Barclays PLC Value creation Annual Report 2001 a Barclays PLC Our new format Annual Report is a summary of where Barclays is today and where we aspire to be in the coming years. 1 Chairman’s Statement 2 Group Chief Executive’s Report 3 Business Performance Group Chief Executive 4 Financial Performance Group Finance Director 5 Building on Barclays Assets 6 The Results Barclays PLC Annual Report 2001 Running your company 2 Increasing shareholder value 3 Tackling a changing global marketplace 4 Building a profitable organisation 4 Meeting the challenge of competition 4 Achieving operational excellence 5 Creating tomorrow’s value 4 Managing risk 5 Shaping our destiny 4 Our stakeholders 5 Business performance 6 Barclays Africa 10 Personal Financial Services 6 Barclays Capital 10 Woolwich 6 Barclays Global Investors 11 Barclays Private Clients 7 Barclaycard 8 Business Banking 9 Financial performance 12 A year of value creation 14 Goals 14 Performance versus goals 14 Investing in the foundations of value 17 Customers 21 Brand 17 Investing in the community 21 Barclays vision for equality and diversity 18 Promoting financial inclusion 22 The Group Executive Committee 19 Investing in a sustainable future 22 Employees 20 A good corporate citizen 23 Presentation of information 26 Directors’ report 92 Financial data 27 Corporate governance 94 Business description 30 Auditors’ reports 105 Financial review 34 Consolidated accounts Barclays PLC 106 Other information 87 Shareholder information 202 Directors and officers 90 Group senior management and principal offices 209 The report this year presents the information in six Chapters. The flap opens out to provide an easy-to-use guide with colour coding – this can be used as a contents list or as a bookmark. Registered No. 48839 This document contains certain forward-looking statements within the meaning of Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, with respect to certain of the Group’s plans and its current goals and expectations relating to its future financial condition and perform- ance. These forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as ‘anticipate’, ‘tar- get’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’, or other words of similar meaning. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including UK domestic and global economic and business conditions, market related risks such as changes in interest rates and exchange rates, the policies and actions of regulatory authorities, changes in legislation and the impact of competition, a number of which are beyond the Group’s control. As a result, the Group’s actual future results may differ materially from the plans, goals and expectations set forth in the Group’s forward-looking state- ments. For a discussion of some of the factors that may cause actual future results and developments to differ materially from these forward-looking statements, see Risk factors on page 89. Any forward-looking statements made by or on behalf of the Group speak only as of the date they are made. Barclays does not undertake to update forward-looking statements to reflect any changes in the Group’s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any further disclosures Barclays may make in documents it files with the US Securities and Exchange Commission. An introduction to Barclays Our mission Our mission is to be an innovative, In order to do this we will: customer-focused Group that delivers superb products and » deliver a superior customer services, ensures excellent careers experience and offer high for our people and contributes value products and services positively to the communities that consistently exceed our in which we live and work. customers’ expectations; Our primary goal » attract, develop and retain Our primary goal is consistently to talented, performance-oriented deliver top-quartile total shareholder people by providing employment return versus our peers over time. opportunities that are among the best in the financial services Our beliefs industry; Our operating philosophy is ‘managing for value’. The » play a full and active role in strategies we follow and the the communities in which actions we take are aligned to we operate, to ensure mutual value creation for all stakeholders. benefit from our success. We believe that value is created and sustained for shareholders by managing customer, employee and community relationships in outstanding ways. Barclays PLC Annual Report 2001 1 Chapter 1 Chairman’s Statement Barclays is focused on safeguarding In 2001, we experienced the impact of the foot-and-mouth crisis in the UK and witnessed the terrible events in New York the financial interests of our and Washington DC. They remind us that we have a privileged shareholders and customers, looking role in supporting our shareholders, our customers and the wider community. Our stakeholders rely on us through after our staff and contributing to the difficult times as well as good ones. They expect of us the wellbeing of the communities integrity, professionalism and expertise. We must be worthy of their trust – without them, Barclays would not exist. That is in which we live and work. why we strive to reach the highest ethical and moral standards in everything we do. Stakeholders are examining the behaviour of large corporations more and more closely these days. We welcome that. Our intention is to lead in governance practices. Transparency is essential if we are to retain the confidence of our stakeholders. That is why we have changed the format of our annual report. You will still find the key facts about our current operations and business performance. But rather than simply reporting on the Group’s financial results, we want to share with you a frank view of the characteristics of our business, the changes it is undergoing, and where we are taking it in the long term. I would welcome views on this new approach to the 2001 annual report. Running your company The Board is made up of 13 Directors – four executive Directors, eight non-executive Directors and the Chairman. The Directors are responsible for overseeing and maintaining due diligence on the strategy, policy, investments, operations and controls of the Barclays Group, to further the interests of shareholders. In 2001, Peter Jarvis retired from the Board. Peter made an important contribution over many years; he bore the heavy burden as Chairman of the Remuneration Committee. We were delighted to welcome Graham Wallace, Chief Executive of Cable and Wireless plc, to the Board. The Chairman and non-executive Directors are responsible for appointing the Group Chief Executive and for assessing his performance. We are also responsible for appointing, on the recommendation of the Group Chief Executive, the senior executive management of the Barclays Group. Barclays is well capitalised and has a comprehensive set of procedures to control and manage risk. We have a strong internal audit function. Our activities are assessed by our auditors, and supervised by central banks and regulatory authorities around the world. 2 Barclays PLC Annual Report 2001 Sir Peter Middleton Chairman The Financial Services Authority (FSA) in the UK is Barclays all these men and women. This is the single most important lead regulator. In all, we have some 150 financial regulators contribution we can make to the public good. As you will around the world – and that excludes regulators in other see in this report, we aim to continue to create value for fields who oversee our activities. shareholders by managing our customer, employee and community relations in outstanding ways. We are building The regulatory system in the UK changed significantly during a world-class financial services organisation. 2001. The Financial Services & Markets Act 2000 came into force on 1st December 2001, finally merging the roles Our people are key to this, and they have done a magnificent of the various UK regulators. The FSA has now taken on the job in a difficult year. We continue to invest in and develop our responsibilities of self-regulating organisations such as the people, wherever we operate in the world. To stay competitive, Securities & Futures Authority and Investment Management we need to keep on raising our game. We can and we will – Regulatory Organisation. The result is a unified regulatory and in the following pages, Group Chief Executive Matthew regime in our home market. The FSA has introduced new Barrett explains how. regulatory procedures and rules relating to governance, compliance and controls. Sir Peter Middleton It is in the best interests of all stakeholders to have an Chairman effective and independent regulator such as the FSA in the UK. However, higher and growing costs of compliance with regulation are a key issue for the financial services industry at a time of increasing domestic and international competition. We are in an era of escalating regulation, often as a reaction to sudden or unexpected events. It is crucial for the future of banking that regulators strike the right balance between, on the one hand, protecting the safety and security of the system and customers and, on the other, encouraging innovation and making it easier for customers to deal with financial institutions. We must avoid a regime that simply increases the costs of doing business, which ultimately leads to higher prices and could constitute a barrier to entry and depress competition. Barclays plays a significant role in the UK economy, and we will continue to work with the authorities to help influence a proper balance.