box 187, Regal House,
Queensway, Gibraltar
Tel: (00 350) 78565

Ian Currie Gibraltar Director

### Barclays Bank PLC, Hong Kong and Barclays Capital Asia
42nd Floor, Citibank Tower
Garden Road Central
Hong Kong
Tel: (00 852) 2903 2000

Roger Davis Chairman and Chief Executive, Asia Pacific

### Barclays Bank PLC and Barclays Capital, India
21/23 Maker Chambers VI, 2nd Floor
Nariman Point
Mumbai 400 021
India
Tel: (00 91) 22 284 2888

Kamal Kalkat Chief Executive Officer

### Barclays Bank PLC, Ireland
47/48 St. Stephen's Green
Dublin 2
Republic of Ireland
Tel: (00 353) 1 6611777

Paul Shovlin Managing Director

### Barclays Bank PLC and Barclays Capital, Italy
Via della Moscova 18
20121 Milan
Italy
Tel: (00 39) 02 63 721

Hugh Malim Country Manager

### Barclays Bank PLC and Barclays Capital, Japan
15F Urbannet Otemachi Building
2-2-2 Otemachi
Chiyoda-Ku
Tokyo 100-0004
Japan
Tel: (00 81) 3 3276 1100

Jeffrey Deck President and Chief Executive

### Barclays Bank of Kenya Limited, Kenya
PO Box 30120
Nairobi
Kenya
Tel: (00 254) 2 332 230

Isaac Takawira Managing Director

### Barclays Bank PLC and Barclays Capital, Latin American Regional Office
1111 Brickell Avenue
Miami
Florida 33131
USA
Tel: (00 1) 305 533 3333

Enrique Arias Deputy Chief Executive Officer

Barclays PLC Annual Report 2000 177

---

# Group senior management and principal offices

### Barclays Bank PLC, Mauritius
PO Box 284
Port Louis
Mauritius
Tel: (00 230) 2082685

Jacques De Navacelle Managing Director

### Barclays Bank PLC, Portugal
Avenida da Republica
50-3rd Floor
1050-196 Lisbon
Portugal
Tel: (00 351) 21 7911100

Joao Freixa General Manager

### Barclays Bank (Seychelles) Limited, Seychelles
PO Box 167
Mahe, Seychelles
Tel: (00 248) 383838

Paul Witkowski Managing Director

### Barclays Bank PLC and Barclays Capital, Singapore
23 Church Street
13-08 Capital Square
Singapore 049 481
Tel: (00 65) 395 3000

Quek Suan Kiat Branch Manager
James Loh Vice Chairman, Barclays Capital, Asia Pacific Region

### Barclays Bank PLC and Barclays Capital, South Africa
261 Oxford Road
Illovo 2196
Johannesburg
South Africa
Tel: (00 27) 11 441 6300

Philip Howell Managing Director

### Barclays Bank SA, Barclays Bank PLC and Barclays Capital, Spain
Apartado de Correos 1075
28080 Madrid
Spain
Tel: (00 34) 1 336 1000

Eduardo Arbizu Chief Executive and Group Country Manager
Pedro Santaella Managing Director, Barclays Capital

### Barclays Bank (Suisse) S.A.
PO Box 3941
CH-1211 Geneva 3
Switzerland
Tel: (00 41) 22 81 95 11

Paul Brown Chief Executive Officer

### Barclays Bank Tanzania Limited, Tanzania
PO Box 5137, TDFL Building
Ohio Street, Dar es Salaam
Tanzania
Tel: (00 255) 22 2129381

Mark Petchell Managing Director

### Barclays Bank PLC and Barclays Capital, USA
222 Broadway
NY 10038
USA
Tel: (00 1) 212 412 4000

Thomas L Kalaris Chief Executive

### Barclays Global Investors, N.A.
45 Fremont Street
San Francisco
CA 94105 USA
Tel: (00 1) 415 597 2000

Patricia Dunn Global Chief Executive

### Barclays Bank of Uganda Limited, Uganda
PO Box 2971
Kampala
Uganda
Tel: (00 256) 41 230972

Frank Griffiths Managing Director

### Barclays Bank of Zambia Limited, Zambia
Kafue House
Cairo Road
Lusaka
Zambia
Tel: (00 260) 1 228 858

Margaret Mwanakatwe Managing Director

### Barclays Bank of Zimbabwe Limited, Zimbabwe
PO Box 1279
Jason Mayo Avenue
Harare
Zimbabwe
Tel: (00 263) 4 758 280

Alec Jongwe Managing Director

### Woolwich plc
Watling Street
Bexleyheath
Kent
DA6 7RR
Tel: 020 8298 5000

Lynne Peacock Chief Executive

178 Barclays PLC Annual Report 2000

2000

Barclays PLC Annual Report

Barclays PLC
Head Office
54 Lombard Street
London EC3P 3AH
Tel 020 7699 5000
www.barclays.com