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Barclays Internal Controls Over Financial Reporting Resolution Plan Public Section July 2014 In many instances, the information contained in this US resolution plan is derived from systems used for internal management purposes that were not designed for resolution pplanninglanning and are not subject to Barclays internal controls over financial reporting. Although Barclays believesbelieves the information presented is accurate, this resolution plan necessarily contains certain summaries and data, particularly projections, estimates and other forward-looking statements that may not reflect actual results. © Barclays Bank PLC 20134 Table of Contents 1 Summary of resolution plan ............................................................................................................................................................3 1.1 Introduction ..................................................................................................................................................................................3 1.2 Material entities ...........................................................................................................................................................................6 1.3 Core business lines .....................................................................................................................................................................8 1.4 Summary financial information regarding assets, liabilities, capital and major funding sources ..................... 10 1.5 Derivative and hedging activities ......................................................................................................................................... 14 1.6 Payment, clearing and settlement systems for US operations .................................................................................... 15 1.7 Global operations ..................................................................................................................................................................... 16 1.8 Material supervisory authorities .......................................................................................................................................... 17 1.9 Principal officers ....................................................................................................................................................................... 19 1.10 Corporate governance structure and processes related to resolution planning ................................................. 20 1.11 Material management information systems .................................................................................................................. 21 1.12 Description of resolution strategy .................................................................................................................................... 22 2 Public Section1 1 Summary of resolution plan 1.1 Introduction Barclays2 has developed a comprehensive and robust resolution plan for its US operations as mandated by the Resolution Plan Final Rule3 (Final Rule) issued pursuant to Section 165(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA). Section 165(d) of the DFA and the Final Rule specifies that the top tier holding company of a foreign banking organization4 that has $50bn or more in worldwide consolidated assets is a covered company subject to US resolution plan requirements set forth in the Final Rule. A foreign covered company must submit a resolution plan annually that provides for rapid and orderly resolution in the event of material financial distress4 at, or failure of, such covered company in compliance with the Final Rule. Barclays PLC (BPLC), a public limited company incorporated and domiciled in England and Wales, is a bank holding company under section 8(a) of the International Banking Act of 1978 (IBA). BPLC has over £1,312bn in global consolidated assets as of 31 December 2013, which exceeds the $50bn threshold, and is therefore a covered company subject to the resolution planning requirements of the Final Rule. Barclays operates a focused international banking model through which it seeks to build strong and stable relationships with customers and clients by meeting a wide range of their needs across different locations. Barclays’ presence in the US dates back to the 1890s. Barclays’ US business is critical to the continued growth of the organization and enables Barclays to serve a global client base, diversify income across geographies, access important strategic markets and achieve growth objectives. Due to Barclays' size,5 Barclays was among the covered companies required to submit its initial US resolution plan on or before 1 July 2012. As determined by the Board of Governors of the Federal Reserve System (FRB) and the Federal Deposit Insurance Corporation (FDIC), Barclays’ second US resolution plan submission was due on or before 1 October 2013 (Barclays’ 2013 US Resolution Plan). Barclays is required pursuant to the Final Rule to file its third resolution submission (Barclays’ 2014 US Resolution Plan) on or before 1 July 2014. Barclays is supportive of reform efforts to promote global financial stability and mitigate any repercussive impact from the distress or failure of any individual large financial institution. The DFA was developed in response to the 2008 financial crisis caused by the multiple idiosyncratic failures of individual institutions and their effect on the global financial ecosystem and on broader global economies. As a Global Systemically Important Financial Institution (G-SIFI), as designated by the Financial Stability Board (FSB), Barclays is subject to requirements for resolvability assessments, recovery and resolution planning, and requirements regarding additional loss absorption capacity. Regulatory supervision regarding recovery and resolution planning includes stronger mandates, increased resources and powers, and higher expectations for risk management functions, data aggregation capabilities, risk governance and internal controls. In early May 2014, BPLC announced its strategy to reposition, simplify and rebalance the Group structure and business units. Barclays will be a focused international bank, with four core businesses: § Personal and Corporate Banking; § Barclaycard; § Africa Banking; and 1 Throughout this Section: “US” means the United States as defined in the Final Rule; “UK” means the United Kingdom and the territories under its jurisdictions; “$” or “USD” means the US Dollar; “£” or “GBP” means the UK pound sterling; and “€” or “EUR” means the official currency of the European Union. 2 “Barclays” and “Group” are terms which are used to refer to Barclays PLC together with its subsidiaries and/or Barclays Bank PLC together with its subsidiaries. The term “Company”, “Parent Company”, “Parent”, “covered company”, “top-tier holding company” or “BPLC” refers to Barclays PLC and the term “Bank” or “BBPLC” refers to Barclays Bank PLC. 3 See Federal Reserve System Regulation QQ, 12 CFR Part 243, and Federal Deposit Insurance Corporation Regulation 12 CFR Part 381 (the “Final Rule”). 4 See Final Rule definition. 5 Barclays’ worldwide consolidated assets exceeded $250bn as per the Final Rule requirement. 3 § Investment Bank. However, Barclays will be selling or winding down assets that do not fit the strategic objectives or returns criteria underlying Barclays’ strategic review of the firm. These assets will be handled through a new unit called “Barclays Non-Core”. The 2014 US resolution strategy of winding down BCI will be unchanged by the strategy announced in early May 2014. BCI will remain the primary operating entity in the US. However, Barclays will be divesting or winding down approximately $150bn in risk weighted assets (RWA) throughout the global investment bank which will include non-standard FICC derivatives, non-core commodities activities and certain emerging markets products. The rebalancing of returns and the efficiencies of simplifying operations as a part of the Barclays restructuring, combined with the implementation of a US intermediate holding company (the IHC) by 1 July 2016 as mandated by the Enhanced Prudential Standards for Bank Holding Companies and Foreign Banking Organizations Final Rule6 (EPS Rule) issued pursuant to Section 165 of the DFA, may impact the designation of core business lines and material entities in future US resolution plans as well as potentially impact the interconnectedness analysis. In the event that an action under Barclays’ restructuring will have a material effect on the resolution plan, Barclays will provide a notice to the FRB and the FDIC in accordance with the Final Rule. Barclays’ goal remains unchanged: to create a Barclays that does business in the right way with the right values and delivers a return on equity above the cost of equity on a sustainable basis while ensuring a rapid and orderly resolution of its US operations in the event of a material financial distress and minimizing risk to the financial stability of the US. In addition to the development of resolution plans, implementation of the DFA and other regulatory reform initiatives have contributed to a more stable global financial system since 2008. Regulatory authorities, including the FRB and the FDIC in the US and the Bank of England (BoE) and the Prudential Regulation Authority (PRA) in the UK, actively work to address cross-border considerations in order to develop sound policies and regulations. The industry has been further shaped by initiatives aimed at reducing
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