# Barclays PLC Annual Report 2017

**Positioned for growth, sharing and success**

## Barclays PLC
## Annual Report 2017

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## About this report
## Where we can find out more

You can learn about Barclays’ strategy, our businesses and performance, approach to governance and risk online, where latest and archived Annual and Strategic Reports are available to view or download.
For further information and a fuller understanding of the results and the state of affairs of the Group, please refer to the full Barclays PLC Annual Report 2017 suite of documents at home.barclays/annualreport

For further information and a fuller understanding of the results and the state of affairs of the Group, please refer to the full Barclays PLC Annual Report 2017 suite of documents at home.barclays/annualreport

Barclays PLC Annual Report was approved by the Board of Directors on 21 February 2018 and signed on its behalf by the Chairman.
Details on how to obtain a copy of the full Barclays PLC Annual Report 2017 can be found in the Shareholder information section.

Approach to non-financial performance reporting
We note the requirements under the provisions of the Companies Act 2006, relating to the preparation of the Strategic Report which have been amended by the Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016, which implements EU Directive 2014/95/EU (on non-financial and diversity information). As a result of these changes, we have integrated the information required for a Non-Financial Information Statement into the Strategic Report, thereby promoting cohesive reporting of non-financial matters.

Notes, Non-IFRS performance measures and forward-looking statements
Barclays management believes that the non-IFRS performance measures included in this document provide valuable information to the readers of the financial statements. This document also contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and Section 27A of the US Securities Act of 1933, as amended, with respect to the Group. For further details on Notes, non-IFRS performance measures, and forward-looking statements used within this document, please see the back cover.

Report of the Auditor
The Auditor’s report on the full accounts for the year ended 31 December 2017 was unqualified, and their statement under section 496 (whether the Strategic Report and the Directors’ report are consistent with the accounts) of the Companies Act 2006 was unqualified.

| Document | Overview |
|---|---|
| Barclays PLC Annual Report | Our Governance, our Risks and our Financials |
| Strategic Report | An overview of the business |
| Country Snapshot | Our tax contributions |
| Pillar 3 Report | Our Risk profile and how we manage it |
| Environmental Social Governance Report | Our shared growth ambition |

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## The Strategic Report
An overview of our 2017 performance, a focus on our strategic direction, and a review of the businesses underpinning our strategy.

## The Detailed Report
Within the Annual Report, these disclosures inform of Barclays 2017 performance. The content meets, and where insightful, goes beyond minimal regulatory reporting standards.

| Section | Page |
|---|---|
| **Strategic framework** | |
| Chairman’s letter | 02 |
| Chief Executive’s review | 04 |
| Operating environment | 06 |
| Business structure | 08 |
| Our business model | 09 |
| Our strategy | 10 |
| Risk management | 12 |
| Key performance indicators | 15 |
| **A review of our performance** | |
| Barclays UK | 23 |
| Personal Banking | 26 |
| Barclaycard Consumer UK | 27 |
| Wealth, Entrepreneurs and Business Banking | 28 |
| Barclays International | 29 |
| Corporate and Investment Bank | 32 |
| Consumer, Cards and Payments | 33 |
| Head Office and Group Service Company | 35 |
| **An overview of governance and financial performance** | |
| Our people and culture | 36 |
| Governance compliance | 38 |
| Viability statement | 40 |
| **Governance** | |
| Governance contents | 43 |
| Directors’ report | 44 |
| People | 89 |
| Remuneration report | 93 |
| **Risk review** | |
| Risk review contents | 117 |
| Risk management | 119 |
| Material existing and emerging risks | 121 |
| Principal Risk management | 127 |
| Risk performance | 138 |
| Supervision and regulation | 197 |
| **Financial review** | |
| Financial review contents | 205 |
| Key performance indicators | 206 |
| Consolidated summary income statement | 208 |
| Income statement commentary | 209 |
| Consolidated summary balance sheet | 210 |
| Balance sheet commentary | 211 |
| Analysis of results by business | 212 |
| Non-IFRS performance measures | 223 |
| **Financial statements** | |
| Financial statements contents | 227 |
| Consolidated financial statements | 234 |
| Notes to the financial statements | 241 |
| **Shareholder information** | |
| Shareholder information | 323 |

home.barclays/annualreport Barclays PLC Annual Report 2017 01

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## Chairman’s letter
## Dear Fellow Shareholders

While a number of challenges remain, the launch of the ring-fenced bank expected at the beginning of April this year largely draws a line on large-scale restructuring, and we look forward to a more traditional business pattern, including the return to a more normal dividend pattern.

As I indicated last year, Barclays is one of the largest restructuring situations in bank history. While this was partly a consequence of the Global Financial Crisis, it was also partly a consequence of the doubling of the balance sheet and the seven-fold increase in derivatives across 2007 and 2008, immediately prior to the full onset of the Global Financial Crisis.

This, together with the subsequent designation of the Group as globally systemic, and the consequent more than doubling of minimum regulatory capital ratios, meant the need substantially to re-capitalise the Group, and resulted in a considerable proportion of our portfolio becoming economically non-viable in the post-crisis environment.

The consequent recapitalisation involved the urgent raising of capital in 2008 (now the subject of charges by the Serious Fraud Office), a substantial reduction in capital and balance sheet usage, and the disposal of a considerable portion of our international network.

Since the crisis, we have refocused the business, halving the balance sheet by £1trn and the staff by some 80,000, through the disposal of Non-Core assets. We are also creating a new UK ring-fenced bank from scratch, resolving and continuing to resolve multiple large legacy conduct matters, as well as preparing the Group for Brexit.

The enormous impact all of this has had on the business, the Board and management, is a sobering lesson.

Over the past six years, reasonable underlying operating profits have been fully eroded in the process. Over this period, we saw £15.1bn in litigation and conduct charges, £2.4bn in bank levies, £10.1bn in losses from Non-Core, a £2.5bn loss from the sell down of Barclays Africa, and £7.1bn in taxes (at an average rate of 65%). All of this, totalling £35.6bn over the six years, resulted in an aggregate attributable loss of £1.0bn over the same period. Imagine if all the underlying profits had gone to shareholders and to investment in growth.

Clearly, shareholders would prefer we declared higher dividends, but it should be remembered over the same period, we paid £5bn in dividends out of negative attributable profits.

While a number of challenges remain, the launch of the ring-fenced bank expected at the beginning of April this year largely draws a line on large-scale restructuring, and we look forward to a more traditional business pattern, including the return to a more normal dividend pattern, planned to begin with the 2018 financial year.

While the bulk of our historical challenges are behind us, we do continue to face some residual challenges. These include the historical residential mortgage backed securities matter in the US, the Serious Fraud Office prosecution in the UK as well as the consequence of Brexit. This said, depending on their scale and pacing, we believe we have the capacity to deal with them over time.

So, while a number of challenges remain, the launch of the ring-fenced bank Barclays UK expected at the beginning of April this year largely draws a line on large-scale restructuring. We look forward to a more traditional business pattern, including the return to a more normal dividend pattern, planned to begin with the 2018 financial year.

Turning to the 2017 financial year itself, this was another critical year for Barclays. Good progress was made on a significant number of fronts. The closure of the Non-Core business from the start of July marked a significant milestone. This business was formed in 2014 in order to deliver the divestment of our non-strategic assets and businesses, releasing capital to support strategic growth in our Core business and to strengthen the Group’s capital position. At its peak, the business comprised approximately £121bn of risk weighted assets (RWAs), representing 28% of the Group’s total at the time and it has been a significant achievement to reduce this to just c.£23bn by the time of its closure.

We also implemented the difficult decision to sell down our shareholding in Barclays Africa in 2017. The changing regulatory requirements for global banks resulted in higher hurdles, making the ownership of the profitable African business uneconomic. Therefore, we successfully sold down 33.7% of our remaining Barclays Africa Group Limited (BAGL) shareholding in the first half of the year. We now own a residual 14.9% of the issued share capital, consistent with regulatory commitments.

2017 also saw us make significant progress in terms of creating the new ring-fenced bank as required by UK legislation. This has been an enormous undertaking as we are in effect creating a new bank comprising some 24 million customers. We remain on track to set up this bank in the second quarter of 2018.

As part of our structural reform requirements a Group Service Company has been successfully established which provides a wide range of operations, technology and functional services to the Group as a whole.

We continued with our Brexit preparations to ensure that Barclays can preserve our access to the EU markets for our customers and clients. Barclays Bank Ireland, where we have a banking license and have operated for nearly 40 years, will provide us with a natural base from which we can continue to provide products and services which require an EU presence.

As shareholders are aware, during 2017 Barclays disclosed a whistleblowing incident involving allegations made in connection with the hiring of a senior management member. After an internal investigation, the Board determined that CEO Jes Staley believed, mistakenly but in good faith, that it was permissible to identify the author. A detailed announcement on the issue was made in April and the matter is now the subject of an external investigation.

Despite the very significant achievements and milestones passed during the year, our financial performance in 2017 highlights that further progress is required to deliver acceptable returns to our shareholders. Profit before tax was £3.5bn, and although this was a 10% increase on prior year, return on tangible equity was a negative 3.6% on a statutory basis. Excluding litigation and conduct, the loss on sale of our BAGL stake and a remeasurement of DTAs, largely from US tax reform, return on tangible equity was 5.6%.

Fortunately, the losses we experienced last year from Non-Core, as well as the costs of structural reform, are unlikely to be repeated going forward, and this, together with the profit improvement programme in the core business, should contribute towards improving returns.

Accordingly, the focus of management and the Board’s attention is on performance, particularly that of the Corporate and Investment Bank in Barclays International. There, performance in Markets, and in particular Macro and Equities, was weak, driven by difficult market conditions. There have been significant management changes and action is being taken to improve profitability in this area.

Barclays Consumer, Cards and Payments saw profits decline by 22% but still produced a respectable 16.7% return on tangible equity. Barclays UK’s profits were marginally up on the previous year generating 9.8% return on tangible equity.

Share price performance in 2017 was disappointing, with the share price falling from 223p to 203p over the calendar year. We are working to reverse this in 2018. Delivering quality earnings above the cost of equity as well as returning to higher dividend levels, are necessary to generate a meaningful recovery in the share price. This is the priority for 2018 and beyond.

The ultimate resolution of legacy conduct and litigation issues will allow underlying profit to fall to the bottom line to the benefit of shareholders. This, together with the resolution of the whistleblowing issue, will also help remove some uncertainty which is overshadowing the Company.

The past few years have been a really tough period for the Board and management, and bottom line results can obscure the real underlying progress that is being made. I would therefore like to thank the Board, the management team and all our staff for the enormous efforts they are making to secure our recovery.

Finally, I would thank shareholders for their patience, and believe it will be rewarded. The situation is more complex and difficult than we had envisaged, and is taking longer than we hoped, but shareholders can rest assured that we will continue to strive to deliver the performance and value creation that their patience deserves.

**John McFarlane**
**Chairman**

home.barclays/annualreport Barclays PLC Annual Report 2017 03

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## Chief Executive’s review
## We have strong foundations in place for delivering to stakeholders and society…

The spirit, energy and professionalism that my colleagues from across Barclays have brought to this endeavour gives me great confidence in our future, both as Group CEO and as a shareholder. While there is still work to be done, the story of Barclays in 2017 has been one of considerable strategic progress.

On the 1st of June, we completed the sell down of our shareholding in Barclays Africa. At a stroke, this single act permitted accounting deconsolidation and regulatory proportional consolidation, reduced both cost and complexity, and improved our capital strength.

**Our Group profit before tax is up by 10%, year on year.**

In July, we closed Barclays’ Non-Core unit, six months ahead of plan. In doing so, we eliminated some £95bn of risk weighted assets, sold more than 20 businesses, exited operations in a dozen countries, and reduced costs by over £2bn – all in just three years.

In September, we stood up the Group Service Company, where around 42,000 of our 80,000 employees now work. Operational and technological strength is a key competitive advantage for any global bank today. The cost efficiencies and improvements in effectiveness realised from this strategic decision are already being felt right across the Group – and that is making a real and positive difference to our customers and clients’ lives, every day.

By December, we had largely completed the work to build our UK ring-fenced bank, which we expect will be fully up and running by the time we meet at the Annual General Meeting (AGM).

The Barclays of today is almost unrecognisable, compared with just a few years ago. The momentum we have built in successfully delivering on our plans so far, leaves me with a sense of confidence about our next task: delivering acceptable Group returns for you, our shareholders.

Our financial performance in 2017 shows that we are on our way to doing this. Our Group profit before tax is up by 10%, year on year, largely driven by a reduction in Non-Core losses. Group return on tangible equity, excluding litigation and conduct charges, the losses related to the sell down of BAGL and a one-off adverse impact from US tax reform, stood at 5.6% in 2017.

Our two businesses, Barclays UK and Barclays International, performed fairly well in the year despite challenging market conditions, and the Group is benefiting from the balance that the diversity of product, currency, geography, and business mix, gives us. In Barclays UK profitability held up, with good progress in mortgages, deposit growth, and mobile banking. Profits were down in Barclays International versus 2016, due to a poor performance in the Markets business of our Corporate and Investment Bank in difficult trading conditions for the industry. We have strong plans in place to address that underperformance in 2018. Our Consumer, Cards and Payments business continues to produce excellent levels of income, while managing risk effectively.

Perhaps most importantly of all, we enter 2018 in a strong capital position. By the end of 2017, we were at a Common Equity Tier 1 (CET1) ratio of 13.3%, within our end-state target range.

This shows that Barclays can sustainably generate profits at a healthy rate, and our capacity to do so should increase over time as we grow our businesses.

That is why in 2017 we set ourselves ambitious but attainable targets for Group returns of greater than 9% in 2019, and of greater than 10% in 2020, excluding litigation and conduct, and based on a CET1 ratio of around 13%.

A small number of significant legacy conduct issues remain, and we will need to resolve them in due course.

Nevertheless, it is our intention to prioritise the return of capital to shareholders, beginning this year. We plan to pay a dividend for 2018 of six and a half pence, which is more than double the amount paid in 2016 and 2017, and restores it to the level paid in 2015.

This is an important first step, but is still a fairly modest proportion of our anticipated earnings for Barclays. It is our firm intent, over time, to return a greater proportion of our earnings to shareholders, both through the annual dividend and in other ways. For example, it has been some 20 years since Barclays last used share buybacks as a means of returning value to investors, but we expect these to be an important part of the capital return mix going forward.

I have worked in banking for some 38 years, and I can say with conviction that the way Barclays does business, constantly seeking to earn the trust of every customer, client and community we serve, is truly extraordinary.

In 2017, we celebrated the 20th anniversary of the Barclays Citizenship Awards – a year which saw over half of our colleagues take part in volunteering, fundraising or giving programmes. Among many examples of great contributions to the communities in which we operate, I was particularly proud of the work we have done to increase digital safety and to prevent the growing threat of fraud. Our education and awareness campaign has seen over 4.8 million people take action to protect themselves as a result.

Supporting the ambitions of customers, clients, and communities is not just the right way to act, it also makes commercial sense. When the societies where we operate succeed, Barclays succeeds. That is why, for over three centuries, this great institution has risen to the challenges that our communities face, and played our part in meeting them.

This is particularly true as our home country, the United Kingdom, faces an uncertain future as negotiations to leave the European Union unfold. Whatever may come, Barclays is here to stay, and here to help the 24 million customers and almost one million UK businesses, who put their trust in us, every day.

It is the talent, ingenuity and dedication of our people, and the progress we have made in the past year, which gives me great confidence for our future. I look forward to discussing this future with you when we meet at our AGM in May.

**James E. Staley**
**Group Chief Executive**

### Barclays Citizenship Awards
Going the extra mile to benefit society and Barclays is what our Shared Growth Ambition is all about. Our Citizenship Awards celebrate the extraordinary Barclays colleagues who do just that and play a positive role in society.

2017 marked the 20th anniversary of the awards and there were almost 500 nominations, celebrating the outstanding contributions of our employees to driving economic, environmental and social prosperity.

The awards were split into five categories that encompass Citizenship and our Shared Growth Ambition: access to financing, access to financial and digital empowerment, access to employment, colleagues in the community and the way we do business.

Whether it’s creating commercial products with a positive societal impact, empowering customers with better financial and digital skills, helping people get into the world of work, improving the way we do business, or colleagues giving their time and skills to the causes they’re passionate about, there is a huge variety of ways in which Barclays colleagues contributed to society in 2017.

Being a contributor is a very important part of the culture of Barclays. It says the right things about who we are. Barclays is a business built on our people and we are proud of the contributions that our extraordinary people make to further our Citizenship ambitions.

**In 2017, over half of our colleagues took part in volunteering, fundraising or giving programmes.**

home.barclays/annualreport Barclays PLC Annual Report 2017 05

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## Operating environment
## …in a constantly evolving environment that creates opportunity and risk

As a transatlantic consumer and wholesale bank with operations globally, Barclays is impacted by a wide range of macroeconomic, political, regulatory, accounting, technological and social developments. The evolving operating environment presents opportunities and risks which we continue to evaluate to ensure that we appropriately adapt our strategy and its delivery.

Global growth saw a modest recovery in 2017, principally driven by an upswing in Europe and Asia. However, the interest rate environment remained low, albeit with indications of Central Banks positioning for a tightening cycle. Notably, the Federal Reserve and the Bank of England commenced tightening actions, with an increase in their key policy rate as well as initiation of actions to wind-down quantitative easing programmes. The low interest rate environment combined with continued low market volatility, relatively weak consumer confidence and a slowing housing market in the UK continued to impact banking sector performance by making income generation more challenging.

The political environment remained uncertain globally throughout 2017 with a notable increase in geopolitical tensions. We remain vigilant to these risks and their potential impact on global trade and investment. In the UK, the General Election resulted in a hung Parliament while negotiations with the EU on post-Brexit arrangements continue, without full clarity on the nature of the UK’s relationship with the EU immediately following its exit. In July, in response to the EU referendum outcome, Barclays announced its intention to use an existing subsidiary in Ireland as its European licensed entity from which to passport financial services across the EU, thereby continuing to serve its customers and clients in the EU post Brexit.

The regulatory landscape impacting Barclays evolved through 2017 and will continue to do so in 2018. The banking industry in the UK has continued implementation of measures to meet structural reform requirements, which include the requirement to ring-fence certain activities. As part of these reforms, Barclays launched its Group Service Company in September 2017. The implementation of structural reform and other regulatory changes requires significant focus and we are seeking to minimise disruption to our customers and clients, while executing in accordance with regulatory timelines (as set out on page 204). Barclays’ ring-fenced bank will be operational during the first half of 2018, subject to court and regulatory approvals.

**The banking industry in the UK has continued implementation of measures to meet structural reform requirements, which include the requirement to ring-fence certain activities.**

With effect from 1 January 2018, as part of the US Tax Cuts and Jobs Act, the federal corporate income tax rate has been reduced from 35% to 21%. Given the Group’s substantial US operations, this tax rate cut materially impacted the measurement of Barclays’ US deferred tax assets, however, it will also result in a material reduction to the Group’s future effective tax rate. This Act also introduced the Base Erosion and Anti-Abuse Tax (BEAT) which involves complex provisions with currently uncertain practical and technical application and which may reduce the future benefit of the lower statutory tax rate.

Detailed analysis of our tax can be found in the Annual Report, or in the Country by Country report, both found at home.barclays/annualreport

In addition, from 1 January 2018 the introduction of IFRS 9, Financial Instruments, will see significant changes to the accounting for impairment and measurement of expected credit losses which we discuss further, along with other significant accounting policies on pages 241 to 246.

Our operating environment continues to be influenced by rapid technological change, significantly impacting customer expectations and behaviour as well as leading to the ongoing review of established banking operating models. We are investing to position our business at the forefront of this evolving environment. New technology is transforming the way customers interact with their banks and continues to encourage new entrants into the market. We expect to see these trends accelerating in 2018 with the implementation of the Second Payment Services Directive (PSD2) and Open Banking, which will have a profound impact on the banking landscape by allowing customers to choose to enable third parties to access their data. Barclays is very supportive of the opportunities that Open Banking presents for those who design their propositions and experiences with customers at their heart. However, we are also aware of potential customer concerns regarding data security and we continue to work hard to ensure the safety of customer data.

Our Corporate and Investment Bank clients are anticipating enhanced electronic capabilities as well as enhanced transparency through the new Markets in Financial Instruments Directive and Markets in Financial Instruments Regulation (collectively referred to as MiFID II), as part of their operating environment. For example, recent advances in trading automation continue to change the operating landscape through increased experimentation with, and implementation of, solutions relying on machine learning, natural-language processing and predictive analytics.

For further information on the changes in Supervision and Regulation of the Group, please see page 197.

We continue to invest in our digital and mobile capabilities to respond to these rapid changes, while maintaining a continued focus on the risks posed by fraud and social engineering and the importance of network defence, cyber risk, IT security and the appropriate management of our most valuable environments and high risk users in the face of growing cyber threats. In 2017, we launched #digisafe, a UK-wide consumer engagement campaign to highlight the importance of digital safety, helping people to be more aware of the risks that exist in the digital world and how to be safer online.

During 2017 there was further activity to advance the financial sector’s understanding of the potential financial, operational and strategic implications of climate change. Recognition of the commercial, reputational and regulatory implications of climate change are shaping the way businesses engage with the climate change agenda. At Barclays, we want to facilitate our stakeholders’ access to financing that places green principles at its core. Please see the Case Study below for examples of how we are putting our beliefs into practice.

Developments in the external environment present both opportunities and risks. Without active risk management to address these external factors, our long-term goals could be adversely impacted.

Our approach to risk management and material existing and emerging risks to the Group’s future performance are outlined in the Risk review section on page 121.

### Green bonds
Barclays’ green bond is one of a number of innovative green products, launched in 2017, which reinforce Barclays’ support for, and participation in, the transition to a sustainable and low carbon global economy, following the publication of Barclays’ Green Bond Framework in September 2017.

In November 2017, Barclays successfully priced and issued a €500m green bond. This was a milestone for the UK market, being the first green bond issued by a UK bank using UK assets.

Green bonds are fixed income securities, designed to raise finance for assets that have positive environmental and climate benefits. The proceeds from Barclays’ green bond have been allocated to the financing and refinancing of Barclays’ residential mortgages on environmentally friendly homes in England and Wales.

Barclays is a signatory to the Green Bond Principles and an active lead manager of green bond issuances across jurisdictions, issuers and currencies within our investment bank. Barclays remains firmly committed to contributing to the growth of the green bond market, and has committed to a green bond investment target of £2bn in its Liquidity Portfolio.

home.barclays/annualreport Barclays PLC Annual Report 2017 07

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## Business structure
## Our enhanced structure empowers our business model…

In 2017, Barclays made significant progress reorganising the business to enable a sharper focus on our strengths as a transatlantic consumer and wholesale bank with global reach.

In March 2016, we announced our intention to operate through two principal business divisions: Barclays UK and Barclays International. As well as accelerating the delivery of our strategy, this change helped enable Barclays to fulfil the requirements of our UK regulators in regard to ring-fencing. Ring-fencing of essential retail banking services is one of the reforms introduced by the UK government to strengthen the UK financial system following the financial crisis that began in 2007. It requires the larger UK high street banks, including Barclays, to separate certain retail and smaller corporate banking activity and products, like savings accounts, current accounts and payments, from more complex, wholesale and investment banking activity and from certain activities outside of the UK and European Economic Area. This separation must be completed by 1 January 2019.

**Barclays Bank UK PLC and Barclays Bank PLC will operate alongside, but independently from one another.**

Both Barclays UK and Barclays International currently operate within the legal entity of Barclays Bank PLC. Barclays UK offers everyday products and services to retail and consumer customers and small to medium sized enterprises based in the UK, and Barclays International delivers products and services designed for our larger corporate, wholesale and international banking clients. During the first half of 2018, we will formally separate the Barclays UK division into a new legal entity – Barclays Bank UK PLC – which will become our UK ring-fenced bank, subject to court and regulatory approvals.

Products and services designed for our larger corporate, wholesale and international banking clients will continue to be offered by Barclays International from within Barclays Bank PLC. Barclays Bank UK PLC and Barclays Bank PLC will operate alongside, but independently from one another as part of the Barclays Group under the listed entity, Barclays PLC.

In September 2017, in preparation for the separation of the Barclays UK business into its separate legal entity, we created our Group Service Company, Barclays Services Limited, as a subsidiary of Barclays PLC. The Group Service Company will deliver critical infrastructure services to businesses within the Barclays Group and will enhance operational continuity for our business units, facilitating the execution of recovery and resolution plans in the event of financial difficulty. It will also become a centre of excellence for services required by the business, such as fraud management and cyber security, reducing duplication and promoting best practice across our businesses.

The new organisational structure, illustrated below, brings complementary businesses more closely together; creates an enhanced focus on our client proposition and offering across all target sectors; and, through the creation of the new Group Service Company, establishes a centre of service excellence that will drive efficiency and increase the Group’s resilience.

Further information on structural reform can be found on page 204. Illustrative unaudited pro forma financials for Barclays Bank UK PLC and Barclays Bank PLC are available at home.barclays/annualreport

```mermaid
graph TD
    A[Barclays PLC] --> B[Barclays Bank UK PLC (Barclays UK – ring-fenced bank)];
    A --> C[Barclays Bank PLC (Barclays International)];
    A --> D[Barclays Services Limited (Group Service Company)];
```
08 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## Our business model
## …and creates value for our stakeholders, with economic benefits to society

Barclays PLC Group operates via two clearly defined divisions – Barclays UK and Barclays International – with a diversified business model that we believe helps enhance our resilience to changes in the external environment.

Our business model is aligned with our strategy of being a leading, diversified transatlantic bank with global reach.

Read more on our strategy on pages 10 to 11.

For further information on our divisions, see: Barclays UK – pages 23 to 28, Barclays International – pages 29 to 34.

| Input | Description |
|---|---|
| **We draw on the following to support our activities and deliver value to our stakeholders:** | |
| Strength and reputation | the strength and reputation of our brand – serving customers and clients for over 325 years |
| Balance sheet | a strong, well-funded and diversified balance sheet |
| Relationships | customer and client relationships built on trust |
| Track record | a solid track record of successfully innovating for customers and clients |
| Geographic focus | our geographic focus: firmly anchored in the two financial centres of London and New York, with global reach |
| People and values | the skills and expertise of our people and our shared values which inform the way we work and how we act |
| **We aim to provide superior services to help customers and clients create, grow and protect wealth in a sustainable way:** | |
| Client base | Barclays’ customers and clients include: individuals, small and medium-sized businesses, large corporates and multinational companies, financial institutions and banks, institutional investors, funds, sovereign institutions and governments. |
| Offerings | We offer: a safe place to save, invest and manage cash and payments, innovative digital and technological capabilities, funding for purchases and growth, management of business and financial risks, financial and business support. |
| **We aim to deliver a broad spectrum of value through the way we do business, including:** | |
| Revenue sources | our services generate revenue via net interest income and non-interest income, including fees and commissions as well as trading and investment income through our wholesale activities |
| Diversification | we are a large financial institution and provide diversification by business line, geography and customer |
| Synergies | we aim to capture the benefits of diversification through efficient delivery of cross-group synergies |
| **We support our stakeholders via a commercially successful business that generates long-term sustainable returns:** | |
| Service | superior service to enable customers and clients to achieve their ambitions |
| Careers | challenging and fulfilling careers for our people in a values-driven organisation |
| Returns for investors | long-term sustainable returns for our investors |
| Reducing risk | we work together with regulators to help reduce risk in the industry and provide a more sustainable banking landscape over the long term |
| Employment and growth | employment and growth in the economies in which we operate |
| Societal engagement | engagement with governments and society in general to address societal issues and needs |

| Supporting Element | Value Created |
|---|---|
| Skills and trust in staff | The skills and trust in our staff helps us, through a range of initiatives, increase financial literacy. |
| Business services | Our business services are tailored to help support SMEs and entrepreneurs, creating wealth. |
| Sustainable investment | Meeting the demands of our customers around sustainable investment drives sustainable value. |
| Innovation | Innovation through our products and services is helping increase access to finance and generating dividends and returns. |

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## Our strategy
## We have positioned Barclays as a leading, diversified, transatlantic bank with global reach…

As a leading, diversified, transatlantic bank with global reach, our goal is to support our stakeholders via a commercially successful business that generates long-term sustainable returns.

We reflect our strategy in a number of financial and non-financial measures.

Read more on our financial and non-financial measures on pages 15 to 22.

### Building on our strong foundations
The strategy of Barclays PLC Group is to build on our strength as a transatlantic consumer and wholesale bank, anchored in our two home markets of the UK and US, with global reach. Our two clearly defined divisions, Barclays UK and Barclays International, provide diversification to our business model. We believe that combining consumer and wholesale businesses, as well as accessing geographic diversification, provide real advantages to both the Group and our investors and help contribute to the delivery of more consistent and sustainable returns through the business cycle. Effective execution of our strategy of diversification should reduce volatility of income and earnings, generate higher returns through the cycle and improve resilience of the Group as a whole.

Consistent with the objective of delivering long-term sustainable value for our stakeholders, we continue to pursue our Shared Growth Ambition – our approach to citizenship and sustainability. The objective is to make decisions and do business that provide our clients and customers, and the communities which we serve, access to a prosperous future.

You can read more about our Shared Growth Ambition within our performance metrics on page 21.

### Completion of the restructuring announced in March 2016
In 2017, we successfully delivered on two key components of the strategic priorities we announced in March 2016:
* during the course of 2017, we completed the partial sale of our stake in BAGL resulting in a non-controlling, accounting deconsolidated position with a residual 14.9% shareholding in BAGL
* on 1 July we closed Barclays Non-Core, six months ahead of schedule, representing a watershed moment for the implementation of the Group’s strategy.

These actions have significantly contributed to the simplification of the Group, helping to reduce drag on Group profitability and laying the foundations for Barclays to drive sustainable returns in its businesses.

### Delivering the Barclays of the future
Our focus is now on building the Barclays of the future, operating principally through Barclays UK, Barclays International and supported by the new Group Service Company. We are fully committed to our model as a diversified bank and will remain a well-diversified financial institution providing best-in-class products and services to our customers and clients, underpinned by world-class operations. We believe that the Group and its entities are well positioned to deliver future growth and appropriate returns for shareholders.

**We will remain a well diversified financial institution providing best-in-class products and services to our customers and clients.**

We continue to invest in our technological and digital capabilities to facilitate delivery of our strategy. This is particularly relevant in Barclays UK where we already have a strong digital proposition, Barclays Mobile Banking. We have a clear strategy to use technology to deliver deeper and more meaningful customer relationships by transforming the way we interact with customers, leverage data analytics and take advantage of the opportunities presented by Open Banking. Delivering a truly customer-centric model is at the heart of Barclays UK’s strategy.

Barclays International will continue to focus on markets and services where we have a competitive advantage, allocating capital where we see the ability to generate the most attractive risk-adjusted returns and investing where we see an opportunity to expand our market share. We see technology as a significant enabler for our strategy across the investment banking business, particularly in Markets business lines, and will continue to invest appropriately, alongside recruiting the best talent as we build the Barclays of the future. In July 2017, we announced our intention to use Barclays Bank Ireland, an existing licensed EU-based bank subsidiary, to continue passported activity after the UK’s departure from the EU.

Despite the uncertainty around the final outcome of the negotiations between the UK and EU, our planning is driven by a strategic intention to preserve EU market access for Barclays and our customers and clients, with a continuous seamless service.

home.barclays/annualreport Barclays PLC Annual Report 2017 11

***

## Leveraging our geographic and business diversification, we see a significant opportunity to develop our payments capabilities across the Group. We aim to leverage our extensive experience and expertise developed through our leadership position in the UK to grow our market share in the US. In the Business to Business (B2B) space, we will continue to invest in our commercial payments capabilities, in order to meet the evolving needs of our customers, by leveraging innovative solutions and our data assets. On the consumer side, we are growing our mobile payment solutions in the UK. In the US, we see opportunity to build on our position of 9th largest credit card issuer by receivables, as our targeted partnership model drives continued growth. Furthermore, we are investing in our US consumer banking proposition, where we have a growing, own-brand and prime-focused digital banking offering.

Our strategic execution as a diversified bank has been enhanced by the launch of the Group Service Company. The Group Service Company changes the way Barclays operates, enabling the delivery of world class services through a more standardised global operating model. We believe our Group Service Company will enable us to extract cross-Group cost synergies through simpler processes, enhanced controls, a better co-ordinated service provision and more effective management of investment in our technology and processes. The Group Service Company is a key component of Barclays’ operating model.

**We believe our Group Service Company will enable us to extract cross-group cost synergies.**

We remain focused on resolving legacy conduct, litigation and regulatory matters and delivering enhanced controls

We aspire to be one of the world’s most respected and well-regarded banks. We are working hard to resolve outstanding legacy issues in an appropriate time frame and manner, while continuing to strengthen our control environment. We put our customers and clients at the heart of everything we do and seek to strengthen the trust of our customers, clients and wider society.

### Contact centres – creating a seamless end to end customer experience in an omni-channel environment
We believe the Group Service Company will enable the delivery of world class services to our customers and clients while driving efficiency gains.

Our global contact centres teams within Barclays UK and Barclays International support over 60 million customer calls each year, across several geographies and business areas. Our colleagues are central to our customer experience and through the creation of the Group Service Company we have a unique platform to unlock opportunities across our shared colleague and technology propositions and through doing so, continue the transformation of our customer experience for Barclays UK and Barclays International.

In the past, our technology supporting contact centres has been highly fragmented and we have operated with different processes with each business unit having their own contact centres, leading to more than 30 different contact centre sites, utilising over 100 bespoke technology applications. Through the creation of the Group Service Company we aim to streamline our technology estate, identifying synergies to support a world class customer and colleague experience.

We will also continue to evolve the way we interact with customers through a highly integrated omni-channel framework, enabling customers to interact with Barclays through their channel of choice. We will continue to roll out and scale new capabilities throughout 2018, supporting our customers choice in how they interact with us.

11 home.barclays/annualreport Barclays PLC Annual Report 2017

***

## Risk management
## …with a structure and governance that enable us to manage risk…

Barclays is exposed to external risks as part of our ongoing activities. These risks are managed as part of our business model.

### Enterprise Risk Management Framework
At Barclays, risks are identified and managed in the business through the Enterprise Risk Management Framework (ERMF), which supports the CEO and Chief Risk Officer in embedding effective risk management and a strong risk culture.

**By applying mandate and scale limits, we can enable and control specific activities.**

The ERMF specifies the Principal Risks of the Group and the approach to managing them.

### Risk Appetite
Risk Appetite defines the level of risk we are willing to take across the different risk types, taking into consideration varying levels of financial stress. Risk Appetite is key for our decision making process, including business planning, mergers and acquisitions, new product approvals and business change initiatives. By applying mandate and scale limits across legal entities and businesses, we can enable and control specific activities that may have material concentration.

The management of risk is embedded into each level of the business, with all colleagues being responsible for the understanding and managing of risks. This is done by specifying responsibilities according to the ‘Three Lines of Defence’. Each Line of Defence is overseen by the next, resulting in a strong design, implementation, remediation, monitoring and testing framework, with independence and robust governance.

#### Three Lines of Defence
The First Line of Defence comprises the revenue generating and client facing areas, along with all associated support functions. The First Line identifies the risks, and sets the policies, standards and controls, within the criteria set by the Second Line of Defence.

The Second Line of Defence comprises Risk and Compliance employees and oversees the First Line, setting the limits, rules and constraints, consistent with the Risk Appetite of the firm.

The Third Line of Defence comprises Internal Audit employees, providing independent assurance to the Board and Executive Management.

The Legal function does not sit in any of the three lines, but supports them all and plays a role in overseeing Legal Risk. The Legal function is also subject to oversight from Risk and Compliance functions with respect to the management of operational and conduct risks.

Together with a governance process using Business and Group level Risk Committees and Board level forums, the main Board of Barclays receives regular information in respect of the risk profile of the Group, and has ultimate responsibility for risk appetite and capital plans.

### Risk management post-ring fencing
There are no significant changes to the ERMF proposed following ring-fencing. However, each of the Boards of Barclays Bank UK PLC and Barclays Bank PLC will approve and implement the ERMF at an entity level, with any requirements specific to the relevant legal entity documented within the ERMF. Group-wide risk management principles will govern both Barclays Bank UK PLC and Barclays Bank PLC and their own legal entity governance processes around risk management, capital and liquidity plans.

We believe that our structure and governance will enable us to manage risk in changing economic, political and market environments.

Barclays is exposed to external risks as part of our ongoing activities. These risks are managed as part of our business model.

| Risks are classified into Principal Risks, as below | How risks are managed |
|---|---|
| **Credit Risk** The risk of loss to the firm from the failure of clients, customers or counterparties, including sovereigns, to fully honour their obligations to the firm, including the whole and timely payment of principal, interest, collateral and other receivables. | Credit risk management teams set the Risk Appetite, monitoring risk against limits and help manage risk through the credit cycle. |
| **Market Risk** The risk of loss arising from potential adverse changes in the value of the firm’s assets and liabilities from fluctuation in market variables including, but not limited to, interest rates, foreign exchange, equity prices, commodity prices, credit spreads, implied volatilities and asset correlations. | A range of complementary approaches to evaluate market risk including specific management and regulatory measures, are used to capture exposure to market risk. These are overseen and managed by dedicated market risk management teams who engage with the businesses to challenge the risk profile on a regular basis. |
| **Treasury and Capital Risk** Liquidity Risk: The risk that the firm is unable to meet its contractual or contingent obligations or that it does not have the appropriate amount, tenor and composition of funding and liquidity to support its assets. Capital Risk: The risk that the firm has an insufficient level or composition of capital to support its normal business activities and to meet its regulatory capital requirements under normal operating environments or stressed conditions (both actual and as defined for internal planning or regulatory testing purposes). This includes the risk from the firm’s pension plans. Interest Rate Risk in the Banking Book: The risk that the firm is exposed to capital or income volatility because of a mismatch between the interest rate exposures of its (non-traded) assets and liabilities. | Treasury and capital risk is managed and monitored through a wide range of activities including: managing limits on a variety of on and off-balance sheet exposures; monitoring of market indicators for early signs of liquidity risk; recovery planning; capital planning and allocation; internal Group wide stress testing; management of foreign exchange and pension risk, and uses a range of metrics and sensitivity analysis to measure non-traded market risk. |
| **Operational Risk** The risk of loss to the firm from inadequate or failed processes or systems, human factors or due to external events (e.g. fraud) where the root cause is not due to credit or market risks. | The Group assesses its operational risk and control environment across its businesses and functions with a view to maintaining an acceptable level of residual risk. |
| **Model Risk** The risk of the potential adverse consequences from financial assessments or decisions based on incorrect or misused model outputs and reports. | Models are validated and approved upon implementation and on an ongoing basis. |
| **Reputation Risk** The risk that an action, transaction, investment or event will reduce trust in the firm’s integrity and competence by clients, counterparties, investors, regulators, employees or the public. | Reputation risk is managed by maintaining a controlled culture within Barclays, with the objective of acting with integrity, enabling strong and trusted relationships to be built with customers and clients, colleagues and broader society. |
| **Conduct Risk** The risk of detriment to customers, clients, market integrity, competition or Barclays from the inappropriate supply of financial services, including instances of wilful or negligent misconduct. | All colleagues are responsible for the management and mitigation of conduct risk. The Compliance function sets the minimum standards required, and provide oversight to monitor that these risks are effectively managed and escalated where appropriate. |
| **Legal Risk** The risk of loss or imposition of penalties, damages or fines from the failure of the firm to meet its legal obligations including regulatory or contractual requirements. | The Group conducts diverse activities in a highly regulated global market and therefore is exposed to legal risks in the conduct of its business. The Group General Counsel and the Legal function support colleagues to manage legal risks. |

12 Barclays PLC Annual Report 2017 home.barclays/annualreport

***

## Risk management
## …and help us focus on climate change

Climate change and resource scarcity are acknowledged as two of the greatest global challenges facing society today. As a global institution, we support our clients and communities as they adopt measures to mitigate and adapt to climate change such as clean technologies and infrastructure resilience.

We acknowledge the validity of climate science and support the efforts of public and private stakeholders around the world aiming to limit global temperature rise to two degrees Celsius above pre-industrial levels.

Barclays participated in the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD), which published its final recommendations in June 2017. Barclays endorsed the final report, and will work to implement the recommendations over the coming years.

The principles laid out in the TCFD recommendations are an important step in providing the foundations from which companies, investors, banks and other market participants can move forward together to improve transparency and build better understanding of potential climate related risks and opportunities.

**This is the start of a longer-term process to enhance disclosures and improve understanding of potential material financial impacts.**

### Governance
On behalf of the Board, the Board Reputation Committee reviews and approves Barclays’ overall Environmental, Social and Governance (ESG) strategy, which includes the approach taken on climate change and emission targets. The Committee discussed the outcome of an externally facilitated review on Barclays alignment with the TCFD recommendations in 2017. See pages 69 to 74 for the Board Reputation Committee report.

### Strategy
Significant financing requirements for energy transition and resilient infrastructure will necessitate access to the capital markets, bank debt and wider funding solutions, providing revenue pools that are projected to grow over time. Our approach is to focus on managing potential climate change related risks at a client and transactional level, and assess current and emerging opportunities across our product suite and geographical footprint.

In the shorter term, Barclays sees immediate opportunities in Green Bonds and other financing solutions. We actively manage our own direct carbon footprint and are making good progress towards our target of 30% reduction by end 2018, against a 2015 baseline, reducing our emissions by 26.1% in 2017.

### Managing climate risk and opportunity
Through a dedicated Environmental Risk Management team within the Credit Risk function, we are focused on managing both physical risks, for instance flood risk for our UK mortgage book, as well as potential transition risks if carbon intensive industries do not plan strategically for a smooth medium to long term transition to a low carbon economy.

During 2017, we have significantly increased our focus on developing new climate opportunities, including the launch of a suite of industry-leading Green Products driven by the Green Banking Council and the issuance of Barclays inaugural Green Bond. Please see the Green Bonds case study on page 7.

Please refer to the 2017 ESG Report for further information, found at home.barclays/annualreport

14 Barclays PLC Annual Report 2017 home.barclays/annualreport

***

## Key performance indicators
## A holistic approach to measuring success

Our approach reflects the way in which management monitors the performance of the Group, allows for a holistic assessment and sets out our progress towards the strategic goals of the organisation.

By incorporating a broad range of financial and non-financial measures, our framework is focused on achieving positive and sustainable outcomes for our diverse group of stakeholders, and influences incentive outcomes for Barclays’ employees.

Read more on our remuneration framework in the Remuneration report pages 93 to 116.

Approach and governance: Performance measurement
In the 2016 Barclays Annual Report, we introduced our revised performance measurement framework to assess progress against our strategy, across our diverse stakeholder groups. The framework reflects a balance of key financial performance metrics and broader strategic non-financial measures.

Financial performance metrics
The financial metrics are aligned to Barclays PLC Group financial targets, updated in Q317, and are reported quarterly as part of our financial results. Achieving our targets is consistent with our aim of generating long-term sustainable returns for the shareholders of Barclays PLC Group.

Strategic non-financial performance measures
Non-financial measures are an important element of how we evaluate our progress towards achieving our ambition of delivering a sustainable business for all our stakeholders. We focus on the impact we have on our customers and clients, colleagues, and the benefit we bring to society via our citizenship activity. These measures are underpinned by how we behave towards all our stakeholders, through our conduct and our culture. To assess our performance, progress towards delivering positive outcomes for our stakeholders is informed by a number of sources including internal dashboards, regular management reporting and external measures, to help provide a balanced review of performance.

We have a range of policies and guidance that can support our key outcomes for our customers and clients, colleagues and citizenship activity. Performance against our strategic non-financial performance measures is one indicator of the effectiveness and outcome of aspects of certain policies and guidance. Our policies and guidance are refreshed regularly. For further details, please see our Customer and Client, Colleague and Citizenship sections.

### Barclays PLC Group Performance Measurement Framework

#### Financial performance metrics
| Metric | 2019 Target | 2020 Target |
|---|---|---|
| Group RoTE\* | >9% | >10% |
| CET1 ratio | 150–200 bps above the end point regulatory minimum level | |
| Group costs | £13.6–£13.9bn in 2019† | Targeting cost: income ratio below 60% |

*\* excluding litigation and conduct, and based on a CET1 ratio of c.13%*
*† excluding litigation and conduct*

#### Strategic non-financial performance measures
**Delivering positive outcomes for our stakeholders**

| Customer and Client | Colleague | Citizenship |
|---|---|---|
| ■ Building trust with our customers and clients, such that they are happy to recommend us to others | Promoting and maintaining: ■ A diverse and inclusive workforce in which colleagues of all backgrounds are treated equally and have the opportunity to be successful and achieve their potential | ■ Making decisions and doing business that provides our clients, customers, shareholders, colleagues and the communities which we serve with access to a prosperous future, through our Shared Growth Ambition |
| ■ Successfully innovating and developing products and services that meet their needs | ■ Engaged and enabled colleagues | ■ Proactively managing the environmental and societal impacts of our business |
| ■ Offering suitable products and services in an accessible way, ensuring excellent customer and client experience | ■ A positive conduct and values based environment | |

**Underpinned by how we behave towards all our stakeholders through our conduct and culture**

home.barclays/annualreport Barclays PLC Annual Report 2017 15

***

## Key performance indicators
## A holistic approach to measuring success

Approach and governance: Remuneration
Performance against our financial metrics and strategic non-financial performance measures is directly linked to executive remuneration, and also influences incentive outcomes for Barclays’ employees more broadly. This approach supports us in our work to deliver positive outcomes for all our stakeholders. Please refer to the Remuneration Report on pages 93 to 116 for further information.

Financial performance metrics
Key outcomes we will look to achieve include:
Achieving our financial targets, consistent with our aim of generating long-term sustainable returns for the shareholders of Barclays PLC Group.

How we measure success
The financial performance metrics are aligned to Barclays PLC Group financial targets, updated in Q317:
* Group Return on Tangible Equity (RoTE) of greater than 9% in 2019 and greater than 10% in 2020, excluding litigation and conduct, and based on a CET1 ratio of c.13%
* CET1 ratio of 150–200 bps above the end point regulatory minimum level
* Group costs, excluding litigation and conduct, of £13.6–13.9bn in 2019, and to have a target cost: income ratio below 60%.

RoTE measures our ability to generate acceptable returns for shareholders. It is calculated as profit after tax attributable to ordinary shareholders, including an adjustment for the tax credit recorded in reserves in respect of other equity instruments, as a proportion of average shareholders’ equity excluding non-controlling interests and other equity instruments adjusted for the deduction of intangible assets and goodwill.

This measure indicates the return generated by the management of the business based on shareholders’ tangible equity. Achieving a target RoTE demonstrates the organisation’s ability to execute its strategy and align management’s interests with the shareholders’. RoTE lies at the heart of the Group’s capital allocation and performance management process.

The CET1 ratio is a measure of the capital strength and resilience of Barclays. The Group’s capital management objective is to maximise shareholder value by prudently managing the level and mix of its capital. This is to ensure the Group and all of its subsidiaries are appropriately capitalised relative to their minimum regulatory and stressed capital requirements, and to support the Group’s risk appetite, growth, and strategic options while seeking to maintain a robust credit proposition for the Group and its subsidiaries.

The ratio expresses Barclays’ capital as a percentage of risk weighted assets (RWAs), as defined by the PRA, in the context of Capital Requirements Directive IV (CRD IV – an EU directive prescribing capital adequacy and liquidity requirements), and is part of the regulatory framework governing how banks and depository institutions are supervised.

Barclays views operating expenses as a key strategic area for banks; those which actively manage costs and control them effectively will gain a strong competitive advantage. Restructuring the cost base is a key execution priority for management and includes a review of all categories of discretionary spending and an analysis of how we can run the business to ensure that costs increase at a slower rate than income.

The cost: income ratio measures operating expenses as a percentage of total income and is used to assess the productivity of the business operations.

### Updating the Return on Tangible Equity metric
Significant strategic progress was made in 2017 with the closure of Non-Core and sell down of our stake in Barclays Africa, marking the completion of our restructuring.

With the closure of Non-Core, we no longer have a Core and Non-Core distinction within the Group, and hence our prior target of Group RoTE to converge with Core RoTE no longer exists. The RoTE target has been updated to reflect our commitment to continuing to execute at pace against our plan and we are confident in asserting when Barclays will start to deliver the economic performance that the Group is capable of.

### How we are doing
| Metric | 2017 Value | 2016 Value |
|---|---|---|
| Group Return on Tangible Equity | (3.6)% | 3.6% |
| Common Equity Tier 1 (CET1) ratio | 13.3% | 12.4% |
| Cost: income ratio | 73% | 76% |
| Operating expenses\* | £14.2bn | £15.0bn |

*\* excluding litigation and conduct*

CRD IV fully loaded CET1 ratio
The Group’s CRD IV fully loaded CET1 ratio increased to 13.3% (2016: 12.4%) driven by a decrease in RWAs of £53bn to £313bn, which was partially offset by a reduction in CET1 capital to £41.6bn (2016: £45.2bn). The 90bps improvement was driven by organic capital generation from continuing operations, the benefit of the proportional consolidation of BAGL and the rundown of Non-Core, partially offset by an adverse movement in reserves and the net impact of the remeasurement of US DTAs.

Operating expenses and cost: income ratio
Group operating expenses were £15.5bn (2016: £16.3bn). Excluding litigation and conduct charges, Group operating expenses were £14.2bn (2016: £15.0bn), in line with 2017 guidance. The reduction in operating expenses was primarily driven by lower Non-Core related operating expenses.

The Group cost: income ratio was 73% (2016: 76%).

For further information on the financial performance of the Group, please see page 47.

### Strategic non-financial performance measures
**How we are doing: summary**
We assess progress towards the delivery of positive outcomes our customers and clients (page 18), colleagues (page 19), and citizenship activity (page 21), all underpinned by conduct and culture.

**Areas of encouragement:**
Customer and Client: In 2017, we continued to focus on delivering excellent customer and client experience, by offering products and services to meet their needs in an appropriate and accessible way. We are encouraged by the performance of our Relationship Net Promoter Scores (NPS®), while our client ranking and market share indicators remained broadly stable across many of our international business areas, which we believe reflect the relevance of our customer and client proposition. Digital solutions can enable a convenient and secure everyday banking experience for customers and clients, and we believe this is reflected in a 7% year on year increase in the number of Barclays UK customers using our digital services.

Colleague: We remain focused on increasing the diversity of our workforce and continuing to build an inclusive culture. We are proud of the progress we have made on the multicultural, multigenerational, LGBT and disability pillars, and we continue to receive external recognition for our diversity and inclusion work. We also continue to focus on the positive engagement of our workforce, and are encouraged to see a 3 percentage point improvement in our annual employee engagement survey score.

Citizenship: We are conscious of our wider stakeholders and the communities in which we operate and have performed well against our citizenship agenda, meeting our internal objectives on all six of our Shared Growth Ambition metrics.

**Areas of continued focus:**
Customer and Client: Further transformation of our customer and client experience remains a key priority for Barclays, particularly as customer and client expectations continue to evolve rapidly. Although we are encouraged by the reductions in the number of complaints we received in 2017, this remains an ongoing area of focus for management and the Board.

Colleague: Our commitment to increasing female representation at all levels of Barclays remains firm. Although we have achieved an increase in the percentage of women at our Managing Director and Director levels, we recognise that there is still progress to be made regarding senior female representation. In addition, although we have made progress, we recognise there is still more to do to further reduce obstacles to efficiency and enable our colleagues to achieve excellent performance. We remain committed to driving the right culture throughout all levels of the organisation and continuing to enhance the effective management of Conduct Risk.

Citizenship: We have made good progress in delivering access to sustainable finance and developing new green products. We see further opportunity in this space and are working to develop broader sustainability and sensitive sector guidelines. In addition, we continue to focus on enhancing disclosures, particularly on climate change, and improving our Environmental, Social and Governance (ESG) ratings and benchmark scores on an absolute and relative basis.

16 Barclays PLC Annual Report 2017 home.barclays/annualreport

***

## Key performance indicators
## A holistic approach to measuring success

Approach and governance: Remuneration
Performance against our financial metrics and strategic non-financial performance measures is directly linked to executive remuneration, and also influences incentive outcomes for Barclays’ employees more broadly. This approach supports us in our work to deliver positive outcomes for all our stakeholders. Please refer to the Remuneration Report on pages 93 to 116 for further information.

Financial performance metrics
Key outcomes we will look to achieve include:
Achieving our financial targets, consistent with our aim of generating long-term sustainable returns for the shareholders of Barclays PLC Group.

How we measure success
The financial performance metrics are aligned to Barclays PLC Group financial targets, updated in Q317:
* Group Return on Tangible Equity (RoTE) of greater than 9% in 2019 and greater than 10% in 2020, excluding litigation and conduct, and based on a CET1 ratio of c.13%
* CET1 ratio of 150–200 bps above the end point regulatory minimum level
* Group costs, excluding litigation and conduct, of £13.6–13.9bn in 2019, and to have a target cost: income ratio below 60%.

RoTE measures our ability to generate acceptable returns for shareholders. It is calculated as profit after tax attributable to ordinary shareholders, including an adjustment for the tax credit recorded in reserves in respect of other equity instruments, as a proportion of average shareholders’ equity excluding non-controlling interests and other equity instruments adjusted for the deduction of intangible assets and goodwill.

This measure indicates the return generated by the management of the business based on shareholders’ tangible equity. Achieving a target RoTE demonstrates the organisation’s ability to execute its strategy and align management’s interests with the shareholders’. RoTE lies at the heart of the Group’s capital allocation and performance management process.

The CET1 ratio is a measure of the capital strength and resilience of Barclays. The Group’s capital management objective is to maximise shareholder value by prudently managing the level and mix of its capital. This is to ensure the Group and all of its subsidiaries are appropriately capitalised relative to their minimum regulatory and stressed capital requirements, and to support the Group’s risk appetite, growth, and strategic options while seeking to maintain a robust credit proposition for the Group and its subsidiaries.

The ratio expresses Barclays’ capital as a percentage of risk weighted assets (RWAs), as defined by the PRA, in the context of Capital Requirements Directive IV (CRD IV – an EU directive prescribing capital adequacy and liquidity requirements), and is part of the regulatory framework governing how banks and depository institutions are supervised.

Barclays views operating expenses as a key strategic area for banks; those which actively manage costs and control them effectively will gain a strong competitive advantage. Restructuring the cost base is a key execution priority for management and includes a review of all categories of discretionary spending and an analysis of how we can run the business to ensure that costs increase at a slower rate than income.

The cost: income ratio measures operating expenses as a percentage of total income and is used to assess the productivity of the business operations.

### How we are doing
| Metric | 2017 Value | 2016 Value |
|---|---|---|
| Group Return on Tangible Equity | (3.6)% | 3.6% |
| Common Equity Tier 1 (CET1) ratio | 13.3% | 12.4% |
| Cost: income ratio | 73% | 76% |
| Operating expenses\* | £14.2bn | £15.0bn |

*\* excluding litigation and conduct*

CRD IV fully loaded CET1 ratio
The Group’s CRD IV fully loaded CET1 ratio increased to 13.3% (2016: 12.4%) driven by a decrease in RWAs of £53bn to £313bn, which was partially offset by a reduction in CET1 capital to £41.6bn (2016: £45.2bn). The 90bps improvement was driven by organic capital generation from continuing operations, the benefit of the proportional consolidation of BAGL and the rundown of Non-Core, partially offset by an adverse movement in reserves and the net impact of the remeasurement of US DTAs.

Operating expenses and cost: income ratio
Group operating expenses were £15.5bn (2016: £16.3bn). Excluding litigation and conduct charges, Group operating expenses were £14.2bn (2016: £15.0bn), in line with 2017 guidance. The reduction in operating expenses was primarily driven by lower Non-Core related operating expenses.

The Group cost: income ratio was 73% (2016: 76%).

For further information on the financial performance of the Group, please see page 47.

### Strategic non-financial performance measures
**How we are doing: summary**
We assess progress towards the delivery of positive outcomes our customers and clients (page 18), colleagues (page 19), and citizenship activity (page 21), all underpinned by conduct and culture.

**Areas of encouragement:**
Customer and Client: In 2017, we continued to focus on delivering excellent customer and client experience, by offering products and services to meet their needs in an appropriate and accessible way. We are encouraged by the performance of our Relationship Net Promoter Scores (NPS®), while our client ranking and market share indicators remained broadly stable across many of our international business areas, which we believe reflect the relevance of our customer and client proposition. Digital solutions can enable a convenient and secure everyday banking experience for customers and clients, and we believe this is reflected in a 7% year on year increase in the number of Barclays UK customers using our digital services.

Colleague: We remain focused on increasing the diversity of our workforce and continuing to build an inclusive culture. We are proud of the progress we have made on the multicultural, multigenerational, LGBT and disability pillars, and we continue to receive external recognition for our diversity and inclusion work. We also continue to focus on the positive engagement of our workforce, and are encouraged to see a 3 percentage point improvement in our annual employee engagement survey score.

Citizenship: We are conscious of our wider stakeholders and the communities in which we operate and have performed well against our citizenship agenda, meeting our internal objectives on all six of our Shared Growth Ambition metrics.

**Areas of continued focus:**
Customer and Client: Further transformation of our customer and client experience remains a key priority for Barclays, particularly as customer and client expectations continue to evolve rapidly. Although we are encouraged by the reductions in the number of complaints we received in 2017, this remains an ongoing area of focus for management and the Board.

Colleague: Our commitment to increasing female representation at all levels of Barclays remains firm. Although we have achieved an increase in the percentage of women at our Managing Director and Director levels, we recognise that there is still progress to be made regarding senior female representation. In addition, although we have made progress, we recognise there is still more to do to further reduce obstacles to efficiency and enable our colleagues to achieve excellent performance. We remain committed to driving the right culture throughout all levels of the organisation and continuing to enhance the effective management of Conduct Risk.

Citizenship: We have made good progress in delivering access to sustainable finance and developing new green products. We see further opportunity in this space and are working to develop broader sustainability and sensitive sector guidelines. In addition, we continue to focus on enhancing disclosures, particularly on climate change, and improving our Environmental, Social and Governance (ESG) ratings and benchmark scores on an absolute and relative basis.

| Category | 2017 Score | 2016 Score |
|---|---|---|
| Barclays Relationship NPS | +14 | +10 |
| Sustainable engagement of colleagues | 78% | 75% |
| Access to financing | £31.7bn | £30.5bn |

home.barclays/annualreport Barclays PLC Annual Report 2017 17

***

## Key performance indicators
## A holistic approach to measuring success

Approach and governance: Remuneration
Performance against our financial metrics and strategic non-financial performance measures is directly linked to executive remuneration, and also influences incentive outcomes for Barclays’ employees more broadly. This approach supports us in our work to deliver positive outcomes for all our stakeholders. Please refer to the Remuneration Report on pages 93 to 116 for further information.

Financial performance metrics
Key outcomes we will look to achieve include:
Achieving our financial targets, consistent with our aim of generating long-term sustainable returns for the shareholders of Barclays PLC Group.

How we measure success
The financial performance metrics are aligned to Barclays PLC Group financial targets, updated in Q317:
* Group Return on Tangible Equity (RoTE) of greater than 9% in 2019 and greater than 10% in 2020, excluding litigation and conduct, and based on a CET1 ratio of c.13%
* CET1 ratio of 150–200 bps above the end point regulatory minimum level
* Group costs, excluding litigation and conduct, of £13.6–13.9bn in 2019, and to have a target cost: income ratio below 60%.

RoTE measures our ability to generate acceptable returns for shareholders. It is calculated as profit after tax attributable to ordinary shareholders, including an adjustment for the tax credit recorded in reserves in respect of other equity instruments, as a proportion of average shareholders’ equity excluding non-controlling interests and other equity instruments adjusted for the deduction of intangible assets and goodwill.

This measure indicates the return generated by the management of the business based on shareholders’ tangible equity. Achieving a target RoTE demonstrates the organisation’s ability to execute its strategy and align management’s interests with the shareholders’. RoTE lies at the heart of the Group’s capital allocation and performance management process.

The CET1 ratio is a measure of the capital strength and resilience of Barclays. The Group’s capital management objective is to maximise shareholder value by prudently managing the level and mix of its capital. This is to ensure the Group and all of its subsidiaries are appropriately capitalised relative to their minimum regulatory and stressed capital requirements, and to support the Group’s risk appetite, growth, and strategic options while seeking to maintain a robust credit proposition for the Group and its subsidiaries.

The ratio expresses Barclays’ capital as a percentage of risk weighted assets (RWAs), as defined by the PRA, in the context of Capital Requirements Directive IV (CRD IV – an EU directive prescribing capital adequacy and liquidity requirements), and is part of the regulatory framework governing how banks and depository institutions are supervised.

Barclays views operating expenses as a key strategic area for banks; those which actively manage costs and control them effectively will gain a strong competitive advantage. Restructuring the cost base is a key execution priority for management and includes a review of all categories of discretionary spending and an analysis of how we can run the business to ensure that costs increase at a slower rate than income.

The cost: income ratio measures operating expenses as a percentage of total income and is used to assess the productivity of the business operations.

### How we are doing
| Metric | 2017 Value | 2016 Value |
|---|---|---|
| Group Return on Tangible Equity | (3.6)% | 3.6% |
| Common Equity Tier 1 (CET1) ratio | 13.3% | 12.4% |
| Cost: income ratio | 73% | 76% |
| Operating expenses\* | £14.2bn | £15.0bn |

*\* excluding litigation and conduct*

CRD IV fully loaded CET1 ratio
The Group’s CRD IV fully loaded CET1 ratio increased to 13.3% (2016: 12.4%) driven by a decrease in RWAs of £53bn to £313bn, which was partially offset by a reduction in CET1 capital to £41.6bn (2016: £45.2bn). The 90bps improvement was driven by organic capital generation from continuing operations, the benefit of the proportional consolidation of BAGL and the rundown of Non-Core, partially offset by an adverse movement in reserves and the net impact of the remeasurement of US DTAs.

Operating expenses and cost: income ratio
Group operating expenses were £15.5bn (2016: £16.3bn). Excluding litigation and conduct charges, Group operating expenses were £14.2bn (2016: £15.0bn), in line with 2017 guidance. The reduction in operating expenses was primarily driven by lower Non-Core related operating expenses.

The Group cost: income ratio was 73% (2016: 76%).

For further information on the financial performance of the Group, please see page 47.

### Strategic non-financial performance measures
**How we are doing: summary**
We assess progress towards the delivery of positive outcomes our customers and clients (page 18), colleagues (page 19), and citizenship activity (page 21), all underpinned by conduct and culture.

**Areas of encouragement:**
Customer and Client: In 2017, we continued to focus on delivering excellent customer and client experience, by offering products and services to meet their needs in an appropriate and accessible way. We are encouraged by the performance of our Relationship Net Promoter Scores (NPS®), while our client ranking and market share indicators remained broadly stable across many of our international business areas, which we believe reflect the relevance of our customer and client proposition. Digital solutions can enable a convenient and secure everyday banking experience for customers and clients, and we believe this is reflected in a 7% year on year increase in the number of Barclays UK customers using our digital services.

Colleague: We remain focused on increasing the diversity of our workforce and continuing to build an inclusive culture. We are proud of the progress we have made on the multicultural, multigenerational, LGBT and disability pillars, and we continue to receive external recognition for our diversity and inclusion work. We also continue to focus on the positive engagement of our workforce, and are encouraged to see a 3 percentage point improvement in our annual employee engagement survey score.

Citizenship: We are conscious of our wider stakeholders and the communities in which we operate and have performed well against our citizenship agenda, meeting our internal objectives on all six of our Shared Growth Ambition metrics.

**Areas of continued focus:**
Customer and Client: Further transformation of our customer and client experience remains a key priority for Barclays, particularly as customer and client expectations continue to evolve rapidly. Although we are encouraged by the reductions in the number of complaints we received in 2017, this remains an ongoing area of focus for management and the Board.

Colleague: Our commitment to increasing female representation at all levels of Barclays remains firm. Although we have achieved an increase in the percentage of women at our Managing Director and Director levels, we recognise that there is still progress to be made regarding senior female representation. In addition, although we have made progress, we recognise there is still more to do to further reduce obstacles to efficiency and enable our colleagues to achieve excellent performance. We remain committed to driving the right culture throughout all levels of the organisation and continuing to enhance the effective management of Conduct Risk.

Citizenship: We have made good progress in delivering access to sustainable finance and developing new green products. We see further opportunity in this space and are working to develop broader sustainability and sensitive sector guidelines. In addition, we continue to focus on enhancing disclosures, particularly on climate change, and improving our Environmental, Social and Governance (ESG) ratings and benchmark scores on an absolute and relative basis.

| Category | 2017 Score | 2016 Score |
|---|---|---|
| Barclays Relationship NPS | +14 | +10 |
| Sustainable engagement of colleagues | 78% | 75% |
| Access to financing | £31.7bn | £30.5bn |

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## Customer and Client
## A holistic approach to measuring success

We therefore remain focused on areas requiring our attention including, for example, the recent issues we have experienced with our Smart Investor proposition, and we are working to improve our service as a result of customer feedback.

**In 2017, Barclaycard US customers logged into our website and mobile apps over 230 million times.**

### Conduct indicators
Barclays has operated at the overall set tolerance for Conduct Risk throughout 2017. The tolerance is assessed by the business through Key Indicators which are aggregated and provide an overall rating which is reported to the Board Reputation Committee as part of the Conduct Dashboard.

We remain focused on the continuous improvement being made to manage Conduct Risk effectively, with an emphasis on enhancing governance and management information to facilitate the identification of risks at earlier stages. For further information on the management and performance of Conduct Risk, please refer to the Risk Review section on page 117.

Policies and guidance can support delivery towards the key outcomes for our customer and clients. The Barclays Way contains statements on how we strive to deliver excellent customer service, and respect and protect the personal information we hold. It defines Conduct Risk outcomes as guiding principles and contains statements on privacy and data protection that colleagues must adhere to. The Barclays Way is available to view at: home.barclays/citizenship/our-approach.html. Performance against our strategic non-financial performance measures for our customers and clients is one indicator of the effectiveness and outcome of certain policies and guidance. Policies which support our customer and client strategic non financial measures include aspects of our Customer Complaints Global Policy.

Our customers and clients are at the heart of our purpose and strategy. For further information on our two divisions, Barclays UK and Barclays International, please refer to pages 23 to 34.

## Colleague
Key outcomes we will look to achieve include:
Promoting and maintaining:
* a diverse and inclusive workforce in which employees of all backgrounds are treated equally and have the opportunity to be successful and achieve their potential
* engaged and enabled colleagues
* a positive conduct and values-based culture.

How we measure success
Measures used in our evaluation include, but are not limited to:
* diversity and Inclusion statistics
* employee sustainable engagement survey scores
* conduct and culture measures.

How we are doing
Areas of encouragement:
**A diverse and inclusive workforce**
We remain focused on increasing the diversity of our workforce and continuing to build an inclusive culture. In 2017, we have placed additional focus on upskilling our leadership through a range of initiatives including our Unconscious Bias Training, which has been delivered to over 10,000 leaders to date.

We are proud of our achievements in 2017, across the following pillars of our global Diversity and Inclusion strategy:

LGBT: Our Spectrum Allies programme is growing, with an estimated over 8,000 colleagues (2016: over 7,000), who have pledged to challenge homophobia, biphobia and transphobia and provide support to LGBT colleagues.

Disability: This year, alongside PwC, we have further scaled the ‘This is Me in the City’ initiative along with the Lord Mayor of the City of London.

Multicultural: The number of apprentices who identify as Black, Asian and Minority Ethnic was 19% in 2017 (2016: 30%), 8 percentage points above the national apprenticeship average.

Multigenerational: Since the Barclays Armed Forces Transition, Employment and Resettlement (AFTER) programme began in 2010, the programme has assisted over 5,500 veterans in employment transition and since 2013 we have hired over 500 ex-military personnel (2016: nearly 400).

Our Dynamic Working campaign is relevant to colleagues at every life stage and encourages the integration of personal and professional responsibilities through smarter work patterns. The campaign is having a positive effect on colleague engagement, with 59% of colleagues actively working dynamically in 2017 with an average overall sustainable engagement score of 83% among this group.

Gender: Our commitment to increasing female representation at all levels remains firm. Please see ‘Areas of continued focus’ below for details on our progress.

Throughout 2017, our work was recognised externally, including: Stonewall recognising Barclays as one of only 12 Top Global Employers; the Human Rights Campaign awarding Barclays 100% on their corporate equality index; Working Families UK recognising Barclays as one of the top 10 Employers for Working Families in 2017; and the City of London and the Social Mobility Commission acknowledging Barclays as a Top 50 Employer through the Social Mobility Employer Index.

| Metric | 2017 Value | 2016 Value |
|---|---|---|
| Barclays Relationship NPS | +14 | +10 |
| Sustainable engagement of colleagues | 78% | 75% |
| Access to financing | £31.7bn | £30.5bn |

**Areas of continued focus:**
A diverse and inclusive workforce
Our commitment to increasing female representation at all levels remains firm and we are mindful of the need to remain focused on improving our gender diversity with goals to improve the percentage of female Managing Directors and Directors to 26% by 2018 (2017: 23%, a 1 percentage point improvement year on year); 33% female representation on our Board by 2020 (2017: 21%, 2016: 31%); and 33% female representation among the Group Executive Committee and their direct reports (2017: 25%, flat year on year). Recognising the importance of strengthening our talent pipeline, we also have an ambition for 50% female graduate hires (2017: 40%, 2016: 39%).

Engaged and enabled colleagues
Although it is pleasing to note that we have made progress across areas identified for opportunity, including ‘eliminating obstacles to efficiency’ and ‘ensuring colleagues have the tools and resources to achieve excellent performance’, there is always more to do. Enabling our employees to achieve excellence remains a key priority and throughout 2018 new initiatives will be identified that will continue to improve the simplicity and efficiency of our tools, processes and systems.

A positive conduct and values-based culture
Within our culture measurement framework, which is anchored in our values, ‘Excellence’ remains the biggest opportunity for improvement, as the ‘Enable’ component within the colleague survey continues to be the lowest scoring measurement of sustainable engagement (64%, up 4 percentage points on 2016). A set of improvement initiatives were identified in 2017 and will continue in 2018 to drive progress in this area.

Barclays has operated at the overall set tolerance for Conduct Risk throughout 2017. The tolerance is assessed by the business through Key Indicators which are aggregated and provide an overall rating which is reported to the Board Reputation Committee as part of the Conduct Dashboard.

We continue to see improvements in conduct performance and are committed to continuing to drive the right culture throughout all levels of the organisation. Barclays will continue to enhance the effective management of Conduct Risk and appropriately consider the relevant tools, governance and management information in decision making processes.

Policies and guidance can support delivery towards the key outcomes for our colleagues. The Barclays Way contains statements on how we aim to create and promote a culture that is diverse and inclusive and create the positive and respectful environment all employees are entitled to enjoy. It also contains requirements for employees to: inform their line managers of changes in circumstances, including, for example, any conflict of interest or outside business interest; take reasonable care of their own and others’ health and safety; and the responsibility to protect Barclays’ assets. It also contains statements on: physical security; Group Resilience Policy and Standards; and communication with the media and public speaking appearances. Performance against our strategic non-financial performance measures for our colleagues is one indicator of the effectiveness and outcome of certain policies and guidance. Policies which support our colleague strategic non-financial measures include aspects of our Employee Opinion Survey Policy.

Please refer to the section on Our people and culture on page 36 and the People section on pages 89 to 92 for further information on our progress.

Notes
a Under the Companies Act 2006, Barclays is required to report on the gender breakdown of our employees and ‘senior managers’. Of our global workforce of 79,900 (45,100 male, 34,800 female), 555 were senior managers (401 male, 154 female), which include Officers of the Group, certain direct reports of the Chief Executive, heads of major business units, certain senior Managing Directors, and directors on the boards of undertakings of the Group, but exclude individuals who sit as Directors on the Board of the Company. The definition of senior managers within this disclosure has a narrower scope than the Managing Director and Director female representation data provided above.
b Previously called female representation across ‘senior leadership’.
c Based on 2016 actual (24%) restated on an ex-Africa basis (22%).

19 Barclays PLC Annual Report 2017

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## Citizenship
Key outcomes we will look to achieve include:
* making decisions and doing business that provides our clients, customers, shareholders, colleagues and the communities which we serve with access to a prosperous future, through our Shared Growth Ambition
* proactively managing the environmental and societal impacts of our business.

How we measure success
Measures used in our evaluation include, but are not limited to:
* delivery against our Shared Growth Ambition
* colleague engagement in citizenship activities
* external benchmarks and surveys.

How we are doing
Areas of encouragement:
**Delivery against our Shared Growth Ambition**
We met our internal objectives on all six of our Shared Growth Ambition metrics. Performance was on-track against our internal milestones for three initiatives around ‘access to financing’, ‘access to digital and financial empowerment’ and ‘access to employment’. We also met or exceeded our 2017 annual targets for The Barclays Way training, carbon emissions reduction and payment of suppliers on time.

**Access to financing**
We continued to deliver financing solutions in areas including renewable energy, water and low carbon technologies; social infrastructure; development institutions; and small business financing. Barclays delivered £31.7bn in financing for specific social and environmental segments across our business lines (2016: £30.5bn$^a$).

There has been significant momentum across the Barclays franchise in 2017, including the launch of a range of new Green Loans, Asset Finance and Deposit products; the issuance of Barclays inaugural Green Bond (see case study on page 7); an industry-first Multi-Impact Growth Fund for retail investors; a range of innovative transactions such as solar project bonds and green asset backed securities; and continued coverage from our Research teams on ESG and Sustainability themes.

**Access to financial and digital empowerment**
Inclusive financial systems are key to achieving economic and societal progress, but there can be several barriers to access. We believe digital offerings can help break down these barriers. We helped empower around 205,000 people in 2017 (2016: 249,000) through initiatives such as Barclaycard Initial for those with a limited credit history; our Digital Eagles network, comprised of specially trained Barclays employees working to provide free technology support to customers and non-customers; and the continued development of learning platforms.

We work closely with partners in the free debt advice sector and collaborate on a number of projects including research and colleague training on financial vulnerability, and how we can best match customers to the advice service that suits them.

**Access to employment**
Barclays is committed to helping people gain access to skills, and supporting entrepreneurs to drive job creation. We helped upskill over 2.1 million people in 2017 (2016:1.7 million), driven by a range of regional employability partnerships and our flagship LifeSkills programme in the UK.

We held Accelerators for the second cohort of the ‘Unreasonable Impact’ programme in partnership with Unreasonable Group, focused on scaling ventures that solve environmental and societal problems. 57 ventures have participated to date in programmes across the UK, US and Asia.

**Barclays delivered £31.7bn in financing for specific social and environmental segments.**

Note
$^a$ Financing volume based on a use of proceeds framework. 2016 actuals have been restated from £21.1bn due to the inclusion of new qualifying categories such as national development banks. Further detail available in the ESG Report.

### Supporting sustainable ventures
Barclays and the Unreasonable Group hosted the first Unreasonable Impact World Forum in 2017, bringing together 27 innovative companies from Asia, the US and Europe working to solve some of the world’s most pressing problems. Held in London, the Forum included elevator pitches from entrepreneurs and panel sessions on themes such as scaling businesses and raising capital through impact investors. Over 400 representatives from a range of stakeholder groups, including investors, clients, NGOs and government agencies attended in person, with the event broadcast live on select social media channels globally.

Unreasonable Impact is an innovative multi-year partnership between Barclays and Unreasonable Group to launch the world’s first international network of accelerators focused on scaling-up entrepreneurial solutions that will help employ thousands worldwide while solving some of our most pressing societal challenges.
See https://unreasonableimpact.com/ for more information.

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## Supporting sustainability-focused ventures to scale-up is one way in which Barclays is supporting the Sustainable Development Goals (SDGs), and we will continue to review and improve our core focus on raising access to financing for social and environmental segments, building skills and supporting empowerment.

External benchmarks and surveys
Barclays’ strategy and performance on a range of ESG factors is evaluated by external agencies on an annual basis.

In 2017, we broadly maintained our performance scores in key ratings and indices. Although methodologies vary and continue to evolve, we believe there is an opportunity to continue to enhance our performance on an absolute and relative basis.

We maintained membership of both the Dow Jones Sustainability Index$^c$ series, where our score reduced by 1 percentage point to 83 points against an industry average of 58 points (2016: 61 points), and the FTSE4Good Index series$^d$, with our absolute score up to 4.3/5 (2016: 3.9/5) and our position relative to the banks sector improved to the 91st percentile (2016: 78th percentile). Barclays was rated ‘BBB’ by MSCI ESG Rating$^e$ (2016: ‘BBB’) and scored 61 points in Sustainalytics ESG$^f$ Ratings (2016: 62 points).

Policies and guidance can support delivery towards the key outcomes for citizenship. The Barclays Way contains statements on: respect for society – our Shared Growth Ambition; respect for human rights; respect for the environment and supporting the communities in which we operate.

Our activity is supported by policies and position statements on a range of material issues including: environmental sustainability; modern slavery; human rights; and anti-bribery and anti-corruption. These are available at home.barclays/citizenship/our-approach/policy-positions.html

Barclays’ Group Statement on Human Rights aims to achieve a consistent and comprehensive approach to respecting human rights. We are committed to operating in accordance with the Universal Declaration of Human Rights and we take account of other internationally accepted human rights standards. We respect and promote human rights through our employment policies and practices, through our supply chain and through the responsible provision of our products and services.

The Barclays Anti-Bribery and Anti-Corruption (ABC) Policy and Standards and the Barclays Introducer Policy and Standard extend to all Barclays’ business dealings globally. Barclays takes a zero-tolerance approach to bribery and corruption and we are committed to conducting our global activities free from any form of bribery and corruption. We also expect the same from any third parties providing services for or on behalf of Barclays. Employees who fail to comply with the requirements of our policies and standards, may face disciplinary action, up to and including dismissal or termination of employment.

Performance against our strategic non-financial performance measures for citizenship is one indicator of the effectiveness and outcome of certain policies and guidance. Policies which support our citizenship strategic non-financial measures include aspects of our policy statement on environmental sustainability.

The full details of our policies and position statements are available at home.barclays/citizenship/our-approach/policy-positions.html

We provide additional information in the Environmental Social Governance (ESG) Report 2017 available at home.barclays/annualreport

Business conduct and environmental impact
The Barclays Way outlines the Purpose and Values which govern our way of working. 99.9% of our colleagues completed annual training on The Barclays Way in 2017 (2016: 99.6%) ahead of our target of above 97%.

We reduced carbon emissions by 26.1% against the 2015 baseline (2016: 14.3%$^a$), making good progress towards our 30% target by 2018.

We also achieved 89% (2016: 88%) on-time payment by value to our suppliers (Target: 85%) and have published an updated Statement on Modern Slavery which includes additional information on the work we are doing with our clients and customers, as well as our suppliers.

Please see the statement on our website home.barclays/citizenship/our-approach/human-rights.html

Colleague engagement in citizenship activities
Colleague participation is essential to the success of our citizenship strategy. More than 50% of our colleagues participated in volunteering, fundraising or regular giving activity with 43,700 unique participants (2016: almost 44,000)$^b$. We also have active internal Digital and LifeSkills, Environmental, Social Innovation and Intrapreneur networks.

Areas of continued focus:
**Shared Growth Ambition**
We will continue to focus on improving integration with our product suite and developing innovative sustainable financing solutions. We intend to focus on enhancing the impact of our employability programmes and providing compelling opportunities for our colleagues to participate in citizenship activities.

In addition, we are developing wider sustainability and sector guidelines for business activity in 2018, and will increase our contribution to policy initiatives and multi-stakeholder partnerships.

Notes
$^a$ 2016 carbon reduction actuals have been restated due to improved billing data replacing estimates and restatements to travel emissions. Further detail available in the ESG Report.
$^b$ Unique participants measures colleague involvement in eligible volunteering, matched fundraising, regular giving initiatives. Data sourced from internal reporting systems including several manual sources.
$^c$ Source: S&P Dow Jones; Sustainable Asset Management (SAM).
$^d$ Source: FTSE Russell.
$^e$ Source: MSCI ESG Inc.
$^f$ Source: Sustainalytics Inc.

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## Barclays UK
## Our performance in the UK

Overview of products, services and clients
Our future ring-fenced bank, Barclays UK, is a personal and business banking franchise, built around our customers’ needs with innovation at its core. Our Personal and Premier Banking financial solutions help customers move forward by putting them at the heart of everything we do, connecting the different aspects of their lives to their financial lives, at a time that suits them. Barclaycard Consumer UK is a leading credit card provider, offering flexible borrowing and payment solutions, while delivering a market-leading customer experience. Wealth, Entrepreneurs and Business Banking serves a spectrum of clients, from those who manage their own investments to small and medium-sized enterprises (SMEs) who need specialist advice, products and services.

Market and environment in which the division operates
Against the background of a prolonged uncertain political and economic climate in the UK, we continue to deliver solid financial performance and provide innovative solutions for our customers and clients. The operating environment continues to be challenging including rapidly changing customer behaviours; increasing expectations of society and regulators; and significant technological disruption amid the threat of dis-aggregation from competitors and new entrants. However, we have a leading brand, a solid customer base and we remain well positioned in the current environment.

With 30,000 colleagues and 24 million customers and clients, Barclays UK strives to help people move forward by providing personalised and perfect experiences, delivered by passionate colleagues. In 2017, we have made significant progress in establishing the ring-fenced bank, protecting our customers and clients and transforming our business through digitisation and automation.

| Component | Details |
|---|---|
| **Customers and Clients** | ■ Individuals ■ Businesses (SMEs) |
| **Products and services** | ■ Personal banking services ■ Credit cards and transactional lending ■ Investment products and services ■ Business banking solutions |
| **Value creation** | ■ To our customers and clients – Building meaningful relationships to provide relevant financial solutions ■ To society – Helping communities move forward ■ To Barclays – Ring-fenced UK-focused bank with sustainable returns and prudent balance growth |
| **Contribution to Group** | Income: £7.4bn, Profit before tax: £1.7bn, RoTE: 9.8%, Cost: income ratio: 66%, Risk Weighted Assets: £70.9bn |

### Barclays UK operational model

24 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## We are committed to ensuring continued growth of Barclays UK, and are cognisant of the rapid pace of technological change in today’s environment.

Risks to the operating model
We continue to monitor leading indicators to identify trends in UK economic performance – in particular, trends caused by low interest rates, Brexit uncertainty, as well as from the impact of the increase in zero hour contracts. We aim to remain conservative and well positioned post-Brexit with stable trends in impairments supported by our strong risk management framework and oversight.

We are committed to ensuring continued growth of Barclays UK, and are cognisant of the rapid pace of technological change in today’s environment. In order to continue to provide exciting and relevant solutions for our customers and remain competitive against new entrants, we are investing significantly in new technology, while simplifying and automating our existing platforms.

Unrelenting growth and sophistication in organised crime remains a concern. In order to reduce the risk of cyber threat and protect our customers and clients, we continue to invest heavily in cyber risk, improving detection and response capability and implementing new resilience standards and testing approaches.

### Innovation at our core
Half a century after launching the world’s first Automated Teller Machine – the ATM, we developed new ‘contactless cash’ withdrawal options in 2017, fit for the digital age. In addition, we extended our cheque imaging pilot programme to other banks, allowing more than 243,000 customers the ability to pay in cheques instantly from wherever they are, 24 hours a day. We also achieved an industry first with Insurance Instant Price – our first mobile insurance proposition, allowing instant price quotes from our providers to approximately one million customers.

Key highlights this year in delivering our strategy
This year we have built the Barclays UK ring-fenced bank and a diverse, highly experienced Board has been appointed by the Barclays UK Chairman. We have also migrated over 600,000 customers onto new sort codes with minimal customer impact.

Alongside this, we have made good progress building meaningful relationships with our 24 million customers and significantly reducing the number of customer complaints – one of our key objectives for 2017 – by developing our colleagues and tackling the root causes. Interactive tools are now available to enable colleagues to more effectively own, manage and collaborate in the timely resolution of complaints. Reducing customer complaints further will continue to remain one of our top priorities for 2018.

### Delivering on shared growth
Our signature citizenship programme, LifeSkills, aims to inspire young people to develop the skills they need for a better future. In less than five years, it has reached over 5.5 million young people and more than 16,000 colleagues are now registered as LifeSkills volunteers.

We expect 2018 to be a pivotal year for the financial services industry with the introduction of PSD2 and Open Banking but we believe Barclays UK has a significant opportunity to thrive in this environment. I am positive we will continue our lead in innovation in an Open Banking environment, as a new ring-fenced bank.

**Over 10 million customers are now actively engaged with our digital services, including our award-winning Barclays Mobile Banking mobile app.**

**Ashok Vaswani**
**CEO, Barclays UK**

### Educating our customers in digital safety
In May 2017, we launched our UK-wide consumer engagement campaign to highlight the importance of digital safety and our role in helping people move forward in this digital age.

The digital age has made our lives much easier in many ways. We now share information, shop online, pay bills, and keep in touch with each other in cyberspace. For many people, this is their way of life and they feel confident in navigating the digital world. However, having the confidence to be able to work and play in the digital age isn’t the same as knowing how to keep safe while doing so.

Our campaign resulted in over 4.8 million people taking action off the back of this outreach, resulting in our leadership role being recognised by Government ministers and the media.

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## Personal Banking
## Our performance in Personal Banking

Our Personal and Premier Banking team develop transparent and innovative solutions for our customers. We help customers move forward by putting them at the heart of everything we do, connecting the different aspects of their lives to their financial lives, at a time that suits them. This ranges from opening their first bank account to completing a mortgage on their dream home.

This year we created a single Product and Propositions team, bringing together our core product capabilities in Current Accounts, FX and Insurance, Consumer Lending, Mortgages and Savings with our newer Information Business and Mobile Payments products, as well as with the Community and Premier segments they serve. Through doing this, we are now able to more fully anticipate and deliver responses to our customers’ needs and understand what they want in the moment they need it.

Moving Barclays UK forward
2017 has seen a continued focus on rewarding customer loyalty and creating advocates for every interaction. Over 930,000 customers now benefit from Blue Rewards, including Cashback. We landed our first 10% Cashback retail offers and have helped our customers earn over £5 million in savings since Cashback was launched.

Technology and data are such fundamental parts of how we serve customers and clients that it is vital that we all become more digitally savvy and help our customers to do the same. We started several years ago with the nationwide force of Digital Eagles, offering our customers and clients the help and resources to improve their digital skills; and continued this year with our Digital Safety campaign which aims to heighten awareness and educate our customers to be digitally safe.

Leveraging our data to benefit our customers and clients is a fundamental pillar of our strategy. We launched Local Insights, providing consumers, businesses and MPs key insights about their local area. We celebrated one year of our Barclays Identity Service, which allows consumers to access government services such as tax self-assessment online in a simplified, secure manner.

We launched a new online Track Savings Goals tool available through Barclays Finance Manager, which aims to support customers in setting and reaching their targets.

Our Mortgages business has continued to focus on enhancing the customer experience this year, and has won eight awards$^a$ in 2017. We’ve also continued to enhance our CloudIt offering, including allowing customers to access their mortgage statements online.

Helping our customers and colleagues
Barclays has made significant progress to enhance accessibility this year. Our high visibility and tactile debit cards aren’t just useful for the visually impaired – many people struggle to read the numbers on their card – so we’ve offered a high contrast design option. We also launched a new larger audio PINsentry device to facilitate easier access to online banking for customers with dexterity and sight difficulties, enabling them to continue to do their banking independently. We have supported customers in vulnerable circumstances by automating complex processes such as registering a power of attorney.

As well as delivering for our customers and clients, we need to ensure we deliver for our colleagues too. Our focus on investment in training, development and coaching as well as creating new ways to engage and support our colleagues continues. Our colleagues’ needs are changing just as those of our customers are, and empowerment, dynamic and flexible working as well as improved technology have been a strong focus as we develop a world-class team who put the customer at the centre of everything they do.

“Barclays has always believed in me. The real support has come from my points of contact at the bank. It’s these relationships that not only keep me banking with Barclays, but encourage me, without a shadow of a doubt, to recommend Barclays.”

**Kieran Miles, Premier Customer**

Note:
$^a$ Best Lender for first-time buyers with family support (Moneywise); Best Lender for Larger loans (Moneywise); Best Online Lender (What Mortgage); Best Help to Buy Mortgage Lender – Equity Loan (What Mortgage); Best Intermediary Lender (Mortgage Finance Gazette); Best Overall Lender (Mortgage Finance Gazette); Best National Bank (Mortgage Finance Gazette); Best Large Loans Mortgage Lender (Your Mortgage).

Our Personal and Premier Banking team develop transparent and innovative solutions for our customers. We help customers move forward by putting them at the heart of everything we do, connecting the different aspects of their lives to their financial lives, at a time that suits them. This ranges from opening their first bank account to completing a mortgage on their dream home.

26 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## Our performance in Barclaycard Consumer UK

Barclaycard Consumer UK offers a suite of products to our customers. Our Barclaycard Initial credit card is aimed at customers who are looking for a first credit card, or have a limited credit history, and helps them to build a credit profile. Our Barclaycard Platinum card offers promotional savings on balance transfers and purchases for borrowers with good credit history. Alternatively, shoppers can earn reward points everywhere they shop with our Barclaycard Freedom Rewards credit card.

The UK credit market continues to experience considerable change, driven by new competitors, new technologies, economic and regulatory pressures, and changing consumer expectations and behaviour. We are responding by developing new products and services for our consumers. For example, this year we have further diversified our offers to new and existing customers with the launch of our Barclaycard Platinum travel card, which has no non-Sterling transaction fees on foreign spend and ATM withdrawals.

**This year also saw the integration of Barclaycard Consumer UK with our retail bank to build and grow more sustainable income while reducing complaints and creating better customer experience.**

The integration of Barclaycard Consumer UK into Barclays UK has progressed with focus on enhancing the customer experience, as well as leveraging resources, technology and digital capabilities.

Barclaycard Consumer UK is a leading credit card provider, providing flexible borrowing and payment solutions to around 10 million customers in the UK. We help people move forward, by enabling them to borrow and pay in a way that suits them. We are a responsible lender, providing credit based on credit history, ability to afford credit and our risk appetite, while delivering a market-leading customer experience.

We are continuously looking for ways to improve the customer experience we deliver
Throughout 2017 we focused on reducing customer complaints, maintained a stable Relationship NPS and reached new records on several transaction NPS, including Customer Service. We are pleased to have won a number of awards, acknowledging the market-leading service we offer our customers. We were recognised at the Top 50 Companies for Customer Service Awards, with two awards, Best Extra-Large Centre and Best Social Media Team.

We support consumers by providing free credit scores, and personalised hints and tips on how to become fraud smart. Fraud-related activity is increasing and our research tells us that customers are increasingly concerned about how to protect themselves, and look to us to help provide support and information. We developed a digital interactive Fraud Fighter Tool to help customers understand where they are vulnerable and what they could do to better protect themselves, by giving them personalised fraud prevention tips.

We also launched the Barclaycard Start Today campaign, to encourage people to start something new that they always wanted to do. So whether it is signing up to those pottery lessons or buying a bike, Barclaycard is there for our customers to help them move forward.

We are continuously looking for ways to improve the customer experience we deliver
Throughout 2017 we focused on reducing customer complaints, maintained a stable Relationship NPS and reached new records on several transaction NPS, including Customer Service. We are pleased to have won a number of awards, acknowledging the market-leading service we offer our customers. We were recognised at the Top 50 Companies for Customer Service Awards, with two awards, Best Extra-Large Centre and Best Social Media Team.

We support consumers by providing free credit scores, and personalised hints and tips on how to become fraud smart. Fraud-related activity is increasing and our research tells us that customers are increasingly concerned about how to protect themselves, and look to us to help provide support and information. We developed a digital interactive Fraud Fighter Tool to help customers understand where they are vulnerable and what they could do to better protect themselves, by giving them personalised fraud prevention tips.

We also launched the Barclaycard Start Today campaign, to encourage people to start something new that they always wanted to do. So whether it is signing up to those pottery lessons or buying a bike, Barclaycard is there for our customers to help them move forward.

***

## Our performance in Wealth, Entrepreneurs and Business Banking

### Wealth and Investments overview
Wealth and Investments is formed of two businesses; Wealth Management and Smart Investor, both of which are supported by our in-house investment and asset management capabilities. Clients of our Wealth Management business benefit from holistic advice in banking, credit, wealth planning, and investments through their dedicated Wealth Manager and access to specialists across Wealth and Investments and the wider Barclays UK division. Despite significant investment in regulations required, Wealth Management has achieved a strong performance, and achieved year on year growth in client acquisitions.

**Despite significant investment in regulations required, Wealth Management has achieved a strong performance, and achieved year on year growth in client acquisitions.**

Smart Investor provides clients access to a wide range of investment products, educational resources to help build their confidence in investing, and tools to assist in planning for their future. The focus of the business this year has been launching Smart Investor and migrating over 225,000 existing Stockbrokers’ clients onto the new platform. This allows our clients to leave the day-to-day management of their investments to our experts, thereby taking the complexity out of investing.

This year, we launched the Multi-Impact Growth Fund, the first impact-investing vehicle of its kind from a major UK bank, offering mainstream investors the opportunity to generate long-term capital growth while making a positive contribution to society.

### Business Banking overview
Our Business Banking unit provides coverage for clients across the UK at every stage of their business cycle in every industry, delivering distribution models which match clients’ needs and sophistication.

This year, we launched our SmartBusiness Dashboard and App and now have over 12,000 clients benefiting from this unique client experience. With all their key business data in one handy place, our business clients are now spending more time within SmartBusiness and reaping the benefits.

The roll-out of Direct, our unique telephony relationship model for small business and start-up customers, has vastly increased the number of conversations and in-depth client reviews we are able to have, which directly benefits over 900,000 customers already on this new, interactive model.

In 2017, we supported more clients, reduced account opening times, lent more money and generated more income than in 2016 through targeting sustainable, long-term growth. Our aim in 2018 is to empower our colleagues through continuing to invest in technology and services.

Within Wealth, Entrepreneurs and Business Banking, Wealth and Investments serves a spectrum of clients, from those who manage their own investments and require an execution service, to those who require a dedicated and holistic service through our Wealth Management services. Business Banking offers specialist advice, products and services to over one million business clients across the UK, helping them to run and grow their business, from start-ups through to mid-sized businesses.

### Investing in change
The Multi-Impact Growth Fund invests primarily in specialist third-party funds which have been identified and blended by our experienced in-house fund and manager selection team. These funds have been chosen as best-in-class based on both their potential for strong financial returns and the consideration of their impact around key social and environmental issues such as climate or demographic changes. The Fund is the first Barclays product in the wider impact investing proposition being developed and is available to clients in Wealth Management and Smart Investor.

28 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## Barclays International
## Our performance in International

Barclays International is the diversified transatlantic, wholesale and consumer bank within Barclays Bank PLC. Encompassing the Corporate and Investment Bank, Barclaycard International and Private Bank and Overseas Services businesses, our dual home markets in the UK and US anchor our business in the two most important global financial centres.

Overview of products, services and clients
On the consumer side, within Barclaycard International, we provide consumers with credit cards, lending and deposit accounts. In Private Bank and Overseas Services, we provide banking, investment and wealth management services. For SMEs and corporates, we enable payment acceptance, commercial card payments and point-of-sale finance. Through our Corporate and Investment Bank, we serve our clients by providing advice, financing, trade and payment solutions, and raising capital. We support our institutional clients through sales and trading of securities.

Our business model in Barclays International is dependent upon our client relationships, the services we provide to our clients and our capital – human, technological and financial. In 2017, Barclays International contributed 68% to Group income with an RoTE of 6.6%, excluding the impact of the US deferred tax assets remeasurement.

| Component | Details |
|---|---|
| **Customers and Clients** | ■ Corporates ■ Financial institutions ■ Institutional investors ■ Governments ■ Consumers ■ High and Ultra-High Net Worth Individuals ■ Family Offices |
| **Products and services** | ■ Financial advice ■ Primary capital raising and capital markets execution ■ Risk and liquidity management ■ Lending ■ Sales and trading ■ International credit cards ■ Consumer payments ■ Banking ■ Investments ■ Wealth management |
| **Value creation** | ■ To our customers and clients – we create value by facilitating the transmission of money from providers to users of capital ■ To society – we provide financing to a range of social and environmental segments ■ To shareholders – as a diversified transatlantic, wholesale and consumer bank |
| **Contribution to Group** | Income: £14.4bn, Profit before tax: £3.3bn, RoTE: 3.4% (6.6% excl. the impact of the US deferred tax assets remeasurement), Cost: income ratio: 69%, Risk Weighted Assets: £210.3bn |

### Barclays International operational model

30 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## Market and environment in which the division operates
The economic markets in 2017 were characterised by a low volatility and low interest rate environment. With this benign backdrop, valuation gains in the equity markets prevailed throughout the year. Prospective and confirmed legislative and regulatory changes continued to influence and shape strategies of all market players. In the UK, consumer confidence hit a four-year low, amid Sterling depreciation and despite historically low unemployment. In the US, the labour market and consumer spending strengthened, with subdued wage growth.

Barclays International is focused on investments in talent, capital and technology.

Barclays International has achieved significant milestones to meet structural reform regulations. Working closely with regulators and stakeholders, we are set up to serve our clients across the globe in alignment with regulatory policies and legislation. The newly-created divisional Board of Directors has been confirmed and has convened prior to formal Board meetings to ensure that we are set to operate within the Barclays governance framework upon the formalisation of structural reform. Significant entities within Barclays International, such as the US Intermediate Holding Company (IHC), are subject to stringent governance standards to ensure safety and soundness, particularly around capital, liquidity and risk management.

Risks to the operating model
Geopolitical and macroeconomic uncertainty in some markets remain a risk, while the volume and reach of regulatory change continues to require significant attention.

We are making comprehensive plans for the UK’s planned exit from the EU and we believe we will provide an uninterrupted service to our clients, consumers and other stakeholders during and after the transition.

We continue to monitor growth in US consumer delinquencies having proactively reduced our exposure to middle market consumers earlier this year.

### Advising on pan-European expansion
Asahi Group Holdings, the largest brewer in Japan, has targeted Europe as its next platform for growth in its drive to become a global beer industry leader. Having already established a presence in Italy, the UK and the Netherlands through the acquisition of brands such as Peroni, Grolsch and Meantime, Asahi engaged Barclays to assist in creating a truly pan-European franchise.

In March 2017, with Barclays acting as Financial Adviser, Asahi successfully closed on its €7.3bn acquisition of AB InBev’s business in the Czech Republic, Slovak Republic, Poland, Hungary and Romania.

Asahi turned to Barclays for this critical transaction due to our holistic capability, including a long-standing, global coverage relationship, leading brewing industry and M&A experience, deep insight into Central Europe and cross-border deal execution expertise.

Cyber crime had a hugely detrimental impact on the global economy in 2017, with unprecedented attacks in terms of their scale, impact and rate of spread. We have continued to invest heavily to ensure that our infrastructure retains industry-leading resilience to cyber crime.

The growth strategy within Barclays International will continue to be executed in a controlled, commercial manner within the ERMF framework.

### Business highlights
Barclays International is focused on investments in talent, capital and technology. In 2017, we affirmed the executive management leadership team within BI. In our Markets division, a new leadership structure has enabled streamlining and simplification, with global heads across credit, equities, macro and distribution.

We are focused on dynamically managing and allocating financial resources to businesses within Barclays International through optimisation of capital, leverage, risk weighted assets, funding and tax across all jurisdictions and legal entities.

Barclays International continues to enhance its customer and client experiences through innovation. For example, in Barclaycard International, we launched a new core payment processing platform that provides, multi-currency and multi-geography settlement capabilities and enables all currencies in all territories to be processed on a single platform. We also launched an Artificial Intelligence/Machine Learning tool to provide the latest advanced platforms and techniques for fraud detection and intelligent customer service automation.

Overall, 2017 was a milestone year for Barclays International. Together, with our colleagues across the globe, we have embarked on a number of initiatives and areas of growth as we strive to matter more to our clients, to grow our revenues, and deliver much improved sustainable returns to our shareholders.

**Tim Throsby**
**President, Barclays International and Chief Executive Officer, Corporate and Investment Bank**

31 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## Corporate and Investment Bank
## Our performance in the Corporate and Investment Bank

The Corporate and Investment Bank offers wholesale banking products and services to corporate and institutional clients. The business is focused on serving our UK and US home markets, while supporting the global ambitions of our strategic clients. The Corporate and Investment Bank includes our markets, investment banking, corporate banking and research businesses.

### Business update
Our markets businesses provide execution, prime brokerage and risk management services across the full range of asset classes including equity, fixed income and rates. With a new markets leadership team in place, we are highly focused on investments in technology to drive client successes and increase market share. For example, we migrated to a new digital platform and funded critical upgrades to our electronic trading platforms in 2017. We are focused on the standardisation and simplification of post-trade technologies with the backdrop of a strong regulatory and controls environment. In 2017, Barclays was named Best Bank for FX in London and Best Bank for GBP/USD in FX Week’s annual awards.

Our investment banking business provides long-term strategic advice on mergers and acquisitions, corporate finance and strategic risk management solutions, and equity and credit origination capabilities. In 2017, Barclays achieved its highest global fee share in three years$^a$, and was the number one ranked bank in the UK for the first time since 2012$^a$. Bolstered by strong mergers and acquisitions activity, we advised on numerous landmark deals to deliver for our clients. Our Leveraged Finance business reached its highest ever global fee share, ranking Barclays top four for the second consecutive year$^a$. Barclays was named 2017 Sterling Bond House of the Year by IFR magazine – with over 150 Sterling bond issues. Serving clients across a number of industries and segments, Barclays is proud to be a top three financier of capital for supranationals, sovereign and agency institutions$^a$, enabling the funding of critical infrastructure and helping to promote global economic growth and stability.

With industry expertise and a history of innovation, our corporate banking business provides comprehensive banking, financing, trade and payment solutions to businesses across the UK. For example, Barclays has supported Pod Point, the UK’s leading provider of electric vehicle charging since inception in 2009. Barclays’ venture debt offering – enabled by our innovation finance product which is partly guaranteed by the European Investment Fund – has supported Pod Point to gain early access to capital so they can focus on developing their business.

Finally, our research business delivers independent, thought-leading content across Equities, Credit, Macro and Quantitative Portfolio Strategy. The implementation of MiFID II has brought unprecedented change to the research industry and reinforced Barclays’ commitment to providing clients with differentiated market insights, actionable trade ideas and thematic views delivered through publications, one-to-one analyst interactions, conferences and events.

Note
$^a$ Source: Dealogic.

32 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## Consumer, Cards and Payments
## Our performance in Consumer, Cards and Payments

Consumer, Cards and Payments includes Barclaycard International and the Private Bank and Overseas Services. Barclaycard International provides branded and co-branded consumer credit cards, lending and deposit accounts to our customers in the US and Germany, and payment solutions to our clients in the UK. Private Bank and Overseas Services provide banking, investment and wealth management services to over 160,000 clients, globally.

### Barclaycard International
Our Barclaycard International business operates in three divisions: Barclaycard US, Barclaycard Business Solutions and Barclaycard Germany.

Barclaycard US offers co-branded and branded credit cards in the US, along with consumer loans and online retail deposits. We are the ninth-largest credit card issuer in the market and this business has strengthened further in 2017. We launched a new co-branded credit card with Uber, which featured a ground-breaking integration into the Uber app, offering a simple, seamless and frictionless customer experience. Our relationship with existing partners strengthened further, with our JetBlue co-branded card being named the ‘best no-fee loyalty airline card’ for 2017 by MONEY magazine.

Across all credit card products, Barclaycard US added over two million new accounts in 2017. In addition, our Barclays-branded consumer retail deposits now exceed $12.5bn.

Barclaycard Business Solutions provides merchant acquiring, payments integration and acceptance, payment gateway, commercial payments and point-of-sale consumer finance solutions in the UK. We are a leading provider in all our businesses and we are one of the largest payment acceptance providers in Europe. In 2017, we processed close to £250bn in payments through acquiring.

**In 2017, we processed close to £250bn in payments through acquiring.**

In 2017, we completed a four-year investment in a new core payment processing platform that provides omni-channel, multi-currency and multi-geography settlement capabilities to help us strengthen our merchant relationships and support their growth. Coinciding with the launch of Apple’s iPhone 8 and X, Barclays Partner Finance rolled out an in-store financing offer in the UK with 131,000 applications received in-store since launch. We are also now a preferred partner for UK point-of-sale finance for Tesla via a digital in-store offering. Barclaycard Business Solutions’ electronic funds transfer platform, known as PrecisionPay Bank Transfer, went live in Q3 with a successful launch, providing clients with the ability to pay their suppliers via bank transfer, which is funded by a commercial card.

Barclaycard has been present in Germany for over a quarter of a century and now serves over 1.2 million cards and loans customers. We are the leading issuer of revolving credit cards in the country by outstanding balances. We also have a strongly growing instalment loans business as well as an online deposit product. In recognition of our focus on innovative products and features, all three Barclaycard open market products (New Visa, Gold and Platinum) received several best-in-class recognitions from leading German business and finance magazines. Barclaycard Germany continues to drive exceptional customer satisfaction rankings, with the business placing in the top two for both cards and loans.

We also provide cards and lending in Norway, Sweden and Denmark via our EnterCard joint venture with Swedbank and we are a leading player in the region.

### Disrupting the US co-branded credit card market
November 2017 marked the unveiling of the Uber Visa Card, recognised as one of the most rewarding ‘no annual fee’ card programs in the US.

As a pioneer in transportation and technology, Uber recognised Barclays’ leadership in payments, innovation and partnerships when launching its first co-branded credit card. With an eye toward the future of mobility, technology and commerce, our companies built one of the most modern payment experiences in the US market.

This cutting-edge payments program represents a ground-breaking approach to mobile app technology that meets the demands of today’s on-the-go consumer. Using their smartphone, approved customers can apply, load their card into the Uber wallet, and start earning rewards in a matter of minutes, providing them value and experiences that are instant, integrated and rewarding.

### Private Bank and Overseas Services
Private Bank and Overseas Services provides a diversified range of financial and wealth products and services to a broad base of clients, ranging from retail, high net worth and ultra high net worth, to family offices and corporates. With a significant global footprint, business operates across the UK, EMEA, India and Offshore Islands.

**With a significant global footprint, the business operates across the UK, EMEA, India and Offshore Islands.**

Within the Private Bank, affluent clients at Barclays are supported by a dedicated Private Banker and a team of investment and wealth specialists. In addition, the Private Bank facilitates access to Barclays Corporate and Investment Bank products and services for ultra high net worth clients. The Overseas Services business delivers banking, treasury and investment solutions to core client segments through relationship led services and online channels.

With a focus on enhanced service delivery and product offerings, our Private Bank and Overseas Services business is poised for growth and scale.

34 Barclays PLC Annual Report 2017 home.barclays/annualreport

***

## Our service operations
## Head Office and Group Service Company

The Head Office function contains the central operations of the Group. With the reintegration of remaining legacy assets and businesses in the second half of 2017, the function became a more material contributor to the Group results. Going forward, many of the Head Office functions will be within the Group Service Company.

The Head Office of Barclays includes the impact of treasury operations, which manage the capital, funding and liquidity position of the Group.

In 2017, the Head Office became more significant for Barclays as it contained some of the costs associated with the legacy assets and businesses, which were reintegrated on 1 July 2017. These factors contributed to a £834m loss before tax in 2017.

From 1 April 2018, the treasury operations will be embedded into the respective legal entities of Barclays Bank UK PLC, and Barclays Bank PLC, as well as into Barclays PLC.

**The Group Service Company has significant commercial and competitive value.**

Central operations are already operating through the Group Service Company – a separate legal entity, recharging all of its costs to the two legal entities.

The scale of the Group Service Company is substantial, accounting for around 42,000 colleagues working globally. It delivers services across a wide range of technical and functional capabilities, including Compliance, Corporate Relations, Legal, Risk, Real Estate, Finance, Operations and Technology. The Group Service Company operates as a separate legal entity with its own Board of Directors, thereby promoting transparency and increased accountability.

The Group Service Company is also a major step in the delivery of our structural reform programme. It is Barclays’ response to the ring-fencing requirements established by the UK Government following the financial crisis that began in 2007. Grouping our services together in this way will allow us to maintain operational continuity for our business units and facilitate the execution of our recovery and resolution plans in the event of financial difficulty, thereby strengthening the overall resilience of the Barclays Group. It also means we have a centre of excellence for services required by the business, such as fraud management and cyber security, where we can reduce duplication and benefit from implementing best practice across all of our businesses.

For further information on the timeline and progress of our structural reform programme, please see page 204.

The Group Service Company was ‘stood up’ in September 2017 and is the hub through which we will deliver a wide range of operations, technology and functional services to the Barclays Group and the two legal entities of Barclays Bank UK PLC and Barclays Bank PLC. The purpose of the Group Service Company is to provide world-class services that are high quality, efficient and cost effective, to support our goal to be at the forefront of industry change and innovation.

With significant commercial and competitive value, we believe the Group Service Company will radically reduce duplication of effort and cost, allowing us to give a more consistent and seamless experience to our colleagues, clients and customers. This will allow us to lead the way in next generation products and services in banking, to fully embrace the advantages that lie in automation, capitalise on our data and to innovate like a Fintech. We intend to unlock efficiencies and release capital for strategic investment, helping to drive the optimisation of Barclays as a whole and delivering value to our shareholders.

35 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## Our people and culture
## Our ongoing commitment to our people drives our success

Fostering the right culture at Barclays is critical to our success. By promoting respect, diversity and performance in the workplace we strive for excellence to deliver the best results for our customers and clients, taking pride in our achievements. We continue to be focused on the importance of embedding a conduct and values-based culture throughout the organisation and this is at the core of our strategy and processes. In recognising the significance of this commitment, conduct, culture and values remained one of our strategic priorities in 2017.

We continue our ambition to become the most accessible, inclusive and sought after employer, where colleagues feel engaged and empowered to achieve their best in order to deliver the best for our customers and clients.

We continue our ambition to become the most accessible, inclusive and sought after employer, where colleagues feel engaged and empowered to achieve their best in order to deliver the best for our customers and clients. We are pleased that in 2017 the sustainable engagement of our employees improved to 78% across the Group.

In 2016, we developed a culture measurement framework, anchored in our values to track and measure cultural progress across the Group. In 2017, we focused on embedding this framework, ensuring it is a key component of the non-financial metrics reviewed to assess the performance and culture of Barclays. Through this framework, and the results from our employee opinion survey ‘Your View’, quarterly insights, key cultural metrics and performance indicators are produced, stimulating management discussions which result in actions and decisions to further promote and embed a conduct and values based culture.

This year colleagues were asked to select the phrases that they would use to describe the current culture at Barclays and we are encouraged that customer satisfaction, continuous improvement and growth are some of the top words selected. Focus continues in areas that we know are key to advancing cultural change, for example our Dynamic Working and employee well-being campaigns, as well as prioritising positive mental health awareness through our ‘This is Me’ campaign. Our ongoing commitment towards increasing female representation at all levels across Barclays remains a core focus of our talent management and leadership succession processes and we recognise that our commitment to greater gender equality is integral to drive societal change in equality, diversity and inclusion. Further details on our gender diversity commitments and additional highlights from across our Diversity and Inclusion strategy can be found in the People section on pages 89 to 92.

We continue to run Group CEO sponsored Enterprise Leaders’ Summits, which seek to develop the next generation of enterprise leaders and strengthen a culture of collaboration among our leaders in order to deliver improved solutions and products for our customers and clients. The control functions rotational programme launched in 2016, which was expanded this year, recognises that future leaders in our businesses must have a strong awareness and understanding of the control environment. The programme provides colleagues the opportunity to work within a control function gaining valuable perspective.

We are committed to helping people succeed, whether entering the workplace for the first time or as an experienced professional. In support of the Barclays Shared Growth Ambition, and youth unemployment and social mobility, our apprenticeship programme has continued to provide opportunities for candidates from a broad range of backgrounds. Since the programme began we have hired over 3,400 apprentices, the majority with no prior qualifications or experience. We have continued to expand the programme, launching in 2017 the first ever Agriculture Higher Apprenticeship programme and Degree Apprenticeship in banking. Through the Barclays Armed Forces Transition, Employment and Resettlement (AFTER) programme we have assisted over 5,500 veterans in employment transition, hired over 500 ex-military colleagues and donated over £4.25m to military charities to assist wounded and injured service personnel in employment transition.

During 2017, external recognition has confirmed the sustained and global impact of our work. We are proud of the increased colleague engagement we are seeing across the organisation and both the external and internal differences that our values and culture are having and the change we can make to people’s lives as a result, enabling success and giving them access to a future where they can thrive. Our drive to continue to embed a conduct and values-based culture shows the importance that we place on the positive and creative contributions of each and every one of our colleagues in order to serve customer and clients and to continue to build trust and respect in the profession of banking.

**Tristram Roberts**
**Group Human Resources Director**

For further information about the gender pay gap at Barclays, please see page 90.

### Dynamic Working
Dynamic working is empowering our colleagues to work in a way that suits their lives and supports our business, to better serve our customers’ and clients’ needs. Every stage of life brings new priorities, responsibilities and opportunities. Having the flexibility when, where and how colleagues work can help them integrate their professional and personal lives and fulfil all their roles more easily.

Dynamic working is not flexi-time rebranded, it is not a policy, instead it is agile, attitudinal approach to meeting colleagues wide-ranging needs while having a positive impact on productivity, engagement and retention in the following ways:
* colleagues who work dynamically score higher on engagement and job satisfaction with 87% saying they would recommend Barclays as a good place to work
* dynamic working provides agility to address the needs of clients and colleagues across the globe living in different time zones
* dynamic working is addressing the needs of a work force that spans five generations.

You can find out more on our Diversity and Inclusion activities reporting at: home.barclays/about-barclays/diversity-and-inclusion.html

36 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## Governance compliance
## Compliance with the UK Corporate Governance Code

A snapshot of how Barclays complies with the requirements of the UK Corporate Governance Code (the Code) is set out below. For further information, see pages 80 to 84.

### Leadership
There is clear division of responsibilities between the Chairman, who runs the Board, and the Group Chief Executive, who runs the Group’s business. Individual roles on the Board and their responsibilities are set out in Barclays’ Charter of Expectations.

The Senior Independent Director, Sir Gerry Grimstone, provides a sounding board for the Chairman, acts as an intermediary for the other Directors when necessary and is available to shareholders if they have concerns that have not been addressed through the normal channels.

The Board has set out Barclays’ culture, values and behaviours in the Barclays Values and Purpose and The Barclays Way, which are embedded throughout the Group.

Directors are expected to provide rigorous and constructive challenge on matters that, owing to their strategic, financial or reputational implications or consequences, are considered significant to the Group.

### Effectiveness
The skills, knowledge and experience needed for an effective Board are recorded on a skills matrix, which is used by the Board Nominations Committee to inform Director recruitment, induction and ongoing development.

The composition of principal Board Committees meets the independence criteria of the Code and there is appropriate cross-membership to further promote effectiveness.

11 of 14 Directors are independent non-executive Directors (79%), while the Chairman was independent on appointment.

As at the date of this report, there are three female Directors (21%), compared to our target of 33% by 2020 which the Board remains committed to achieving.

The Board Nominations Committee regularly considers Board and senior management succession plans.

Appointments to the Board are made following a formal, rigorous and transparent process, based on merit, taking into account the skills, experience and diversity needed on the Board in the context of Barclays’ strategic direction.

All Directors are expected to commit sufficient time to fulfil their duties to Barclays. In 2017, Directors’ attendance at scheduled Board meetings was 99% and across the scheduled Board Committee meetings was an average of 94%.

The Board assesses its effectiveness and that of its Committees and the individual Directors annually in a process that is externally facilitated by an independent third party.

Directors are subject to election or re-election each year by shareholders at the AGM.

Barclays’ Charter of Expectations sets out responsibilities for providing the Board with accurate, timely and high-quality information necessary for it to fulfil its duties.

### Accountability
The Board, assisted by its Risk and Reputation Committees, conducts robust assessments of the principal risks facing Barclays.

The Board is responsible for setting Barclays’ risk appetite, that is, the level of risk it is prepared to take in the context of achieving Barclays’ strategic objectives.

Barclays’ Enterprise Risk Management Framework is designed to identify and set minimum requirements in respect of the main risks to achieving the Barclays’ strategic objectives and to provide reasonable assurance that internal controls are effective.

The Board, assisted by its Risk and Reputation Committees, conducts robust assessments of the principal risks facing Barclays, including those that would threaten its business model, future performance, solvency or liquidity. It reports on this in the annual viability statement on pages 40 and 41.

The Directors also review the effectiveness of the Group’s systems of internal control and risk management.

The Board has put in place processes to support the presentation to shareholders of fair, balanced and understandable information.

The Board Audit Committee, comprising independent non-executive Directors, oversees the effectiveness of Barclays’ internal and external auditors.

### Remuneration
The Board Remuneration Committee, comprising independent non-executive Directors, sets the overarching Group remuneration policy and approves the remuneration arrangements of the Chairman, the executive Directors and other senior executives.

The Board Remuneration Committee seeks the views of Barclays’ major shareholders on remuneration matters. This engagement is meaningful and contributes directly to the decisions it makes.

Barclays’ reward framework is simple and transparent and is designed to support and drive business strategy and long-term success.

To ensure alignment with shareholder interests, a significant part of performance related pay is delivered through Barclays shares.

Unvested deferred remuneration is subject to malus. Clawback also applies to any variable remuneration awarded to Material Risk Takers after 1 January 2015.

### Engagement
The Chairman and Senior Independent Director, together with other Board representatives and the Company Secretary, hold meetings with investors focusing on corporate governance matters.

The Group Chief Executive and Group Finance Director present quarterly results briefings and the Group Finance Director holds briefings for equity and debt sell-side analysts.

Regular engagement with Barclays’ brokers ensures that the Group’s strategy and performance is being communicated effectively and provides a better understanding of investor views.

The Board receives feedback on investor relations activity, along with regular reports of changes in holdings of substantial shareholders and reports on share price movements.

A number of events are held throughout the year to maintain an open dialogue with investors, of which the AGM is the most important.

38 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## Governance compliance
## Compliance with the UK Corporate Governance Code

| Leadership | Page |
|---|---|
| Every company should be headed by an effective board which is collectively responsible for the long-term success of the company. | |
| ■ Board of Directors | 47 |
| ■ Composition of the Board | 81 |
| There should be a clear division of responsibilities at the head of the company between the running of the board and the executive responsibility for the running of the company’s business. No one individual should have unfettered powers of decision. | |
| ■ Roles on the Board | 80 |
| The chairman is responsible for leadership of the board and ensuring its effectiveness on all aspects of its role. | |
| ■ Roles on the Board | 80 |
| As part of their role as members of a unitary board, non-executive directors should constructively challenge and help develop proposals on strategy. | |
| ■ Roles on the Board | 80 |
| **Effectiveness** | **Page** |
| The board and its committees should have the appropriate balance of skills, experience, independence and knowledge of the company to enable them to discharge their respective duties and responsibilities effectively. | |
| ■ Board of Directors | 47 |
| ■ Board diversity | 46 |
| There should be a formal, rigorous and transparent procedure for the appointment of new directors to the board. | |
| ■ Appointment and re-election of Directors | 77 |
| All directors should be able to allocate sufficient time to the company to discharge their responsibilities effectively. | |
| ■ Attendance | 80 |
| ■ Time commitment | 81 |
| All directors should receive an induction on joining the board and should regularly update and refresh their skills and knowledge. | |
| ■ Induction | 81 |
| ■ Training and development | 82 |
| The board should be supplied in a timely manner with information in a form and of a quality appropriate to enable it to discharge its duties. | |
| ■ Information provided to the Board | 82 |
| The board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors. | |
| ■ Review of Board and Board Committee effectiveness | 78 |
| All directors should be submitted for re-election at regular intervals, subject to continued satisfactory performance. | |
| ■ Composition of the Board | 81 |
| ■ Appointment and re-election of Directors | 77 |
| **Accountability** | **Page** |
| The board should present a fair, balanced and understandable assessment of the company’s position and prospects. | |
| ■ Strategic Report | 2 |
| ■ Risk management | 119 |
| ■ Viability statement | 40 |
| The board is responsible for determining the nature and extent of the principal risks it is willing to take in achieving its strategic objectives. The board should maintain sound risk management and internal control systems. | |
| ■ Risk management and internal control | 82 |
| The board should establish formal and transparent arrangements for considering how they should apply the corporate reporting, risk management and internal control principles, and for maintaining an appropriate relationship with the company’s auditors. | |
| ■ Board Audit Committee report | 53 |
| ■ Accountability | 82 |
| **Remuneration** | **Page** |
| Executive directors’ remuneration should be designed to promote the long-term success of the company. Performance related elements should be transparent, stretching and rigorously applied. | |
| ■ Remuneration report | 93 |
| There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his or her own remuneration. | |
| ■ Remuneration report | 93 |
| **Relations with shareholders** | **Page** |
| There should be a dialogue with shareholders based on the mutual understanding of objectives. The board as a whole has responsibility for ensuring that a satisfactory dialogue with shareholders takes place. | |
| ■ Stakeholder engagement | 84 |
| The board should use general meetings to communicate with investors and to encourage their participation. | |
| ■ Stakeholder engagement | 84 |

The UK Corporate Governance Code (the Code) is not a rigid set of rules. It consists of principles (main and supporting) and provisions. The Listing Rules require companies to apply the main principles and report to shareholders on how they have done so. You can find our disclosures as follows:

44 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## Chairman’s introduction
## Dear Fellow Shareholders

Welcome to my 2017 corporate governance report. In my Chairman’s letter on page 2, I highlighted the significant milestones and achievements for Barclays in 2017, including the further sell-down of our interest in Barclays Africa Group Limited, the closure of Barclays Non-Core, progress towards the establishment of our ring-fenced bank in 2018 as well as preparations for the UK’s departure from the EU. Throughout this period of activity and change, your Board has been providing critical oversight of executive management to oversee the successful execution of the Group’s long-term strategy.

I firmly believe and have often said that the role of the Board is to create long-term, sustainable value for our shareholders. In order to do this, we must have a robust corporate governance framework, providing systems of checks and controls to ensure accountability and drive better decision-making, and also policies and practices which ensure that the Board and its Committees operate effectively. Part of this is creating an environment which encourages a constructive relationship between the Board and executive management to enable an appropriate level of debate, challenge and support in the decision-making process. I am pleased to report that in 2017 your Board and executive management continued to demonstrate this dynamic as we worked together in executing strategy.

The impending changes to our Group corporate structure following structural reform has been a significant area of focus for the Board in 2017 and no doubt will continue to be at the forefront of our minds in 2018. After approving for appointment Sir Gerry Grimstone as the Chairman of Barclays International and Sir Ian Cheshire as the Chairman of Barclays UK, we worked closely with both of them to recruit high quality candidates to build the boards of those two entities. Our aim is to ensure that corporate governance within Barclays is in line with best practice for FTSE100 companies and as a Board we will work hard to ensure that our governance framework is always providing the strong foundation needed for effective management of the Group.

### Board changes in 2017
Through the Board Nominations Committee, we are always considering whether we have the right mix of individuals on the Board, providing an appropriate balance and diversity of skills, experience and perspectives. It is important that it is inherent within the composition of the Board that a broad range of perspectives and views are able to be provided which are representative of our customers, clients and employees as the foundations of our Bank. In addition, we are also regularly thinking about Board succession planning and ensuring we have a strong pipeline of directors to steer the Group over the long term. With this in mind, we brought on three new non-executive Directors in 2017: Sir Ian Cheshire, Matthew Lester and Mike Turner CBE, all of whom have significant board-level experience and bring specific sector and technical expertise to your Board. During 2017, Diane de Saint Victor and Steve Thieke, both non-executive Directors, left the Board and I thank them on behalf of the Board for their contributions and service.

With the changes in 2017, our current female representation on the Board sits at 21%. Last year I reported that we set ourselves a Board diversity target of having 33% female representation on the Board by 2020. We are conscious that our gender diversity balance on the Board has fallen from 2016, but remain committed to achieving the target that we have set. Ensuring diversity of gender, as well as diversity in its other forms such as ethnicity, is built into our governance processes around Board composition and succession planning, and you can read more about this in the Board Nominations Committee report on pages 75 to 79.

### Conduct, culture and values
The Board also actively supports diversity throughout the Group. To attract and retain the best talent, we need to create an environment in which colleagues can thrive, develop and achieve their ambitions. I am very proud of the initiatives that we have at Barclays to encourage diversity and support inclusion among colleagues. Most recently, we launched a campaign aimed at increasing mental health awareness as Barclays aims to become a ‘mental health confident’ organisation, and we are delighted that our Chief Internal Auditor, Sally Clark, is the Executive sponsor for ‘Be Well’, our well-being initiative. Everything we do at Barclays is underpinned by the Barclays Values and Purpose, and we must act with respect, transparency and integrity in our interactions with stakeholders and with each other to create the right culture, and encourage the right behaviours by colleagues, across the Group. With that framework, we can build and maintain the trust and confidence of our stakeholders and the market.

An important part of our strategy in relation to cultural progress and embedding our Barclays Values is our citizenship strategy, the Shared Growth Ambition, where our long-term aim is to create and grow a collection of products, services and partnerships that improve the lives of people in the communities that we serve. In 2017 we launched Barclays’ ‘green bonds’ as part of our support for the transition to a sustainable and low carbon economy. This was the first green bond issued by a UK bank using UK assets, and you can read more about this on page 7. Initiatives like this not only enable us to contribute meaningfully to society, but also enable us to better understand the environment in which we operate and our wider societal obligations, supporting the Board’s objective of delivering sustainable returns to shareholders.

You can read more about the Shared Growth Ambition at home.barclays/citizenship

### Stakeholder views
As a Board we are conscious of the impact that our business and decisions have on our customers, clients and employees as well as our wider societal impact. It is through an appreciation of our stakeholders that we can create a strategy aimed at delivering sustainable returns to our shareholders over the long term. The Board is supported in this role by the Board Reputation Committee, which monitors key indicators across the areas of conduct, culture, citizenship and customer satisfaction, as well as Barclays’ reputation and events that occur which may impact the trust in our brand.

The Board receives information about, and engages with, our various stakeholders throughout the year and one of the most important dates in our calendar is our Annual General Meeting, which gives the Board an opportunity to meet our shareholders and hear their views. During the year the Board is kept informed of shareholder views through regular updates from the Head of Investor Relations, as well as the views of employees through the results of the Barclays Your View employee opinion surveys. Another key stakeholder of Barclays is our regulators, and during 2017 the Board invited representatives of our regulators to attend meetings to hear directly their views and expectations of Barclays. All of these views form the context in which Board decision-making takes place and feeds into the considerations and debate when determining the Group’s strategy.

### Board effectiveness
To deliver our strategy and achieve the delivery of long-term, sustainable value for shareholders requires an effective Board. It is an important part of my role as Chairman to satisfy myself that the Board – both collectively and its individual members – operates effectively. Each year, we conduct a self-assessment of our performance with the aid of an independent facilitator. As part of this process, I receive a report on the performance of our individual Directors, and our non-executive Directors, led by our Senior Independent Director, have the opportunity to review my performance. I am pleased to report that the results of the findings showed that your Board and its Committees are still operating effectively. There are, of course, areas to work on and challenges ahead once the new Group structure is crystallised following the stand-up of our new ring-fenced bank in 2018. Ensuring that there is clear accountability and delineated responsibilities in the new structure, not just between boards but also between committees and between the boards and the executive team, will be a key focus for us in 2018. You can read more about the findings and the review process undertaken for 2017 on page 78.

### Looking ahead
2018 will be another pivotal year for Barclays with the execution of our new Group corporate structure, and I look forward to working closely with the boards of Barclays UK and Barclays International to embed a strong framework to ensure clear, effective and consistent corporate governance. We will continue to work closely with executive management on improving performance within the Group’s businesses, without losing sight of the need to constantly be acting in line with the Barclays Values and Purpose to build on and retain the trust and confidence of our customers, clients, employees. Together with your Board, we remain focused on working hard to execute the Group’s strategy in order to create sustainable long-term value for our shareholders.

| Board diversity | |
|---|---|
| **Balance of non-executive Directors: executive Directors** | |
| Chairman | 1 |
| Executive Directors | 2 |
| Non-executive Directors | 11 |
| **Gender balance** | |
| Female | 3 |
| Male | 11 |
| **Length of tenure (Chairman and non-executive Directors)** | |
| 0-3 years | 6 |
| 3-6 years | 4 |
| 6-9 years | 2 |
| **Industry experience (Chairman and non-executive Directors)\*** | |
| Financial Services | 12 (100%) |
| Political/regulatory experience | 12 (100%) |
| Current/recent Chair/CEO | 5 (42%) |
| Accountancy/auditing | 2 (17%) |
| Operations and Technology | 1 (8%) |
| Retail/marketing | 1 (8%) |
| **International experience† (Chairman and non-executive Directors)\*** | |
| International (UK) | 10 (83%) |
| International (US) | 2 (17%) |
| International (Rest of the World) | 2 (17%) |

* Individual Directors may fall into one or more categories.
† In relation to board experience based on the location of the headquarters/registered office of a company.

**John McFarlane**
**Chairman**
**21 February 2018**

home.barclays/annualreport Barclays PLC Annual Report 2017 45

***

## Governance: Directors’ report
## Who we are – Board of Directors

Barclays understands the importance of having a Board with the right balance of skills, experience and diversity, and the composition of the Board is regularly reviewed by the Board Nominations Committee. The skills and experience of the current Directors and the value they bring to the Barclays Board are highlighted below.

Full biographies can be accessed online via home.barclays/investorrelations

| Director | Role | Appointed |
|---|---|---|
| **John McFarlane** | Chairman | 1 January 2015 |
| **Jes Staley** | Group Chief Executive | 1 December 2015 |
| **Sir Gerry Grimstone** | Deputy Chairman and Senior Independent Director | 1 January 2016 |
| **Mike Ashley** | Non-executive | 18 September 2013 |
| **Tim Breedon CBE** | Non-executive | 1 November 2012 |
| **Sir Ian Cheshire** | Non-executive | 3 April 2017 |
| **Mary Francis CBE** | Non-executive | 1 October 2016 |
| **Crawford Gillies** | Non-executive | 1 May 2014 |
| **Reuben Jeffery III** | Non-executive | 16 July 2009 |
| **Matthew Lester** | Non-executive | 1 September 2017 |
| **Dambisa Moyo** | Non-executive | 1 May 2010 |
| **Diane Schueneman** | Non-executive | 25 June 2015 |
| **Mike Turner CBE** | Non-executive | 1 January 2018 |
| **Stephen Shapiro** | Company Secretary | 1 November 2017 |

Details of relevant skills and experience are provided under each director's section.

47 Barclays PLC Annual Report 2017 home.barclays/annualreport

***

## Governance: Directors’ report
## Who we are – Group Executive Committee

Group Executive Committee meetings are also attended on a regular basis by the Chief Internal Auditor, Sally Clark, and by an ex-officio member, drawn from senior management. The current ex-officio member is Barry Rodrigues, Head of Barclaycard International.

Biographies for Jes Staley, Group Chief Executive, and Tushar Morzaria, Group Finance Director, who are members of the Group Executive Committee, which is chaired by Jes Staley, can be found on pages 47 and 48.

| Member | Title |
|---|---|
| **Paul Compton** | Group Chief Operating Officer |
| **Bob Hoyt** | Group General Counsel |
| **Laura Padovani** | Interim Group Chief Compliance Officer |
| **Tristram Roberts** | Group Human Resources Director |
| **Tim Throsby** | President, Barclays International and Chief Executive Officer, Corporate and Investment Bank |
| **Ashok Vaswani** | CEO, Barclays UK |
| **C S Venkatakrishnan** | Chief Risk Officer |

home.barclays/annualreport Barclays PLC Annual Report 2017 49

***

## Governance: Directors’ report
## What we did in 2017
## Board report

We act in a way that we consider promotes the success of Barclays for the benefit of shareholders as a whole, and are accountable to the shareholders for creating and delivering sustainable value. It is our responsibility as the Board to ensure that management not only delivers on short-term objectives, but promotes the long-term growth of Barclays. Our corporate governance framework embeds what we believe are the right culture, values and behaviours throughout the Group and supports our role in determining strategic objectives and policies.

In addition to setting strategy and overseeing its implementation, we are also responsible for ensuring that management maintains an effective system of internal control. An effective system of internal control should provide assurance of effective and efficient operations, internal financial controls and compliance with law and regulation. In meeting this responsibility, we consider what is appropriate for the Group’s business and reputation, the materiality of financial and other risks and the relevant costs and benefits of implementing controls. See page 82 for further details on those systems of controls.

The Board is the decision-making body for matters that, owing to their strategic, financial or reputational implications or consequences, are considered significant to the Group. A formal schedule of powers reserved to the Board ensures that our control of these key decisions is maintained. A summary of the matters reserved to the Board can be found at home.barclays/corporategovernance. It includes the approval of appointments to the Board, Barclays’ strategy, financial statements, capital expenditure and any major acquisitions, mergers or disposals.

### Board Committees
The main Board Committees are the Board Audit Committee, the Board Nominations Committee, the Board Remuneration Committee, the Board Reputation Committee and the Board Risk Committee. Pursuant to authority granted under our Articles of Association, each Board Committee has had specific responsibilities delegated to it by the Board. Further information on the role and activities of each of the Board Committees can be found in this report on pages 53 to 79 and pages 114 to 115, and in their individual terms of reference, which have been approved by the Board and are available at home.barclays/corporategovernance.

In addition, the Regulatory Investigations Committee was formed in 2012 and focused on providing Board-level oversight of regulatory investigations. In 2017, this Committee was disbanded with residual matters being brought under the oversight of the Board Audit Committee or falling directly under the Board’s oversight, as appropriate.

You can read more about what the Board and each of the Board Committees did during 2017 on the following pages.

### Board Governance Framework
| Committee | Responsibility | Further Information |
|---|---|---|
| **Board Audit Committee** | ■ Reviews accounting policies and financial reports ■ Monitors the internal control environment ■ Considers the adequacy and scope of the internal and external audit ■ Reviews and monitors the Group’s whistleblowing policies | See page 53 for further information. |
| **Board Nominations Committee** | ■ Reviews the composition of the Board ■ Recommends the appointment of new Directors ■ Considers succession plans for the Chairman and Group Chief Executive ■ Oversees the annual Board effectiveness review | See page 75 for further information. |
| **Board Remuneration Committee** | ■ Sets principles and parameters of remuneration for Barclays ■ Considers and approves remuneration for executive Directors and senior executives ■ Oversees employee share schemes | See page 93 for further information. |
| **Board Reputation Committee** | ■ Considers Barclays’ conduct and reputational risk issues and exposures ■ Reviews and approves Barclays’ overall citizenship strategy ■ Oversees Barclays’ approach to customer and regulatory matters | See page 69 for further information. |
| **Board Risk Committee** | ■ Monitors and recommends financial and operational risk appetite ■ Monitors the financial and operational risk profile ■ Reviews limits for types of financial and operational risk | See page 64 for further information. |

The role of the Board
The Board of Directors is responsible for promoting the highest standards of corporate governance in Barclays. Further details about our corporate governance framework, policies and Board responsibilities can be found online at home.barclays/corporategovernance

50 Barclays PLC Annual Report 2017 home.barclays/annualreport

***

### Strategy formulation and monitoring
Debated and provided input to management on the formulation of overall Group strategy, and reflected on the Group strategy with longer-term views on what could be done to accelerate returns and build capital. The topics covered include:
* potential growth opportunities, and key trends and risks, for Barclays UK and Barclays International
* constraints and risks to strategy execution, including economic assumptions, expected regulatory requirements on capital and solvency ratios, anticipated changes to accounting rules including IFRS 9, investor expectations, and potential impacts for clients and customers
* a strategic approach to costs optimisation, including analysing the impact on costs of different structural initiatives such as product redesign and automation
* impact of continuing legacy conduct issues on capital requirements and profit targets
* options for the location of Barclays’ operations in Europe, driven by the EU Referendum result.
St Ac Bu Cr Ma Tr Op Mo Re Co Le

Discussed regular updates from the Group Chief Executive on the progress being made against the Group’s 2017 execution priorities and capital targets, received insights on stakeholder, employee and cultural matters (including results from employee opinion surveys), and updates on items of focus for the Group Executive Committee.
St Ac Bu Cr Ma Tr Op Mo Re Co Le

Considered the strategy, and assessed the progress of execution of strategy, in the businesses within each of Barclays UK and Barclays International.
St Ac Bu Cr Ma Tr Op Mo Re Co Le

Monitored the progress of the sell down of the Group’s remaining interest in Barclays Africa Group Limited.
Ac Bu Tr Op Re Le

Monitored the progress of the rundown and subsequent closure of Barclays Non-Core.
Ac Bu Tr Op Re Le

Monitored the progress of the Group’s execution of its structural reform programme – see the case study on page 52 for further details.
St Ac Bu Tr Op Re Le

Monitored the potential implications of the UK’s preparations to leave the EU following the EU Referendum result; approved and monitored progress of the expansion of Barclays Bank Ireland’s operations in preparation for Brexit – see the case study on page 52 for further details.
St Ac Bu Ma Tr Op Re Le

### Finance (including capital and liquidity)
Debated and approved the Group’s Medium Term Plan for 2017-2019.
St Ac Bu Cr Ma Tr Mo Co Le

Regularly assessed financial performance of the Group and its main businesses through reports from the Group Finance Director.
St Ac Bu Cr Ma Tr Mo Co Le

Reviewed and approved Barclays’ financial results prior to publication, including approving final and interim dividends.
St Bu Cr Ma Tr Re

Discussed market and investor reaction to Barclays’ strategic and financial results announcements, with insights provided by the Head of Investor Relations.
St Bu Re

Provided input, guidance and advice to senior management on the high-level shape of Barclays’ 2018-2020 Medium Term Plan and subsequently approved the final plan.
St Ac Bu Cr Ma Tr Mo Co Le

During 2017, the Board focused on a number of specific areas, outlined in the table below, in line with Barclays’ three strategic goals and eight Principal Risks:

| Strategic goals | Principal risks |
|---|---|
| St Have strong foundations in place | Cr Credit |
| Ac Accelerate the completion of restructuring | Ma Market |
| Bu Build the Barclays of the future | Tr Treasury and capital |
| | Op Operational |
| | Mo Model |
| | Re Reputation |
| | Co Conduct |
| | Le Legal |

| Board allocation of time\* (%) | 2017 | 2016 |
|---|---|---|
| 1 Strategy formulation and implementation monitoring | 47 | 55 |
| 2 Finance (including capital and liquidity) | 15 | 17 |
| 3 Governance and risk (including regulatory issues) | 35 | 26 |
| 4 Other (including compensation) | 3 | 2 |

\* Based on scheduled Board meetings

51 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## Governance and risk (including regulatory issues)
Debated and approved the 2017 risk appetite for the Barclays Group
St Bu Cr Ma Tr Mo Co

Regularly assessed Barclays’ overall risk profile and emerging risk themes, hearing directly from the Chief Risk Officer and the Chairman of the Board Risk Committee
St Bu Cr Ma Tr Op Mo Re Co Le

Received reports on Barclays’ operational and technology capability, including specific updates on cyber risk capability and the strategy for technology and infrastructure services
St Bu Op Mo Re Le

Approved the Group’s 2017 Recovery Plan and US Resolution Plan
St Ac Bu Tr Op Re Co Le

Invited representatives of Barclays’ UK and US regulators to meetings to enable the Board to hear first-hand about regulatory expectations and their specific views on Barclays
St Ac Bu Tr Op Re Co Le

Considered and debated proposals for the establishment of a programme to further enhance Barclays’ management information framework across all businesses and entities within the Group
St Bu Op Mo

Discussed and received regular updates directly from the Chief Controls Officer on the Group’s internal controls and framework, and monitored progress of the Barclays Internal Control Enhancement Plan (the programme for remediation of identified risk and control issues)
St Ac Bu Op Mo Re Co Le

Considered regular updates from the Group General Counsel on the legal and regulatory risks and issues facing Barclays – refer to note 29 in the financial statements
St Ac Bu Tr Re Co Le

Considered matters relating to Board succession and approved appointments to the Board and Board Committees
St Ac Bu Cr Ma Tr Op Mo Re Co Le

Received regular updates (following the establishment of each respective board) from the Chairs of the Barclays UK and Barclays International divisional boards and the Group Service Company
St Ac Bu Re

Considered updates on views of major shareholders, particularly in the period leading up to the 2017 Annual General Meeting
St Bu Re

Discussed the Board and Committee governance framework in the context of structural reform, and considered significant developments in UK corporate governance and other corporate governance matters
St Ac Bu Op Co

Considered the results of the 2016 Board effectiveness review and proposed action plan, and considered the process for and findings of the 2017 Board effectiveness review. See page 78 for further details of this process and the findings for 2017
St Ac Bu Op Co

### Other (including compensation)
Considered progress on Barclays’ talent and succession planning (and hosted receptions for key talent within the Group), and received updates on the Bank’s diversity and inclusion initiatives, including from the Chairman of the Board Nominations Committee
St Bu Op Re Co

Considered and approved the 2017 incentive funding pools for the Group and allocation among each business and function – see the Remuneration report on pages 93 to 116 for further details
St Bu Op Re Co

Governance in action – Structural reform and Brexit
Execution of structural reform
The execution of our structural reform programme was a significant focus for the Group in 2017 as we move towards the legal entity stand up of our ring-fenced bank in 2018. Building on from the work carried out in 2016, the Board continued to closely monitor and evaluate progress on the execution of the programme in 2017. Specific matters addressed by the Board included the following:
* overseeing the establishment of the Group Service Company, which was launched on 1 September 2017
* monitoring the stakeholder communications plan (including, in particular, the communications plan for customers and employees)
* considering regular updates on migrating sort codes with a focus on any potential impact on customers and clients
* overseeing and approving various transfers of assets and liabilities among Barclays Group entities including establishing a committee to provide appropriate Board-level oversight of the processes involved
* with the support of the Board Nominations Committee, debating the composition of, and appointments to each of, the boards of Barclays UK, Barclays International and the Group Service Company and discussing the appropriate governance arrangements for the new Group structure.

Preparations for Brexit
Another area of focus for the Board was preparations for the impact of the UK’s exit from the EU. Barclays has created an internal programme specifically in relation to the planning and preparation for Brexit. The Board debated potential EU hubs for Barclays’ European operations and decided to pursue expansion in Ireland where we have been operating for over 40 years and have an existing banking licence held by Barclays Bank Ireland. Specific matters considered by the Board included debating the feasibility of a significant expansion of Barclays Bank Ireland’s operations, the transfer of capital and resources to Barclays Bank Ireland and assessing the progress being made with applications for the necessary regulatory licensing requirements with the relevant authorities.

The successful completion of the Group’s structural reform programme and further progress on our Brexit plans will continue to be areas of focus for the Board in 2018.

European operations and decided to pursue expansion in Ireland where we have been operating for over 40 years and have an existing banking licence held by Barclays Bank Ireland. Specific matters considered by the Board included debating the feasibility of a significant expansion of Barclays Bank Ireland’s operations, the transfer of capital and resources to Barclays Bank Ireland and assessing the progress being made with applications for the necessary regulatory licensing requirements with the relevant authorities.

The successful completion of the Group’s structural reform programme and further progress on our Brexit plans will continue to be areas of focus for the Board in 2018.

52 Barclays PLC Annual Report 2017 home.barclays/annualreport

***

## What we did in 2017
## Board Audit Committee report

Dear Fellow Shareholders
In writing this report I have reflected on how Barclays has been working to embed the significant strategic changes put in place during 2016 while responding to new challenges driven by the external landscape, in particular the delivery of structural reform and preparation for Brexit.

As I reported in 2017, the Committee continues to consider a critical part of its role to be ensuring that the commitment to strengthening Barclays’ control environment is maintained throughout this transformational period. My Committee colleagues and I have been encouraged by the increased rigour applied to oversight of the Group control environment following the creation of the Chief Controls Office at the end of 2016. This has given the Committee greater clarity and transparency regarding thematic control environment issues impacting the Group, and has helped to highlight areas of the business where there may be a concentration of issues and where focus on remediation is required.

Regular updates on the overall control environment framework have also continued to be provided to the Board over the course of the year, underlining the importance that the Board of Barclays places on this programme of activity.

Solid progress has been made in turning the controls enhancement programme into a ‘business as usual’ activity, with an emphasis on achieving sustainable progress. The Committee has observed heightened focus and attention across the organisation on the importance of having robust processes in place across the business to self-identify controls issues and ensure that there are effective remediation plans in place for which senior management are accountable. The embedding of the Chief Controls Office as part of the first line of management within the organisation has also been helpful in delineating more clearly for the organisation the respective roles of the second and third lines of defence. The Chief Controls Office has taken over the co-ordination of the Risk and Control Self-Assessment process and this will continue to be an area of focus in 2018 as management develops a more detailed, granular self-assessment process which should assist in proactively identifying controls which require remediation. Further details may be found in the Risk management and internal control section on page 82.

The Committee has continued to engage with senior management regarding areas of controls weaknesses in their businesses and has received presentations from a number of different areas of the organisation on the actions taken to address unsatisfactory audit reports.

In assessing control issues for disclosure in the Annual Report, the Committee has continued to apply similar definitions to those used for assessing internal financial controls for the purposes of Sarbanes-Oxley. The conclusion we have reached is that there are no control issues that are considered to be a material weakness, which merit specific disclosure.

The Committee has continued to oversee the performance and effectiveness of internal and external audit, the main independent assurance mechanisms that serve to protect shareholders’ interests.

I continue to hold regular meetings with the Chief Internal Auditor and members of her senior management team to ensure I am aware of current work programmes and any emerging issues. I also agreed the Chief Internal Auditor’s objectives and the outcomes of her performance assessment and remuneration. The Committee also held a networking event with Barclays Internal Audit (BIA) during 2017, enabling Committee members to meet on a less formal basis with senior members of the BIA management team.

During 2017, the Committee continued to monitor closely the implementation of the action plan to address the recommendations arising from the review undertaken by the PRA of BIA to increase its effectiveness. The Chartered Institute of Internal Auditors requires an independent external review of internal audit functions to be carried out at least every five years and during 2017, the Committee commissioned an independent external quality assessment of BIA, further details of which may be found on page 61. The Committee was satisfied with the conclusions drawn in the report, while noting that there were a number of areas for potential development. The Committee considered that the need for a period of stability and consolidation within BIA would be particularly important to embedding existing initiatives and the Committee will continue to monitor this and other recommendations during 2018. In preparation for structural reform, BIA has aligned its audit planning and reporting to the new legal entity structure.

The Committee continued to exercise its responsibility for ensuring the integrity of Barclays’ published financial information by debating and challenging the critical judgements and estimates made by management. The exercise of appropriate judgement in preparing the financial statements is critical in ensuring that Barclays reports to its shareholders in a fair, balanced and transparent way. During the course of 2017, the Committee oversaw Barclays’ transition to KPMG as Barclays’ statutory auditor which was approved by shareholders at the 2017 Annual General Meeting. The lead audit partner is Guy Bainbridge who has held this role since KPMG’s appointment as the Group’s auditor. KPMG has brought fresh challenge and insight not only on accounting judgements and policies but also on financial controls which the Committee has found valuable. The report that follows sets out details of the material matters considered by the Committee since my last report. One of the key developments in accounting policy in 2017 has been Barclays’ preparation for the implementation of the IFRS 9 impairment standard on 1 January 2018. The Committee reviewed the guidance note to non-executive Directors from the PRA in relation to IFRS 9 implementation and was comfortable that the areas highlighted by the PRA were being addressed. Further details of the Committee’s

**Solid progress has been made in turning the controls enhancement programme into a ‘business as usual’ activity, with an emphasis on achieving sustainable progress.**

| Focus Area | Committee Allocation of Time (%) | 2017 | 2016\* |
|---|---|---|---|
| Control issues | 11 | 23 |
| Business control environment | 15 | 19 |
| Financial results | 33 | 36 |
| Internal audit matters | 25† | 11 |
| External audit matters | 8 | 6 |
| Other (including governance and compliance) | 8 | 4 |

*\* 2016 figures have been rebased according to the significant matters considered by the Committee in 2017.*
*† The increased time allocation to internal audit matters in 2017 reflects the role of the Committee in (i) overseeing the recommendations arising from the review undertaken by the PRA of Barclays Internal Audit to increase its effectiveness, and (ii) the independent external quality assessment of Barclays Internal Audit which was commissioned by the Committee in 2017.*

### Committee composition and meetings
The Committee is composed solely of independent non-executive Directors, with membership designed to provide the breadth of financial expertise and commercial acumen it needs to fulfil its responsibilities. Its members as a whole have experience of the banking and financial services sector in addition to general management and commercial experience. Mike Ashley, who is the designated financial expert on the Committee for the purposes of the US Sarbanes-Oxley Act, is a former audit partner who during his executive career acted as lead engagement partner on the audits of a number of large financial services groups. Following the Board’s finding that the Committee could be strengthened by the appointment of an additional member with direct accounting and auditing experience, Matthew Lester was appointed to the Board and Committee with effect from 1 September 2017. During his executive career, Matthew held a number of senior finance roles across a range of business sectors, including financial services, and most recently was the Chief Financial Officer of Royal Mail Group. You can find more details of the experience of Committee members in their biographies on pages 47 and 48.

The Committee met 10 times in 2017 and the chart above shows how it allocated its time. Meetings are generally arranged well in advance and are scheduled in line with Barclays’ financial reporting timetable. One additional meeting was arranged to select an appropriate service provider for the independent review of Barclays Internal Audit and to undertake an early review of particular issues relevant to the financial statements. Committee meetings were attended by management, including as required the Group Chief Executive, Group Finance Director, Chief Internal Auditor, Chief Controls Officer, Chief Risk Officer, Chief Operating Officer, Group General Counsel and Head of Compliance, as well as representatives from the businesses and other functions. The lead audit partner of KPMG (the Group’s external auditor), Guy Bainbridge, attended all Committee meetings since January 2017. The Committee held a number of private sessions with each of the Chief Internal Auditor or the lead audit partner, which were not attended by management. The lead audit partner of PwC, the Group’s previous external auditor, attended meetings until the end of February 2017 to deliver its final audit report to the Committee on the 2016 financial statements before PwC resigned as the Group’s statutory auditor.

| Member | Meetings attended/eligible to attend |
|---|---|
| Mike Ashley | 10/10 |
| Tim Breedon | 10/10 |
| Crawford Gillies | 10/10 |
| Diane Schueneman\* | 8/10 |
| Matthew Lester (from 1 September 2017)† | 1/3 |

\* Did not attend due to personal circumstances.
† Did not attend owing to existing commitments with other boards (the Committee meeting dates were set before Matthew joined the Board).

### Committee role and responsibilities
The Committee is responsible for:
* assessing the integrity of the Group’s financial reporting and satisfying itself that any significant financial judgements made by management are sound
* evaluating the effectiveness of the Group’s internal controls, including internal financial controls
* scrutinising the activities and performance of the internal and external auditors, including monitoring their independence and objectivity
* overseeing the relationship with the Group’s external auditor
* reviewing and monitoring the effectiveness of the Group’s whistleblowing procedures
* overseeing significant legal and regulatory investigations, including the proposed litigation statement for inclusion in the statutory accounts.

The Committee’s terms of reference are available at home.barclays/corporategovernance

### The Committee’s work
The significant matters addressed by the Committee during 2017 and in evaluating Barclays’ 2017 Annual Report and financial statements, are described on the following pages.

#### Financial statement reporting issues
The Committee’s main responsibility in relation to Barclays’ financial reporting is to review with both management and the external auditor the appropriateness of Barclays’ financial statements, including quarterly results announcements and half-year and annual financial statements and supporting analyst presentations, with its primary focus being on:
* the quality and acceptability of accounting policies and practices
* any correspondence from financial reporting regulators in relation to Barclays’ financial reporting
* material areas where significant judgements have been made, along with any significant assumptions or estimates, or where significant issues have been discussed with or challenged by the external auditor
* an assessment of whether the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess Barclays’ position and performance, business model and strategy.

#### Accounting policies and practices
The Committee discussed reports from management in relation to the identification of critical accounting judgements and key sources of estimation uncertainty, significant accounting policies and the proposed disclosure of these in the 2017 Annual Report. Following discussions with both management and the external auditor, the Committee approved the critical accounting judgements, significant accounting policies and disclosures, which are set out in Note 1, ‘Significant accounting policies’, to the consolidated financial statements.

There was one significant change in accounting policy during the period which was the early adoption of IFRS 9 (Financial Instruments) in relation to own credit, resulting in the recognition of fair value movements through the Statement of Comprehensive Income. Further information regarding this change can be found in note 1, to the consolidated financial statements. Two new significant accounting standards became effective from 1 January 2018, IFRS 9 (Financial Instruments) and IFRS 15 (Revenue Recognition). Further information regarding these changes can be found in note 1, to the consolidated financial statements. During 2017, the Committee was regularly updated on Barclays’ preparations for the implementation of IFRS 9, in particular in relation to the new expected loss model which represents a fundamental change in approach to impairment. The Committee discussed with management the key technical decisions and interpretations required and Barclays’ approach to these. Further details of the Committee’s role in overseeing the Group’s IFRS 9 preparations can be found on page 63, ‘Governance in action’.

#### Financial reporting regulators and Barclays
The Committee from time to time considers comment letters and papers from external bodies including the SEC and the Financial Reporting Council (FRC). In that regard, the Committee considered the following:
* the FRC’s Year-End Advice Letter to Audit Committee Chairs and Finance Directors which highlighted key developments for 2017/18 annual report
* the FRC’s Annual Review of Corporate Reporting which summarised key characteristics of good corporate reporting for the 2017/18 reporting year
* the PRA note of advice to non-executive Directors regarding IFRS 9 implementation which set out a series of questions for consideration to ensure audit committees were well prepared for the transition and its implications.

The Committee sought to ensure that Barclays took due account of the matters raised in the letters and papers described above in its external reporting and has sought to enhance and clarify relevant disclosures.

The Committee from time to time considers comment letters from the SEC in relation to its reviews of Barclays’ Annual Report and other publicly filed financial statements. Such comment letters and Barclays’ responses are made publicly available by the SEC on its website, sec.gov, once it has closed each such review. Barclays received one comment letter from the SEC during 2017 requesting clarification from the SEC in relation to its 2017 half year filing. Barclays responded to clarify the queries raised by the SEC. The letter did not raise any material concerns or disclosure items.

#### Significant judgements and estimates
The significant judgements and estimates and actions taken by the Committee in relation to the 2017 Annual Report and financial statements are outlined below. The significant judgements and estimates are broadly comparable in nature to prior years. Each of these matters was discussed with the external auditor during the year and, where appropriate, have been addressed in the Auditor’s Report on pages 228 to 233.

53 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## What we did in 2017
## Board report

In addition, the Committee also covered the following matters:
* assessed Barclays’ exposures to the leveraged finance market, general conditions in that market and approved an updated leveraged finance framework which would be submitted annually to the Committee for approval
* was briefed by PwC on main risk issues identified during the 2016 year-end audit, specifically impairment, post-model adjustments, forbearance control issues, key valuation judgements (including in relation to the ESHLA portfolio), and key assumptions used in the pension scheme liabilities
* requested and evaluated a report on partnership programmes in the US Cards business with a focus on risk profile and credit quality
* considered a report on the effectiveness of the Committee and any areas of the Committee’s performance that could be improved
* reviewed and updated its terms of reference, recommending them to the Board for approval.

Read more about Barclays’ risk management on pages 119 and 120 and in our Pillar 3 Report, which is available online at barclays.com/annualreport

### Governance in action – Risk and Control Self Assessment programme
A key focus of the Committee in 2017 was oversight of the implementation of a revised Risk and Control Self-Assessment (RCSA) programme. The RCSA enhancement programme was established as part of Barclays’ commitment to the effective management the Group’s Operational risk and extend both the scope of coverage across a wider range of risks, and also improve the granularity of management’s risk and control assessments of business processes. The programme is the firm-wide process led approach for management to identify and regularly assess material inherent risks and their associated controls, in order to mitigate these risks and reduce the likelihood and/or severity of losses to the firm from a Risk event.

In 2017, a number of pilot RCSAs were rolled out across the Group in addition to the regular RCSA process, which was also enhanced. Improvements were also made in the assessment of inherent risk values and the aggregation process for risk and control assessments across risk types. During the year, the Committee reviewed progress in terms of the RCSAs completed across the Group, and also considered the next steps in the review process and the results of the residual risk assessments. Based on the results of the pilot RCSAs undertaken, the Committee was satisfied that the process will improve management’s understanding of the risk and control environment, so they can prioritise and remediate ineffective controls where required.

Following completion of the pilot RCSA programme, the Committee considered the ways in which the RCSA programme could be enhanced for the wider implementation of the programme in 2018. The Committee considered specific revisions of the 2017 RCSA programme with the aim of:
* improving the identification of inherent risk, control effectiveness and residual risk by going into detail at a more granular process level
* increasing the degree of independent challenge provided by all Three Lines of Defence
* increasing the granularity of assessments for a further set of pilot RCSAs to estimate inherent risk at activity level by risk type, together with the identification and assessment of detailed operating controls by activity and residual risk.

The Committee will continue to work with management in 2018 on further refining and enhancing the RCSA programme.

| Area of Focus | Matter Addressed | Role of the Committee | Conclusion/Action Taken |
|---|---|---|---|
| **Conduct provisions** (refer to Note 27 to the financial statements) | Barclays makes certain assumptions and estimates, analysis of which underpins provisions made for the costs of customer redress, such as for Payment Protection Insurance (PPI). | ■ Regularly analysed the judgements and estimates made with regard to Barclays’ provisioning for PPI claims, taking into account forecasts and assumptions made for PPI complaints and actual claims experience for Barclays and the industry as a whole, including the volume of invalid PPI claims. ■ Debated the impact on the future range of provisions arising from (i) the FCA’s introduction of August 2019 as the time-bar on claims, (ii) the PPI marketing campaign, and (iii) the progress of the proposed fee cap on the submission of PPI complaints by claims management companies which is being considered by the UK Parliament. ■ Evaluated proposed additional provisions for PPI, considering whether the total provision is within the modelled range of future outcomes, and whether the external auditor agreed with management’s analysis and approach. ■ Monitored the position on provisions for alternative PPI (card protection and payment break plan insurance) and considered whether further provisions were required. | The Committee and management continue to monitor closely any changes in customer or claims management companies’ behaviour in light of the FCA time-bar and marketing campaign. Having regard to the actual claims experience over 2017 the Committee agreed with management’s assessment that the current provision of £1,600m was appropriate. The Committee noted that this estimate remains subject to significant uncertainty in particular regarding the level of valid customer claims that may be received in the period to August 2019. In this context the Committee was satisfied that sensitivities to the key variables were appropriately disclosed. |
| **Legal, competition and regulatory provisions** (refer to Notes 27 to 29 to the financial statements) | Barclays is engaged in various legal, competition and regulatory matters. The extent of the impact on Barclays of these matters cannot always be predicted, but matters can give rise to provisioning for contingent and other liabilities depending on the relevant facts and circumstances. The level of provisioning is subject to management judgement on the basis of legal advice and is therefore an area of focus for the Committee. | ■ Evaluated advice on the status of current legal, competition and regulatory matters. ■ Assessed management’s judgements and estimates of the levels of provisions to be taken and the adequacy of those provisions, based on available information and evidence. ■ Considered the adequacy of disclosure, recognising that any decision to set provisions involves significant judgement. | The Committee discussed provisions and utilisation. Having reviewed the information available to determine what was both probable and could be reliably estimated, the Committee agreed that the level of provision at the year end was appropriate. The Committee also considered that the disclosures made provided the appropriate information for investors regarding the legal, competition and regulatory matters being addressed by the Group. |
| **Valuations** (refer to Notes 14 to 18 to the financial statements) | Barclays exercises judgement in the valuation and disclosure of financial instruments, derivative assets and certain portfolios, particularly where quoted market prices are not available, including the Group’s Education, Social Housing and Local Authority (ESHLA) portfolio. | ■ Evaluated reports from Barclays Valuations Committee, with particular focus on the matters below. ■ Monitored the valuation methods applied by management to significant valuation items, including the ESHLA portfolio, a valuation disparity with a third party in respect of a specific long dated derivative portfolio, and the approach to the marking of Own Credit. ■ Monitored and discussed the impact of negative interest rates on derivative valuation. ■ Considered the treatment of the re-integration of Non-Core residual operations into the core business. | The Committee discussed these matters and agreed that a minor modification be made to the valuation of the specific long dated derivative portfolio where there existed significant valuation disparity. This did not result in a material change to the fair value recorded by the Group. The Committee noted that, following efforts by management to restructure derivative agreements impacted by negative interest rates, any residual uncertainty was now insignificant. |

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| Area of Focus | Reporting Issue | Role of the Committee | Conclusion/Action Taken |
|---|---|---|---|
| **Impairment** (refer to Note 7 to the financial statements) | Where appropriate, Barclays models potential impairment performance, allowing for certain assumptions and sensitivities, to agree allowances for credit impairment, including agreeing the timing of the recognition of any impairment and estimating the size, particularly where forbearance has been granted. | ■ Assessed impairment experience against forecast and whether impairment provisions were appropriate. ■ Evaluated credit impairment reports (reviewed by the Group Impairment Committee) presented by the Chief Risk Officer. ■ Considered a report from the Chief Risk Officer on the position in the US Cards portfolio and monitored the position to determine whether increase in impairment would be required. ■ Considered a report from the Group Impairment Committee on the adequacy of loan impairment allowances as at 31 December 2017, including assessing internal and external trends, methodologies and key management estimates. | The Committee reviewed model adjustments made by management to ensure that impairment allowances were set at appropriate and adequate levels. The Committee reviewed the impairment charge in Barclaycard US arising in the third quarter from the asset sale in the first quarter. The Committee also reviewed three material single name charges in the Corporate Bank. The Committee agreed that the provision levels for impairment were appropriate. |
| **Tax** (refer to Note 10 to the financial statements) | Barclays is subject to taxation in a number of jurisdictions globally and makes judgements with regard to provisioning for tax at risk and on the recognition and measurement of deferred tax assets. | ■ Evaluated the appropriateness of tax risk provisions to cover existing tax risk. ■ Confirmed the forecasts and assumptions supporting the recognition and valuation of deferred tax assets was in line with Barclays’ Medium Term Plan (MTP). ■ Monitored the impact to Barclays of the new US framework for tax legislation covering a broad range of tax proposals which was enacted on 22 December 2017 and which had a substantial impact on the measurement of the Group’s US deferred tax assets. The Committee also considered the potential impact of the Base Erosion Anti-abuse Tax (BEAT) which was introduced as part of the new legislation. | The Committee reviewed Barclays’ global tax risk and associated provisions for the full year and noted that the level of tax provisions remained at about the same level, although the amount of gross tax risk was assessed as slightly reduced. In relation to the treatment of deferred tax assets the Committee noted that those due to US tax losses (£1,520m) are forecast to be utilised by 2019 which is significantly earlier than the first expiry date of 2028. The Committee agreed with management’s view that it was appropriate not to take account of any potential future BEAT liabilities in the measurement of the deferred tax assets. It noted that this would be in line with recent US GAAP pronouncements and as disclosed, management is also continuing to assess the full impact to the Group of the complex provisions in the new US legislation. |
| **Long-term viability** (refer to Note 41 to the financial statements) | The Directors are required to make a statement in the Annual Report as to the long-term viability of Barclays. The Committee provides advice to the Board on the form and content of the statement, including the underlying assumptions. | ■ Evaluated at year end a report from management setting out the view of Barclays’ long-term viability. This report was based on Barclays’ MTP and covered forecasts for capital, liquidity and leverage, including forecast performance against regulatory targets, outcomes of the stress test of the MTP and forecast capital and liquidity performance against stress hurdle rates, funding and liquidity forecasts and an assessment of global risk themes and the Group’s risk profile. ■ Considered the viability statement in conjunction with Barclays’ risk statements and strategy/business model disclosures. ■ Addressed feedback from investors, the FRC and other stakeholders on viability statements in general. | The Committee agreed that the appropriate timeframe for the viability statement continued to be three years. Taking into account the assessment by the Board Risk Committee of stress testing results and risk appetite, the Committee agreed to recommend the viability statement to the Board for approval. |

57 Barclays PLC Annual Report 2017 home.barclays/annualreport

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| Area of Focus | Reporting Issue | Role of the Committee | Conclusion/Action Taken |
|---|---|---|---|
| **Fair, balanced and understandable reporting** (including country-by-country reporting and Pillar 3 reporting) | Barclays is required to ensure that its external reporting is fair, balanced and understandable. The Committee undertakes an assessment on behalf of the Board in order to provide the Board with assurance that it can make the statement required by the UK Code on Corporate Governance. | ■ Assessed through discussion with and challenge of management, including the Group Chief Executive and Group Finance Director, whether disclosures in Barclays’ Annual Report and other financial reports were fair, balanced and understandable. ■ Evaluated reports from Barclays’ Disclosure Committee on its assessment of the content, accuracy and tone of the disclosures. ■ Established through reports from management that there were no indications of fraud relating to financial reporting matters. ■ Evaluated the outputs of Barclays’ internal control assessments and Sarbanes-Oxley s404 internal control process. ■ Assessed disclosure controls and procedures. ■ Confirmed that management had reported on and evidenced the basis on which representations to the external auditors were made. | Having evaluated all of the available information and the assurances provided by management, the Committee concluded that the processes underlying the preparation of Barclays’ published financial statements, including the 2017 Annual Report and financial statements, were appropriate in ensuring that those statements were fair, balanced and understandable. In assessing Barclays’ financial results statements over the course of 2017, the Committee specifically addressed and provided input to management on the disclosure and presentation of: ■ the classification of Barclays’ holding in Barclays Africa Group Limited as an available for sale asset with effect from 1 June 2017 ■ the closure of the Barclays Non-Core business and the reintegration of the remaining businesses and portfolio ■ the Group Finance Director’s presentations to analysts ■ the level of segmental reporting. The Committee recommended to the Board that the 2017 Annual Report and financial statements are fair, balanced and understandable. |
| **Other significant matters** | | | |
| Internal control | Read more about the Barclays’ internal control and risk management processes on page 82. | The effectiveness of the overall control environment, including the status of any material control issues and the progress of specific remediation plans. | ■ Evaluated and tracked the status of the most material control issues identified by management through regular reports from the Chief Controls Officer, assessed against the new Controls Maturity Model created as part of the Barclays Internal Controls Enhancement Programme (BICEP). ■ Evaluated the status of specific material control issues and associated remediation plans, including in particular those relating to Model risk, resilience, cyber, compliance, technology, credit risk, transaction operations and data management which remained open as at December 2017 and which were reported as ‘on track’ to return to satisfactory status within agreed timeframes. ■ Considered the second line of defence role in the oversight of operational risk controls, including financial controls over operational risk. ■ Evaluated reports on the internal control environment from the external auditor. ■ Discussed lessons learned from specific control incidents and how these could be applied to Barclays’ business globally. ■ Assessed the progress of the enhancements being made to Barclays’ Risk and Control Self-Assessment (RCSA) process. ■ Clarified the role and responsibilities of the Committee in relation to the split of responsibility for operational risk between the Committee and the Board Risk Committee. | The Committee welcomed the positive change in approach that the BICEP programme had driven across the business, notably that the first line of defence was now more focused on proactively self-identifying control issues rather than waiting for them to be highlighted by the second or third lines of defence. The Committee continued to emphasise the importance of a disciplined self-assessment by management. The Committee provided feedback on the reporting of material control issues, requesting further detail regarding completion dates, key milestones and current status for significant remediation projects to enable closer monitoring and help drive accountability at the appropriate management level. The Committee challenged the application of the lessons learned process in view of the low level of coverage of significant control incidents. Management has taken steps to enhance the process and ensure compliance. Going forward this will be tracked by the Chief Controls Office. The Committee has continued to use the output from the RCSA process in its review of the control environment. While providing a reasonable overview of the control environment, the Committee welcomes management’s plans to put in place a more granular process which should provide greater visibility on controls requiring remediation and associated risks. This approach was piloted in 2017 and will be rolled out across the Group in 2018. |
| The effectiveness of the control environment in each individual business, including the status of any material control issues and the progress of specific remediation plans. | ■ Assessed reports on individual businesses and functions on their control environment, questioned the heads of the relevant businesses or functions on control concerns and scrutinised any identified control failures and closely monitored the status of remediation plans or workstreams to enhance the respective control environments. ■ Received updates directly from senior management, and scrutinised action plans, in relation to remediation plans following unsatisfactory audit findings. ■ Reviewed updates from management on the Designated Market Activity (DMA) remediation plan which addresses Barclays’ regulatory commitments to the Fed and other US and UK regulators in relation to sales and trading practices across the FX, Rates and other markets related business areas. | The Committee received deep dive control environment presentations from Barclays International and Barclays UK. These provided further detail of management’s assessment of the business unit control environment and key areas of focus, including key controls hot spots for the businesses. The Committee also received a number of presentations from business heads following unsatisfactory audit reports. The Committee challenged the business regarding their role in identifying the control issues and requested confirmation from management regarding the remediation programme, timeframe and accountability for delivery and which are subsequently monitored. The Committee was encouraged that the level of resources being devoted to the DMA programme now shows that it is on track to meet its milestones. |
| Internal audit | The performance of BIA and delivery of the internal audit plan, including scope of work performed, the level of resources and the methodology and coverage of the internal audit plan. | ■ Scrutinised and agreed internal audit plans and methodology and deliverables for 2017 and the first half of 2018, including reviewing the number of audits for delivery following the alignment of the Audit Universe to Barclays’ new structure following structural reform. ■ Monitored BIA’s response to feedback received from the PRA as part of its review of internal audit, including independence and impact, quality and weight of resources, productivity and methodology. ■ Monitored delivery of the agreed audit plans, including assessing internal audit resources and hiring levels and any impacts on the audit plan and reviewing the reasons for the postponement of audits in greater depth. ■ Debated audit risk appetite and issue validation. ■ Tracked the levels of unsatisfactory audits, including discussing the time taken to issue audit reports and the reasons for any delays. ■ Discussed BIA’s assessment of the management control approach and control environment in Barclays UK, Barclays International and the functions. ■ Evaluated the outcomes from BIA’s annual self-assessment. ■ Commissioned an independent external review of BIA. The reviewer was selected as a result of a tender process also run by the Committee. | The Committee received semi-annual thematic controls reports from BIA and a quarterly operational report during 2017. The Committee reiterated its support for BIA’s recruitment plans which reflected significant activity during 2017 to ensure appropriate audit coverage to support the focus on BIA quality across the audit cycle. The Committee Chairman provided input into the recruitment of the two key roles of Head of Internal Audit in Barclays UK and Barclays International. The Committee observed that the issues arising from unsatisfactory audits indicated that there was still work to do in embedding the required level of control consciousness across the Group and ensuring that control exceptions were highlighted clearly in management reporting. The Committee also requested that senior management support BIA in holding individuals accountable for failure to remediate risks effectively where they had failed BIA validation. The Committee confirmed that it was satisfied with the outcome of the self-assessment of BIA performance and the independent external review, both of which evidenced that the function generally conforms to the standards set by the Institute of Internal Auditors. It further confirmed that it felt able to rely on the work of BIA in discharging its own responsibilities. The Committee is providing oversight over the actions arising from the external review. See page 61 opposite for further details of the review. |
| External audit | The work and performance of KPMG | ■ Met with key members of the KPMG audit team to discuss the 2017 audit plan and agree areas of focus. ■ Assessed regular reports from KPMG on the progress of the 2017 audit and any material accounting and control issues identified. ■ Discussed KPMG’s feedback on Barclays’ critical accounting estimates and judgements. ■ Discussed KPMG’s draft report on certain control areas and the control environment ahead of the 2017 year end. ■ Discussed the approach to KPMG’s annual report to the PRA which will be issued following completion of the 2017 audit. ■ Considered the draft SOX controls report and the draft audit opinion. | The Committee approved the audit plan and the main areas of focus. The Committee also approved the principal services agreement and terms of engagement in connection with KPMG’s appointment as the Group’s auditors. Read more about the Committee’s role in assessing the performance, effectiveness and independence of the external auditor and the quality of the external audit below. |

The Committee also covered the following matters:
* assessed Barclays’ exposures to the leveraged finance market, general conditions in that market and approved an updated leveraged finance framework which would be submitted annually to the Committee for approval
* was briefed by PwC on main risk issues identified during the 2016 year-end audit, specifically impairment, post-model adjustments, forbearance control issues, key valuation judgements (including in relation to the ESHLA portfolio), and key assumptions used in the pension scheme liabilities
* requested and evaluated a report on partnership programmes in the US Cards business with a focus on risk profile and credit quality
* considered a report on the effectiveness of the Committee and any areas of the Committee’s performance that could be improved
* reviewed and updated its terms of reference, recommending them to the Board for approval.

Read more about Barclays’ risk management on pages 119 and 120 and in our Pillar 3 Report, which is available online at barclays.com/annualreport

### Governance in action – Responding to stakeholder concerns
During the year, the Committee gave consideration to Barclays’ exposure to environmental, social and sustainability matters through its business relationships and challenged management to establish a more formal and proactive approach to documenting policy positions and guidelines in relevant sectors.

In response to recommendations from the Committee, management commenced work to review Barclays’ involvement and practices in certain ‘sensitive sectors’ and is in the process of drawing up proposals for sector-specific policies that will articulate the forward-looking intentions of Barclays in these areas. The Committee will be reviewing and approving these policies during 2018 and look forward to reporting on their content and implementation in next year’s Annual Report.

The Committee considers that the establishment of sector-specific policies and guidelines will be a significant step in further enhancing the role that Barclays plays in the wider business community and believe they will improve the quality of the Company’s future reporting on climate change and other matters of social and environmental interest.

74 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## What we did in 2017
## Board Reputation Committee report

Dear Fellow Shareholders
This is my second report to you as Chairman of the Board Reputation Committee. At the conclusion of my last report I commented that the Committee, by way of its membership, executive engagement and reporting processes, had built a strong foundation on which to base its future operations and drive Barclays to be a governance leader in conduct, culture and reputation matters. This strong foundation has ensured that the Committee has been well positioned during 2017, a time of significant organisational change for the Group, to ensure that our people, whether within Barclays UK, Barclays International or the Group Service Company, continue to demonstrate behaviours and conduct that are consistent with the Barclays Values.

On two occasions during 2017 the Committee extended an invite to representatives of the Banking Standards Board (BSB) to present and discuss the outcomes of their 2016 and 2017 assessments of Barclays. As an independent third party with insights across the banking industry as a whole, the Committee attaches significant value to the insights offered by the BSB and I would like to extend my personal thanks to Dame Colette Bowe and her team at the BSB for their continuing work to promote the highest standards of behaviour in UK banking and restore public trust in the sector. We were encouraged to hear that the results had generally improved between 2016 and 2017 and were particularly pleased to see how strongly the Barclays Values still resonate with our colleagues. The Committee also carefully considered the BSB’s feedback on results relating to colleague well-being and you will find an outline of our discussion on colleague well-being on page 71.

One of the key challenges faced by the Committee is how to maintain oversight of Group Conduct and Culture matters as a whole, without overlooking the cultural differences that, naturally and quite rightly, exist between our different operating businesses and support functions. During the year the Committee actively discussed this challenge and, in an attempt to address this, I rebalanced the Committee’s agenda by introducing business and functional ‘Deep Dive’ sessions into each meeting. The Deep Dives allow the Committee to understand the conduct, culture and customer satisfaction issues being faced in specific areas of the business and the actions undertaken to address them. While consideration of our well-refined dashboards and Reputation risk reports ensure that Group-level metrics, challenges and initiatives remain clearly visible and subject to Committee consideration and challenge. You can read about some of the Deep Dives undertaken by the Committee during 2017 on the following pages.

A significant output from the Committee during 2017 resulted from discussions around Barclays’ historic commitments to the financing of certain fossil fuels projects, which resulted in a decision to develop a more proactive approach to the management of sustainability issues across the Barclays business. I would encourage you to refer to the ‘Governance in action’ box on page 74 for further details on this initiative.

### Committee performance
Through the process of the annual Board effectiveness review, which confirmed the continued effectiveness of the Committee, the ongoing evolution of the Committee’s role and the increased impact that it had during the last year was clearly acknowledged. An area that the review identified for further consideration was the continued oversight of Conduct and Reputation risk matters in the post-structural reform corporate structure, which I will ensure is addressed by the Committee ahead of April 2018.

### Looking ahead
Finally, I would like to record my thanks to Mike Roemer, who stepped down as Group Chief Compliance Officer in October 2017, for his outstanding contribution to the work of the Committee during his tenure in that role. I would also like to thank Diane de Saint Victor, who stepped down from the Committee on her retirement from the Board in May 2017. I look forward to working with our new Committee member, Mike Turner and, subject to regulatory approval, our new Group Chief Compliance Officer, Laura Padovani, as we continue to support the delivery of the Board’s collective vision of the Barclays Values.

**Sir Gerry Grimstone**
**Chairman, Board Reputation Committee**
**21 February 2018**

**The Committee has been well positioned during 2017, a time of significant organisational change for the Group, to ensure that our people, whether within Barclays UK, Barclays International or the Group Service Company, continue to demonstrate behaviours and conduct that are consistent with the Barclays Values.**

| Committee Allocation of time (%) | |
|---|---|
| Conduct and compliance | 36 |
| Culture | 20 |
| Customer satisfaction | 14 |
| Citizenship | 16 |
| Brand and other Reputation risk | 14 |

| Member | Meetings attended/eligible to attend |
|---|---|
| Sir Gerry Grimstone | 4/4 |
| Mike Ashley | 4/4 |
| Mary Francis | 4/4 |
| Dambisa Moyo | 4/4 |
| Diane de Saint Victor (to 10 May 2017) | 1/1 |

The principal purpose of the Committee is to:
* support the Board in promoting its collective vision of Barclays’ purpose, values, culture and behaviours
* ensure, on behalf of the Board, the efficiency of the processes for identification and management of Conduct and Reputation risk
* oversee Barclays’ conduct in relation to its corporate and societal obligations, including setting the guidance, direction and policies for Barclays’ approach to customer and regulatory matters and Barclays’ Citizenship Strategy, including advising the Board and management on these matters.

The Committee’s terms of reference are available at home.barclays/corporategovernance

### The Committee’s work
The significant matters addressed by the Committee during 2017 are described below:

| Area of Focus | Matter Addressed | Role of the Committee | Conclusion/action taken |
|---|---|---|---|
| **Conduct risk** | Monitoring the risks that can arise from the inappropriate supply of financial services, including instances of wilful or negligent misconduct. | ■ Discussed updates from management on Conduct risk and considered performance against Conduct risk indicators at each meeting. ■ Discussed the specific Conduct risks associated with certain business areas and the status of initiatives in place to address those risks and further strengthen the culture of the business. ■ Received reports from Barclays Internal Audit (BIA) in respect of internal audit activities on conduct risk management matters, including details of any unsatisfactory audit reports and remediation steps identified. ■ Discussed and approved the Conduct Risk Framework, with Conduct risk having been identified as a Principal Risk under the Barclays Enterprise Risk Management Framework (ERMF). ■ Received forward looking information on regulatory developments, including the issuance of new consultations by regulators, that might have a Conduct risk impact on Barclays in the future. ■ Approved the annual Compliance Plan. ■ Considered and approved the proposed methodology for calculating Conduct risk adjustments to incentive pools. | In line with its recategorisation under the ERMF, the Committee adopted Board level oversight of financial crime risk and conducted a Deep Dive into this area. The Conduct dashboard report was updated to include financial crime information and metrics, and the Committee was encouraged by management’s open and transparent approach to engaging with regulators on financial crime matters. The Committee considered the differing regulatory requirements placed on the UK and US Cards businesses and have suggested that a ‘Barclays view’ should overlay the requirements of local regulations to ensure that all retail facing businesses within the Group operate within a framework that prioritises the concept of ‘Treating Customers Fairly’. During discussion of the realignment of businesses between Barclays UK and Barclays International, the Committee encouraged management to take advantage of opportunities presented by structural reform to address some areas of Conduct risk by harmonising policies and operations, in areas such as collections and affordability assessments. The Committee considered an update from BIA on the use of Conduct risk information by legal entities within the Group and their assessment of reporting mechanisms and the escalation of issues up the organisational hierarchy. |
| **Cultural progress** | Reviewing management’s progress on embedding a values-based culture across the organisation. | ■ Considered the Citizenship dashboards presented at each meeting and assessed status updates on the Shared Growth Ambition. ■ Reviewed Barclays’ ratings and relative peer ranking in external Environmental Social Governance (ESG) benchmarks and tracked external perceptions on Citizenship through stakeholder and media analysis. ■ Received information on new Citizenship initiatives such as the #Digisafe campaign which aims to educate individuals to better protect themselves against digital fraud. ■ Received an update from Barclays’ Global Head of Financial Crime in respect of the function’s development of intelligence led initiatives to combat fraud. ■ Reviewed and recommended the approval of Barclays’ Statement on Modern Slavery. | Through consideration of the Culture dashboards and YourView results, the Committee was encouraged by the consistently strong sustainable engagement scores achieved throughout 2017. Improvements have been made in the area of colleague enablement, however the Committee appreciated management’s acknowledgement that further improvement is still required in this area, notably in terms of reducing perceived bureaucracy throughout the organisation. The Committee discussed the importance of a culture in which colleagues feel able to speak up and raise concerns. Particular attention has been paid to whistleblowing metrics throughout the year and, on recommendation of the Committee, the YourView survey system now contains a direct link to Barclays’ whistleblowing resources with the intention of further encouraging and supporting employees to report instances of unethical or inappropriate behaviour. Additional and more detailed information is becoming available to the Committee, by way of reporting on cultural attributes, on what employees perceive to be the most prevalent facets of Barclays’ organisational culture. It is intended that this information be used to monitor attainment of a set of desired attributes and facilitate further discussion and action in order to achieve this. By way of discussion of the FCA’s feedback on Barclays’ dashboards, the Committee acknowledged that the dashboards are just one of a number of key management information tools used to set its agenda and facilitate an ongoing discussion with management on culture which leads, in some cases, to deliberate actions being taken by the Group and business executive committees. |
| **Customer satisfaction** | Ensuring fair outcomes for customers by monitoring complaints volumes, the standard and quality of complaints handling processes and other relevant metrics. | ■ Debated Complaints dashboards and performance against key indicators at each meeting. ■ Gave consideration to the impact that matters, such as an effective communication channel, have on customer complaints volumes. ■ Considered the quality of the processes in place to address and resolve customer complaints. ■ Monitored trends in the underlying causes of complaints and considered forward looking analysis to identify events (both industry-wide and Barclays-specific) which could influence the volume and timings of complaints. ■ Considered the differing complaints profiles of the Barclays UK and Barclays International businesses and the actions being undertaken to positively improve the customer journey by utilising complaints management information (MI). ■ Requested further insight into the first line management of customer complaints and conducted a Deep Dive into Barclays UK’s complaints handling processes (Barclays UK receives the majority of Barclays’ customer complaints given its retail focus). ■ Requested additional Deep Dives on areas of the Barclays International business that have a retail customer base and considered the complaints profiles of those businesses. ■ Considered the progress being made by relevant businesses to improve their respective net promoter score (NPS). | The Committee was pleased to see a general downward trend in the number of complaints received by Barclays during 2017. While the Committee still receives a Group-wide report on complaints, underlying reporting has been refined in line with organisational changes to ensure the Committee receives a clear view on the complaints metrics of Barclays UK and Barclays International respectively. The Committee made recommendations to management, in the context of the structural reform programme, in respect of ensuring a consistent ‘Barclays’ customer experience is received by retail clients whether they are being serviced by Barclays UK or Barclays International. The Committee developed its understanding of how complaints MI is mapped by Barclays UK in order to identify root causes and received information on the strategic initiatives being undertaken to address them. The Committee’s Deep Dive also led to further refinement of the Barclays UK Complaints dashboards to include complaints volumes by channel. The analysis of the data revealed a high level of customer satisfaction with Barclays’ online bank offering. The Committee was pleased to see an increase in Barclays UK’s NPS during the course of 2017 and support management’s objective of further increasing NPS to ensure Barclays UK remains competitive against challenger and start-up banks. In relation to Barclays International’s business areas, the Committee was encouraged to hear that complaints volumes were at an all-time low within Barclaycard US but noted management’s desire to improve the business’s net promoter score against key US competitors. The Committee also considered the approach being taken by Barclays Partner Finance to identify potential areas of future complaints and proactively reaching out to customers to resolve issues before complaints arise. |
| **Citizenship** | Monitoring progress against the Shared Growth Ambition (Barclays’ Citizenship plan for 2016-2018) and the effectiveness of policy statements on Citizenship matters. | ■ Considered the Citizenship dashboards presented at each meeting and assessed status updates on the Shared Growth Ambition. ■ Reviewed Barclays’ ratings and relative peer ranking in external Environmental Social Governance (ESG) benchmarks and tracked external perceptions on Citizenship through stakeholder and media analysis. ■ Received information on new Citizenship initiatives such as the #Digisafe campaign which aims to educate individuals to better protect themselves against digital fraud. ■ Received an update from Barclays’ Global Head of Financial Crime in respect of the function’s development of intelligence led initiatives to combat fraud. ■ Reviewed and recommended the approval of Barclays’ Statement on Modern Slavery. | The Committee was very pleased to see that Citizenship metrics demonstrate a high level of colleague pride in the contribution Barclays makes to the community and society. The Committee is very encouraged by management’s decision to dedicate resource to financial crime, skills and employability and digital empowerment initiatives that provide benefits not only to Barclays and its customers, but to the banking industry and UK population more generally. Read more about Barclays’ approach to Citizenship on pages 21 and 22. |
| **Reputation and brand** | Ensuring that the Barclays brand is proactively managed and Reputation risks and issues are identified and managed appropriately. | ■ Reviewed Reputation risk updates from management, receiving specific information on those issues deemed to constitute the most significant Reputation risks and issues in each quarter. ■ Regularly evaluated the measures being taken to enhance the Barclays brand and to understand, and propose action to improve, where appropriate, external perceptions of the Bank. ■ Considered whether the process for identifying, managing and overseeing Reputation risk was functioning effectively. | The Committee approved the Reputation Risk Framework, confirming that Reputation risk is now a Principal Risk under the ERMF. Significant discussion also took place in respect of the correlation between cultural indicators, conduct outcomes and Reputation risk. The Committee requested further refinement of the Reputation risk reporting received to include sentiment analysis of media coverage and metrics on Barclays’ social media presence. The Corporate Relations priorities for 2017 were pre-approved by the Committee and fulfilment of those priorities kept under review throughout the year. This process improved management’s ability to more effectively understand and monitor external perceptions of Barclays among key stakeholders. The Committee requested that management undertake work to further refine the components of Reputation risk, clarify the process for identifying risks, enhance management oversight and give consideration to how the overall process can be better communicated. |

The Committee also covered the following matters:
* received a report on management’s annual review of the effectiveness of compliance with the Volcker Rule (restrictions on proprietary trading and certain fund investments by banks operating in the US)
* received a report from management on Barclays’ Swap Dealer Annual Compliance Report
* discussed the outcome of an externally facilitated review on Barclays’ compliance with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) and its comparative performance against its peers.
* approved, from a Reputation risk perspective, a proposal to restructure certain intra-group shareholdings and enhance capital utilisations
* assessed and discussed a report on the Committee’s performance
* reviewed and updated its terms of reference.

Read more about Barclays’ risk management on pages 119 and 120 and in our Pillar 3 Report, which is available online at barclays.com/annualreport

### Governance in action – Responding to stakeholder concerns
During the year, the Committee gave consideration to Barclays’ exposure to environmental, social and sustainability matters through its business relationships and challenged management to establish a more formal and proactive approach to documenting policy positions and guidelines in relevant sectors.

In response to recommendations from the Committee, management commenced work to review Barclays’ involvement and practices in certain ‘sensitive sectors’ and is in the process of drawing up proposals for sector-specific policies that will articulate the forward-looking intentions of Barclays in these areas. The Committee will be reviewing and approving these policies during 2018 and look forward to reporting on their content and implementation in next year’s Annual Report.

The Committee considers that the establishment of sector-specific policies and guidelines will be a significant step in further enhancing the role that Barclays plays in the wider business community and believe they will improve the quality of the Company’s future reporting on climate change and other matters of social and environmental interest.

74 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## What we did in 2017
## Board Reputation Committee report

In 2017 we made significant progress towards our new Group governance structure in preparation for structural reform and the stand up of our ring-fenced bank in 2018, with appointments having been made to both the Barclays UK and Barclays International divisional boards.

Dear Fellow Shareholders
In 2017 we made significant progress towards our new Group governance structure in preparation for structural reform and the stand up of our ring-fenced bank in 2018, with appointments having been made to both the Barclays UK and Barclays International divisional boards. We are delighted to welcome the new directors to those boards, led by Sir Gerry Grimstone as Chairman of Barclays International (subject to regulatory approval) and Sir Ian Cheshire as Chairman of Barclays UK (which will become our ring fenced bank). We continued to refine the details of how the Group Board will interact with those boards and the boards of our other strategically significant subsidiaries, building on the Governance Guiding Principles we created in 2016. We look forward to working collaboratively with them to ensure that the roles and responsibilities of each board are clear, while providing effective governance of the Group and protection of shareholder interests.

In view of the significant changes to our Group corporate structure, and always bearing in mind the long-term strategy of the Group, the Committee continues to regularly consider our Board composition and succession plans, ensuring it comprises the right balance of diversity, skills and experience to provide the strategic oversight needed to steer the business of the Group. We conducted searches for non-executive Directors in 2017 and were pleased to appoint Matthew Lester and Mike Turner CBE to the Board, in addition to the appointment of Sir Ian Cheshire. Matthew, Mike and Sir Ian each bring with them significant board-level experience and you can find out more about their background and relevant skills and experience that they bring to the Board in their profiles on pages 47 and 48.

I have previously emphasised that it is a key part of our role to be satisfied that there are proper processes in place for executive succession, and this continues to remain another key consideration of the Committee. We closely monitored the status and progress of the Barclays Talent and Succession strategy, providing input and guidance to management to ensure we attract and retain the best talent for the Group. As a Committee, we also discuss ways in which we can develop and nurture high performing individuals within senior management to strengthen our succession pipeline, including the use of ex-officio posts to relevant executive committees to give those individuals exposure to Group matters and leadership. Our people are the driving force in sustaining our business and we firmly believe in the benefits of having a diverse workforce. I am proud to see the number and variety of diversity and inclusion initiatives we have at Barclays to develop and support colleagues, and ultimately to encourage them to grow their careers with us. While we recognise that diversity is not only about gender, it is nevertheless an important element of diversity and we have set ourselves a target of 33% female representation on the Board by 2020, which as a Board we remain committed to achieving. Please see page 79 for further information about our approach to diversity at both Board and Group Executive Committee levels.

### Committee performance
The performance of the Committee was assessed as part of the annual Board effectiveness review and I am pleased to report that the results show that it is performing effectively, with the role and responsibilities of the Committee clear and well understood. One area identified for consideration is that the Committee should be mindful of ensuring that all non-executive Directors receive the same flow of information in relation to decisions and discussions by the Committee, which I will address in my updates to the Board as Chairman of the Board Nominations Committee, and outside of scheduled Board meetings to the extent appropriate. The report on the Board effectiveness review can be found on page 78.

### Looking ahead
In 2018 we look forward to the execution of our new Group structure and to the implementation of robust processes providing clear, consistent and effective corporate governance for the Group post-structural reform. Throughout this period of change, the Committee will continue to ensure that we have the right people leading the strategic direction of Barclays, motivating colleagues and sustaining our business over the long term.

**John McFarlane**
**Chairman, Board Nominations Committee**
**21 February 2018**

home.barclays/annualreport Barclays PLC Annual Report 2017 75

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## What we did in 2017
## Board Nominations Committee report

Review of Board and Board Committee effectiveness
Process
Each year, an evaluation is conducted on the effectiveness of the Board, the Board Committees and individual Directors. Full external evaluations of Board effectiveness have been undertaken in the past two years. In view of the impending new Group corporate structure, following which another external evaluation will be carried out once the structure has had time to settle, the Board decided to focus this year’s review on individual Director performance to monitor the Board’s progress and to inform the agenda of the next full external review process.

Independent Board Evaluation facilitated the effectiveness review for 2016 and was engaged again to conduct the 2017 Board review, also again led by Ffion Hague. Independent Board Evaluation is an independent external consultancy with no other connection to Barclays. Consistent with previous years, Ffion Hague carried out interviews with the Directors to obtain feedback on the effectiveness of the Board throughout 2017.

Independent Board Evaluation issued a report to the Board on the findings of the effectiveness review. In addition, the Chairman was provided with a report and feedback on the performance of each of the Directors, and the Senior Independent Director received a report on the Chairman.

Following consideration of the findings of the 2017 Board and Committee effectiveness reviews, the Directors remain satisfied that the Board and each of the Board Committees are operating effectively.

### Outcomes of 2017 review
Board performance is considered to be improving, with more effective and insightful questions being asked in Board debates and a better balance being struck between support and challenge. In particular, the Directors were positive about:
* the preparations for structural reform
* project execution, such as the remediation of control issues and preparations for Brexit
* the recruitment of high quality new Board members and members for the boards of Barclays UK and Barclays International.

The Directors were also pleased with progress on strengthening the senior executive team and deepening relationships between Directors and key executives. The executive team feels well supported by the Board and is grateful for that support.

Business performance is a concern for Board members, and the Board is focused on improving this within the Group. This will be a particular area of focus in 2018. The restructuring of the Group in April 2018 is also a significant focus for the Group and regarded as a major challenge. The Board is cognisant of the challenges of ensuring the new Group corporate structure is effective and efficient, and is conscious of the need to maintain good governance overall and minimise duplication. The interaction between the Group Board and the boards of our strategically significant subsidiaries will be closely monitored and thought will be given to identifying opportunities for engagement with subsidiary board members to develop and maintain a good working relationship. The impact of the new structure on Board work and governance will be a key area of review for the 2018 external evaluation of the Board.

### Committee effectiveness
The 2017 Board Committee effectiveness review was carried out internally, led by the Company Secretary. A questionnaire was circulated to all Committee members with a report of the findings of the effectiveness review provided to the Chair of each Committee as well as an update to the Board. The conclusion from the Committee reviews is that the Committees are working well, and you can read more about the findings for each Board Committee within each Committee Chairman’s letter.

### Progress against 2016 findings
Following the 2016 Board effectiveness review facilitated by Independent Board Evaluation, a number of findings were identified and the summary below sets out the Board’s progress against those actions in 2017.

| 2016 findings | Actions taken/findings in 2017 |
|---|---|
| **Board priorities** Create regular broad-based risk oversight Board sessions to allow Directors to look across the risk spectrum. Schedule a debate on the role of the Board and non executive Directors and link the conclusions to revised Board objectives to help focus the Board’s agenda. | Time was scheduled for free-ranging discussion around risk, strategy and the Bank’s long term plan during the Board’s annual strategy session. The review reported that Board discussion was more focused and struck a balance between support and challenge. |
| **Board/executive relationship** Positive and constructive relations between the Board and the new management team were reported. | The review found that the relationship between the Board and executive management deepened during 2017, with executive management feeling well supported. |
| **Optimise communication and collaboration\*** Continue to optimise the information flow between Directors in the run-up to structural reform in 2018. Consider agreeing common values for the Group and the banking subsidiary boards in the new structure. | The Chairman continued to hold meetings with non-executive Directors ahead of Board meetings to brief them on current issues. Further principles and practices were developed for interaction between the Board and the boards of Barclays UK and Barclays International, building on the Governance Guiding principles created in 2016. |
| **Board appointment process** Continue to refine the Board skills matrix to ensure it aligns with the Group’s strategy and informs the succession plan for key Board roles. Implement more regular reporting to the Board on potential non-executive Directors under consideration. | The Board skills matrix and succession plan were kept under review, with separate skills matrices established for the Barclays UK and Barclays International boards. Board members were updated on recruitment progress and details of potential candidates. |
| **Director induction** Continue to enhance the Director induction process with a focus on providing broader governance training to anyone who has not previously served on a UK PLC board. | The induction programme was reviewed to factor in tailored governance training for new Directors and was extended also to directors of Barclays UK, Barclays International and the Group Service Company. |
| **Reporting to the Board†** Review reporting arrangements on strategy implementation and review the KPIs or dashboard reports for key initiatives. | The form and content of reporting to the Board was reviewed and refreshed by management to ensure that the Board is provided with appropriate management information on strategy and execution priorities. |

* In 2016 this finding was named ‘Greater awareness of Board Committee work’.
† In 2016 this finding was named ‘Dealing more strategically with global regulation’.

76 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## Governance: Directors’ report
## What we did in 2017
## Board Nominations Committee report

Committee composition and meetings
The Committee is composed solely of independent non-executive Directors. John McFarlane, as Chairman of the Board, is also Chairman of the Committee. Mike Ashley, Tim Breedon, Crawford Gillies, and Sir Gerry Grimstone, being the Chairmen of each of the other Board Committees, and Sir Ian Cheshire (as Chairman of Barclays UK) and Reuben Jeffery III, are also members of the Committee. Details of the skills and experience of the Committee members can be found in their biographies on pages 47 and 48.

During 2017 there were three meetings of the Committee, including one held at Barclays’ New York offices. Attendance by members at Committee meetings is shown below and the chart to the left shows how the Committee allocated its time. Committee meetings were attended by the Group Chief Executive, with the Group HR Director, the Head of Talent, and the Global Head of Diversity and Inclusion attending as appropriate.

| Member | Meetings attended/eligible to attend |
|---|---|
| John McFarlane | 3/3 |
| Mike Ashley | 3/3 |
| Tim Breedon | 3/3 |
| Crawford Gillies | 3/3 |
| Sir Gerry Grimstone | 3/3 |
| Reuben Jeffery III | 3/3 |
| Sir Ian Cheshire (from 9 May 2017) | 0/1\* |

\* Sir Ian Cheshire did not attend owing to prior commitments, but his views and comments were made available to, and considered by, the Committee.

### Committee role and responsibilities
The principal purpose of the Committee is to:
* support and advise the Board in ensuring that the composition of the Board and its Committees is appropriate and enables them to function effectively
* examine the skills, experience and diversity on the Board and plan succession for key Board appointments, planning ahead to deal with upcoming retirements and to fill any expected skills gaps
* provide Board-level oversight of the Group’s talent management programme and diversity and inclusion initiatives
* agree the annual Board effectiveness review process and monitor the progress of any actions arising
* ensure the Board has appropriate corporate governance standards and practices in place and keep these under review to ensure they are consistent with best practice.

The Committee’s terms of reference are available at home.barclays/corporategovernance

### The Committee’s work
The significant matters addressed by the Committee during 2017 are described below:

| Area of Focus | Matter Addressed | Role of the Committee | Conclusion/Action Taken |
|---|---|---|---|
| **Board and Board Committee composition** | The membership of the Barclays PLC Board and the current and future composition of the Board and its Committees. | ■ Reviewed the Board skills matrix and discussed the key skills and experience needed on the Board in the context of future strategic direction, including any areas requiring strengthening for skills and succession and conducted a search for non-executive Directors. ■ Considered the skills and composition of the Board in a post-structural reform environment. ■ Reviewed the membership, size and composition of Board Committees. | The Committee identified the need to appoint an additional non-executive Director with chairman or CEO experience to add further depth to the Board. During the year it recommended for appointment to the Board Mike Turner CBE, Sir Ian Cheshire (brought on as Chairman of Barclays UK) and Matthew Lester (following the Committee’s previous recommendation of an additional non-executive Director with accounting and auditing experience). The Committee agreed that a search would be conducted for an additional female non-executive Director to promote diversity of gender on the Board and in recognition of the Board’s commitment to achieving 33% female representation on the Board by 2020. The Committee agreed to review the role, purpose and composition of the Group Board once the Barclays UK and Barclays International Boards were fully constituted and operational boards. It noted that changes to Board Committee membership may take place once those boards, as well as the Group Service Company board, were operational so that a holistic view can be taken on appropriate memberships and cross memberships of boards and committees. Please refer to page 77 for more details of the Board’s approach to the recruitment of new Directors. |
| **Board composition of Barclays UK and Barclays International in preparation for the legal entity stand up in 2018 under the structural reform programme** | The composition of the Barclays UK and Barclays International divisional boards. | ■ Considered the board skills matrix for Barclays UK and Barclays International. ■ Considered updates on the establishment of boards of Barclays UK and Barclays International and discussed the suitability of potential candidates identified to join those boards. | The Committee, in reviewing the skills matrices for Barclays UK and Barclays International following appointments to those boards, is of the view that there do not appear to be any skills gaps across the two boards, subject to the recruitment of a non-executive Director with retail banking experience to the Barclays UK board. It discussed opportunities for interaction between the Barclays PLC, Barclays UK and Barclays International boards and agreed to consider opportunities for engagement at board and committee level going forward. |
| **Executive succession planning and talent management** | Succession planning and talent management at Group Executive Committee level. | ■ Considered updates on, and progress being made against, Barclays’ Talent and Succession strategy, including monitoring diversity within the talent pipeline. ■ Discussed updates from the Group HR Director on Group Executive Committee succession plans, including assessing emergency cover, the existing talent pipeline and any potential gaps. ■ Considered individuals identified as potential Group Executive Committee successors and discussed next steps for their development. ■ Considered the succession plans for the most critical business unit and functional roles and discussed how to develop the high performing individuals identified. | The Committee welcomed the progress made in the Group Executive Committee succession planning, but noted that there was further work to be done in ensuring we are able to recruit and retain the best talent for the Group. It noted that the boards of Barclays UK and Barclays International, once established, would be able to take a more granular view of succession to some of the roles. The Committee also discussed the use of ex officio posts to both the Group Executive Committee and business executive committees to give senior individuals exposure to Group matters as a further way of developing those individuals to ensure a healthy pool of potential candidates in the succession pipeline. |
| **Appointment and re-election of Directors** | Board and Board Committee composition is a standing item for consideration at each Committee meeting. This includes the consideration of potential new non-executive Director appointments, both in respect of planned succession for known retirements and as a result of the ongoing review of the skills and experience needed on the Board in order for it to continue to operate effectively. The Committee frequently considers a skills matrix for the Board, which identifies the core competencies, skills, diversity and experience required for the Board to deliver its strategic aims and govern the Group effectively. Certain attributes identified in the skills matrix have a target weighting attached to them and these are regularly updated over time to reflect the needs of the Group. The Committee reviews the skills matrix when considering a new appointment to the Board, as well as reviewing the current and expected Board and Board Committee composition. This helps to determine a timeline for proposed appointments to the Board. When recruiting a new non-executive Director, the specific skills that are needed are identified, for example, an individual with international experience, or recent history serving on a particular board committee. The Charter of Expectations contains the key competencies and skills expected of non-executive Directors, and these, in addition to other details such as expected time commitment, will be included in an individual specification. The Committee as a whole then considers curriculum vitae and references for potential candidates. Any candidates who are shortlisted will be interviewed by members of the Committee and, if applicable, key shareholders and Barclays’ regulators may be asked to provide feedback on the proposed appointment. The Board is updated on the progress of the recruitment and interview process, and any feedback from the interviews is provided to the Board alongside a recommendation for appointment. Executive search firms Egon Zehnder and Buchanan Harvey were instructed to assist with the search for non-executive Directors during 2017. Neither firm has any other connection to Barclays, other than to provide recruitment services. Open advertising for Group Board positions was not used in 2017, as the Committee believes that targeted recruitment is the optimal way of recruiting for Board positions. Both of the firms used for non-executive Director recruitment have signed up to the Voluntary Code of Conduct for Executive Search Firms, which include measures designed to improve gender diversity on boards. In 2017, Barclays announced the appointments of Sir Ian Cheshire, Matthew Lester and Mike Turner CBE as non-executive Directors, with each Director bringing specific skills and experience to fill the role previously identified by the Committee as well as all having extensive board-level experience (see pages 47 and 48 for details of each Director’s experience and background). Diane de Saint Victor and Steve Thieke both stood down from the Board with effect from the end of the 2017 AGM. The Directors in office at the end of 2017 were subject to an effectiveness review, as described on page 78. Based on the results of the review the Board accepted the view of the Committee that each Director proposed for election or re-election continues to be effective and that they each demonstrated the level of commitment required in connection with their role on the Board and the needs of the business. |

In addition, the Committee covered the following matters:
* considered the results of, and the action plan in respect of, the 2016 Board effectiveness review and the process for the 2017 Board and Committee effectiveness review
* reviewed and confirmed the effectiveness of the processes for authorising Directors’ conflicts of interests and Directors’ induction and training
* considered a report on the effectiveness of the Committee
* reviewed the Committee’s terms of reference.

Please refer to page 77 for more details on the Board’s approach to the recruitment of new Directors.

76 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## Governance: Directors’ report
## What we did in 2017
## Board Nominations Committee report

### Review of Board and Board Committee effectiveness
Process
An evaluation is conducted each year on the effectiveness of the Board, the Board Committees and individual Directors. Full external evaluations of Board effectiveness have been undertaken in the past two years. In view of the impending new Group corporate structure, following which another external evaluation will be carried out once the structure has had time to settle, the Board decided to focus this year’s review on individual Director performance to monitor the Board’s progress and to inform the agenda of the next full external review process.

| Committee allocation of time (%) | 2017 | 2016 |
|---|---|---|
| Corporate governance matters | 8 | 20 |
| Board and Committee composition | 42 | 36 |
| Succession planning and talent | 33 | 31 |
| Board effectiveness | 11 | 8 |
| Other | 6 | 5 |

| Member | Meetings attended/eligible to attend |
|---|---|
| John McFarlane | 3/3 |
| Mike Ashley | 3/3 |
| Tim Breedon | 3/3 |
| Crawford Gillies | 3/3 |
| Sir Gerry Grimstone | 3/3 |
| Reuben Jeffery III | 3/3 |
| Sir Ian Cheshire (from 9 May 2017) | 0/1\* |

\* Sir Ian Cheshire did not attend owing to prior commitments, but his views and comments were made available to, and considered by, the Committee.

### Committee role and responsibilities
The principal purpose of the Committee is to:
* support and advise the Board in ensuring that the composition of the Board and its Committees is appropriate and enables them to function effectively
* examine the skills, experience and diversity on the Board and plan succession for key Board appointments, planning ahead to deal with upcoming retirements and to fill any expected skills gaps
* provide Board-level oversight of the Group’s talent management programme and diversity and inclusion initiatives
* agree the annual Board effectiveness review process and monitor the progress of any actions arising
* ensure the Board has appropriate corporate governance standards and practices in place and keep these under review to ensure they are consistent with best practice.

The Committee’s terms of reference are available at home.barclays/corporategovernance

### The Committee’s work
The significant matters addressed by the Committee during 2017 are described below:

| Area of Focus | Matter Addressed | Role of the Committee | Conclusion/Action Taken |
|---|---|---|---|
| **Board and Board Committee composition** | The membership of the Barclays PLC Board and the current and future composition of the Board and its Committees. | ■ Reviewed the Board skills matrix and discussed the key skills and experience needed on the Board in the context of future strategic direction, including any areas requiring strengthening for skills and succession and conducted a search for non-executive Directors. ■ Considered the skills and composition of the Board in a post-structural reform environment. ■ Reviewed the membership, size and composition of Board Committees. | The Committee identified the need to appoint an additional non-executive Director with chairman or CEO experience to add further depth to the Board. During the year it recommended for appointment to the Board Mike Turner CBE, Sir Ian Cheshire (brought on as Chairman of Barclays UK) and Matthew Lester (following the Committee’s previous recommendation of an additional non-executive Director with accounting and auditing experience). The Committee agreed that a search would be conducted for an additional female non-executive Director to promote diversity of gender on the Board and in recognition of the Board’s commitment to achieving 33% female representation on the Board by 2020. The Committee agreed to review the role, purpose and composition of the Group Board once the Barclays UK and Barclays International Boards were fully constituted and operational boards. It noted that changes to Board Committee membership may take place once those boards, as well as the Group Service Company board, were operational so that a holistic view can be taken on appropriate memberships and cross memberships of boards and committees. Please refer to page 77 for more details of the Board’s approach to the recruitment of new Directors. |
| **Board composition of Barclays UK and Barclays International in preparation for the legal entity stand up in 2018 under the structural reform programme** | The composition of the Barclays UK and Barclays International divisional boards. | ■ Considered the board skills matrix for Barclays UK and Barclays International. ■ Considered updates on the establishment of boards of Barclays UK and Barclays International and discussed the suitability of potential candidates identified to join those boards. | The Committee, in reviewing the skills matrices for Barclays UK and Barclays International following appointments to those boards, is of the view that there do not appear to be any skills gaps across the two boards, subject to the recruitment of a non-executive Director with retail banking experience to the Barclays UK board. It discussed opportunities for interaction between the Barclays PLC, Barclays UK and Barclays International boards and agreed to consider opportunities for engagement at board and committee level going forward. |
| **Executive succession planning and talent management** | Succession planning and talent management at Group Executive Committee level. | ■ Considered updates on, and progress being made against, Barclays’ Talent and Succession strategy, including monitoring diversity within the talent pipeline. ■ Discussed updates from the Group HR Director on Group Executive Committee succession plans, including assessing emergency cover, the existing talent pipeline and any potential gaps. ■ Considered individuals identified as potential Group Executive Committee successors and discussed next steps for their development. ■ Considered the succession plans for the most critical business unit and functional roles and discussed how to develop the high performing individuals identified. | The Committee welcomed the progress made in the Group Executive Committee succession planning, but noted that there was further work to be done in ensuring we are able to recruit and retain the best talent for the Group. It noted that the boards of Barclays UK and Barclays International, once established, would be able to take a more granular view of succession to some of the roles. The Committee also discussed the use of ex officio posts to both the Group Executive Committee and business executive committees to give senior individuals exposure to Group matters as a further way of developing those individuals to ensure a healthy pool of potential candidates in the succession pipeline. |
| **Appointment and re-election of Directors** | Board and Board Committee composition is a standing item for consideration at each Committee meeting. This includes the consideration of potential new non-executive Director appointments, both in respect of planned succession for known retirements and as a result of the ongoing review of the skills and experience needed on the Board in order for it to continue to operate effectively. The Committee frequently considers a skills matrix for the Board, which identifies the core competencies, skills, diversity and experience required for the Board to deliver its strategic aims and govern the Group effectively. Certain attributes identified in the skills matrix have a target weighting attached to them and these are regularly updated over time to reflect the needs of the Group. The Committee reviews the skills matrix when considering a new appointment to the Board, as well as reviewing the current and expected Board and Board Committee composition. This helps to determine a timeline for proposed appointments to the Board. When recruiting a new non-executive Director, the specific skills that are needed are identified, for example, an individual with international experience, or recent history serving on a particular board committee. The Charter of Expectations contains the key competencies and skills expected of non-executive Directors, and these, in addition to other details such as expected time commitment, will be included in an individual specification. The Committee as a whole then considers curriculum vitae and references for potential candidates. Any candidates who are shortlisted will be interviewed by members of the Committee and, if applicable, key shareholders and Barclays’ regulators may be asked to provide feedback on the proposed appointment. The Board is updated on the progress of the recruitment and interview process, and any feedback from the interviews is provided to the Board alongside a recommendation for appointment. Executive search firms Egon Zehnder and Buchanan Harvey were instructed to assist with the search for non-executive Directors during 2017. Neither firm has any other connection to Barclays, other than to provide recruitment services. Open advertising for Group Board positions was not used in 2017, as the Committee believes that targeted recruitment is the optimal way of recruiting for Board positions. Both of the firms used for non-executive Director recruitment have signed up to the Voluntary Code of Conduct for Executive Search Firms, which include measures designed to improve gender diversity on boards. In 2017, Barclays announced the appointments of Sir Ian Cheshire, Matthew Lester and Mike Turner CBE as non-executive Directors, with each Director bringing specific skills and experience to fill the role previously identified by the Committee as well as all having extensive board-level experience (see pages 47 and 48 for details of each Director’s experience and background). Diane de Saint Victor and Steve Thieke both stood down from the Board with effect from the end of the 2017 AGM. The Directors in office at the end of 2017 were subject to an effectiveness review, as described on page 78. Based on the results of the review the Board accepted the view of the Committee that each Director proposed for election or re-election continues to be effective and that they each demonstrated the level of commitment required in connection with their role on the Board and the needs of the business. |

Directors received a report on the findings of the effectiveness review. The Directors received a report on the Chairman.

### Outcomes of 2017 review
Board performance is considered to be improving, with more effective and insightful questions being asked in Board debates and a better balance being struck between support and challenge. In particular, the Directors were positive about:
* the preparations for structural reform
* project execution, such as the remediation of control issues and preparations for Brexit
* the recruitment of high quality new Board members and members for the boards of Barclays UK and Barclays International.

The Directors were also pleased with progress on strengthening the senior executive team and deepening relationships between Directors and key executives. The executive team feels well supported by the Board and is grateful for that support.

Business performance is a concern for Board members, and the Board is focused on improving this within the Group. This will be a particular area of focus in 2018. The restructuring of the Group in April 2018 is also a significant focus for the Group and regarded as a major challenge. The Board is cognisant of the challenges of ensuring the new Group corporate structure is effective and efficient, and is conscious of the need to maintain good governance overall and minimise duplication. The interaction between the Group Board and the boards of our strategically significant subsidiaries will be closely monitored and thought will be given to identifying opportunities for engagement with subsidiary board members to develop and maintain a good working relationship. The impact of the new structure on Board work and governance will be a key area of review for the 2018 external evaluation of the Board.

### Committee effectiveness
The 2017 Board Committee effectiveness review was carried out internally, led by the Company Secretary. A questionnaire was circulated to all Committee members with a report of the findings of the effectiveness review provided to the Chair of each Committee as well as an update to the Board. The conclusion from the Committee reviews is that the Committees are working well, and you can read more about the findings for each Board Committee within each Committee Chairman’s letter.

### Progress against 2016 findings
Following the 2016 Board effectiveness review facilitated by Independent Board Evaluation, a number of findings were identified and the summary below sets out the Board’s progress against those actions in 2017.

| 2016 findings | Actions taken/findings in 2017 |
|---|---|
| **Board priorities** Create regular broad-based risk oversight Board sessions to allow Directors to look across the risk spectrum. Schedule a debate on the role of the Board and non executive Directors and link the conclusions to revised Board objectives to help focus the Board’s agenda. | Time was scheduled for free-ranging discussion around risk, strategy and the Bank’s long term plan during the Board’s annual strategy session. The review reported that Board discussion was more focused and struck a balance between support and challenge. |
| **Board/executive relationship** Positive and constructive relations between the Board and the new management team were reported. | The review found that the relationship between the Board and executive management deepened during 2017, with executive management feeling well supported. |
| **Optimise communication and collaboration\*** Continue to optimise the information flow between Directors in the run-up to structural reform in 2018. Consider agreeing common values for the Group and the banking subsidiary boards in the new structure. | The Chairman continued to hold meetings with non-executive Directors ahead of Board meetings to brief them on current issues. Further principles and practices were developed for interaction between the Board and the boards of Barclays UK and Barclays International, building on the Governance Guiding principles created in 2016. |
| **Board appointment process** Continue to refine the Board skills matrix to ensure it aligns with the Group’s strategy and informs the succession plan for key Board roles. Implement more regular reporting to the Board on potential non-executive Directors under consideration. | The Board skills matrix and succession plan were kept under review, with separate skills matrices established for the Barclays UK and Barclays International boards. Board members were updated on recruitment progress and details of potential candidates. |
| **Director induction** Continue to enhance the Director induction process with a focus on providing broader governance training to anyone who has not previously served on a UK PLC board. | The induction programme was reviewed to factor in tailored governance training for new Directors and was extended also to directors of Barclays UK, Barclays International and the Group Service Company. |
| **Reporting to the Board†** Review reporting arrangements on strategy implementation and review the KPIs or dashboard reports for key initiatives. | The form and content of reporting to the Board was reviewed and refreshed by management to ensure that the Board is provided with appropriate management information on strategy and execution priorities. |

* In 2016 this finding was named ‘Greater awareness of Board Committee work’.
† In 2016 this finding was named ‘Dealing more strategically with global regulation’.

home.barclays/annualreport Barclays PLC Annual Report 2017 77

***

## Governance: Directors’ report
## What we did in 2017
## Board Nominations Committee report

### Board and Board Committee composition
The matters addressed by the Committee during 2017 are described below:

| Area of Focus | Matter Addressed | Role of the Committee | Conclusion/Action Taken |
|---|---|---|---|
| **Board and Board Committee composition** | The membership of the Barclays PLC Board and the current and future composition of the Board and its Committees. | ■ Reviewed the Board skills matrix and discussed the key skills and experience needed on the Board in the context of future strategic direction, including any areas requiring strengthening for skills and succession and conducted a search for non-executive Directors. ■ Considered the skills and composition of the Board in a post-structural reform environment. ■ Reviewed the membership, size and composition of Board Committees. | The Committee identified the need to appoint an additional non-executive Director with chairman or CEO experience to add further depth to the Board. During the year it recommended for appointment to the Board Mike Turner CBE, Sir Ian Cheshire (brought on as Chairman of Barclays UK) and Matthew Lester (following the Committee’s previous recommendation of an additional non-executive Director with accounting and auditing experience). The Committee agreed that a search would be conducted for an additional female non-executive Director to promote diversity of gender on the Board and in recognition of the Board’s commitment to achieving 33% female representation on the Board by 2020. The Committee agreed to review the role, purpose and composition of the Group Board once the Barclays UK and Barclays International Boards were fully constituted and operational boards. It noted that changes to Board Committee membership may take place once those boards, as well as the Group Service Company board, were operational so that a holistic view can be taken on appropriate memberships and cross memberships of boards and committees. Please refer to page 77 for more details of the Board’s approach to the recruitment of new Directors. |
| **Board composition of Barclays UK and Barclays International in preparation for the legal entity stand up in 2018 under the structural reform programme** | The composition of the Barclays UK and Barclays International divisional boards. | ■ Considered the board skills matrix for Barclays UK and Barclays International. ■ Considered updates on the establishment of boards of Barclays UK and Barclays International and discussed the suitability of potential candidates identified to join those boards. | The Committee, in reviewing the skills matrices for Barclays UK and Barclays International following appointments to those boards, is of the view that there do not appear to be any skills gaps across the two boards, subject to the recruitment of a non-executive Director with retail banking experience to the Barclays UK board. It discussed opportunities for interaction between the Barclays PLC, Barclays UK and Barclays International boards and agreed to consider opportunities for engagement at board and committee level going forward. |
| **Executive succession planning and talent management** | Succession planning and talent management at Group Executive Committee level. | ■ Considered updates on, and progress being made against, Barclays’ Talent and Succession strategy, including monitoring diversity within the talent pipeline. ■ Discussed updates from the Group HR Director on Group Executive Committee succession plans, including assessing emergency cover, the existing talent pipeline and any potential gaps. ■ Considered individuals identified as potential Group Executive Committee successors and discussed next steps for their development. ■ Considered the succession plans for the most critical business unit and functional roles and discussed how to develop the high performing individuals identified. | The Committee welcomed the progress made in the Group Executive Committee succession planning, but noted that there was further work to be done in ensuring we are able to recruit and retain the best talent for the Group. It noted that the boards of Barclays UK and Barclays International, once established, would be able to take a more granular view of succession to some of the roles. The Committee also discussed the use of ex officio posts to both the Group Executive Committee and business executive committees to give senior individuals exposure to Group matters as a further way of developing those individuals to ensure a healthy pool of potential candidates in the succession pipeline. |

In addition, the Committee covered the following matters:
* considered the results of, and the action plan in respect of, the 2016 Board effectiveness review and the process for the 2017 Board and Committee effectiveness review
* reviewed and confirmed the effectiveness of the processes for authorising Directors’ conflicts of interests and Directors’ induction and training
* considered a report on the effectiveness of the Committee
* reviewed the Committee’s terms of reference.

Appointment and re-election of Directors
Board and Board Committee composition is a standing item for consideration at each Committee meeting. This includes the consideration of potential new non-executive Director appointments, both in respect of planned succession for known retirements and as a result of the ongoing review of the skills and experience needed on the Board in order for it to continue to operate effectively. The Committee frequently considers a skills matrix for the Board, which identifies the core competencies, skills, diversity and experience required for the Board to deliver its strategic aims and govern the Group effectively. Certain attributes identified in the skills matrix have a target weighting attached to them and these are regularly updated over time to reflect the needs of the Group. The Committee reviews the skills matrix when considering a new appointment to the Board, as well as reviewing the current and expected Board and Board Committee composition. This helps to determine a timeline for proposed appointments to the Board.

When recruiting a new non-executive Director, the specific skills that are needed are identified, for example, an individual with international experience, or recent history serving on a particular board committee. The Charter of Expectations contains the key competencies and skills expected of non-executive Directors, and these, in addition to other details such as expected time commitment, will be included in an individual specification. The Committee as a whole then considers curriculum vitae and references for potential candidates. Any candidates who are shortlisted will be interviewed by members of the Committee and, if applicable, key shareholders and Barclays’ regulators may be asked to provide feedback on the proposed appointment. The Board is updated on the progress of the recruitment and interview process, and any feedback from the interviews is provided to the Board alongside a recommendation for appointment.

Executive search firms Egon Zehnder and Buchanan Harvey were instructed to assist with the search for non-executive Directors during 2017. Neither firm has any other connection to Barclays, other than to provide recruitment services. Open advertising for Group Board positions was not used in 2017, as the Committee believes that targeted recruitment is the optimal way of recruiting for Board positions. Both of the firms used for non-executive Director recruitment have signed up to the Voluntary Code of Conduct for Executive Search Firms, which include measures designed to improve gender diversity on boards.

In 2017, Barclays announced the appointments of Sir Ian Cheshire, Matthew Lester and Mike Turner CBE as non-executive Directors, with each Director bringing specific skills and experience to fill the role previously identified by the Committee as well as all having extensive board-level experience (see pages 47 and 48 for details of each Director’s experience and background). Diane de Saint Victor and Steve Thieke both stood down from the Board with effect from the end of the 2017 AGM.

The Directors in office at the end of 2017 were subject to an effectiveness review, as described on page 78. Based on the results of the review the Board accepted the view of the Committee that each Director proposed for election or re-election continues to be effective and that they each demonstrated the level of commitment required in connection with their role on the Board and the needs of the business.

Group Board positions was not used in 2017, as the Committee believes that targeted recruitment is the optimal way of recruiting for Board positions. Both of the firms used for non-executive Director recruitment have signed up to the Voluntary Code of Conduct for Executive Search Firms, which include measures designed to improve gender diversity on boards.

In 2017, Barclays announced the appointments of Sir Ian Cheshire, Matthew Lester and Mike Turner CBE as non-executive Directors, with each Director bringing specific skills and experience to fill the role previously identified by the Committee as well as all having extensive board-level experience (see pages 47 and 48 for details of each Director’s experience and background). Diane de Saint Victor and Steve Thieke both stood down from the Board with effect from the end of the 2017 AGM.

The Directors in office at the end of 2017 were subject to an effectiveness review, as described on page 78. Based on the results of the review the Board accepted the view of the Committee that each Director proposed for election or re-election continues to be effective and that they each demonstrated the level of commitment required in connection with their role on the Board and the needs of the business.

77 Barclays PLC Annual Report 2017 home.barclays/annualreport

***

## Governance: Directors’ report
## What we did in 2017
## Board Nominations Committee report

| Committee allocation of time (%) | 2017 | 2016 |
|---|---|---|
| Corporate governance matters | 8 | 20 |
| Board and Committee composition | 42 | 36 |
| Succession planning and talent | 33 | 31 |
| Board effectiveness | 11 | 8 |
| Other | 6 | 5 |

| Member | Meetings attended/eligible to attend |
|---|---|
| John McFarlane | 3/3 |
| Mike Ashley | 3/3 |
| Tim Breedon | 3/3 |
| Crawford Gillies | 3/3 |
| Sir Gerry Grimstone | 3/3 |
| Reuben Jeffery III | 3/3 |
| Sir Ian Cheshire (from 9 May 2017) | 0/1\* |

\* Sir Ian Cheshire did not attend owing to prior commitments, but his views and comments were made available to, and considered by, the Committee.

### Committee role and responsibilities
The principal purpose of the Committee is to:
* support and advise the Board in ensuring that the composition of the Board and its Committees is appropriate and enables them to function effectively
* examine the skills, experience and diversity on the Board and plan succession for key Board appointments, planning ahead to deal with upcoming retirements and to fill any expected skills gaps
* provide Board-level oversight of the Group’s talent management programme and diversity and inclusion initiatives
* agree the annual Board effectiveness review process and monitor the progress of any actions arising
* ensure the Board has appropriate corporate governance standards and practices in place and keep these under review to ensure they are consistent with best practice.

The Committee’s terms of reference are available at home.barclays/corporategovernance

### The Committee’s work
The significant matters addressed by the Committee during 2017 are described below:

| Area of Focus | Matter Addressed | Role of the Committee | Conclusion/Action Taken |
|---|---|---|---|
| **Board and Board Committee composition** | The membership of the Barclays PLC Board and the current and future composition of the Board and its Committees. | ■ Reviewed the Board skills matrix and discussed the key skills and experience needed on the Board in the context of future strategic direction, including any areas requiring strengthening for skills and succession and conducted a search for non-executive Directors. ■ Considered the skills and composition of the Board in a post-structural reform environment. ■ Reviewed the membership, size and composition of Board Committees. | The Committee identified the need to appoint an additional non-executive Director with chairman or CEO experience to add further depth to the Board. During the year it recommended for appointment to the Board Mike Turner CBE, Sir Ian Cheshire (brought on as Chairman of Barclays UK) and Matthew Lester (following the Committee’s previous recommendation of an additional non-executive Director with accounting and auditing experience). The Committee agreed that a search would be conducted for an additional female non-executive Director to promote diversity of gender on the Board and in recognition of the Board’s commitment to achieving 33% female representation on the Board by 2020. The Committee agreed to review the role, purpose and composition of the Group Board once the Barclays UK and Barclays International Boards were fully constituted and operational boards. It noted that changes to Board Committee membership may take place once those boards, as well as the Group Service Company board, were operational so that a holistic view can be taken on appropriate memberships and cross memberships of boards and committees. Please refer to page 77 for more details of the Board’s approach to the recruitment of new Directors. |
| **Board composition of Barclays UK and Barclays International in preparation for the legal entity stand up in 2018 under the structural reform programme** | The composition of the Barclays UK and Barclays International divisional boards. | ■ Considered the board skills matrix for Barclays UK and Barclays International. ■ Considered updates on the establishment of boards of Barclays UK and Barclays International and discussed the suitability of potential candidates identified to join those boards. | The Committee, in reviewing the skills matrices for Barclays UK and Barclays International following appointments to those boards, is of the view that there do not appear to be any skills gaps across the two boards, subject to the recruitment of a non-executive Director with retail banking experience to the Barclays UK board. It discussed opportunities for interaction between the Barclays PLC, Barclays UK and Barclays International boards and agreed to consider opportunities for engagement at board and committee level going forward. |
| **Executive succession planning and talent management** | Succession planning and talent management at Group Executive Committee level. | ■ Considered updates on, and progress being made against, Barclays’ Talent and Succession strategy, including monitoring diversity within the talent pipeline. ■ Discussed updates from the Group HR Director on Group Executive Committee succession plans, including assessing emergency cover, the existing talent pipeline and any potential gaps. ■ Considered individuals identified as potential Group Executive Committee successors and discussed next steps for their development. ■ Considered the succession plans for the most critical business unit and functional roles and discussed how to develop the high performing individuals identified. | The Committee welcomed the progress made in the Group Executive Committee succession planning, but noted that there was further work to be done in ensuring we are able to recruit and retain the best talent for the Group. It noted that the boards of Barclays UK and Barclays International, once established, would be able to take a more granular view of succession to some of the roles. The Committee also discussed the use of ex officio posts to both the Group Executive Committee and business executive committees to give senior individuals exposure to Group matters as a further way of developing those individuals to ensure a healthy pool of potential candidates in the succession pipeline. |

In addition, the Committee covered the following matters:
* considered the results of, and the action plan in respect of, the 2016 Board effectiveness review and the process for the 2017 Board and Committee effectiveness review
* reviewed and confirmed the effectiveness of the processes for authorising Directors’ conflicts of interests and Directors’ induction and training
* considered a report on the effectiveness of the Committee
* reviewed the Committee’s terms of reference.

**Appointment and re-election of Directors**
Board and Board Committee composition is a standing item for consideration at each Committee meeting. This includes the consideration of potential new non-executive Director appointments, both in respect of planned succession for known retirements and as a result of the ongoing review of the skills and experience needed on the Board in order for it to continue to operate effectively. The Committee frequently considers a skills matrix for the Board, which identifies the core competencies, skills, diversity and experience required for the Board to deliver its strategic aims and govern the Group effectively. Certain attributes identified in the skills matrix have a target weighting attached to them and these are regularly updated over time to reflect the needs of the Group. The Committee reviews the skills matrix when considering a new appointment to the Board, as well as reviewing the current and expected Board and Board Committee composition. This helps to determine a timeline for proposed appointments to the Board.

When recruiting a new non-executive Director, the specific skills that are needed are identified, for example, an individual with international experience, or recent history serving on a particular board committee. The Charter of Expectations contains the key competencies and skills expected of non-executive Directors, and these, in addition to other details such as expected time commitment, will be included in an individual specification. The Committee as a whole then considers curriculum vitae and references for potential candidates. Any candidates who are shortlisted will be interviewed by members of the Committee and, if applicable, key shareholders and Barclays’ regulators may be asked to provide feedback on the proposed appointment. The Board is updated on the progress of the recruitment and interview process, and any feedback from the interviews is provided to the Board alongside a recommendation for appointment.

Executive search firms Egon Zehnder and Buchanan Harvey were instructed to assist with the search for non-executive Directors during 2017. Neither firm has any other connection to Barclays, other than to provide recruitment services. Open advertising for Group Board positions was not used in 2017, as the Committee believes that targeted recruitment is the optimal way of recruiting for Board positions. Both of the firms used for non-executive Director recruitment have signed up to the Voluntary Code of Conduct for Executive Search Firms, which include measures designed to improve gender diversity on boards.

In 2017, Barclays announced the appointments of Sir Ian Cheshire, Matthew Lester and Mike Turner CBE as non-executive Directors, with each Director bringing specific skills and experience to fill the role previously identified by the Committee as well as all having extensive board-level experience (see pages 47 and 48 for details of each Director’s experience and background). Diane de Saint Victor and Steve Thieke both stood down from the Board with effect from the end of the 2017 AGM.

The Directors in office at the end of 2017 were subject to an effectiveness review, as described on page 78. Based on the results of the review the Board accepted the view of the Committee that each Director proposed for election or re-election continues to be effective and that they each demonstrated the level of commitment required in connection with their role on the Board and the needs of the business.

2018 Diversity commitments
| Internally we are committed to: | Externally we are committed to: |
|---|---|
| Leadership accountability including gender diversity targets and the introduction of a gender task force | UN HeForShe |
| Focusing on a more inclusive work environment to ensure all colleagues have the flexibility to achieve personal and professional goals | Global Impact Champion |
| Ensuring we are developing leaders who are equipped to meet the demands of a more diverse workforce | Barclays role models |
| **Cultural change** | **Strategic partnerships** |
| Dynamic Working | Women’s Business Council |
| Progressive parental policies | 30% Club |
| Barclays’ Win Gender Network | |
| **Talent management** | |
| Leadership succession planning | |
| Ex-officio leadership roles | |
| Internal mobility | |
| **Leadership development** | |
| Unconscious bias training | |
| Global Women in Leadership Conference | |
| Enterprise Leaders summits | |

We acknowledge that there is still a lot of work to do, but our determination and commitment to building a diverse and inclusive workforce through attracting, retaining and developing world class professionals is paramount, and we are working hard to foster an environment in which all employees have the opportunity to succeed, regardless of race, religion or belief, age, gender, disability, sexual orientation, gender identity or nationality.

Further details on the gender pay gap and Barclays commitments to gender diversity and equality can be found at home.barclays/diversity

Under the Companies Act 2006, Barclays is required to report on the gender breakdown of our employees and ‘senior managers’. Of our global workforce of 79,900 (45,100 male, 34,800 female), 555 were senior managers (401 male, 154 female), which include Officers of the Group, certain direct reports of the Chief Executive, heads of major business units, certain senior Managing Directors, and directors on the boards of undertakings of the Group, but exclude individuals who sit as Directors on the Board of the Company. The definition of senior managers within this disclosure has a narrower scope than the Managing Director and Director female representation data provided above.

92 Barclays PLC Annual Report 2017 home.barclays/annualreport

***

## Governance: Directors’ report
## What we did in 2017
## Board Risk Committee report

The Committee continued to monitor UK economic trends, consumer behaviour and portfolio performance, and a prudent approach to lending was maintained.

During the year, the Committee also evaluated the financial and capital impacts of operational risk. The Committee has noted, and encouraged, the efforts by management to improve the Risk and Control Self Assessment programme in Operational risk. This work is important in an environment of heightened cyber risk and increased operational complexity as the Bank implements structural reform.

As in past years, the Committee reviewed the execution by management of material regulatory programmes and initiatives. These included the BCBS239 effort to improve the quality and reliability of data and information, and IFRS 9, a new standard for the estimation of credit impairment.

### Committee performance
The performance of the Committee during 2017 was assessed as part of an internal annual Committee effectiveness review. The conclusion of my Board colleagues was that the Committee is considered to operate effectively and that the Board continues to have a high degree of confidence in the diligence and coverage of the Committee. Feedback from the review indicated that the Committee was both effective and influential in identifying areas of risk where Barclays needs to change its performance or adjust its risk profile.

One of the areas identified for improvement was to consider whether the Committee would benefit from deeper expertise by including a member with a risk function management background and we will give further consideration to this in 2018. The review also highlighted the need to ensure that the way in which the Committee works with the Board Reputation and Board Audit Committees continues to capture all significant issues effectively while minimising any overlap. I continued to work closely with my fellow Board Committee Chairmen during 2017, particularly with the Board Audit Committee Chairman in order to clarify the responsibility of each committee in relation to operational risk matters during the year which each Committee has a role in overseeing. We will work to embed this further in 2018. The Committee will also focus on ensuring there is a framework in place to ensure clear allocation of responsibilities regarding the Committee’s interaction with the risk committees of Barclays UK and Barclays International under the new Group structure.

You can read more about the outcomes of the Board effectiveness review on page 78.

### Looking ahead
2018 is important for Barclays as it completes the restructuring required under the structural reform programme. As a result, the firm will have two important subsidiary legal entities in Barclays UK, the core domestic franchise in the UK, and Barclays International, the Corporate and Investment Banking and international consumer businesses of the firm. These will be in addition to the US Intermediate Holding Company, which is part of Barclays International. The Committee will pay close attention to the executive’s management of risk within and across these entities.

We expect that credit and employment conditions in the UK will continue to be uncertain, as future trade and economic arrangements with the EU take shape. In the US, the impact of the corporate tax reform on the health of companies and consumers will need assessment. Lastly, the Committee will continue to monitor the risk to Barclays from volatility in financial markets, which have experienced many years of steady asset appreciation.

**Tim Breedon**
**Chairman, Board Risk Committee**
**21 February 2018**

| Committee allocation of time (%) | 2017 | 2016 |
|---|---|---|
| Risk profile/risk appetite (including capital and liquidity management) | 53 | 52 |
| Key risk issues | 26 | 26 |
| Internal control/risk policies | 12 | 8 |
| Other (including remuneration and governance issues) | 9 | 14 |

| Member | Meetings attended/eligible to attend |
|---|---|
| Tim Breedon | 9/9 |
| Mike Ashley | 9/9 |
| Reuben Jeffery | 9/9 |
| Diane Schueneman | 9/9 |
| Matthew Lester (from 1 September 2017) | 3/3 |
| Steve Thieke (to 10 May 2017) | 3/3 |

### Committee role and responsibilities
The Committee’s main responsibilities include:
* reviewing and recommending to the Board the Group’s financial and operational risk appetite
* monitoring the Group’s financial and operational risk profile
* commissioning, receiving and considering reports on key financial and operational risk issues.

The Committee’s terms of reference are available at home.barclays/corporategovernance

65 Barclays PLC Annual Report 2017 home.barclays/annualreport

***

## What we did in 2017
## Board Risk Committee report

The significant matters addressed by the Committee during 2017 are described below:

| Area of Focus | Matter Addressed | Role of the Committee | Conclusion/Action Taken |
|---|---|---|---|
| **Risk appetite and stress testing**, i.e. the level of risk the Group chooses to take in pursuit of its business objectives, including testing whether the Group’s financial position and risk profile provide sufficient resilience to withstand the impact of severe economic stress. | The risk context to Medium Term Plan (MTP), the financial parameters and constraints and mandate and scale limits for specific business risk exposures; the Group’s internal stress testing exercises, including scenario selection and financial constraints, stress testing themes and the results and implications of stress tests, including those run by the Bank of England (BoE). | ■ Assessed the risk context for the 2017 MTP, including general economic and financial conditions and how these had been reflected in planning assumptions. ■ Debated the assumptions, parameters and results of the internal stress test of the risk appetite of the 2017 MTP. ■ Discussed and agreed mandate and scale limits for Credit, Market and Treasury and capital risk. ■ Evaluated the BoE annual cyclical stress test results, and the results of a stress test under the BoE biennial exploratory scenario. ■ Observed and debated regulatory and market reaction to the publication of BoE stress test results. ■ Considered and approved internal stress test themes and the financial constraints and scenarios for stress testing risk appetite for the 2018 MTP. ■ Considered the Federal Reserve Board’s feedback on the US Intermediate Holding Company’s Comprehensive Capital Analysis and Review (CCAR) capital plan following the submission of the CCAR stress test results. | The Committee recommended the proposed risk appetite for 2017 to the Board for approval, although noted that this may need to be revisited to take account of the impact of IFRS 9 in due course. It encouraged management to make further progress on enhancing infrastructure used to conduct the internal stress test. The Committee approved the 2017 annual stress test results for submission to the BoE, including the range of management actions and overlays designed to mitigate risk impacts. Similarly, the Committee approved the results of the stress test under the BoE biennial exploratory scenario and recommended that the results should be taken into consideration for strategy projections. In recommending the internal stress test and risk appetite for the 2018 MTP, the Committee noted and considered that the severity of the internal stress test had been higher than normal, which provided added resilience to the various challenges for the MTP, such as macroeconomic issues. |
| **Capital and funding**, i.e. having sufficient capital and financial resources to meet the Group’s regulatory requirements and its obligations as they fall due, to maintain its credit rating, to support growth and strategic options. | The trajectory to achieving required regulatory and internal targets and capital and leverage ratios. | ■ Debated, on a regular basis, capital performance against plan, tracking the capital trajectory, any challenges and opportunities and regulatory policy developments. ■ Assessed, on a regular basis, liquidity performance against both internal and regulatory requirements. ■ Regularly monitored capital and funding requirements on a legal entity basis. ■ Assessed the possible implications of litigation and investigations on the Group’s liquidity position, including a review of the Bank’s liquidity risk control framework. ■ Monitored the funding risk and capital volatility associated with the Barclays pension scheme. | The Committee supported the forecast capital and funding trajectory and the actions identified by management to manage the Group’s capital position. It approved the proposed capital and liquidity processes for Barclays UK for submission to the regulator as part of its banking licence application. The Committee considered and approved the Group capital adequacy assessment together with the methodologies and results of the reverse stress testing for the submission of the 2017 Internal Capital Adequacy Assessment Process (ICAAP) as well as the Group’s 2017 Individual Liquidity Adequacy Assessment Process (ILAAP). |
| **Political and economic risk**, i.e. the impact on the Group’s risk profile of political developments and macroeconomic conditions. | The potential impact on the Group’s risk profile of political developments, such as elections in other European countries, as well as continuing to monitor the impact of the aftermath of the UK’s EU Referendum. | ■ Monitored progress on actions to mitigate the risk of the potential impact of negative interest rates in the UK on Barclays. ■ Monitored the potential impacts of Brexit, including a ‘hard’ Brexit. ■ Considered trends in the UK economy, including risk of inflation amid negative real wage growth. ■ Continued to monitor the risks relating to South Africa while Barclays still had control of Barclays Africa Group Limited (BAGL). ■ Monitored Barclays’ exposures to certain products, and with particular focus on redenomination risk, and the risk of a single country leaving the Euro. | Following the further sell-down of the equity stake in BAGL and the subsequent proportionate regulatory consolidation, the Committee agreed that South Africa should be removed as an ongoing risk theme, although it continued to maintain oversight of any emerging risk. It also agreed to remove negative interest rates as a key risk theme on the basis that the actions previously identified and agreed to mitigate the risk were nearing completion. The Committee suggested that monitoring geopolitical risks in Europe should be broadened to include other regions, but requested that China continue to be reported as a separate geopolitical risk theme. |
| **Credit risk**, i.e. the potential for financial loss if customers fail to fulfil their contractual obligations. | Conditions in the UK housing market, particularly in London and the South East; levels of UK consumer indebtedness, particularly in the context of the risk of inflation and negative real wage growth; and the performance of the UK and US Cards businesses, including levels of impairment. | ■ Continued to assess and monitor conditions in the UK property market in case of signs of stress. ■ Evaluated how management was tracking and responding to rising levels of consumer indebtedness, particularly unsecured credit in both the UK and US. ■ Discussed the PRA’s statement on consumer credit and unsecured lending in the UK, and considered Barclays’ response to the PRA statement. ■ Scrutinised the performance of the UK and US Cards businesses, including the level of impairment. ■ Reviewed and approved proposals for frameworks relating to Securities Financial Limits and Maximum Exposure Governance. ■ Scrutinised a strategic review of business activity in the Corporate and Investment Bank. | The Committee focused on effective collections capability as an important tool of risk management. The Committee encouraged management to carry on with its conservative approach to UK lending. The Committee approved changes to the risk appetite levels for US Cards. The Committee requested more granular detail of the impact of strategy changes on risk limits and oversight. |
| **Operational risk**, i.e. costs arising from human factors, inadequate processes and systems or external events. | The Group’s operational risk capital requirements and any material changes to the Group’s operational risk profile and performance of specific operational risks against agreed risk appetite. | ■ Tracked operational risk key indicators via regular reports from the Head of Operational Risk. ■ Debated specific areas of emerging risks, including conduct risk, cyber, execution risk, technology and data, including the controls that had been put in place for managing and avoiding such risks. | The Committee focused its attention on the financial and capital impacts of operational risk. In relation to fraud, it encouraged management to further integrate strategy, models and operations. |
| **Risk framework and governance** | The frameworks, policies and talent and tools in place to support effective risk management and oversight. | ■ Monitored progress on the implementation of an enhanced modelling framework, including receiving updates from Barclays Internal Audit on findings in relation to specific modelling processes. ■ Tracked the progress of significant risk management projects, including the progress on achieving compliance with the Basel Committee for Banking Supervision 239 (BCBS239) regulation for risk data aggregation principles as well as the roll out of the Risk and Control Self-Assessment (RCSA) process across the Group. Please see the ‘Governance in action’ box on page 68 for further details about the Committee’s role in overseeing the RCSA process. ■ Assessed risk management matters raised by Barclays’ regulators and the actions being taken by management to respond. ■ Endorsed Legal risk and Model risk, as new Principal Risks under the Enterprise Risk Management Framework (ERMF), forming part of the Committee’s roles and responsibilities in future. ■ Reviewed the implementation of the ERMF during 2017 which had been designed to address feedback from the PRA following a review of the ERMF. | The Committee requested a gap analysis together with an action plan to remediate specific weaknesses identified in the internal audit in relation to modelling. The Committee assessed during the year the Group’s risk management capability in the form of a Risk Capability Scorecard and reviewed and approved proposals for the external third party evaluation which was scheduled to be performed in early 2018. |
| **Remuneration** | The scope of any risk adjustments to be taken into account by the Board Remuneration Committee when making remuneration decisions for 2017. | ■ Debated, in a joint meeting with the Board Reputation Committee, the Risk function’s view of 2017 performance, making a recommendation to the Board Remuneration Committee on the financial and operational risk factors to be taken into account in remuneration decisions for 2017. | The Committee discussed the report of the Chief Risk Officer and considered the proposal put forward in relation to the impact of relevant risk factors in determining 2017 remuneration decisions, noting that it should also include positive events such as the 2017 Banking Standards Board report which had reported improvements on 2016. |

67 Barclays PLC Annual Report 2017 home.barclays/annualreport

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## Risk review
## Risk performance
## Reputation risk

Reputation risk was re-designated as a Principal Risk under Barclays’ Enterprise Risk Management Framework with effect from January 2017.

Reputation risk may arise from any business decision or activity. It may also arise as a result of issues and incidents relevant to other Principal Risks, in particular other non-financial risks e.g. conduct or operational risk. Reputation risks and issues are identified via regular information gathering from within the business and from external stakeholders. Some risks and issues are specific to Barclays, while others are also relevant to the banking sector more generally.

Barclays has set tolerances for reputation risk, which take into account the risks arising from specific events or decisions and longer-term strategic themes. The primary responsibility for managing reputation risk lies with each business and function, where there are processes in place to identify, assess and manage reputation risks and issues.

There are circumstances, however, where it is necessary to escalate to Group level the evaluation of the reputation risk associated with particular decisions beyond an individual, business or function. The GRC is the most senior executive body responsible for reviewing and monitoring the effectiveness of Barclays’ management of reputation risk.

### Summary of performance in the period
Barclays is committed to identifying reputation risks and issues as early as possible and managing them appropriately. Throughout 2017, reputation risks and issues were overseen by the Board Reputation Committee (RepCo), which reviews the processes and policies by which Barclays identifies and manages reputation risk.

RepCo reviewed risks raised by the businesses and considered whether management’s proposed actions, for example attaching conditions to proposed client transactions or increased engagement with impacted stakeholders, were appropriate to mitigate the risks effectively. RepCo received regular updates with regard to key reputation risks and issues, including: legacy conduct issues; Barclays’ association with sensitive sectors; cyber and data security; fraud and scams that could impact Barclays customers and the resilience of key Barclays systems and processes.

In 2017, the central reputation management team received 581 referrals from across the businesses (625 referrals in 2016) for consideration. These referrals covered a variety of sectors including, but not limited to, defence, fossil fuels and mining.

As part of Barclays 2017 Medium Term Planning process, material reputation risks associated with strategic and financial plans were also assessed.

The effectiveness of the supporting governance arrangements and management information, including the impact of other Principal Risks on Barclays’ reputation, were reviewed by the Board and senior management during 2017. Following this, RepCo requested certain refinements to reputation risk reporting and processes, which are in progress.

| Area of Focus | Matter Addressed | Role of the Committee | Conclusion/action taken |
|---|---|---|---|
| **Conduct risk** | Monitoring the risks that can arise from the inappropriate supply of financial services, including instances of wilful or negligent misconduct. | ■ Discussed updates from management on Conduct risk and considered performance against Conduct risk indicators at each meeting. ■ Discussed the specific Conduct risks associated with certain business areas and the status of initiatives in place to address those risks and further strengthen the culture of the business. ■ Received reports from Barclays Internal Audit (BIA) in respect of internal audit activities on conduct risk management matters, including details of any unsatisfactory audit reports and remediation steps identified. ■ Discussed and approved the Conduct Risk Framework, with Conduct risk having been identified as a Principal Risk under the Barclays Enterprise Risk Management Framework (ERMF). ■ Received forward looking information on regulatory developments, including the issuance of new consultations by regulators, that might have a Conduct risk impact on Barclays in the future. ■ Approved the annual Compliance Plan. ■ Considered and approved the proposed methodology for calculating Conduct risk adjustments to incentive pools. | In line with its recategorisation under the ERMF, the Committee adopted Board level oversight of financial crime risk and conducted a Deep Dive into this area. The Conduct dashboard report was updated to include financial crime information and metrics, and the Committee was encouraged by management’s open and transparent approach to engaging with regulators on financial crime matters. The Committee considered the differing regulatory requirements placed