20-F 1 fy2019arbplc.htm 20-F
 
 
 
 
 
 
 
UNITED STATES
SECURITIES
 
AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 20-F
(Mark One)
 
 
REGISTRATION
 
STATEMENT PURSUANT
 
TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
 
OR
 
 
ANNUAL REPORT PURSUANT TO
 
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
 
OF 1934
 
 
For the fiscal year ended
 
December 31,
 
2019
 
OR
 
 
TRANSITION REPORT PURSUANT
 
TO SECTION 13 OR
 
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period
 
from
 
to
 
OR
 
 
SHELL COMPANY REPORT PURSUANT
 
TO SECTION 13 OR 15(d) OF
 
THE SECURITIES EXCHANGE ACT OF 1934
 
Date of event requiring
 
this shell
 
company
 
report
 
 
Commission file number
Barclays PLC
1-09246
 
BARCLAYS PLC
 
(Exact Name of Registrant as Specified in its Charter)
 
ENGLAND
 
(Jurisdiction of Incorporation
 
or Organization)
 
1 CHURCHILL PLACE, LONDON E14 5HP,
 
ENGLAND
 
(Address of Principal Executive Offices)
 
GARTH WRIGHT, +44 (0)20 7116
 
3170, GARTH.WRIGHT@BARCLAYS.COM
 
1 CHURCHILL PLACE, LONDON E14 5HP,
 
ENGLAND
 
(Name, Telephone,
 
E-mail and/or Facsimile number
 
and Address of Company
 
Contact Person)
 
Securities registered or to be registered
 
pursuant to Section 12(b)
 
of the Act:
 
 
Title of each class
 
Trading
 
symbol(s)
 
Name of each exchange
on which registered
 
25p ordinary
 
shares*
Not applicable*
New York
 
Stock Exchange*
 
 
Title of each class
 
Trading
 
symbol(s)
 
Name of each exchange
on which registered
 
American Depositary Shares, each representing
 
four 25p
 
ordinary shares
BCS
New York
 
Stock Exchange
4.338% Fixed
 
-to-Floating Rate Senior Notes due 2024
BCS24A
New York
 
Stock Exchange
Floating Rate Senior Notes due 2024
BCS24B
New York
 
Stock Exchange
4.972%
 
Fixed-to-Floating Rate Senior Notes due 2029
BCS29
New York
 
Stock Exchange
4.610%
 
Fixed-to-Floating Rate Senior Notes due 2023
BCS23B
New York
 
Stock Exchange
Floating Rate Senior Notes due 2023
BCS23C
New York
 
Stock Exchange
4.375%
 
Fixed Rate Subordinated Notes due 2024
BCS24
New York
 
Stock Exchange
3.65% Fixed Rate Senior Notes due 2025
BCS25
New York
 
Stock Exchange
2.875%
 
Fixed Rate Senior Notes due 2020
BCS20B
New York
 
Stock Exchange
5.25% Fixed Rate Senior Notes due 2045
BCS45
New York
 
Stock Exchange
3.25% Fixed Rate Senior Notes due 2021
BCS21B
New York
 
Stock Exchange
4.375%
 
Fixed Rate Senior Notes due 2026
BCS26
New York
 
Stock Exchange
5.20% Fixed Rate Subordinated
 
Notes due 2026
BCS26A
New York
 
Stock Exchange
3.20% Fixed Rate Senior Notes due 2021
BCS21
New York
 
Stock Exchange
Floating Rate Senior Notes due 2021
BCS21A
New York
 
Stock Exchange
Floating Rate Senior Notes due 2023
BCS23
New York
 
Stock Exchange
3.684% Fixed Rate Senior Notes due 2023
BCS23A
New York
 
Stock Exchange
4.337%
 
Fixed Rate Senior Notes due 2028
BCS28
New York
 
Stock Exchange
4.950% Fixed Rate Senior Notes due 2047
BCS47
New York
 
Stock Exchange
4.836% Fixed Rate Subordinated
 
Callable
 
Notes due 2028
BCS28A
New York
 
Stock Exchange
3.250% Fixed Rate Senior Notes due 2033
BCS33
New York
 
Stock Exchange
3.932%
 
Fixed-to-Floating Rate Senior Notes due 2025
BCS25A
New York
 
Stock Exchange
5.088%
 
Fixed-to-Floating Rate Subordinated Notes due 2030
BCS30
New York
 
Stock Exchange
*
Not for trading, but in connection with the registration of
 
American Depository Shares, pursuant to the requirements
 
to the Securities and Exchange
Commission.
 
Securities registered or to be registered
 
pursuant to Section 12(g)
 
of the Act:
 
None
 
Securities for which there is a reporting
 
obligation pursuant to Section 15(d)
 
of the Act:
 
None
 
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common
 
stock as
 
of the close of the period covered
 
by the annual
report
 
.
 
 
25p ordinary
 
shares
17,322,057,836
Indicate by check mark if the registrant is a well-known
 
seasoned issuer, as defined in Rule 405 of the Securities Act.
 
Yes
 
No
 
If this report is an annual or transition report,
 
indicate by check mark if the registrant is not required
 
to file
 
reports pursuant
 
to Section 13 or 15(d)
 
of the
Securities Exchange Act 1934.
 
 
 
Yes
 
No
 
Note – Checking the box above
 
will not relieve any registrant required
 
to file
 
reports pursuant
 
to Section 13 or 15(d)
 
of the Securities
 
Exchange Act of 1934
from their obligations under
 
those Sections.
 
Indicate by check mark whether
 
the registrant (1) has filed all reports required
 
to be filed by Section 13 or 15(d)
 
of the Securities
 
Exchange Act of 1934
during the preceding
 
12 months (or for such shorter
 
period that the
 
registrant was required
 
to file
 
such reports), and (2)
 
has been subject to
 
such filing
requirements for
 
the past 90 days.
 
Yes
 
No
 
Indicate by check mark whether
 
the registrant has submitted electronically every Interactive Data File required
 
to be submitted pursuant to Rule 405 of
Regulation S-T
 
(§ 232.405
 
of this
 
chapter) during
 
the preceding 12 months (or for such shorter period that the registrant was required to submit and
submit such files).
 
Yes
 
No
 
Indicate by check mark whether
 
the registrant is a large accelerated filer, an accelerated filer,
 
a non-accelerated filer, or an emerging
 
growth
 
company. See
definition of “large accelerated filer”, “accelerated
 
filer” and “emerging
 
growth
 
company” in Rule 12b
 
-2
 
of the Exchange Act:
 
 
Large Accelerated Filer
Accelerated Filer
Non-Accelerated
 
Filer
Emerging
 
growth
 
company
If an emerging growth
 
company
 
that prepares its
 
financial statements in accordance
 
with U.S.
 
GAAP,
 
indicate by check mark if the registrant has elected
not to use the extended transition period
 
for complying
 
with any new or revised financial accounting standards† provided
 
pursuant to Section
 
13(a)
 
of the
Exchange Act.
 
† The term “new or revised financial accounting
 
standard” refers to any update issued by the Financial Accounting
 
Standards Board
 
to its
 
Accounting
Standards Codification after April 5, 2012.
*Indicate by check mark which
 
basis of accounting the registrant has used to prepare
 
the financial
 
statements included in this filing:
 
U.S. GAAP
 
International Financial Reporting Standards as issued by
 
the International Accounting
 
Standards Board
 
 
Other
 
*If “Other” has been chec
 
ked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to
follow:
 
Item 17
 
Item 18
 
If this is an annual report, indicate by check mark
 
whether the registrant is a shell company (as defined in Rule 12b
 
-2
 
of the Exchange Act).
 
Yes
 
No
 
(APPLICABLE
 
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
 
PROCEEDINGS DURING THE PAST
 
FIVE YEARS)
 
Indicate by check mark whether
 
the registrant has filed all documents and reports required
 
to be filed by Section 12, 13 or 15(d)
 
of the Securities
 
Exchange
Act of 1934
 
subsequent to the distribution of securities under a plan confirmed by a court.
 
Yes
 
No
 
 
 
SEC Form 20-F Cross
 
reference information
 
Form 20-F item number
Page and caption references
in this document*
1
Identity of Directors, Senior Management and Advisers
Not applicable
2
Offer Statistics and Expected Timetable
Not applicable
3
Key Information
 
 
A.
 
Selected financial data
181,
 
183,
 
303
 
B.
 
Capitalization and indebtedness
Not applicable
 
C.
 
Reason for the offer and use
 
of proceeds
Not applicable
 
D.
 
Risk factors
90-100
4
Information on the Company
 
 
A.
 
History and development of the company
i (Notes), 178
 
-199, 268
 
-271 (Note 26), 297 (Note
41), 299,
 
311
 
B.
 
Business overview
ii (Market and other data), 171
 
-177,
 
185
 
-192, 219-
220 (Note
 
2)
 
C.
 
Organizational structure
286
 
-290 (Notes 34 and
 
35), 321
 
-324
 
D.
 
Property,
 
plants and equipment
257
 
-261
 
(Notes 20 and 21)
4A
Unresolved
 
staff
 
comments
Not applicable
5
Operating and Financial Review and Prospects
 
 
A.
 
Operating results
90-100,
 
103
 
-107,
 
139, 165,
 
167-177,
 
179-
 
192,
236
 
-243
 
(Note 14)
 
B.
 
Liquidity and capital resources
137
 
-138, 145
 
-158, 165-166, 210,
 
212-
 
213, 236-
243
 
(Note 14), 272
 
-275 (Notes 27 and 28), 286-
287 (Note
 
34), 291
 
-292 (Note 37), 316
 
-326
 
C.
 
Research and development,
 
patents and licenses, etc.
41
 
D.
 
Trend
 
information
92
 
-100, 146
 
-169, 178
 
-199
 
E.
 
Off-balance sheet arrangements
109
 
-111,
 
267 (Note 25), 287-
 
290 (Note 35)
 
F.
 
Tabular disclosure of contractual
 
obligations
327
 
G.
 
Safe harbor
ii
 
(Forward
 
-looking statements)
6
Directors, Senior Management and Employees
 
 
A.
 
Directors and senior management
3-5, 313
 
-316
 
B.
 
Compensation
45-47,
 
63, 73
 
-76, 79, 163
 
-164, 279
 
-285 (Notes 32
and 33), 294
 
-296 (Note 39), 471
 
C.
 
Board
 
practices
3-5, 11
 
-19, 38, 59
 
-61, 79
 
-81
 
D.
 
Employees
83-86, 185,
 
187,
 
191,
 
219-
 
220 (Note 2)
 
E.
 
Share ownership
78, 279
 
-280 (Note
 
32), 294-
 
296 (Note 39), 319-
320
7
Major Shareholders
 
and Related Party
 
Transactions
 
 
A.
 
Major shareholders
41
 
-43, 312
 
B.
 
Related party transactions
C.
 
Interests of experts and counsel
294
 
-296 (Note 39), 345
Not applicable
8
Financial Information
 
 
A.
 
Consolidated statements and other financial information
201
 
-214,
 
214
 
-298,
 
300
 
-301
 
B.
 
Significant changes
Not applicable
9
The Offer and Listing
 
 
A.
 
Offer and listing details
303
 
-304,
 
311
 
B.
 
Plan of distribution
Not applicable
 
C.
 
Markets
303
 
-304,
 
311
 
D.
 
Selling shareholders
Not applicable
 
E.
 
Dilution
Not applicable
 
F.
 
Expenses of the issue
Not applicable
10
Additional
 
Information
 
 
A.
 
Share capital
Not applicable
 
B.
 
Memorandum
 
and Articles of Association
41
 
-43, 299
 
-302
 
C.
 
Material contracts
48, 52
 
-62, 79
 
D.
 
Exchange controls
308
 
E.
 
Taxation
305
 
-308
 
F.
 
Dividends and paying agents
Not applicable
 
G.
 
Statement by experts
Not applicable
 
H.
 
Documents on display
308
 
I.
 
Subsidiary information
286
 
-287 (Note
 
34), 321-
 
324
11
Quantitative and Qualitative Disclosure
 
about Market
 
Risk
87-1
 
77,
 
237
 
-255 (Notes 14-17)
12
Description of Securities
 
Other than Equity Securities
 
 
A.
 
Debt Securities
Not applicable
 
 
 
B.
 
Warrants and Rights
Not applicable
 
C.
 
Other Securities
Not applicable
 
D.
 
American Depositary Shares
303
 
,
 
309
13
Defaults, Dividends Arrearages and Delinquencies
Not applicable
14
Material Modifications to the Rights of Security Holders
 
and Use of Proceeds
Not applicable
15
Controls and Procedures
 
 
A.
 
Disclosure controls and
 
procedures
312
 
B.
 
Management’s annual report on
 
internal control over
 
financial reporting
38
 
C.
 
Attestation report
 
of the registered public accounting firm
201
 
-204
 
D.
 
Changes in internal control over
 
financial reporting
38
16A
Audit Committee Financial Expert
12
16B
Code of Ethics
31
 
1
16C
Principal
 
Accountant Fees and
 
Services
18
 
-19, 296
 
(Note 40)
16D
Exemptions from the Listing Standards
 
for Audit Committees
Not applicable
16E
Purchases of Equity Securities by the Issuer
 
and Affiliated Purchasers
42
16F
Change in Registrant’s Certifying Accountant
Not applicable
16G
Corporate Governance
311
16H
Mine Safety Disclosure
Not applicable
17
Financial Statements
Not applicable (See Item 8)
18
Financial Statements
Not applicable (See Item 8)
19
Exhibits
Exhibit Index
*
 
Captions have been included
 
only in respect of pages with multiple sections on the same page in order to identify the relevant caption on
 
that page
covered
 
by the corresponding
 
Form 20-
 
F
 
item number.
 
fy2019arbplcp6i1.jpg
 
 
fy2019arbplcp6i0.gif fy2019arbplcp6i0.jpg fy2019arbplcp6i3.jpg fy2019arbplcp6i2.jpg
 
 
 
 
Delivering for our stakeholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Barclays
 
PLC
2019 Annual Report on Form 20-F
 
 
 
 
 
Notes
The terms Barclays or Group refer to Barclays PLC together
 
with its subsidiaries. Unless otherwise stated, the income statement analysis compares the
year ended 31
 
Decem
 
ber 2019 to the corresponding twelve months of 2018 and balance sheet analysis as
 
at 31 December 2019
 
with comparatives
relating
 
to 31 December 2018. The abbreviations ‘£m’ and ‘£bn’ represent millions and thousands of millions of Pounds Sterling respectively; the
abbreviations ‘$m’ and
 
‘$bn’ represent millions and thousands of millions of US Dollars respectively
 
;
 
and the abbreviations
 
‘€m’ and ‘€bn’ represent
millions and
 
thousands of millions of Euros respectively.
 
Non-IFRS performance measures
Barclays management
 
believes that the non
 
-IFRS performance measures
 
included in
 
this
 
document
 
provide valuable information to the readers of the
financial
 
statements
 
as
 
they enable
 
the reader to identify a more consistent basis for comparing the businesses’
 
performance
 
between financial periods
and provide
 
more detail concerning the elements of performance which the manag
 
ers
 
of these businesses are most directly able
 
to influence or
 
are
relevant
 
for an assessment
 
of the Group. They
 
also reflect an important aspect of the way in which operating targets are defined and performance is
monitored
 
by Barclays management. However
 
,
 
any non-IFRS performance measures
 
in this document
 
are not a substitute for IFRS
 
measures and
readers should consider
 
the IFRS measures as well. Refer to the appendix on pages 193 to 199 for further information
 
and calculations
 
of non-IFRS
performance
 
measures
 
included
 
throughout this document, and the most directly comparable IFRS measures.
 
Key non
 
-IFRS measures
 
included
 
in this
 
document,
 
and the most directly comparable IFRS measures, are:
 
– Attributable
 
profit excluding litigation and conduct represents attributable profit excluding litigation and conduct charges. The comparable IFRS
measure is attributable
 
profit. A reconciliation is provided on pages 197-199;
 
– Average allocated
 
equity represents the average shareholders’ equity that is allo
 
cated to
 
the businesses.
 
The comparable
 
IFRS measure is average
equity.
 
A reconciliation is provided on pages 197-199
 
;
 
– Average allocated
 
tangible equity is calculated as
 
the average
 
of the previous month’s period end allocated tangible equity and the cu
 
rrent month’s
period
 
end allocated tangible equity.
 
The average allocated tangible equity for the period is the average of the monthly averages within that period.
Period
 
end allocated tangibl
 
e
 
equity is
 
calculated
 
as
 
13.0% (2018:
 
13.0%) of RWAs
 
for each b
 
usiness,
 
adjusted
 
for capital deductions, excluding
goodwill
 
and intangible assets,
 
reflecting
 
the assumptions the Group uses
 
for capital
 
planning purposes. Head Office allocated tangible equity represents
the difference
 
between the Group’s
 
tangible
 
shareholders’ equity and the amounts allocate
 
d
 
to businesses.
 
The comparable
 
IFRS measure is
 
average
equity.
 
A reconciliation is provided on pages 197-199
 
;
 
– Average tangible
 
shareholders’ equity is calculated as the average of the previous month’s period end
 
tangible equity and the current month’s period
end tangible
 
equity.
 
The average tangible shareholders’
 
equity
 
for the period is
 
the average
 
of the monthly averages within that period. The comparable
IFRS measure is average equity.
 
A reconciliation is
 
provid
 
ed on pages
 
197
 
-199;
 
– Basic earnings
 
per share excluding litigation and conduct
 
is calculated by dividing statutory profit after tax attributable to ordinary shareholders
excluding
 
litigation and conduct charges, by the basic weighted average number of shares.
 
The comparable
 
IFRS measure is basic earnings per share.
A reconciliation
 
is provided on pages 197-199;
 
– Cost: income
 
ratio excluding litigation and conduct represents operating expenses excluding
 
litigation and conduct charges, divided by total income.
The comparabl
 
e
 
IFRS measure is cost:
 
income
 
ratio. A reconciliation is provided on pages 197-199
 
;
 
– Operating
 
expenses
 
excluding
 
litigation and conduct represents operating expenses
 
excluding
 
litigation and conduct charges. The comparable IFRS
mea
 
sure is operating expenses. A
 
reconciliation
 
is provided on pages 197-199
 
;
 
– Operating
 
expenses
 
excluding
 
litigation and conduct, and a Guaranteed Minimum Payments (GMP)
 
charge of £140m
 
for 2018 represents operating
expenses excluding
 
litigation and conduct charges, and a GMP charge of £140m for 2018.
 
The comparable IFRS measure is operating expenses. A
reconciliation
 
is provided on page 181;
 
– Profit before
 
tax excluding litigation and conduct
 
represents profit before tax excluding litigation and conduct charges. The comparable IFRS measure
is profit before
 
tax. A reconciliation is provided on pages 197-199;
 
– Return on average allocated
 
equity represents
 
the return on shareholders’ equity
 
that is allocated to the businesses.
 
The comparable
 
IFRS measure is
return on equity.
 
A reconciliation is provided on page 197;
 
– Return on average allocated
 
tangible equity is calculated as
 
the annualised
 
profit after tax attributable to ordinary equity holders of the parent, as a
proporti
 
on of average allocated tangible equity. The comparable
 
IFRS measure is return on equity. A reconciliation is provided on page 196
 
;
 
– Return on average allocated
 
tangible equity excluding litigation and conduct is calculated as the annualised profit after tax attributable to ordina
 
ry
equity
 
holders of the parent excluding litigation
 
and conduct charges,
 
as
 
a proportion
 
of average allocated tangible equity. The comparable IFRS
measure is return on equity.
 
A reconciliation is provided on page 196;
 
– Return on average tangible
 
shareholders’
 
equity
 
is calculated as the annualised profit after tax attributable to ordinary equity holders of the parent, as
 
a
proportion
 
of average shareholders’
 
equity
 
excluding non
 
-controlling interests
 
and other equity
 
instruments
 
adjusted
 
for the deduction of intangible
assets and goodwill.
 
The comparable IFRS measure is return on equity. A reconciliation is provided on
 
page 196;
 
and
 
– Tangible
 
net asset
 
value
 
per share is calculated
 
by dividing shareholders’
 
equity,
 
excluding non-controlling interests
 
and other equity
 
instruments, less
goodwill
 
and intangible assets,
 
by the number
 
of issued ordinary shares. The components of the calculation have been included on page 199
 
.
 
Forward
 
-looking statements
This document
 
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. Barclays cautions readers that no forward-looking statement
is a guarantee
 
of future performance and that actual results or
 
other financial
 
condition or performance measures could differ materially from those
contained
 
in the forward
 
-looking statements.
 
These forward-looking
 
statements can be identified by the fact that they do not relate only to historical or
current facts. Forward-looking
 
statements sometimes use
 
words such as ‘may’, ‘will’, ‘seek’, ‘continue’,
 
‘aim’, ‘anticipate’, ‘target’, ‘projected’, ‘expect’,
‘estimate’,
 
‘intend’, ‘plan’, ‘goal’, ‘believe’,
 
‘achieve’ or
 
other words of similar meaning.
 
Forward-looking statements can be made in writing but also may
be made
 
verbally by members of the management
 
of the Group (including, without limitation, during management presentations to financial analysts)
 
in
 
 
connection
 
with this document. Examples of forward-looking statements include, among others, statements or guidance regarding or relating to the
Group’s future financial
 
position, income growth, assets,
 
impairment
 
charges, provisions, business
 
strategy, capital,
 
leverage and other regulatory ratios,
payment
 
of dividends (including dividend payout ratios and expected payment strategies), projected levels of growth in the
 
banking and financial
markets, projected
 
costs
 
or savings, any commitments
 
and
 
targets, estimates of capital expenditures, plans and objectives for future operations,
projected
 
employee numbers, IFRS impacts and other statements that are not historical fact. By their nature, forward
 
-looking statements
 
involve risk and
uncertainty
 
because they relate to future events and circumstances. The forward
 
-looking statements
 
speak only as at the date on which they
 
are made
and such statements may be affected
 
by changes in legislation, the development of standards and interpretations under IFRS, including evolving
practices with regard to the
 
interpretation and
 
application of accounting and regulatory standards, the outcome of current and future legal proceedings
and regulatory
 
investigations, future levels of conduct provisions, the policies and actions of governmental and regulatory authorities, geopolitical risks
and the impact
 
of competition. In addition, factors including (but not limited to) the following may have an effect: capital, leverage and other regulatory
rules applicable
 
to past, current and future periods; UK, US,
 
Eurozone
 
and global macroeconomic and business conditions; the effects of any volatility in
credit markets; market related
 
risks
 
such as changes
 
in interest rates and foreign exchange
 
rates; effects of changes
 
in valuati
 
on of credit market
exposures; changes in
 
valuation
 
of issued securities; volatility in capital markets; changes in credit ratings of any entity within the Group or any securities
issued by such entities;
 
the potential for one or more countries exiting the Eurozone; instability as a result of the exit by the UK from the European Union
and the disruption
 
that may subsequently result in the UK and globally; and the success
 
of future acquisitions,
 
disposals and other strategic transactions.
A number of these i
 
nfluences and factors are beyond the Group’s control.
 
As
 
a result, the Group’s actual financial
 
position, future results,
 
dividend
payments, capital,
 
leverage or other regulatory ratios
 
or other financial
 
and non-financial metrics or
 
performance
 
measures
 
may differ
 
materially from the
statements or guidance
 
set forth in the Group’s forward-looking statements.
 
Subject
 
to our obligations under the applicable laws and regulations of any relevant jurisdiction, (including,
 
without limitation, the UK and the US), in
relation
 
to disclosure and ongoing information, we undertake no obligation to update publicly or revise any forward-looking statements, whether as a
result of new information,
 
future events
 
or otherwise.
 
Market and other data
This document
 
contains information, including statistical data, about certain Barclays markets
 
and its competitive
 
position. Except as otherwise
indicated,
 
this
 
information is taken or derived from Datastream
 
and other external sources. Barclays cannot guarantee the accuracy of information taken
from external
 
sources,
 
or that, in respect of internal
 
estimates,
 
a third party using different methods would obtain
 
the same estimates as
 
Barclays.
 
Uses of Internet addresses
This document
 
contains inactive textual addresses
 
to internet
 
websites operated by us and third parties. Reference
 
to such websites
 
is made for
information
 
purposes only, and
 
information found at such websites
 
is not incorporated
 
by reference into this
 
document.
 
References
 
to Strategic Report
 
and Pillar
 
3 Report
This document
 
contains references throughout to the Barclays
 
PLC Strategic
 
Report and Pillar 3 Report.
 
References
 
to the aforementioned report
 
s
 
are
made for information
 
purposes
 
only,
 
and information found in said report
 
s
 
is not incorporated by reference into this document.
 
 
 
 
 
 
 
1
 
Barclays
 
PLC 2019
 
Annual Report
 
on Form
 
20-F.
 
Contents
What’s
 
inside this
 
report
 
Governance
 
Governance
 
contents
2
 
Directors’ report
9
 
Remuneration
 
report
44
 
Colleagues
83
Risk review
 
Risk review contents
87
 
Risk management
90
 
Material
 
existing and emerging risks
92
 
Principal
 
Risk
 
management
102
 
Risk performance
108
 
Supervision
 
and regulation
171
Financial
 
review
 
Financial
 
review contents
178
 
Key performance
 
indicators
179
 
Consolidated
 
summary income statement
181
 
Income
 
statement commentary
182
 
Consolidated
 
summary balance sheet
183
 
Balance
 
sheet commentary
184
 
Analysis of results by business
185
 
Non-IFRS performance
 
measures
193
Financial
 
statements
 
Financial
 
statements contents
200
 
Consolidated
 
financial statements
205
 
Notes to the financial
 
statements
214
Shareholder
 
information
 
Key dates, Annual
 
General Meeting, Dividends, and useful information
299
 
 
 
 
 
 
2
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
OUR GOVERNANCE
Contents
 
 
Welcome to our Governance report. This report
explains who we are, at Board and Executive
Committee (“ExCo”) level how our
 
governance
framework operates, and our key areas of focus in
2019.
 
 
Our primary aim
 
is that our governance:
 
Is effective
 
in providing challenge, advice and support to management; Provides checks
and balances and
 
encourages constructive challenge; Drives informed, collaborative
and accountable
 
decision
 
-making; and Creates
 
long
 
-term sustainable value for our
shareholders, having
 
regard to our other stakeholders.
 
We are in a new regime
 
for 2019, with the revised 2018 UK Corporate Governanc
 
e
Code (the “Code”) and the Companies
 
(Miscellaneous Reporting) Regulations 2018
 
(the
“Regulations”) now in force, and
 
our Governance Report reflects these requirements.
 
To
 
view our specific compliance
 
as
 
against the
 
Code, please see
 
pages 33 to 38.
 
Certain additional
 
information, signposted throughout this report, will be available at
barclays.com/ourgovernance
.
 
Page
Directors’
 
Report
Board of Directors: a year of renewal
3
 
Executive
 
Committee: strategically enhanced and strengthened
6
 
Striving
 
for simplicity and effectiveness
7
 
Our key areas of focus in 2019
9
 
Key priorities
10
 
Board Audit
 
Committee report
11
 
Board Nominations
 
Committee report
20
 
Board Risk Committee
 
report
25
 
How we comply
33
 
Other statutory information
39
Remuneration Report
44
 
 
 
 
 
fy2019arbplcp12i1.jpg
 
fy2019arbplcp12i3.jpg fy2019arbplcp12i2.jpg fy2019arbplcp12i0.jpg fy2019arbplcp12i4.jpg
 
3
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
DIRECTORS’
 
REPORT
Board
 
of Directors:
 
a year of
 
renewal
 
 
 
 
 
Relevant
 
skills and experience:
 
Nigel is the Group Chairman. He
 
is also Chairman
 
of
Barclays
 
Bank PLC.
 
Nigel has extensive
 
experience
in, and understanding of, banking
 
and financial
services,
 
gained
 
through a
 
36-year career at
Rothschild
 
& Co. where
 
he was most recently
 
Deputy
Chairman. Prior to that he was Chairman
 
of the Group
Executive
 
Committee and
 
Managing Partner
 
of
Rothschild
 
& Co. He is a
 
seasoned
 
business leader
with a strong track record in leading
 
and chairing
 
a
range of organisations and in acting as
 
a strategic
adviser
 
to multiple major
 
international
 
corporations
and governments. The breadth of
 
Nigel’s knowledge
and operational experience with international
 
banking
groups, building teams and culture,
 
and growing
businesses
 
are all hugely
 
beneficial to
 
Barclays, and
enables Nigel to contribute to the strategic
 
direction
and long-term sustainable success of
 
Barclays.
 
 
Key current appointments
 
Chairman, Sadler’s Wells; Non-Executive
 
Director,
Tetra Laval
 
Group
 
 
Committee membership
 
Board Nominations Committee (Chair)
 
 
 
 
Relevant
 
skills and experience
 
Jes has nearly four decades of extensive
 
experience
in banking and financial services.
 
He brings a
 
wealth
of investment banking knowledge
 
to the Board
 
as well
as strong executive leadership, and this
 
contribution
is reflected in Barclays strategy and
 
long-term
sustainable success of the business.
 
He previously
worked for more than 30 years at
 
JP Morgan where
he initially trained as a commercial banker,
 
later
advancing
 
to the leadership
 
of major businesses
involving
 
equities, private
 
banking and
 
asset
management,
 
and ultimately
 
heading
 
JP Morgan’s
Global Investment Bank.
 
 
Key current appointments
 
Board Member, Bank Policy Institute; Board
 
Member,
Institute
 
of International
 
Finance
 
 
Committee membership
 
None
 
 
 
 
 
 
Relevant
 
skills and experience
 
Crawford has extensive business
 
and management
experience at executive and board level
 
spanning
over 30 years. Beneficial to the Board
 
and to
Barclays’ strategy and long-term
 
sustainable success
is his key
 
understanding
 
of stakeholder
 
needs and his
experience in international and cross-sector
organisations, strong leadership and
 
strategic
decision-making. Crawford brings to the
 
Board robust
remuneration experience gained
 
from his former
remuneration committee chairmanships
 
at Standard
Life plc and other current positions.
 
 
Key current appointments
 
Non-Executive Director, SSE plc; Chairman,
Edrington Group
 
 
Committee membership
 
Board Audit Committee, Board Nominations
Committee,
 
Board Remuneration
 
Committee (Chair)
 
 
 
 
Relevant
 
skills and experience
 
Mike has deep knowledge
 
of accounting, auditing
 
and
associated
 
regulatory
 
issues, having
 
previously
worked at KPMG
 
for over 20 years. Mike’s former
roles include acting as the lead engagement
 
partner
on the audits of large financial services
 
groups
including HSBC, Standard Chartered
 
and the Bank
 
of
England, as Head of Quality and Risk
 
Management
for KPMG Europe LLP and
 
as KPMG UK’s Ethics
Partner. The Board benefits from his extensive
experience in accounting, auditing
 
and financial
reporting and therefore Mike continues
 
to contribute
to the long-term sustainable success
 
of the business.
 
 
Key current appointments
 
Member, Cabinet Office Board; Member, International
Ethics Standards Board for Accountants;
 
Member,
ICAEW Ethics Standards Committee;
 
Member,
Charity
 
Commission
 
Committee membership
 
Board Audit Committee (Chair), Board
 
Nominations
Committee,
 
Board Risk
 
Committee
 
 
 
 
 
Full Director biographies can be
 
found on pages
 
313 to 315.
 
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4
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
 
 
 
 
Relevant
 
skills and experience
 
Tim’s continued contribution to Barclays’
 
strategy
 
and
long-term sustainable success comes
 
from his
extensive
 
financial
 
services experience,
 
knowledge
 
of
risk management and UK and EU
 
regulation, as
 
well
as an understanding of key investor
 
issues. He
 
had a
distinguished career with Legal &
 
General, where,
among other roles, he was the Group
 
CEO until June
2012, and this experience enables
 
Tim to provide
challenge, advice and support to management
 
on
business performance and decision-making.
 
Key current appointments
 
Chairman, Apax Global Alpha Limited
 
Committee membership
 
Board Audit Committee, Board Nominations
Committee,
 
Board Remuneration
 
Committee,
 
Board
Risk Committee (Chair)
 
 
 
Relevant
 
skills and experience
 
Sir Ian is a member of the Board and
 
is also Chair of
Barclays
 
Bank UK PLC.
 
He contributes
 
to the Board
substantial
 
business experience
 
particularly in
 
the
international retail sector from his lengthy
 
executive
career at the Kingfisher Group, as
 
well as experience
in sustainability and environmental matters
 
which are
important
 
to the Group’s
 
strategy
 
and long-term
sustainable success. Sir Ian holds strong
 
credentials
in leadership, is involved with many
 
charitable
organisations, such as The Prince of Wales’s
Charitable Foundation, and is highly regarded
 
by the
Government for his work with various
 
Government
departments
 
.
 
Key current appointments
 
Chairman, Maisons du Monde; Chairman,
 
Menhaden
plc; Lead Non-Executive Director for the
 
Government;
Trustee, Institute for Government
 
Committee membership
 
Board Nominations Committee
 
 
 
 
Relevant
 
skills and experience
 
Mary Anne is an experienced Non-Executive
 
Director
with considerable financial services and
 
investment
banking experience, following an executive
 
career
spanning over 20 years with Morgan
 
Stanley. This
enables her to contribute to the effectiveness
 
of
Barclays
 
 
operations, strategy
 
and long-term
sustainable success of the business.
 
Her current
other Non-Executive positions and
 
Senior Advisory
role with Blackstone, coupled with
 
her previous board
and senior management level positions
 
(with Dollar
Tree Inc., Health
 
Net, Inc.,
 
and Blackstone
 
Advisory
Partners), contribute to the wide-ranging
 
global,
strategic
 
and advisory
 
experience
 
she can provide to
the Board.
 
Key current appointments
 
Non-Executive Director, HP Inc.; Non-Executive
Director,
 
Ahold Delhaize
 
N.V.; Non-Executive
Director,
 
Alcoa Corporation;
 
Senior Advisor, The
Blackstone
 
Group L.P.
 
Committee membership
 
Board Risk Committee
 
 
 
 
 
 
Relevant
 
skills and experience
 
Mohamed is a highly respected economist
 
and
investor,
 
with considerable
 
experience
 
in the asset
management industry and multilateral
 
institutions.
 
He
is chief
 
economic advisor
 
at Allianz
 
SE, the corporate
parent of PIMCO (Pacific Investment
 
Management
Company LLC) where he formerly
 
served as Chief
Executive
 
and Co-Chief
 
Investment
 
Officer. As well
 
as
serving
 
on several advisory
 
committees
 
and boards,
Mohamed is a regular
 
columnist for Bloomberg
Opinion and a
 
contributing editor at the Financial
Times. He has also published widely on international
economic and financial topics. He
 
spent 15 years
 
at
the IMF where he
 
served
 
as Deputy Director
 
before
moving
 
to the private
 
sector and
 
financial services.
Mohamed’s acute knowledge and understanding
 
of
international economics and the financial
 
services
sector strengthens the Board’s capacity
 
for
overseeing
 
the strategic
 
direction
 
and development
 
of
the Group. Mohamed’s knowledge and
 
experience
enables him to contribute to the long-term
 
sustainable
success
 
and strategy
 
of the business.
 
Key current appointments
 
Board Member (Non-Executive),
 
Under Armour Inc.;
Chief
 
Economic Advisor,
 
Allianz SE; Senior
 
Advisor,
Gramercy Fund
 
s
 
Management;
 
Senior Advisor,
Investcorp Bank BSC
 
Committee membership
 
None
 
 
Relevant
 
skills and experience
 
Dawn is a highly experienced financial
 
executive who
holds the role of Chief Investment
 
Officer at Soros
Fund Management LLC.
 
Her previous
 
experience
includes 25 years with UBS and its predecessor
organisations, most recently as Head
 
of Investments
for UBS Asset Management. Her
 
knowledge of
 
the
businesses
 
and markets
 
in which the Group
 
operates
further
 
strengthens
 
the depth and
 
range of relevant
sector skills and experience across the
 
Board. This
enables Dawn to challenge and contribute
 
effectively
to the Group’s operations and the long-term
sustainable success of the business.
 
Key current appointments
 
Chief
 
Investment Officer at Soros
 
Fund Management
LLC;
 
Member of The New York Federal Reserve’s
Investor
 
Advisory Committee
 
on Financial
 
Markets;
Member of Advisory Board and Investment
Committee of the Open Society Foundations’
 
and
their Economic Justice Programme
 
Committee membership
 
Board Risk Committee
 
 
 
Relevant
 
skills and experience
 
Mary has extensive and diverse board-level
experience across a range of industries,
 
including her
previous
 
Non-Executive
 
Directorships of the
 
Bank of
England, Alliance & Leicester, Aviva, Centrica and
Swiss Re Group. Through her
 
former senior executive
positions with HM Treasury, the Prime Minister’s
Office,
 
and as Director
 
General of
 
the Association
 
of
British Insurers, she brings to the Board
 
a strong
understanding of the interaction between
 
public and
priv
 
ate sectors, skills in
 
strategic
 
decision-making
 
and
reputation management and promotes
 
strong board
governance
 
values, which
 
enables her
 
to continue
 
to
contribute effectively to the long-term
 
sustainable
success
 
of the Group.
 
Key current appointments
 
Non-Executive Director, Valaris PLC; Member of
Advisory
 
Panel, The
 
Institute of Business
 
Ethics;
Member, UK Takeover
 
Appeal Board
 
Committee membership
 
Board Remuneration Committee
 
 
 
 
fy2019arbplcp14i3.jpg fy2019arbplcp14i2.jpg fy2019arbplcp14i1.jpg fy2019arbplcp14i0.jpg
 
5
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
DIRECTORS’
 
REPORT
Board
 
of Directors:
 
a year of
 
renewal
 
 
 
 
 
Relevant
 
skills and experience
 
Brian has served as Chief Financial Officer
 
for BP
p.l.c.
 
since 2012. He
 
joined BP in
 
1986 after obtaining
a PhD in Mathematics. After performing
 
a broad
range of commercial and financial roles
 
across all
facets
 
of the group, he
 
became chief executive
 
of
BP’s integrated supply and trading function
 
(2005 –
2009). Brian will
 
retire fro
 
m
 
BP in June
 
2020. His
experience outside BP includes serving
 
as a
 
Non-
Executive
 
Director and
 
audit committee
 
member of
 
Air
Liquide S.A., the Royal Navy, and the Francis Crick
Institute.
 
Brian also
 
chairs the ‘100 Group’
 
of the
FTSE 100 Finance Directors. Brian brings
 
to the
Board his extensive experience of
 
management,
finance
 
and strategy gained
 
at BP
 
and other public
and private boards. His experience
 
with, and
understanding of, the challenges
 
and opportunities
inherent in advancing a sustainable
 
energy future
 
will
be invaluable as Barclays considers
 
how it can help
to accelerate the transition to a
 
low carbon world.
 
 
Key current appointments
 
Chief
 
Financial Officer, BP p.l.c.;
 
Non-Executive
Director,
 
Air Liquide S.A.;
 
Non-Executive Director,
 
the
Royal
 
Navy; Senior Independent
 
Director, the Francis
Crick Institute; Chairman, the 100 Group
 
of the FTSE
100 Finance Directors
 
 
Committee membership
 
None
 
 
 
 
Relevant
 
skills and experience
 
Tushar is a chartered accountant with over
 
25 years
of strategic
 
financial
 
management,
 
investment
banking, operational and regulatory
 
relations
experience, which enables him to
 
contribute to the
long-term sustainable success and strategy
 
of the
business.
 
He joined
 
Barclays from
 
JP Morgan,
 
where
he held various senior roles including
 
the CFO
 
of its
Corporate & Investment Bank at the
 
time of the
merger of the investment bank and
 
the wholesale
treasury/security services business.
 
 
Key current appointments
 
Member, the 100 Group of the FTSE 100
 
Finance
Directors
 
;
 
Main Committee Chair,
 
Sterling Risk Free
Reference Rates Working Group
 
 
Committee membership
 
None
 
 
 
 
 
Relevant
 
skills and experience
 
Diane is a member of the Board, Chair
 
of Barclays
Execution Services Limited and a
 
member of the
Board of Barclays US LLC. She brings
 
to Barclays a
wealth of experience in managing
 
global, cross-
discipline business operations, client services
 
and
technology in the financial services
 
industry, which
enables her to robustly challenge
 
the Group’s
strategy
 
and support the
 
long-term sustainable
success
 
of Barclays.
 
Diane had
 
an extensive career
at Merrill Lynch,
 
holding
 
a variety of senior
 
roles,
including responsibility for banking, brokerage
services
 
and technology
 
provided to the
 
company’s
retail and middle market clients.
 
 
Key current appointments
 
None
 
 
Committee membership
 
Board Audit Committee, Board Nominations
Committee,
 
Board Risk
 
Committee
 
 
 
Company Secretary
 
 
 
 
Relevant
 
skills and experience
 
Stephen was appointed Company
 
Secretary in
November 2017 having previously
 
served as the
Group Company Secretary and Deputy
 
General
Counsel of
 
SABMiller plc.
 
Prior to
 
this, he practised
law as a partner in a
 
law firm in South Africa, and
subsequently
 
in corporate
 
law and
 
M&A at Hogan
Lovells
 
in the UK. Stephen
 
has extensive
 
experience
in corporate governance, legal, regulatory
 
and
compliance matt
 
ers.
 
Stephen serves as
 
Vice Chair of
the GC100, the association of General
 
Counsel
 
and
Company Secretaries working in FTSE
 
100
companies,
 
and has
 
previously served
 
as Chairman
of the ICC UK
 
’s Committee
 
on Anti-Corruption.
 
 
 
 
 
fy2019arbplcp15i0.jpg
 
6
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
Executive
 
Committee:
 
strategically
enhanced
 
and strengthened
 
 
 
We have changed
 
the composition of the
ExCo, removing
 
a management layer and
bringing
 
key
 
business areas closer
 
to, and
making their
 
leaders a part of, the most senior
management
 
forum for the Group.
 
The following
 
new roles
 
and additions to the
ExCo mean that
 
it now has a stronger
 
and
closer strategic focus on, and
 
oversight over,
the businesses comprising
 
our CIB and our
global
 
consumer banking and payments
businesses:
 
New roles
President of Barclays Bank PLC
 
Paul Compton
 
Global Head of Consumer Banking and
Payments
 
Ashok Vaswani
 
Paul and
 
Ashok
 
were previously members of
the ExCo in their
 
capacities as
 
Chief Operating
Officer and
 
CEO of Barclays UK respectively
 
Roles elevated to the ExCo
Global Head of Banking
 
Joe McGrath
 
Global Head of Markets
 
Stephen
 
Dainton
 
Head of Corporate Banking
 
Alistair
 
Currie
 
 
Group Executive
 
Committee biographies can
be found
 
on pages 314 to 316.
 
 
 
fy2019arbplcp16i0.jpg
 
7
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
Striving
 
for simplicity
 
and effectiveness
 
Barclays is a large, diversified organisation. We are committed, through
our governance model, to driving four key features: simplification,
collaboration, accountability and quality of decision-making.
 
 
Our governance framework
Our Group-wide governance
 
framework
 
has
been designed
 
to facilitate the effective
management
 
of the Group by our CEO and his
ExCo whilst preserving the constructive
challe
 
nge, support and oversight of our major
subsidiary boards in the UK, Ireland
 
and the
US, consistent with their respective
 
legal and
regulatory
 
responsibilities. The Barclays PLC
(BPLC) Board sets the strategic direction
 
and
risk appetite
 
of the Group and is
 
the ultimate
decision
 
-making body for matters of
 
Group-
wide strategic,
 
financial, regulatory or
reputational
 
significance.
 
BPLC is the group parent
 
company and has a
premium
 
listing on the London Stock
Exchange.
 
Each of our main operating entities,
Barclays Bank PLC (BBPLC), Barclays Bank
UK PLC (BBUKPLC), Barclays Bank Ireland
PLC, Barclays US LLC and Barclays Bank
Delaware,
 
has its
 
own board
 
comprising
Executive
 
and
Non-Executive
 
Directors.
 
Each also has its
own board committees.
 
During the year,
 
we consolidated
 
and
streamlined
 
membership of the BPLC and
BBPLC boards, such that membership
 
of the
BBPLC board is now a subset of the BPLC
Board, with
 
all members of the BPLC Board
except the Senior
 
Independent Director (SID),
the Chairm
 
an of BBUKPLC and one Non
 
-
Executive
 
Director now also serving on the
board of BBPLC.
 
This partial
 
consolidation has
significantly
 
increased coordination and
efficiency,
 
and reduced complexity and
duplication.
 
The revised BBPLC board
composition
 
vests
 
oversight over the activities
of BBPLC in a board the
 
members of which
also have direct
 
accountability to BPLC
 
’s
shareholders through
 
their separate
responsibilities
 
as
 
members of the BPLC
Board.
Board composition
In 2019, we welcomed
 
our new
 
Chairman,
Nigel
 
Higgins. We also announced
 
the
appointment
 
of two new Non-Executive
Directors:
 
 
Dawn Fitzpatrick, who joined
 
the Board on
25 September
 
2019;
 
and
 
Mohamed
 
A. El-Erian, who joined the Board
on 1 January 2020.
 
In January 2020,
 
we announced the
appointment
 
of Brian Gilvary who joined the
Board on 1 February 2020.
 
All of these appointments bring
 
tremendous
insight
 
and experience relevant to the markets
in which we operate.
 
In accordance with the
recommendation
 
of the Code, Reuben Jeffery
and Dr. Dambisa
 
Moyo, each
 
having served on
the Board for nine
 
years, stepped down, as did
Sir Gerry Grimstone
 
and Mike Turner.
 
Matthew
Lester stepped down
 
on 1 January
 
Board Governance Framework
 
 
 
fy2019arbplcp17i0.jpg
 
8
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
 
2020. We also bade
 
farewell to John
McFarlane,
 
who stepped down after four years
as Chairman,
 
including a period where he was
Executive
 
Chairman. We are grateful to them all
for their service to Barclays.
 
We are actively
 
seeking to complement the
current range of skills on our Board, ideally
 
with
individuals
 
who can bring additional retail
banking
 
and technology
 
experience. Our strong
belief
 
in the benefits of diversity – of gender,
ethnicity
 
and thought – underpins
 
our search. In
the report of our Nominations
 
Committee we
address the continuing
 
evolution of our Board.
 
Principal committees
The principal
 
Committees of the BPLC Board,
and the core responsibilities
 
of each, are
described in
 
the “Board Governance
Framework” table
 
at the foot of the previous
page. The
 
remit of each Committee is set
 
out in
brief in the
 
table, and you can read more
 
about
the Committees
 
and their work
 
on pages
 
11
 
to
32
 
and 80 to 82
 
.
 
In September
 
2019, the Board reviewed the
responsibilities
 
of the Reputation Committee
and reallocated
 
them mainly to the Board so
that it could
 
itself directly oversee the critical
topics of culture,
 
the environment and
reputation.
 
Responsibility for the oversight of
Conduct risk and Compliance
 
was
 
transferred
from the Reputation
 
Committee to the Risk
Committee.
 
We measure our effectiveness
An effective
 
Board is one that delivers for
stakeholders. We assess the effectiveness of
our Board, its Committees
 
and Board members
each year, as required
 
by the Code. Although
the Code only
 
requires an externally facilitated
evaluation
 
every three years,
 
for each of the
past four years we have used the services of an
external
 
agency to facilitate the assessment of
the effectiveness of the Board.
 
This year, the
Nominations
 
Committee decided to ask our
SID, with the support of the Company
Secretary,
 
to conduct the
 
assessment.
 
They are
well placed
 
to do this, having been closely
involved
 
in the transition to a new Chairman
and the evolving
 
composition of the Board and
the way it operates. You
 
can read more about
our 2019 process and our progress against the
2018 review
 
on page
 
s
 
23 to 24.
 
 
 
 
fy2019arbplcp18i0.jpg
 
9
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
DIRECTORS’
 
REPORT
Our key
 
areas
 
of focus
 
in 2019
 
We think of governance as how we govern the organisation and make
decisions to promote its success for the long-term benefit of our
stakeholders. Effective governance makes possible the delivery of our
purpose and our strategy.
 
 
Governance in action: our
programme of prioritised deep
dives
To
 
underpin
 
informed and sound decision-
making,
 
the Board needs to have a deep and
granular
 
understanding of the Group as a
whole and
 
each of its significant businesses –
where the key risks lie, how and
 
where
resources are allocated
 
and the contribution
made by each
 
part of the business.
Led by
 
the Chairman,
 
the Board and the
ExCo have agreed
 
a prioritised series of deep
dives which now form a significant
 
part of
each Board meeting,
 
with two to four deep
dives on the agenda
 
for a typical Board
meeting.
 
The materials for each deep dive
facilitat
 
e
 
an in-depth understanding of the
issues and generate
 
meaningful discussion,
debate,
 
support to management and
challenge
 
on key topics, allowing the Board
 
to
exercise effective
 
oversight and assist
 
the
delivery
 
of the Group’s strategy.
Through
 
this process,
 
the Board considers
strategy at every meeting,
 
rather than in a set
piece
 
event once
 
a year.
The Board
 
has discharged its responsibilities
as described in this high
 
-level flow diagram.
 
 
 
10
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
Key priorities
 
 
Core areas of focus
 
Our programme
 
of deep dives is outlined below
and in the
 
“Governance
 
in action” section on
the previous page.
 
This programme
commenced
 
in July 2019, following the
appointment
 
of Nigel Higgins as
 
Chairman.
The deep
 
dives held this year
 
included
consideration
 
of a wide range of topics,
covering
 
selected individual business units as
well as Group-wide
 
matters such as
 
our capital
allocation
 
framework, our
 
costs, our societal
purpose, our culture,
 
the environment and our
risk profile.
 
Feedback from our shareholders and
 
wider
stakeholders has been taken into
 
account
 
in
arriving
 
at and prioritising our deep dives.
 
The Board
 
received updates on the
performance
 
of the business
 
and execution
of the strategy at every meeting,
 
and the
approval
 
of our MTP,
 
in which our strategy is
embedded,
 
was
 
a key Board responsibility
 
at
its November
 
and December 2019 mee
 
tings.
We also gave considerable
 
focus to
developments in
 
the regulatory environment,
and to engagement
 
with our regulators in the
UK and the US in particular.
 
The oversight of
risk and of our control environment
 
is also
a core Board responsibility
 
and has
 
been
addressed at meetings through
 
the year.
 
The Board
 
believes
the right
 
culture
 
and
values,
 
supported
 
by
effective
 
leadership
and a consistent
 
tone
from the
 
top, are
crucial
 
to the success
of the Group.
 
 
Stakeholder engagement
 
We have enjoyed
 
extensive engagement with
our shareholders in 2019
 
through a variety of
mechanisms,
 
including:
 
 
 
In February, March
 
and April
 
2019, Nigel
Higgins held
 
around 50 meetings with
shareholders and other
 
stakeholders. This
was a “listening
 
tour”, the aim of which was
for Nigel to introduce
 
himself to a wide
range of stakeholders, including
 
our
institutional
 
shareholders,
 
and to hear
directly
 
from them their views on the
Company
 
before he became Chairman in
May 2019.
 
We also engaged with activist
investor Sherborne
 
Investors
 
Management
LP as part of this process;
 
 
Our AGM, where the Board engaged
extensively
 
with shareholders, both
formally
 
during the meeting and
informally
 
before and after the AGM; and
 
 
Through
 
our intensive Investor Relations
programme
 
of conference calls, webcasts
and meetings
 
at the time
 
of each of our
quarterly
 
results releases.
 
Our broader stakeholder engagement
 
is
described in
 
the Strategic Report
 
available at
home.barclays/annualreport
. Specifically
with regard to our workforce, engagement
 
with
our colleagues
 
has long been
 
a part of our
DNA as an organisation.
 
The Board conducted
a full review
 
of our existing engagement model
and concluded
 
that this, with certain
enhancements,
 
would be the best and most
effectiv
 
e
 
means to ensure sustained
engagement
 
with our workforce
 
whilst also
meeting
 
the objectives of the Code’s
 
new
workforce engagement
 
requirements. Our
workforce engagement
 
model is described in
the People
 
section on page
 
83 to 86.
Purpose, culture and values
 
Our purpose, adopted
 
in May 2018, is
“Creating opportunities to rise”. This is
underpinned
 
by our values: respect, integrity,
service, excellence
 
and stewardship, and by
the behaviours associated with
 
them. Our
purpose, values and
 
behaviours are designed
to support each other,
 
to drive our culture
 
and
to guide
 
our strategy and decision
 
-making.
 
The Board
 
has recently examined
 
our purpose
and concluded
 
that whilst it is fully integrated
into many
 
of our key
 
processes and decision-
making forums, we have further
 
work to do to
bring to life:
 
to express
 
and apply
 
it consistently
across the Group, and
 
for it to better connect
all of our stakeholders, our businesses, ESG
activities and
 
ambitions. This work is under
way.
 
Our values were adopted
 
in January 2013.
They were, and
 
remain, fully
 
embedded and
integrated
 
into the Group.
 
Our culture is a core area of focus for the
Board, which
 
bel
 
ieves
 
that the right
 
culture and
values, supported
 
by effective leadership and a
consistent tone from
 
the top, are crucial to the
success of the Group.
 
How
 
does the
 
Board review
our culture?
 
The Board
 
reviews our culture in a number of
ways, including:
 
 
 
Quantitative
 
and qualitative feedback on
how our culture aligns with
 
our purpose,
values and strategy through
 
Culture
Dashboards, so the Board can
 
see the
effect our people
 
engagement has on our
performance,
 
and the continued strength
of our culture;
 
 
Analysis of employee
 
survey results;
 
 
Face-to-face engagement
 
with employees
locally
 
to hear what they think; and
 
 
Review of people
 
policies, which are
designed
 
to provide equal opportunities
and create an inclusive
 
culture, in line with
our values and i
 
n
 
support of our long term
success.
 
 
 
11
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
DIRECTORS’
 
REPORT,
 
BOARD AUDIT
 
COMMITTEE REPORT
Ensuring
 
reporting
 
integrity
 
and
an effective
 
controls
 
environment
 
 
The Board Audit Committee has a central role in maintaining and
challenging the quality of Barclays external disclosures and its internal
control environment.
 
Dear Fellow
 
Shareholder
 
2019 was a year of steady progress for
the Group both
 
in enhancing its control
environment
 
and embedding new financial
reporting
 
requirements, particularly in relation
to the expected
 
credit loss
 
(ECL) model
introduced
 
by the implementation of IFRS 9
in 2018.
 
Ensuring focus on strengthening
 
the
 
Barclays
internal
 
control environment
has continued to
be a key activity
 
for the Committee. 2019 was
an important
 
year for
 
the Barclays Internal
Control Environment
 
Programme (BICEP)
which commenced
 
in January 2017 and is
 
on
track to complete
 
by the end of March 2020. As
at the end of 2019,
 
94% of issues
 
were either
closed or in validation
 
with 96% of the BICEP
milestones
 
achieved. When BICEP is fully
completed,
 
the Group’s control environment
will
 
be in a much stronger position, but
inevitably,
 
as
 
expect
 
ations and standards
change
 
and new control events occur, work is
still required
 
both to maintain and to further
develop
 
it. The Committee is therefore working
to ensure that as we transition
 
to “business
 
as
usual”, management
 
has a robust
 
framework
for identifying
 
and responding to control issues
with appropriate
 
reporting to the Committee
and other Board
 
Committees. A key
component
 
of this will be the work
 
the Chief
Controls Office
 
is doing to further streamline
and automate
 
the Risk
 
and Controls Self-
Assessment (RCSA) process to make it more
dynamic.
 
In assessing general
 
control issues for
disclosure in this Annual
 
Report, the
Committee
 
continued to apply similar concepts
to those used for assessing internal
 
financial
controls for the purposes of the US Sarbanes-
Oxley Act. The
 
conclusion we reached is that
there are no control
 
issues that are considered
to be a material
 
weakness
 
and which
 
therefore
merit specific
 
disclosure.
 
IFRS 9
continued
 
to be a major focus for the
Committee
 
this year as
 
models conti
 
nue to be
validated
 
and refined. In addition disclosures
have been
 
enhanced, although more work is
required
 
to develop the ability to generate and
disclose more meaningful
 
sensitivity analyses.
Following
 
the introduction of the time bar by
the FCA at the e
 
nd of August, the level
 
of
subjectivity
 
of the PPI provision at 31
December 2019
 
has been considerably
reduced.
 
However the Committee did consider
whether the “spike” in complaints received
 
just
before the
 
deadline
 
might have been
anticipated
 
and was satisfied that there was no
evidence
 
that would have justified an earlier
significant
 
increase in the provision.
 
I continued
 
my regular meetings with the
Chairs of the main
 
subsidiary audit
committees,
 
including the Chair of the BBPLC
audit
 
committee until the partial consolidation
of the BPLC and BBPLC
 
boards. Since that
time
 
I have also met with the
 
Chair of the
Barclays US LLC audit
 
committee, attended
a meeting
 
of the Barclays Bank
 
Ireland
 
PLC
audit
 
committee, and attended
 
the meeting of
the BBUKPLC au
 
dit committee which
considered
 
the main year
 
-end accounting
issues. The Chair
 
of the BBUKPLC audit
committee
 
also attends the meeting of the
Committee
 
where we consider the control
environment
 
of BBUKPLC as
 
part of our year-
end evaluation.
 
I also continued to meet
frequently
 
with members of senior
management,
 
including the Group Finance
Director and Chief
 
Internal Auditor.
 
In relation
to the latter,
 
I am pleased that the Committee
approved
 
the appointment in September 2019
of Lindsay O’Reilly
 
as
 
the new Chi
 
ef Internal
Auditor
 
following a joint reco
 
mmendation from
myself and the
 
Group Chief
 
Executive Officer.
As she was appointed
 
to this
 
role from a first
line
 
of defence function, the Committee have
taken steps to understand
 
and safeguard
against potential
 
and
 
perceived conflicts of
interest that may
 
arise in order to support BIA’s
continued
 
independence from the business.
BIA is a key component
 
in supporting the
Committee’s work and I am pleased
 
with
the way that the function
 
has continued to
develop
 
throughout the year in scoping,
performing
 
and reporting the outcomes
of its work both to management
 
and
the Committee.
 
I have also continued
 
my regular engagement
with the Group’s regulators both
 
in the UK and
US. This has encompassed not
 
only my work
as the Chair of the Committee,
 
but also my role
as the Group’s Whistleblowing
 
Champion. In
that respect, I also oversaw the production
 
of
the first of three annual
 
reports which we have
agreed to submit
 
to the FCA and PRA in the
UK and also the New York Department
 
of
Financial
 
Services containing certain
information
 
regarding our whistleblowing
programme.
 
Committee
 
performance
 
The performance
 
of the Committee was
assessed internally
 
as
 
part of the annual
effectiveness review of the Board.
 
In line
 
with
the approach
 
adopted for all Board
Committees in
 
2019, the process involved
completion
 
of a tailored questionnaire by
Committee
 
members
 
and standing
 
attendees.
 
The results confirm
 
that the Committee is
operating
 
effectively, and the Board takes a
high
 
level of assurance from the technical
and commercial
 
competence and diligence
of the Committee’s work. It is considered
 
well-
constituted,
 
with the right balance of skills
 
and
experience
 
to provide an appropriately broad
level
 
of challenge and oversight of the areas
within
 
its remit. Consideration will need to be
given
 
to adding an
 
additional member of the
Committee
 
with recent and relevant financial
experience
 
following the departure of Matthew
Lester at the end
 
of the year.
 
Last year’s review commented
 
on the improved
focus of the Committee
 
on key issues
 
in the
context of managing
 
a demanding agenda
efficiently
 
so
 
that time is allocated to the
 
most
significant
 
items for discussion. As
 
the
Committee
 
has taken on additional
responsibilities
 
during the year,
 
for example the
oversight of tax matters, continued
 
focus on
this area will
 
be beneficial.
 
In response to a request to provide
 
feedback
on the interaction
 
with subsidiary audit
committees,
 
the review highlighted that
interaction
 
with the BBUKPLC audit committee
had
 
been helpful
 
and effective. Following the
consolidation
 
of the membership of the
Committee
 
with the BBPLC audit committee,
coverage of BBPLC
 
matters within concurrent
meetings
 
was
 
considered
 
adequate, noting that
it will
 
benefit from further embedment.
 
Looking ahead
 
In 2020 the Committee
 
will still continue to
monitor
 
the embedment of IFRS 9 processes
and further enhancements
 
to our disclosure,
particularly
 
as
 
regards sensitivities.
 
We will
 
also be looking to assess
 
the reporting
of control issues after the conclusion
 
of BICEP
as well as monitor
 
the satisfactory completion
of remediation
 
programmes which are due to
extend beyond
 
31 March 2020, in particular the
Designated
 
Markets
 
Activity
 
remediation plan.
 
Mike Ashley
Chair, Board
 
Audit Committee
 
 
12
 
February 2020
 
fy2019arbplcp21i0.jpg fy2019arbplcp21i1.jpg
 
12
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
 
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 recent and
 
relevant experience of the
banking
 
and financial services sector, in
addition
 
to general management and
commercial
 
experience, and are financially
literate.
 
In particular, 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. Matthew
 
Lester, who
resigned from the
 
Committee on 1 January
2020, held
 
a number
 
of senior finance roles
across a range of business sectors,
including
 
financial services, during his
executive
 
career. You
 
can find more details
of the experience
 
of Committee members
 
in
their biographies
 
on pages 3 to 6.
During 2019,
 
the Committee met 10 times
and the chart opposite
 
shows
 
how it
allocated
 
its time. Attendance by members
at Committee
 
meetings is
 
also shown
opposite.
 
Committee meetings were
attended
 
by representatives
 
from
management,
 
including the Group Chief
Executive
 
Officer, Group Finance Director,
Chief Internal
 
Auditor,
 
Chief Controls
Officer,
 
Chief Risk
 
Officer,
 
Chief Operating
Officer,
 
Group General Counsel
 
and Group
Chief Compliance
 
Officer, as well as
representatives from the
 
businesses
 
and
other functions.
 
The lead audit engagement
partner of KPMG,
 
Michelle Hinchliffe, also
attended
 
Committee meetings. The
Committee
 
held a number of separate
private sessions with each of the Chief
Internal
 
Auditor and the lead audit
engagement
 
partner, which were not
attended
 
by management.
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
 
policies and procedures;
and
 
Overseeing significant
 
legal and
regulatory
 
investigations, including the
proposed litigation
 
statement for
inclusion
 
in the statutory accounts.
 
 
 
 
 
 
 
13
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
DIRECTORS’
 
REPORT,
 
BOARD AUDIT
 
COMMITTEE REPORT
Ensuring
 
reporting
 
integrity
 
and
an effective
 
controls
 
environment
 
Area of focus
Reporting
 
issue
Role of the Committee
Conclusion/action
 
taken
Fair, balanced and
understandable
reporting
(including
 
Country-by-
Country Reporting
 
and
Modern
 
Slavery
Statement)
In light
 
of the Board’s obligation
under the Code,
 
the Committee
assesses external
 
reporting to
ensure it is fair, balanced
 
and
understandable.
In addition
 
to this Annual Report and
associated year-end
 
reports, the
Committee
 
also reviewed the Group’s
quarterly
 
reports and the GFD’s
presentations to analysts.
The Committee
 
informed these
reviews by:
■ Consideration
 
of reports of the
Disclosure Committee
 
which
included
 
views on content,
accuracy and tone;
■ Direct
 
questioning
 
of management
including
 
the CEO and GFD on the
transparency and accuracy
 
of
disclosures;
■ Consideration
 
of management’s
response to letters issued by the
FRC;
■ Evaluation
 
of the output of the
Group’s internal
 
control
assessments and Sarbanes
 
-Oxley
s404 internal
 
control process;
 
and
■ Consideration
 
of the results of
management’s processes relating
to financial
 
reporting matters
 
and
to evidence
 
the representations
provided
 
to the external auditors.
The Committee
 
noted specifically that
whilst the disclosures regarding
IFRS9 met nearly
 
all the
recommendations from the
 
Enhanced
Disclosure Task
 
Force these were
still evolving.
 
The Committee
encouraged
 
management to continue
to enhance
 
the disclosure particularly
as the ability
 
to analyse
 
sensitivities
was developed.
Having evaluated
 
all of the available
information,
 
the assurances
 
by
management
 
and underlying
processes used to prepare the
published
 
financial information, the
Committee
 
concluded and advised
the Board that
 
the 2019
 
Annual
Report and financial
 
statements are
fair balanced
 
and understandable.
Going concern
 
and
long-term
 
viability
Barclays is required
 
to assess
whether it is appropriate
 
to prepare
the financial
 
statements on a going
concern basis and also, in
accordance
 
with the Code, Barclays
must provide a statement
 
of its
viability.
The Committee
 
considered both the
going
 
concern assumption and the
form and content
 
of the viability
statement
 
having regard to:
■ The
 
MTP and
 
WCR;
■ The
 
forecasted liquidity
 
and
funding
 
profile;
■ The
 
results of
 
stress tests based
on both internal
 
and regulatory
specified
 
assumptions as reviewed
by the Risk Committee;
 
and
■ Current risk and
 
strategy
disclosures.
The Committee
 
recommended to the
Board that the
 
financial statements
should be prepared
 
on a going
concern basis and that there were no
material
 
uncertainties
 
that may cast
significant
 
doubt on the Group’s
ability
 
to continue as
 
a going
 
concern.
The Committee
 
also agreed that the
appropriate
 
time frame for the viability
statement
 
continued to be three
 
years
and recommended
 
the viability
statement
 
to the Board for approval.
 
 
 
 
 
 
 
14
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
 
Area of focus
Reporting
 
issue
Role of the Committee
Conclusion/action
 
taken
Impairment
(refer to Note 7
to the
financial
 
statements)
Following
 
implementation of IFRS9,
ECLs
 
are modelled
 
using a range of
forecast economic
 
scenarios. The
key areas of judgement
 
include
setting the modelling
 
assumptions,
developing
 
the macroeconomic
scenarios and the
 
methodology for
weighting
 
them, establishing the
criteria
 
to determine significant
deterioration
 
in credit quality and the
application
 
of management
adjustments
 
to the modelled output.
As part of their
 
monitoring the
Committee
 
considered a number of
reports from management
 
on:
■ The
 
continued development and
embedding
 
of controls over the
internal
 
processes
 
supporting
 
the
ECL calculation
 
and related
assessment of SOx compliance
(including
 
by the external
auditors);
■ Model
 
changes and refinements to
the staging
 
criteria;
■ Regeneration
 
of the
macroeconomic
 
variables
 
and
associated weighting;
■ Adjustments
 
made to the
 
modelled
output
 
to reflect updated data and
known model
 
deficiencies;
■ Comparisons
 
betwe
 
en actual
experience
 
and forecast losses;
and
■ Single
 
name exposures.
Having considered
 
and scrutinised
the reports, the Committee
 
agreed
with management’s
 
conclusion that
the impairment
 
provision (including
specifically
 
the £150m for anticipated
economic
 
uncertainty in the UK) was
appropriate.
Going
 
forward the Committee also
agreed with
 
management that it
would be
 
appropriate to review the
frequency
 
of regenerating the
macroeconomic
 
scenarios.
Conduct provisions
(refer to Note 24
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 PPI.
With a view to evaluating
 
adequacy of
the provision,
 
the Committee
analysed
 
the judgements and
estimates made
 
with regard to
Barclays’ provisioning
 
for PPI claims,
taking into
 
account:
■ Forecasts
 
and assumptions made
for PPI complaints;
■ Actual
 
claims levels and validity of
claims; and
■ Increased
 
levels of claims based
on the August 2019
 
time bar for
claims (including
 
claims from the
Official
 
Receiver).
In light
 
of information received, the
Committee
 
agreed with management
that the PPI provision
 
was
 
adequate
during
 
H1 2019 and did not
 
need to
be increased.
 
The PPI provision
 
was
increased in
 
Q3 2019 by £1.4bn
 
due
to the exceptionally
 
high volume of
claims received
 
in late August 2019
prior to the time
 
bar. The Committee
agreed with
 
this increase and that
 
the
level
 
of provision at the end of the
year was appropriate.
The Commit
 
tee also made
recommendations regarding
 
the
sensitivity disclosures.
Legal, competition
and
 
regulatory
provisions
(refer to Notes 24
and 26
to the financial
statements)
Barclays is engaged
 
in various
legal,
 
competition and regulatory
matters which may give
 
rise to
provisioning
 
based on the facts.
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 and assessed
management’s judgements
 
on the
levels of provisions to be taken and
accompanying
 
disclosure.
The Committee
 
discussed provisions
and utilisation
 
and 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, comp
 
etition and
regulatory
 
matters being addressed
by the Group.
 
 
 
 
 
 
15
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
DIRECTORS’
 
REPORT,
 
BOARD AUDIT
 
COMMITTEE REPORT
Ensuring
 
reporting
 
integrity
 
and
an effective
 
controls
 
environment
 
Area of focus
Reporting
 
issue
Role of the Committee
Conclusion/action
 
taken
Valuations
(refer to Notes 13 to 17 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.
The Committee:
■ Evaluated
 
reports from the Group
Financial
 
Controller;
■ Monitored
 
the valuation methods
applied
 
by management requiring
significant
 
judgement such as
 
the
ESHLA portfolio;
 
and
■ Reviewed
 
the restructuring of the
long
 
-dated derivative portfolio
which had
 
previously
 
given rise to
a significant
 
valuation disparity
with the counterparty.
The Committee
 
noted that there were
no new significant
 
valuation
judgements
 
at the end of the year.
The Committee
 
was
 
satisfied with the
accounting
 
treatment on an amortised
cost basis of the investments now
held
 
as
 
a result of the restructuring
 
of
the long
 
-dated derivative portfolio.
The Committee
 
was
 
also satisfied
that the day one
 
valuation ascribed to
resultant instruments
 
was
 
appropria
 
te
by reference both
 
to the existing
valuation
 
methodology and the
ongoing
 
profitability of the instruments
now held.
Tax
(refer to Note 9
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.
The Committee
 
is responsible for
considering
 
the Group’s tax
 
strategy
and overseeing
 
compliance with the
Group’s Tax
 
Code of Conduct.
 
In this
regard the Committee
 
received
reports from the Tax
 
Management
Oversight Committee
 
and in particular
considered
 
the utilisation of the
Luxembourg
 
tax losses
 
and revised
US holding
 
company structure.
The Committee
 
reviewed the
appropriateness of provisions made
for uncertain
 
tax positions, including
the retrospective
 
de-grouping of
certain entities from the
 
UK VAT
group.
The Committee
 
also confirmed that
the estimates and
 
assumptions used
in assessing the recoverability
 
of
deferred tax assets were supported
by the MTP.
The Committee
 
was
 
satisfied that
specific strategies were in line
 
with
the Group’s Tax
 
Code of Conduct
 
and
on behalf
 
of the Board approved the
UK Tax
 
Strategy statement
 
published
as part of the Country-by-Country
Report.
The Committee
 
noted that the
uncertain
 
tax positions covered a
diverse range of issues and as a
consequence
 
agreed with
management’s view that
 
there was
not a significant
 
risk
 
of a material
adjustment
 
during the next year.
The Committee
 
was
 
also satisfied
that deferred
 
tax assets
 
recognition
was appropriate.
 
 
 
 
 
 
 
16
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
 
Area of focus
Reporting
 
issue
Role of the Committee
Conclusion/action
 
taken
Internal
 
controls
and
 
business
control environment
Read more about
Barclays’ internal
 
control
and risk management
processes on page
 
s
 
37
to 38.
The effectiveness of the overall
control
 
environment,
 
including the
status of any significant
 
control
issues and the progress of specific
remediation
 
plans.
 
The Committee:
■ Evaluated
 
and tracked the status
of the most significant
 
control
issues through
 
regular reports
from the Chief
 
Controls Officer,
including
 
updates on lessons
learned
 
and assessment
 
against
the Controls Maturity
 
Model. The
Committee
 
also received
independent
 
evaluations
 
from BIA
and external
 
auditors;
■ Evaluated
 
the status of specific
significant
 
control Hot Spots,
specifically;
 
transaction
operations,
 
cyber, treasury and
capital
 
liquidity risk
 
reporting
 
and
model
 
risk
 
(control framework and
model
 
reporting);
■ Scrutinised
 
reports from individual
businesses and functions on their
control
 
environment
 
and focused
on the progress relating
 
to
remediation
 
areas; and
■ Monitored
 
CASS updates and
associated remediation
 
activities.
At its next meeting,
 
the Committee
will
 
receive feedback from the Chief
Controls Office
 
on the 2019
 
RCSA
process, which will
 
help inform the
Committee’s overall
 
assessment
 
of
the Group’s control environment.
 
The
Committee
 
also received preliminary
feedback from the
 
Chief Controls
Officer on the
 
2019 RCSA process
which helped
 
inform the Committee’s
overall
 
assessment
 
of the Group’s
control environment.
Throughout
 
2019, the Committee
has:
■ Monitored
 
progress
 
of BICEP
against completion.
 
At the end of
2019, the
 
Committee noted that
BICEP was on target for
completion
 
by March 2020;
■ Monitored
 
key
 
control issues
through
 
a series
 
of deep
 
dives and
scrutinised the pathway
 
to ‘Return
to Satisfactory’ in respect of
internal
 
controls operated by the
various functions
 
and businesses;
■ Recommended
 
enhancements
 
to
the RCSA review process,
including
 
streamlining review
through
 
integration with the
internal
 
control process
 
review;
and
■ Enhanced
 
monitoring of liquidity
risk remediation
 
actions
 
relating
 
to
buffer increases, following
 
an
increase in regulatory
 
technical
breaches.
Raising concerns
The adequacy
 
of the Group’s
arrangements
 
to allow employees to
raise concerns in confidence
 
and
anonymously
 
without fear of
retaliation,
 
and the outcomes of
 
any
substantiated
 
cases.
The Committee:
■ Has
 
overseen the embedding
 
of a
new centralised
 
team to manage
concerns raised; and
■ Received
 
reports from
management
 
and monitored
whistleblowing
 
metrics and
retaliation
 
reports.
The Committee
 
received two in
 
-depth
semi-annual
 
reports on
whistleblowing
 
from management. At
year-end the Co
 
mmittee noted the
recent ‘Satisfactory’ rating
 
by BIA of
the audit
 
of the centralised team and
considered
 
that the whistleblowing
programme
 
generally met with best
practice
 
as
 
identified
 
by the PRA.
However the Committee
 
encouraged
the team
 
to consider how interaction
with whistleblowers might
 
be further
enhanced
 
to improve their experience
with the process. In addition
 
the
Committee
 
stressed
 
the importance
of ensuring the time
 
taken to
investigate
 
concerns
 
robustly was
 
as
short as possible in order to mini
 
mise
the potential
 
stress
 
for all concerned.
 
 
 
 
 
 
 
17
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
DIRECTORS’
 
REPORT,
 
BOARD AUDIT
 
COMMITTEE REPORT
Ensuring
 
reporting
 
integrity
 
and
an effective
 
controls
 
environment
 
Area of focus
Reporting
 
issue
Role of the Committee
Conclusion/action
 
taken
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.
The Committee
 
has:
■ Scrutinised
 
and agreed internal
audit
 
plans, methodology and
deliverables for 2020
 
including
assessing internal
 
audit resources
and hiring
 
levels, and any impacts
on the audit
 
plan;
■ Tracked
 
the levels of
unsatisfactory audits,
 
and
monitored
 
related remediation
plans;
■ Considered
 
the recommendation
for the appointment
 
of the Chief
Internal
 
Auditor;
■ Discussed
 
BIA’s approach
 
to data
analytics;
■ Discussed
 
BIA’s assessment of
the management
 
control approach
and control
 
environment in
BBUKPLC, BBPLC
 
and the
functions;
 
and
■ Evaluated
 
the outcomes from
BIA’s annual
 
self-assessment.
At year-end the Committee
 
approved
the 2020
 
Audit Plan detailing the
number
 
of audits and areas of focus,
and was satisfied with the
 
level of
resource to be allocated.
In particular.
 
the Committee has
scrutinised:
■ The
 
appointment of the
 
new Chief
Internal
 
Auditor;
■ Internal
 
audit resource and the
ability
 
of BIA to support the 2020
Audit
 
Plan; and
■ BIA’s
 
assessment of the overall
control environment.
External audit
The work and performance
 
of
KPMG.
The Committee:
■ Met
 
with key members of the
KPMG audit
 
team to discuss
 
the
2019 audit
 
plan and KMPG’s
areas of focus;
■ Assessed regular
 
reports from
KPMG on the
 
progress
 
of the
2019 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
2019 year end;
 
and
■ considered
 
the draft SOx control
report and the draft
 
audit
 
opinion.
The Committee
 
approved the audit
plan
 
and the main
 
areas
 
of focus.
Read more about
 
the Committee’s
role in assessing the performance,
effectiveness and independence
 
of
the external
 
auditor below.
 
 
 
 
 
18
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
 
 
External auditor
Following
 
an external audit tender in 2015,
KPMG was appointed
 
as
 
Barclays’
 
statutory
auditor
 
with effect from the 2017 financial year.
Michelle
 
Hinchliffe of KPMG is the Senior
Statutory
 
Auditor and was appointed to this
role with effect
 
for the 2018 financial year.
 
Assessing external auditor
effectiveness, objectivity and
independence and non-audit
services
The Committee
 
is responsible for assessing
the effectiveness, objectivity
 
and independence
of the Group
 
’s
 
auditor,
 
KPMG. This
responsibility
 
was
 
discharged
 
throughout the
year at formal Committee
 
meetings, during
private mee
 
tings
 
with KPMG,
 
and through
discussions with key executive
 
stakeholders. In
addition
 
to the matters noted above, the
Committee
 
also:
 
 
 
Approved
 
the terms of the audit
engagement
 
letter and associated fees,
on behalf
 
of the Board;
 
Discussed and agreed
 
revisions to the
Group policy
 
on the
Provision of Services
by the Group Statutory
 
Auditor
(the Policy)
and regularly
 
analysed reports
 
from
management
 
on the non-audit services
provided
 
to Barclays;
 
 
Evaluated
 
and approved revisions to
 
the
Group policy
 
on
Employment of
Employees or Workers from the Statutory
Auditor
and ensured compliance with the
policy
 
by regularly assessing
 
reports from
management
 
detailing any appointments
made;
 
 
 
 
 
 
The Committee
considered
 
that
KPMG
 
maintained
 
its
independence
 
and
objectivity, and
 
that
the audit
 
process
was effective.
 
Was briefed
 
by KPMG on critical
accounting
 
judgements and estimates and
internal
 
controls over financial reporting;
 
Considered the
 
formal report from the
Public
 
Company Audit Oversight Board on
their review of KPMG
 
’s
 
audit
 
of the 2017
financial
 
statements
 
and the consequential
revisions made by KPMG
 
to their audits for
both the 2018
 
and 2019 financial
statements. These were in lin
 
e
 
with the
provisional
 
results reported last year; and
 
 
Assessed any potential
 
threats
 
to
independence
 
that were self-identified and
reported by KPMG.
 
The Committee
 
is aware that the FRC
 
has also
reviewed
 
certain
 
aspects of
 
KPMG
 
’s
 
audit
 
of
the 2018
 
fina
 
ncial
 
statements although its
report is not yet available.
 
KPMG has informed
the Committee
 
of areas for
 
improvement
 
which
are likely to be reported
 
by the FRC
 
and how
these matters have been
 
addressed in the
2019 audit.
 
Based on its understanding to date,
the Committee
 
believes
 
that KPMG
 
’s
 
audit
work should provide
 
reasonable assurance that
the financial
 
statements are free of material
misstatement.
 
KPMG
 
’s
 
performance,
 
independence and
objectivity
 
during 2019 were also formally
assessed at the beginning
 
of 2020 by way of a
questionnaire
 
completed by key
 
stakeholders
across the Group, including
 
the chairs of the
BBUKPLC, Barclays US LLC and Barclays
Bank Ireland
 
PLC audit committees. The
questionnaire
 
was
 
designed
 
to evaluate
KPMG
 
’s
 
audit
 
process and addressed matters
such as the quality
 
of planning and
communication,
 
technical knowledge, the level
of scrutiny and challenge
 
applied and KPMG’s
understanding
 
of the business.
 
In addition,
 
as
in the prior year,
 
KPMG nominated
 
a senior
partner of the audit
 
team reporting to the
Senior
 
Statutory Auditor to have
 
specific
responsibility
 
for ensuring audit quality. The
Committee
 
therefore met with the partner
concerned
 
without the Senior Statutory Auditor
to receive a report on his assessment of audit
quality.
 
Taking
 
into account
 
the result of all of the
above,
 
the Committee
 
considered that KPMG
maintained
 
its independence and objectivity
and that the
 
audit process was
 
effective.
 
Non-audit services
In order to safeguard the auditor
 
’s
independence
 
and objectivity, Barclays has in
place
 
a policy
 
setting out the circumstances in
which the auditor
 
may be engaged to provide
services other than those covered
 
by the
Group audit.
 
The Policy applies to all Barclays’
subsidiaries and other
 
material entities over
which Barcla
 
ys
 
has significant
 
influence. The
core principle
 
of the Policy is that non
 
-audit
services (other than those legally
 
required to
be carried out by the Group
 
’s
 
auditor)
 
should
only be performed
 
by the auditor in certain
controlled
 
circumstances. The Policy sets
 
out
those types of services that are strictly
prohibited
 
and those that are allowable in
principle.
 
Any service types that do not fall
within
 
either list are considered by the
Committee
 
Chair on a case-by-case basis,
supported by a risk assessment provided
 
by
management.
 
A summary of the Policy can be
found at
home.barclays/who
 
-we-are/our-
governance/auditor
 
-independence
.
 
The P
 
olicy
 
is reviewed on an annual basis
 
to
ensure that it is fit for purpose, and
 
that it
reflects applicable
 
rules
 
and guidelines
 
.
 
The P
 
olicy
 
is also aligned with KPMG’s
 
own
internal
 
policy on non-audit services for
 
FTSE
350 companies
 
which broadly restricts non-
audit
 
work
 
to services that are ‘closely
 
related
 
to the audit.
 
Any changes to the Policy
 
are approved at a
Group level
 
by the Committee. This is
 
in
accordance
 
with European Union law and
 
FRC
guidance,
 
pursuant to which audit committees
of Public
 
Interest Entities (such
 
as Barclays)
are required
 
to approve non
 
-audit services
provided
 
by their auditors to such
 
entities,
 
and
subsidiary Public
 
Interest Entities in the UK –
such as BBUKPLC and BBPLC
 
– can rely on
the approval
 
of non
 
-audit services
 
by the
ultimate
 
parent’s
 
audit
 
committee. It should be
noted that
 
audit services, and the fee cap, will
also be monitored
 
by the rele
 
vant audit
committee,
 
as
 
appropriate.
 
Under the Policy
 
the Committee has pre-
approved
 
all allowable services for which fees
are less than £100,000.
 
However, all proposed
work, regardless of the fees, must be
sponsored by a senior executive
 
and recorded
on a centralised
 
online system, with a detailed
explanation
 
of the clear commercial benefit
arising from engaging
 
the auditor over other
potential
 
service providers. The audit
engagement
 
partner must also confirm that the
engagement
 
has been approved in accordance
with the auditor
 
’s
 
own internal
 
ethical
standards and does not pose any threat to the
auditor
 
’s
 
independence
 
or objectivity.
 
All
requests to engage
 
the auditor are assessed
by independent
 
management before work can
commence.
 
Requests
 
for allowable
 
service
types in respect of which the fees are expected
to meet or exceed
 
the above
 
threshold must
 
be
approved
 
by the Chair of the Committee before
work is permitted
 
to begin. Services where the
fees are expected
 
to be £250,000 or higher
must be approved
 
by the Committee as a
whole.
 
All expenses and disbursements must
be included
 
in the fees calculation.
 
 
19
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
DIRECTORS’
 
REPORT:
 
BOARD
 
AUDIT COMMITTEE
 
REPORT
 
Ensuring
 
reporting
 
integrity
 
and
an effective
 
controls
 
environment
 
During 2019,
 
all engagements where expected
fees met or exceeded
 
the above threshold
were evaluated
 
by either the Committee Chair
or the Committee
 
as
 
a whole who, before
confirming
 
any approval, assured themselves
that there was justifiable
 
reason for engaging
the auditor
 
and that its independence and
objectivity
 
would not be threatened. No
requests to use KPMG were declined
 
by the
Committee
 
in 2019 (2018: none). On a
quarterly
 
basis, the Committee
 
reviewed
details
 
of individually
 
approved and pre-
approved
 
services
 
undertaken by KPMG
 
in
order to satisfy itself that they
 
posed no risk
to independence,
 
either in isolation or on an
aggregated
 
basis.
 
 
For the purposes of the Policy,
 
the Comm
 
ittee
has determined
 
that any pre-approved service
of a value of under
 
£50,000 is to be regarded
as trivial
 
in terms of its impact on Barclays’
financial
 
statements
 
and requires the Group
Financial
 
Controller to specifically review and
confirm
 
to the Commi
 
ttee that any pre-
approved
 
service with a value of £50,000-
£100,000
 
may be regarded as
 
such. The
Committee
 
undertook a review of pre-approved
services at its meeting
 
in December 2019 and
satisfied itself
 
that such pre-approved
 
services
were trivial
 
in the context of their impact
 
on the
financial
 
statements.
 
 
The fees payable
 
to KPMG for the year ended
31 December
 
2019 amounted to £56m, of
which £11m
 
(2018: £11m) was payable
 
in
respect of non
 
-audit services. A
 
breakdown of
the fees payable
 
to the auditor for statutory
audit
 
and non
 
-audit work
 
can be found
 
in Note
40.
 
Of the £11m
 
of non-audit services provided
by KPMG during
 
2019, the significant
categories of engagement,
 
i.e. services where
the fees amounted
 
to more than £500,000,
included:
 
 
 
Audit
 
-related services: services
 
in
connection
 
with CASS audits;
 
 
Other services in connection
 
with
regulatory,
 
compliance and internal control
reports and audit
 
procedures, required by
law or regulation
 
to be provided by the
statutory auditor;
 
and
 
 
Other attest and assurance services, such
as ongoing
 
attestation and assurance
services for treasury and capital
 
markets
transactions to meet
 
regulatory
requirements, including
 
regular reporting
obligations
 
and verification reports.
 
The Statutory Audit Services
for Large Companies Market
Investigation (Mandatory Use
of Competitive Tender Processes
and Audit Committee
Responsibilities) Order 2014
 
An external
 
audit tender was conducted in
 
2015 and
 
the decision was made to appoint
KPMG as Barclays’
 
external
 
auditor with effect
from the 2017
 
financial year, with
 
PwC
resigning
 
as
 
the Group
 
’s
 
statutory auditor
 
at
the conclusion
 
of the 2016 audit.
 
 
Barclays is in compliance
 
with the
requirements of The
 
Statutory Audit Services
for Large Companies Market Investigation
(Mandatory
 
Use
 
of Competitive
 
Tender
Processes and Audit
 
Committee
Responsibilities) Order 2014,
 
which relates to
the frequency
 
and governance of tenders for
the appointment
 
of the external auditor and the
setting of a policy
 
on the provision
 
of non-audit
services.
 
 
Provided
 
that KPMG continue to maintain their
independence
 
and objectivity, and the
Committee
 
remains satisfied with their
performance,
 
the Group has no intention of
appointing
 
an alternative external auditor
before the
 
end of the current required
 
period of
10 years.
 
fy2019arbplcp29i0.jpg fy2019arbplcp29i1.jpg
 
20
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
DIRECTORS’
 
REPORT:
 
BOARD
 
NOMINATIONS
 
COMMITTEE REPORT
Delivering
 
effectiveness
 
An effective Board is a cohesive Board that provides
informed and constructive support and challenge to
the management team. This is vital to the generation
of increased and sustainable stakeholder value.
 
Achieving
 
this – through its focus on the
composition
 
of the Board, its Committees
and the ExCo, and
 
by ensuring a pipeline of
succession to these and other
 
senior
management
 
key
 
roles – is the main role
 
of the
Nominations
 
Committee.
Delivering
 
effectiveness is
 
not however just
about the
 
continuous task of
 
evolving
 
the
composition
 
of the Board, a Committee or the
ExCo to ensure that each
 
is diverse and well
balanced
 
with the right mix of talent, skills and
experience
 
(illustrated below). As important
is how the Board operates – the quality
of its agenda
 
and its engagement with
management,
 
of the papers and presentations
it considers and of the rigour of its
discussions. The effectiveness of the Board
was enhanced
 
in 2019 through revisi
 
ons
to the Board engagement
 
process
 
with an
intensive
 
focus on the preparation of our
Board papers, the delivery
 
of targeted training
sessions to the Board and
 
our new programme
of prioritised
 
deep dives discussed
 
on page 10
 
.
Much was done
 
in 2019
 
on all of these fronts,
and there is more to do.
The Committee
 
comprises
 
solely Non-
Executive
 
Directors and is chaired by
our Group Chairman.
 
Details
 
on Committee
membership
 
and attendance are set out on this
page.
 
 
 
21
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
DIRECTORS’
 
REPORT,
 
BOARD NOMINATIONS
 
COMMITTEE
 
REPORT
Delivering
 
effectiveness
 
Principal activities
The Committee
 
’s
 
allocation
 
of time and
the principal
 
activities during the year
under review are set out on page
 
s
 
20 to 22.
 
Board composition
With the restructuring
 
of Barclays largely
complete,
 
and a new Chairman in place,
the Nominations Committee
 
recognised that
balancing
 
the existing skills
 
on the Board with
further banking
 
and technology experience
would enhance
 
its ability to provide informed
and constructive
 
challenge to management,
and therefore
 
its effectiveness.
 
Building
 
on the work
 
of the Committee
under previous Chairman
 
John McFarlane,
the Committee
 
analysed the skills and
experience
 
on the Board against those
required
 
to drive forward the execution of
the Group
 
’s
 
strategy and
 
the performance
 
of
the business. The
 
Committee concluded that
the Board must now include
 
more Directors
with experience
 
in technology,
 
retail banking
and wholesale
 
banking. Capturing the clear
benefits
 
of greater diversity of background and
opinion
 
was
 
also recognised
 
as
 
a top priority.
The Committee
 
also concluded that to be more
effective
 
the Board would need to be smaller.
 
 
 
The Board
 
was delighted
to announce
 
the
appointment
 
of Dr. El-
Erian, Ms
 
Fitzpatrick
 
and
Dr. Gilvary as
 
Non-
Executive
 
Directors.
Each will
 
make a
significant
 
contribution
 
to
the effectiveness
 
of the
Board.
Working alongside
 
independent external
search firms Egon Zehnder
 
and Spencer
Stuart, neither
 
of which has any connection
to Barclays or any of the Directors other than to
assist with searches for executive
 
and non-
executive
 
talent, the Committee set rigorous
criteria
 
for the roles it was seeking to fill, both
in terms of technical
 
capabilities and
cultural/style
 
attributes,
 
and conducted
extensive search and selection
 
processes.
Open advertising
 
for Board positions was
 
not
used this year.
 
The Board
 
was
 
delighted
 
to announce the
appointment
 
in September 2019 of two new
Non-Executive
 
Directors,
 
Dawn Fitzpatrick
and Mohamed
 
A. El-Erian, and is
 
confident that
each will
 
make a very significant contribution to
the effectiveness of the Board.
 
Their respective
skills and experience
 
are set
 
out in their
biographies
 
on page 3
 
.
 
Since the year end, the
Board has announced
 
the appointment of Brian
Gilva
 
ry. The Committee
 
’s
 
focus now is on
securing a further Non-Executive
 
Director with
outstanding
 
retail banking and technology
experience
 
to join the Board, with the benefits
of diversity remaining
 
a key
 
consideration.
 
The Committee
 
has also made progress
against its goal
 
of delivering a smaller Board –
a reduction
 
in membership during 2019 from
15 to 11, going
 
up to 12 with the appointment
of Dawn Fitzpatrick. On 1 January 2020,
Mohamed
 
A. El-Erian joined the Board and
Matthew
 
Lester stepped down, as announced
on 16 December
 
2019. Brian Gilvary joined
the Board on 1 February 2020.
 
Executive
 
succession
Executive
 
succession is
 
a key consideration
and during
 
the year, the Committee closely
monitored
 
the status and progress of Barclays’
strategies for attracting
 
and retaining the
best talent.
 
The Committee
 
played an important role in the
management
 
changes at ExCo level which
took place
 
in March 2019. It recognised the
significant
 
strategic an
 
d
 
operational benefits of:
 
 
Elevating
 
to the ExCo the heads of key
businesses within
 
the CIB; and
 
 
Aligning
 
the Group’s
 
global
 
consumer
banking
 
and payments business under a
newly created
 
ExCo role of Global Head of
Consumer Banking
 
and Payments.
 
You
 
can read more about
 
these and the other
management
 
changes on page 6.
Simplification of
 
governance
The Board
 
is already a little smaller than it was,
and with the
 
support of our regulators we have
simplified
 
the multi-tier structure
 
at the top of
the organisation
 
by bringing about a much
greater overlap
 
between the Board and the
board of BBPLC.
 
We expect
 
this to produce
more cohesive
 
and efficient
 
governance, and
to enhance
 
oversight by and accountability to
the Board of this key part of our business.
 
Diversity
At the end of 2019
 
we had met our 2020 Board
gender diversity
 
target of 33%. Although recent
appointments
 
took us to 31% we
 
are
committed
 
to continuing to bring the very best,
diverse talent
 
we can attract to the Board.
 
 
Alongside
 
the Board, the Committee continues
to champion
 
the benefits of diversity – be it
religious,
 
ethnic or gender diversity or diversity
of social backgrounds or cognative
 
and
personal strengths – at Board,
 
Committee and
senior management
 
level. In pursuit of this, the
Committee
 
is monitoring and supporting the
Group’s
 
focus on accelerated
 
development of
the female
 
talent pipeline, with the aim of
moving
 
more female talent into the ‘Ready
Now’ succession positions. The
 
mechanisms
being
 
used Group-wide to achieve this include:
 
 
Identifying
 
female talent;
 
Providing
 
leadership and mentoring
programmes;
 
and
 
Launching
 
‘Aspire’
 
– a programme used
to fast track the development
 
of high
potential
 
Vice Presidents to Director
(of which the majority
 
in the programme
are female).
 
Successful leadership
 
and governance
comes from different
 
experiences and
perspectives, not just one point
 
of view.
Our commitment
 
is to attract and retain a broad
based pool
 
of talent – not a particular type of
person – and the
 
Board Diversity Policy and
the Committee
 
terms of reference support this.
Both are available
 
at
home.barclays/corpo
 
rate governance
.
 
For additional
 
information on diversity and
inclusion,
 
our Diversity Policy and data on the
percentage
 
of females in senior management
positions, please
 
see pages 28 and 31
respectively
 
of the Strategic Report
 
available at
home.barclays/annualreport
.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
fy2019arbplcp31i11.jpg fy2019arbplcp31i9.jpg fy2019arbplcp31i4.jpg fy2019arbplcp31i0.jpg fy2019arbplcp31i15.jpg fy2019arbplcp31i13.jpg fy2019arbplcp31i10.jpg fy2019arbplcp31i5.jpg fy2019arbplcp31i1.jpg fy2019arbplcp31i16.jpg fy2019arbplcp31i16.jpg fy2019arbplcp31i16.jpg fy2019arbplcp31i16.jpg fy2019arbplcp31i12.jpg fy2019arbplcp31i7.jpg fy2019arbplcp31i6.jpg fy2019arbplcp31i2.jpg fy2019arbplcp31i14.jpg fy2019arbplcp31i8.jpg fy2019arbplcp31i3.jpg fy2019arbplcp31i6.jpg
 
22
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
 
Committee
 
responsibilities
 
Ensuring the
 
right individuals
are appointed
 
– in
 
line with
suitability criteria
 
– who
 
can
discharge the
 
duties and
responsibilities of
 
directors.
Effective
 
Exco, Board and
Committee composition,
 
through
focus on
 
appointment and
succession based
 
on merit
 
and
 
skill,
through
 
a diversity
 
lens.
Leading
 
candidate search
 
and
identification.
Regular
 
review of
 
succession
planning
 
and
 
recommendations
 
for
key executive
 
and
 
non-executive
roles.
Monitoring of
 
time commitments
 
for
incoming and
 
existing Directors
 
to
ensure
 
sufficient time for
 
effective
discharge of
 
duties.
Monitoring compliance
 
against
corporate
 
governance
 
guidelines
and
 
the Diversity
 
Policy, including
yearly review
 
and
any recommendations
 
for
enhancements.
Ensuring compliance
 
by the Board
with legal
 
and
 
regulatory
requirements.
Individual
 
Director, Board
and
 
Committee effectiveness
reviews
 
and
 
implementing
any required
 
actions.
Considering
 
and
 
authorising,
subject to ratification
 
by the
 
Board,
any conflicts of
 
interest.
 
Principal activities
 
 
Approval
 
of re-allocation of management positions and reporting
lines following
 
the reorganisation of the Group’s consumer banking
and payments
 
business.
 
Approval
 
of key
 
executive
 
appointments including the Global Head
of Markets.
 
Consideration
 
and approval of new Group Chief Operating Officer
and CEO of BX, allowing
 
the current role holder (Paul Compton) to
focus on the role
 
of BBPLC President.
 
 
Candidate
 
evaluation for both executive and non-executive current
and future
 
roles including
 
review of core skills
 
and (for internal
candidates) scrutiny of internal
 
feedback.
Review of the balance
 
of skills
 
and diversity on
 
the Board, and
leading
 
the search and recruitment process
 
(including
 
conflict
analysis) for candidates
 
with relevant banking
 
and technology
experience.
 
The Committee utilised external search consultants
Egon Zehnder
 
and Spencer Stuart to facilitate the targeted external
search processes based on agreed and
 
reviewed criteria.
 
Directors’ tenure and
 
effectiveness review, and identifying
candidates for re-election.
 
Approval
 
of the appointment of Ms Schueneman to the
Nominations
 
Committee.
 
Analysed ExCo composition
 
and succession
 
planning
 
for strengths
and weaknesses, focussing on increasing
 
diversity.
 
Reviewed
‘Ready Now’ successors for key roles such as Group Chief
 
Risk
Officer,
 
Group Human
 
Resources
 
Director and Group
 
Chief
Compliance
 
Officer and suggested external market mapping for
any roles where a lack of a strong pipeline
 
was
 
identified.
 
Reviewed
 
recommendations and suggested improvements arising
from the 2018
 
Board Effectiveness
 
Review.
 
Approved
 
that the 2019 Effectiveness Review be conducted
internally,
 
led by the SID with support from the Company Secretary
and Nominations
 
Committee oversight.
 
Approved
 
further enhancements to Director training through deep
dive Director training
 
sessions.
 
Review and approval
 
of the composition of the Board Committees.
 
 
 
23
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
DIRECTORS’
 
REPORT:
 
BOARD
 
NOMINATIONS
 
COMMITTEE REPORT
Delivering
 
effectiveness
 
Review of
 
Board, Committee
 
and
individual Director effectiveness
 
 
Progress against 2018
 
Board
effectiveness
 
review
 
The 2018
 
externally
 
-facilitated
 
effectiveness
review outlined
 
the following key
recommendations:
 
Board size and composition:
The 2018
review highlighted
 
that the Board, at 15
members, was large
 
relative to peers and
suggested that a Board of 10 to12
members is optimal,
 
with 8 to 10 Non-
Executive
 
Directors, provided that diversity,
succession planning
 
and skills mix criteria
continue
 
to be
 
met.
 
2019:
The size of the Board
 
was
 
reduced
to 11 (post AGM) and
 
is currently 13.
The Committee
 
believes that the size of the
Board is now more appropriate,
 
with more
work to do to reduce it further
 
in size, and
that its effectiveness, and
 
the balance of
skills, experience
 
and diversity on the
Board, have
 
been enhanced
 
during 2019.
 
Culture, purpose and values:
The 2018
review recommended
 
that the Board
ensure that the Company’s purpose and
values are fully
 
aligned with its culture
and that all
 
Directors
 
lead
 
by example
and promote
 
the desired culture.
 
2019:
Deep dives have been
 
held by the
Board covering
 
purpose, values and culture
and considerable
 
progress
 
has been made
in relation
 
to these recommendations.
 
Director training and development:
The 2018
 
review recommended that
enhanced
 
training be provided for Board
members and senior executives on
 
UK
corporate governance,
 
and that refresher
training
 
sessions
 
and more opportunities
 
for
site visits be made available.
 
2019:
Training
 
on UK corporate
governance
 
has been delivered in 2019
to Non-Executive
 
Directors and to key
executives,
 
and a new programme
 
of
training
 
sessions
 
for Directors has been
implemented,
 
with sessions
 
held
 
to date
focusing on technical
 
aspects of
 
some
of the more complex
 
areas
 
of the business,
in particular
 
within the CIB. Opportunities
for site visits in the US and the
 
UK have
been made
 
available to all Board members.
 
Board objectives:
The 2018 review
recommended
 
that to enable the Board
to spend more time
 
on longer
 
-term
and strategic issues a short set of annual
objectives would
 
help to bring focus
to key issues and would
 
result in papers
and meetings being
 
more effective.
2019:
Through
 
the programme of deep dives,
which covers a rolling
 
18-month period and
reflects the Board’s key priorities
 
and
objectives, and
 
through the effort
 
to address
the deep
 
dive topics effectively in
 
the papers
 
to
the Board, the
 
Committee believes that this
recommendation
 
has, in substance,
been addressed. Time
 
is now devoted
to strategy and strategic issues at every
meeting
 
of the Board, rather than once a year.
 
2019
 
Board
 
effectiveness
 
review
 
The 2019
 
Board effectiveness
 
review was
conducted
 
internally, in line
 
with the Code, and
was led
 
by the SID with support from the
Company
 
Secretary.
 
The review followed a
structured interview
 
process
 
with Board
members, senior management
 
and other
stakeholders, including
 
our auditors,
 
building
on the last year’s externally
 
facilitated review.
 
The review
 
is an important part of the way
Barclays monitors a
 
nd improves Board
performance
 
and effectiveness; maximising
strengths and highlighting
 
areas for further
development.
 
Feedback indicated
 
that recent changes
 
in the
composition
 
of the Board have made it more
effective,
 
with the new mix of skills and
experi
 
ence enhancing the quality of
discussion.
 
Board members commented
 
that meetings are
characterised
 
by constructive dialogue on
strategic issues, and healthy
 
challenge in an
open and
 
collegiate environment. The quality
of management’s input
 
to Board meetings
 
is
felt to have
 
improved,
 
in part as
 
a result of
more active
 
Board engagement
 
in shaping
materials
 
for debate.
 
The induction
 
of the new Chairman has been
effective,
 
enabling him to quickly understand
the organisation
 
and provide effective
challenge
 
and a strong
 
platform for inclusive
debate.
 
The integration
 
of BBPLC and BPLC board
meetings
 
is viewed as efficient, whilst still
enabling
 
the appropriate focus on matters
relevant
 
to each entity.
 
Recommendations
■ The
 
breadth
 
and complexity of some issues
may necessitate a deeper
 
discussion than
is currently possible
 
in Board meetings.
Consideration
 
will be given to the best way
to achieve
 
this without significantly
increasing
 
demands on the Board’s time;
 
■ As Barclays, and
 
the wider industry,
becomes incr
 
easingly more digital, there
may be benefit
 
to adding greater
technology
 
expertise to the Board. This
could
 
be achieved
 
either through greater
external
 
input, or by looking to expand or
adjust Board membership;
■ There
 
may also be opportunities to
increase
 
the input
 
to the Board from outside
Barclays on a wider range of issues,
thereby further
 
strengthening decision-
making and
 
ensuring that Board members
have the fullest understanding
 
of the
context for their
 
decisions; and
 
 
■ Barclays should
 
ensure that its ongoing,
structured approach
 
to workforce
engagement
 
includes
 
appropriate
opportunities for Board members to engage
directly
 
with employees, to help the Board
take the issues of interest to employees
into acc
 
ount in decision
 
-making.
 
Review
 
of Nominations
Committee effectiveness
The performance
 
of the Committee was
assessed internally
 
in
 
line with the approach
adopted
 
for all Board Committees in 2019. The
process involved
 
completion of a tailored
questionnaire
 
by Committee members and
standing
 
attendees.
 
The results confirm
 
that the Committee is
operating
 
effectively. This year’s
 
review
highlights that
 
the Committee
 
continues
 
to be
well constituted
 
and that the role and
responsibilities
 
of the Committee are clear and
well understood.
 
The Committee’s interaction
with the Board,
 
Board Committees and senior
management
 
is considered effective. In
particular,
 
this
 
year’s
 
review noted
 
the positive
steps which had
 
been taken to address
feedback from the
 
previous review on ensuring
the same flow of infor
 
mation is received by all
Non-Executive
 
Directors
 
in relation
 
to
discussions and decisions made
 
by the
Committee.
 
The review
 
also noted that the Committee may
benefit
 
from a more formalised meeting
schedule.
 
It was
 
acknowledged
 
that due to the
nature of the Committee’s roles and
responsibilities
 
this is
 
not always possible, but
further consideration
 
will be given to this
during
 
the year.
 
In response to a request to provide
 
feedback
on interaction
 
with subsidiary committees, the
review noted
 
that interaction with the
BBUKPLC nominations committee
 
had been
effective.
 
Following the consolidation of the
membership
 
of the Committee with the BBPLC
nominations
 
committee,
 
coverage of BBPLC
matters within
 
concurrent meetings was
considered
 
adequate, noting that
 
it will benefit
from further embedment.
 
 
24
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
 
Review
 
of the effectiveness
 
of other
Committees
In addit
 
ion to reviewing its own effectiveness,
the Committee
 
also reviewed the outcomes
of the effectiveness reviews conducted
 
by the
Audit,
 
Remuneration and Risk Committees
which had
 
also been conducted by way of
tailored
 
questionnaire. You can read about
those reviews in the individual
 
Committee
reports elsewhere in
 
this Governance
 
Report.
 
Following
 
consideration of the findings of the
2019 Board
 
and Board Committee
effectiveness reviews, the Directors remain
satisfied that the
 
Board and each of the Board
Committees are operating
 
effectively.
 
Individual
 
Director Effectiveness
All Directors in office
 
at the end of 2019 (with
the exception
 
of Matthew Lester who stepped
down on 1 January 2020)
 
were subject to an
individual
 
effectiveness
 
review. The
 
Chairman
and the SID considered
 
each Director’s
individual
 
contribution to the Company as
well as any feedback received
 
as
 
part of the
broader Board
 
and Committee
 
effectiveness
review. The
 
reviews were conducted by the
Chairman
 
and the Chairman’s review was
conducte
 
d
 
by the SID. The Committee also
reviewed
 
the independence of the Directors,
and in the
 
cases of Tim Breedon,
 
Mike Ashley
and Crawford Gillies,
 
all of whom have
 
served
(or will
 
have by the time of the 2020 AGM) on
the Board for more than
 
six years,
 
their
independence
 
was
 
subjected
 
to a more
rigorous review as required
 
by the Code.
 
Based on these reviews and the additional
review in respect of Mr. Staley
 
described
below
 
,
 
the Board accepted the view of the
Committee
 
that each Director proposed for
election
 
or
 
re-election
 
at the 2020 AGM
continues
 
to be effective,
 
and contributes to
the Company’s long
 
-term sustainable success.
 
Director effectiveness
 
assessment:
disclosure of
 
regulatory
 
investigation
In accordance
 
with the Code,
 
all of the current
Directors of the Company
 
will be submitting
themselves for election
 
or re-election at the
2020 AGM
 
to be held
 
on 7 May 2020, and will
be unanimously
 
recommended by the Board
for election
 
or re-election as
 
app
 
ropriate.
 
Further information
 
in this regard will be set
out in the Notice
 
of Meeting which will be
published
 
in due course.
 
In deciding
 
whether to recommend Jes Staley
for re-election,
 
the Board has carried out its
usual formal
 
and rigorous performance
assessment, which it does in respect of the
effectiveness of each of the Directors.
 
As part
of its determination
 
in respect of Mr. Staley,
the Board has had regard to media
 
reports
 
in
the past 6 months that
 
have highlighted
historical
 
links
 
between
 
Mr. Staley
 
and Jeffrey
Epstein.
 
 
As has been widely
 
reported, earlier in his
career Mr. Staley
 
developed a professional
relationship
 
with Mr. Epstein.
 
In the summer
of 2019, in
 
light of the renewed media interest
in the relationship,
 
Mr. Staley volunteered an
 
d
gave to certain
 
executives, and the Chairman,
an explanation
 
of his relationship with Mr.
Epstein.
 
Mr. Staley
 
also confirmed to the
Board that he
 
has had no contact whatsoever
with Mr. Epstein
 
at any time
 
since taking up his
role as Barclays Group CEO in
 
December
2015.
 
The relationship
 
between Mr. Staley
 
and Mr.
Epstein was the subject
 
of an enquiry from the
Financial
 
Conduct Authority (FCA),
 
to which
the Company
 
responded.
 
The FCA and the
Prudential
 
Regulation Authority subsequently
commenced
 
an investigation, which is
ongoing,
 
into Mr. Staley's characterisation to
the Company
 
of his relationship with Mr.
Epstein and
 
the subsequent description of that
relationship
 
in the Company’s response
 
to the
FCA.
 
 
Based on a review, conducted
 
with the support
of external
 
counsel, of the
 
information
available
 
to us
 
and representations made
 
by
Mr. Staley,
 
the Board (the Executive Directors
having
 
been recused) believes that Mr. Staley
has been sufficiently
 
transparent with the
Company
 
as
 
regards the nature
 
and extent
 
of
his relationship
 
with Mr. Epstein.
 
Accordingly,
Mr. Staley
 
retains the full confidence of the
Board, and
 
is being unanimously
recommended
 
for re-election at the 2020
AGM.
 
The Board
 
will continue to cooperate fully with
the regulatory
 
investigation, and will provide a
further update
 
as
 
and when it is appropriate
 
to
do so.
 
 
25
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
 
DIRECTORS’
 
REPORT,
 
BOARD RISK
 
COMMITTEE
 
REPORT
 
Effective
 
risk management:
designed
 
to identify, assess
and control
 
our risks
 
As a British universal bank, Barclays is subject to a variety of financial,
operational, legal and conduct risks.
 
 
Dear Fellow
 
Shareholders
During 2019,
 
the Committee maintained its
focus on the potential
 
impact of macro-
economic
 
developments and market volatility
on the risk profile
 
of the Group. These issues
remain
 
challenging and we continue to work
with management
 
to position the Group
conservatively
 
in response to a heightened risk
environment.
 
UK risks
were the subject of particular
attention
 
due to the economic uncertainty
arising from the
 
planned withdrawal from the
EU. The October
 
2019 withdrawal agreement
and the subsequent
 
General Election
 
result
have reduced
 
political uncertainty significantly
but the future
 
trading relationship with
 
the EU
is yet to be agreed.
 
Given the
 
tight timetable
and the potential
 
economic consequences this
remains a significant
 
area of risk.
 
The
Committee
 
has also been active in ensuring
the operational
 
resilience of the Group should
the UK leave the
 
EU without reaching an
agreement
 
on the future trading relationship.
 
We have continued
 
to encourage management
to manage
 
consumer and corporate credit
exposure in the UK in a cautious
 
man
 
ner and
this has helped
 
the Group to limit losses
 
and
avoid
 
a number of the
 
high profile corporate
failures seen during
 
2019.
 
Other key risks with potential
 
for wider
contagion
 
include those related to the
US economy
 
where underlying economic
performance
 
remains
 
robust but growth
has slowed and consumer and
 
corporate
indebtedness is high and
 
growing. Political and
trade tensions, notably
 
with China and Europe,
have increased
 
and present a threat to growth
globally.
 
 
Despite the strength of the US economy
 
in
2019, the
 
Committee remains focused on the
credit quality
 
of our consumer and corporate
lending
 
portfolios. In particular, the US credit
cards strategy was reviewed and
 
the
Committee
 
supported a continued steady
transition
 
to a higher quality book and l
 
ower-
risk new business mix.
The Committee
 
has also considered the
ageing
 
of the credit cycle
 
and rising
recessionary risks in our major
 
markets. In the
second half of 2019,
 
central banks
 
undertook
synchronised rate cuts and other
 
monetary
easing measures, with the Federal
 
Reserve
Bank reversing its 2018 rate increases in the
face of moderate
 
inflationary pressure
 
and a
weaker growth outlook.
 
This has supported
asset markets but increased
 
the margin
pressures on banks from very low or negative
interest rate
 
s,
 
whilst also presenting
operational
 
challenges. Policy tools available
to central banks to deal with
 
further economic
weakness are limited
 
and with abundant
liquidity
 
influencing risk-pricing in financial
markets, the potential
 
exists
 
for extreme
market moves to occur, not
 
least in response
to policy
 
errors.
 
These risks are actively
managed
 
and the Committee maintains
regular oversight
 
of the overall risk
 
profile
 
of
the Group’s balance
 
sheet and actions taken.
The ongoing
 
focus
 
on book quality is
evidence
 
d
 
by another positive impairment
performance
 
this
 
year.
 
The Committee
 
again reviewed in detail with
management
 
the
Group’s leveraged finance
business
 
in light
 
of continued concerns
regarding
 
reduced market liquidity, particularly
for larger transactions, lower quality
 
issues
and more aggressive structures. The
 
balance
of risk and reward in this market continues to
be acceptable
 
and underwriting losses
 
in the
year were modest. However management
 
was
encouraged
 
to remain particularly vigilant to
these trends.
 
Barclays’ strategy includes some expansion
 
of
structured credit exposures and an enhanced
control
 
framework has
 
been established
 
to
control
 
exposures and to ensure they are in
line
 
with strategy in both scale and type.
 
The Committee
 
also took on responsibility for
Conduct risk
 
following
 
the dissolution of the
Board Reputation
 
Committee in September.
The role
 
of the Committee is to oversee the
management
 
of regulatory risk
 
and challenge
the business to continue
 
to deliver fair
outcomes for customers. We have welcomed
the opportunity
 
to achieve further alignment in
the consideration
 
of both financial and non-
financial
 
risks.
 
In addition
 
to focusing on the
Conduct risk profile
 
of our core businesses,
the Committee
 
has identi
 
fied a number
 
of key
conduct
 
themes requiring active management.
Finally,
 
the Committee reviewed the significant
enhancements
 
the Group has made in its
approach
 
to the management of the
risks
 
of
climate
 
change
. Both physical and transition
risks across al
 
l
 
portfolios were considered in
the context
 
of a severe but plausible climate
stress. This analysis will
 
support the Group’s
response to the forthcoming
 
Bank of England
(BoE) industry-wide stress test. This progress
was welcomed
 
whilst acknowledging the need
for risk management
 
practices generally to
evolve
 
further across the whole industry in
respect of climate
 
change risk.
 
Operational risk
During the year,
 
the Committee
 
continued
to monitor
 
and challenge the progress
 
being
made by management
 
in the identification,
assessment and management
 
of operational
risk. A key part of this was the further delivery
and embedding
 
of work
 
commenced
 
in prior
years. Two complementary
 
risk
 
management
tools used by management
 
are the Risk
 
and
Control Self
 
-Assessments
 
(RCSAs) and
Structured Scenario
 
Assessments
 
(SSAs).
 
The RCSAs give
 
“day-to-day” coverage
 
of the
risk and control
 
environment
 
of the Group.
They are built
 
on a foundation of the actual
processes the Group employs
 
and the risks
it faces from its activities. This
 
approach
enables management
 
to better identify and
manage
 
operational risks
 
going
 
forward and
also to review in detail
 
risk
 
events that
 
have
occurred in order to identify
 
root causes.
 
 
26
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
 
The Committee
 
continued to see progress
on SSAs and a number
 
of specific scenarios
were reviewed during
 
the course of the
year covering
 
both Conduct (e.g. mis-selling of
products) and Non-Conduct
 
(e.g. customer
data compromise,
 
supplier financial failure)
scenarios. The SSAs are used to evaluate
operational
 
risk
 
arising from more
 
extreme but
plausible
 
situations and so
 
complement
 
the
RCSA approach,
 
in combination they enable
the Committee
 
to oversee the risk
 
the Group
faces at both ends of the risk likelihood
spectrum. The
 
SSAs are also an important
input
 
to our Operational
 
risk
 
stress testing and
capital
 
frameworks.
 
Risk appetite and risk models
One of the most important
 
roles
 
of the
Committee
 
is to recommend to the Board an
appropriate
 
risk
 
appetite
 
for the Group
. This
represents the amount
 
of risk
 
the Group is
able
 
to take to earn an appropriate return
whilst meeting
 
minimum internal and
regulat
 
ory capital requirements
 
in a severe but
plausible
 
stress
 
environment.
 
The Committee
analyses Barclays performance
 
in both its
internally
 
-generated stress
 
tests and those run
externally
 
by such bodies
 
as
 
the Bank of
England,
 
the European Banking Authority and
the Federal
 
Reserve Board, and following such
analysis, will
 
recommend adjustments to the
Group’s overall
 
risk
 
profile.
 
For our
internal
 
stress
 
test
, the Committee
received
 
a detailed briefing
 
on the process
being
 
applied and was satisfied that the
internally
 
-generated scenario was
appropriately
 
calibrated, and also stressed
the particular
 
vulnerabilities of the Bank. They
were further satisfied that the
 
Group would
meet internal
 
and regulatory requirements for
capital
 
and liquidity in such a scenario.
The Committee
 
continued to oversee the
improvement
 
of model risk
 
management
 
in the
Group and the
 
ongoing validation of our
models,
 
with specific
 
progress
 
and
methodology
 
enhancements in the model
outputs supporting
 
our stress
 
tests, including
the Interna
 
l
 
Capital Adequacy Assessment
Process (ICAAP) and Internal
 
Liquidity
Adequacy
 
Assessment
 
Process (ILAAP)
. Our
models are the core foundation
 
upon which
 
the
majority
 
of our internal assessment
 
processes
run. The Committee
 
is pleased to report that
progress has continued
 
during 2019 to embed
the Model
 
risk
 
management
 
framework as
evidenced
 
by an increasingly stable model
inventory
 
and further improvements in
documentation
 
and control. However, models
remain
 
a key
 
risk area for the Group,
 
and the
Committee
 
is closely monitoring the
development
 
of the Group’s approach.
 
Risk function
The Committee
 
is responsible for ensuring the
independence
 
and effectiveness
 
of the Risk
function
 
whose primary role is the oversight
and challenge
 
of risk-taking
 
as the second line
of defence.
 
It accomplishes this by
establishing
 
the policies, limits, rules and
constraints under which
 
first line activities shall
be performed,
 
consistent with the Group’s risk
appetite
 
and through monitoring the
performance
 
of the first line of defence
 
against
these policies,
 
limits and constraints. The
Committee’s responsibilities
 
include designing
a consistent classification
 
of the risks
 
faced by
the Group in
 
order to organise their
management
 
and reporting; designing and
operating
 
the process
 
of setting risk appetite
and material
 
limits for the Group as
 
a whole
and its main
 
entities; setting or approving
strategies for approvals
 
of transactions, and
sanctioning
 
large individual agreements; and
establishing
 
key
 
controls requirements to
which customer
 
-facing areas of Barclays must
adhere in
 
the conduct of their businesses.
The Committee
 
reviewed the Risk
 
function’s
own assessment of its capability
 
in late 2019
which showed the function
 
continues to meet
regulatory
 
expectations in providing effective
and
 
independent
 
oversight with strong
stewardship and technical
 
competency.
Progress continued
 
in 2019 to ensure systems
and strategic architecture
 
are fit for purpose
with further enhancement
 
on technology
capabilities due
 
from the delivery of further
strategic infrastructure
 
in 2020.
 
Compliance function
The Compliance
 
function is responsible for the
overall
 
management and oversight of Conduct
and Reputation
 
risk
 
management
 
practices as
the second line
 
of defence. Compliance
participates in
 
the prevention, detection and
management
 
of breaches of applicable laws,
rules, regulations and
 
relevant procedures and
has a key role in
 
helping Barclays achieve the
right conduct
 
outcomes. The Committee
supports the Compliance
 
function to be
independent
 
from operational functions and
have sufficient
 
authority, stature, resources
and access to the management
 
body.
 
The Committee
 
monitored
 
the delivery of the
Compliance
 
function’s Annual Plan for 2019
and approved
 
the Compliance function’s
Annual
 
Plan for 2020.
 
Committee
 
effectiveness
The 2019
 
Committee effectiveness review
was conducted
 
in line with the Code. This
internal
 
review involved completion of a
tailored
 
questionnaire by Committee members,
senior management
 
and other stakeholders,
including
 
our auditors, building on the prior
year’s externally
 
-facilitated review. The review
is an important
 
part of the way
 
Barclays
monitors and
 
improves Committee
performance
 
and effectiveness, maximising
strengths and highlighting
 
areas for further
development.
 
The results of the review were positive
 
and
indicated
 
that the Committee is operating
effectively;
 
and that it provides an effective
 
and
broad level
 
of challenge and oversight of the
areas within
 
its remit. During the year, the
Committee
 
took on
oversight of Conduct and
Compliance
 
matters
, following re-allocation of
the responsibilities from
 
the Reputation
Committee.
 
 
fy2019arbplcp36i0.jpg fy2019arbplcp36i1.jpg
 
27
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
DIRECTORS’
 
REPORT,
 
BOARD RISK
 
COMMITTEE
 
REPORT
 
Effective
 
risk management:
designed
 
to identify, assess
and control
 
our risks
 
Following
 
the consolidation of the
membership
 
of the Committee with the
BBPLC risk committee,
 
coverage of
BBPLC matters within
 
concurrent
meetings
 
was
 
considered
 
appropriate,
noting
 
that it will benefit from further
embedment.
 
Looking ahead
In 2020, the
 
Committee will
 
continue to
focus on the impact
 
of the external
environment
 
on the Group’s risk
 
profile,
particularly
 
as
 
the negotiations on the
future trade relationship
 
with the EU
progress and the
 
broader geopolitical
context evolves
 
in the run up to the US
presidential
 
election.
 
Tim Breedon
Chair, Board
 
Risk Committee
 
 
12
 
February 2020
Committee
 
meetings
During 2019,
 
the Committee met nine times
and the chart opposite
 
shows
 
how it allocated
its time.
 
Two of the meetings were held at
Barclays’ New York offices.
 
Attendance
 
by
members at Committee
 
meetings
 
is shown on
this page. Committee
 
meetings were attended
by representatives from management,
including
 
the Group Chief Executive Officer,
Group Finance
 
Director, Group Chief Internal
Auditor,
 
Group Chief Risk
 
Officer,
 
Group
Treasurer, Group
 
Chief Compliance
 
Officer
and Group General
 
Counsel, as
 
well as
representatives from the
 
businesses
 
and
other representatives
 
from the Risk
 
function.
The lead
 
audit engagement partner of KPMG,
Michelle
 
Hinchliffe, also attended Committee
meetings.
 
The Committee held a number of
separate private
 
sessions
 
with the Group
Chief Risk Officer and
 
Group Chief
Compliance
 
Officer, which were not attended
by management.
 
Committee
 
role and
responsibilities
The Committee
 
is responsible for:
 
■ Recommending
 
to the Board the Group’s
risk appetite
 
for financial, operational and
legal
 
risk;
 
■ Monitoring
 
financial, operational and legal
risk appetite,
 
including setting limits for
individual
 
types
 
of risk, e.g. credit, market
and funding
 
risk;
 
■ Mon
 
itoring the Group’s financial,
operational
 
and legal risk
 
profile;
■ Commissioning,
 
receiving and considering
reports on key financial
 
operational and
legal
 
risk
 
issues;
 
■ Providing
 
input from a financial and
operational
 
risk
 
perspective to the
Remuneration
 
Committee to assist
 
in its
deliberations
 
relating to incentive
packages; and
 
■ Oversight
 
of conduct and
 
compliance.
 
 
 
 
 
 
 
 
 
 
 
28
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
 
 
Primary activities
The Committee
 
has diligently discharged its responsibilities in 2019, reviewing Group exposures in the context of the current
 
and emerging risks
facing
 
Barclays. It has sought to promote a strong culture of disciplined
 
risk
 
management.
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
scenarios.
The risk context to
the 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 BoE.
■ To
 
advise the Board
 
on the
appropriate
 
risk
 
appetite
 
and
tolerance
 
for the principal risks,
including
 
the proposed overall
Group risk appetite
 
and limits;
 
■ To
 
discuss and agree stress loss
and mandate
 
and scale limits, for
Credit risk, Market risk and
Treasury and Capital
 
risk;
 
■ To
 
consider and approve
 
internal
stress test themes and the
financial
 
constraints and
scenarios for stress testing risk
appetite
 
for the MTP;
■ To
 
evaluate
 
the results of the
BoE’s annual
 
cyclical stress
 
test
and the BoE’s Biennial
Exploratory
 
Scenario; and
 
■ To
 
consider the
 
Federal
 
Reserve
Board’s feedback
 
of the Barclays
US LLC’s Comprehensive
Capital
 
Analysis and Review
(CCAR) following
 
the submission
of the CCAR stress test results.
The Committee
 
reviewed and recommended the
proposed risk appetite
 
to the Board for approval. It
discussed and approved
 
the 2019 mandate and scale
limits
 
for the Group, which
 
included changes
 
to A-level
stress loss limits.
 
The Committee
 
reviewed proposed enhancements to
the Group’s stress testing processes and
 
models. It
also attended
 
a stress
 
test briefing
 
providing additional
background and
 
context to aid the review and approval
of various stress tests.
The Committee
 
reviewed and approved the scenarios
for, and the financial
 
results of, the MTP internal stress
test exercise, and on the
 
basis that the results
remained
 
within the Group’s
 
risk appetite
 
constraints,
subsequently
 
recommended
 
the MTP to the Board for
approval.
 
It gave particular attention to the
 
severity of
the internal
 
stress
 
test scenario, as well as the
application
 
of “perfect foresight” methodology through
the test.
 
The Committee
 
evaluated the results of the 2018
Annual
 
Cyclical Scenario, which included increased
focus on strategic manageme
 
nt actions,
 
and approved
the 2019
 
submission to the BoE. Similarly,
 
the
Committee
 
approved Barclays’ initial Biennial
Exploratory
 
Scenario submission to the BoE.
 
The Committee
 
received updates on the 2019 CCAR
submission, and reviewed
 
the feedback from the
Federal
 
Reserve Board following the
 
release of the
results.
 
 
 
 
 
 
 
 
29
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
DIRECTORS’
 
REPORT,
 
BOARD RISK
 
COMMITTEE
 
REPORT
 
Effective
 
risk management:
designed
 
to identify, assess
and control
 
our risks
 
Area of focus
Matter addressed
Role of the Committee
Conclusion/action
 
taken
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.
■ To
 
review, on a regular
 
basis,
capital
 
performance against plan,
tracking the capital
 
trajectory,
any challenges
 
and
opportunities,
 
and regulatory
policy
 
developments;
■ To
 
assess on a regular basis
liquidity
 
performance against
both internal
 
and regulatory
requirements; and
 
■ To
 
monitor capital
 
and funding
requirements.
The Committee
 
examined and supported the forecast
capital
 
and funding trajectory and the actions
 
identified
by management
 
to manage the Group’s capital
position,
 
taking into account the potential impact of
macroeconomic
 
factors.
The Committee
 
considered and approved the Group’s
capital
 
adequacy assessment,
 
together
 
with the
methodologies
 
and results of the reverse
 
stress test
for submission of the 2019 ICAAP,
 
as
 
well as
approving
 
the Group’s 2019 ILAAP. Committee
members also attended
 
an ICAAP and ILAAP briefing
to further support their review
 
and approval
 
of the
submissions. The
 
Committee evaluated regulatory
feedback on the ICAAP
 
and ILAAP
 
and oversaw
 
the
continued
 
improvement of the processes.
 
The Committee
 
reviewed and agreed with
management’s approach
 
to an out-of-cycle refresh of
the Group’s 2018 ICAAP following
 
an increase to PPI
provisioning.
 
The Committee
 
reviewed and scrutinised the Group
Recovery Plan,
 
which forms a part of the Group’s
capital
 
and liquidity risk
 
management
 
framework, and
confirmed
 
that it was
 
fit for purpose, ahead
 
of its
presentation
 
to the Board for approval.
 
The Committee
 
approved risk
 
appetite
 
constraints in
relation
 
to capital and funding which require capital
and liquidity
 
ratios to
 
remain
 
at a level where all
internal
 
and regulatory requirements, and all
obligations
 
as
 
they fall
 
due can be met under stress.
Political and
economic risk
 
i.e. the
 
impact on
the
Group’s risk
profile
 
of
political
and economic
developments and
macroeconomic
conditions.
The potential
 
impact
on the Group’s risk
profile
 
of geopolitical
developments,
 
as
well as continuing
 
to
monitor
 
the political
and economic
impact
 
of Brexit
scenarios.
■ To
 
review and discuss plans for
the impacts of Brexit
 
under
various withdrawal
 
scenarios;
 
■ To
 
consider trends in the UK and
US economies;
 
■ To
 
assess the transmission
effects of Chinese/US trade
tensions and monitor
 
the impacts
of slowing growth in
 
China;
 
and
 
■ To
 
review exposures to
emerging
 
markets
 
as a result of
volatility
 
in these markets
 
arising
from the impact
 
of global political
and economic
 
events.
The Committee
 
monitored the potential risk
 
impacts of
Brexit, giving
 
particular consideration to the impact risk
of an exit without
 
an agreement in place. It received
updates on, and
 
oversaw management’s preparations
for, Brexit from
 
a risk perspective, review
 
ing in
particular
 
any potential impact to the capital and
liquidity
 
positions.
The Committee
 
monitored the Group’s performance in
light
 
of a backdrop of uncertain global political and
economic
 
conditions, with particular focus on Barclays’
European
 
exposures.
 
Other key material
 
risk
 
themes discussed and
monitored
 
by the Committee included rising global
debt and
 
the response of Central Banks, the low rates
environment
 
and potential for weakness
 
in US
consumer credit.
 
The Committee
 
received updates on
 
the progress
 
of
the global
 
transition to alternative risk
 
free reference
rates including
 
on preparations by the LIBOR
Transition
 
Programme to manage and mitigate the
financial
 
and non-financial risks
 
associated with the
transition.
 
 
 
 
 
 
 
30
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
 
Area of focus
Matter addressed
Role of the Committee
Conclusion/action
 
taken
Credit risk
i.e. the
 
potential
for
financial
 
loss
 
if
customers fail
 
to
fulfil
their
contractual
obligations.
Conditions in
 
the UK
housing
 
market;
levels of UK
consumer
indebtedness; and
the performance
 
of
the UK and US
cards businesses,
including
 
levels of
impairment.
■ To
 
assess conditions in the UK
property market and monitor
signs of stress;
 
■ To
 
monitor how management
was tracking and
 
responding to
persistent rising levels of
consumer indebtedness,
particularly
 
unsecured credit in
both the UK and US;
■ To
 
review leveraged
 
finance
portfolios
 
in order to assess
these were within
 
risk
 
appetite
and manageable
 
limits;
 
and
 
■ To
 
review business development
activities in
 
the CIB.
The Committee
 
continued to iterate the need to ensure
appropriate
 
credit selection and discipline when
selecting
 
business, and the importance of consumer
profiling
 
to achieve improved risk
 
selection.
 
It
encouraged
 
management to consider the impact of all
associated risks.
 
The Committee
 
oversaw improvements to the control
environment
 
in the US cards
 
business, and received
updates on the impacts of US economic
 
conditions on
the portfolio.
The Committee
 
was
 
updated
 
on programmes initiated
to assist customers to meet their
 
contractual
 
credit
obligations
 
in the UK including the
 
review of practices
in relation
 
to customer affordability and persistent debt.
The Committee
 
also reviewed the procedures
implemented
 
to manage corporate exposure to UK
sectors primarily
 
driven by consumer spending.
 
The Committee
 
received an update on the leveraged
finance
 
business,
 
which continues to be one
 
of the
largest businesses within
 
the Investment Bank, noting
that portfolios
 
were within
 
appetite and that
management
 
had a strong focus on regulatory
compliance
 
in this
 
area. The
 
Committee also received
updates on the structured finance
 
business, noting the
growth in this activity
 
and the fact that exposures
remained
 
within appetite.
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.
■ To
 
track operational
 
risk
 
key
indicators;
 
■ To
 
consider specific
 
areas of
operational
 
risks,
 
including
 
fraud,
conduct
 
risk, cyber
 
risk,
execution
 
risk,
 
technology
 
and
data, including
 
the controls that
had been
 
put in place for
managing
 
and avoiding such
risks; and
 
■ To
 
review Barclays’ approach
to scenario analyses as a risk
management
 
tool and assess
a range of SSAs which had
 
been
created to support assessments
and management
 
of tail risk
within
 
the business,
 
stress
testing and
 
risk
 
tolerance.
The Committee
 
continued to focus its
 
attention
 
on the
financial
 
and capital impacts of
 
operational risk.
 
The Committee
 
approved and recommended the 2019
Operational
 
Risk
 
Tolerance
 
Statement to the Board,
which included
 
financial loss
 
appetites for fraud and
transaction
 
operations for the first
 
time.
 
The Committee
 
used SSAs to
 
evaluate
 
operational
risks that might
 
arise in extreme but plausible
scenarios. They heard
 
updates on SSAs, including,
those in relation
 
to unauthorised trading and supplier
risk, and requested
 
that SSAs continue
 
to be
presented in
 
2020, specifically those in
 
relation to data
privacy and misuse.
 
 
 
 
 
 
 
 
31
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
DIRECTORS’
 
REPORT:
 
BOARD
 
RISK COMMITTEE
 
REPORT
Effective
 
risk management:
designed
 
to identify, assess
and control
 
our risks
 
Area of focus
Matter addressed
Role of the Committee
Conclusion/action
 
taken
Model risk
 
i.e. the
 
risk
 
of the
potential
 
adverse
consequences
from
financial
assessments
or
decisions based
on
incorrect or
misused
model
outputs and
reports.
Model
 
risk
governance.
■ To
 
evaluate
 
the appropriateness
of the Model
 
risk
 
management
framework, and monitor
 
progress
on the implementation
 
of an
enhanced
 
modelling framework,
including
 
receiving updates on
findings in
 
relation
 
to specific
modelling
 
processes.
The Committee
 
reviewed and approved the Model
Risk Tolerance
 
Criteria for 2019, which included CCAR
models at the
 
Committee’s request. The Committee
maintained
 
oversight of Model risk
 
and in particular
monitored
 
planned improvements to Barclays’ Model
risk management
 
framework
 
and ongoing upgrade
plans. The
 
Committee monitored progress to ensure
that the scope of Model
 
risk
 
management
implementation
 
was
 
expanded
 
to bring into
governance
 
non
 
-modelled methods
 
used in a number
of large model
 
frameworks.
 
The Committee
 
also maintained oversight of the
models used in the
 
2019 CCAR, ICAAP and ILAAP
submissions, and related
 
stress
 
test processes to
ensure they were materially
 
brought into governance
by management.
 
The Committee recognised the
added
 
value that stronger model gove
 
rnance
 
had on
the quality
 
of these
 
submissions.
 
The Committee
 
sought, and were provided with,
assurance from the Independent
 
Validation Unit of the
validation
 
of models in relation to specific processes,
including
 
ICAAP and ILAAP.
Risk framework
and
 
governance
The frameworks,
policies and
 
tools in
place
 
to support
effective
 
risk
management
 
and
oversight.
■ To
 
track the progress of
significant
 
risk
 
management
projects, including
 
progress
 
on
achieving
 
compliance with the
Basel Committee
 
for Banking
Supervision
 
(BCBS239) risk
 
data
aggregation
 
principles and the
RCSA process across the
Group;
■ To
 
assess risk management
matters raised by Barclays’
regulators and
 
the actions
being
 
taken by management
to respond; and
 
■ To
 
review the design
 
of the
ERMF.
The Committee
 
monitored the delivery of an action
plan
 
created by management
 
to review areas
 
identified
for potential
 
improvement identified by the
independent
 
assessment
 
of the design and
effectiveness of the Risk function
 
completed in 2018.
 
The annual
 
update to the ERMF was
 
recommended
 
to
the Board by the Committee.
 
The Committee
discussed and approved
 
an annual refresh of the
Principal
 
Risk
 
Frameworks.
 
The Committee
 
reviewed the results of the 2018
RCSAs across the Group and
 
recognised that its
output
 
was
 
extremely
 
useful to inform internal
processes, but also to facilitate
 
helpful dialogue with
the regulator.
 
The Committee
 
monitored management’s progress
 
in
achieving
 
compliance with all aspects of BCBS239,
and received
 
updates on the level of implementation
throughout
 
the year recognising the progress
 
made
towards achieving
 
full compliance by the end of 2020.
 
In relation
 
to climate change, the Committee received
an update
 
on the associated financial and operational
risks and endorsed management’s
 
app
 
roach to the
management
 
of those risks,
 
which included
 
the
establishment
 
of a Climate Change Financial Risk
 
and
Operational
 
Risk
 
Policy
 
and the inclusion of climate
change
 
in the ERMF and
 
principal risk
 
frameworks.
Remuneration
The scope of any
risk adjustments to
be taken into
account
 
by the
Board
Remuneration
Committee
 
when
making
remuneration
decisions for 2019.
■ To
 
debate
 
the Risk
 
function’s
view of performance,
 
making
a recommendation
 
to the
Remuneration
 
Committee on the
financial
 
and operational risk
factors to be taken into
account
 
in remuneration
decisions for 2019.
The Committee
 
discussed the report of the Group
Chief Risk Officer and
 
considered,
 
and reported to the
Remuneration
 
Committee on, the proposal put forward
in relatio
 
n
 
to the impact of relevant risk
 
factors in
determining
 
2019 remuneration.
 
 
 
 
32
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
 
 
Area of focus
Matter addressed
Role of the Committee
Conclusion/action
 
taken
Conduct Risk*
 
i.e. the
 
risk
 
of
detriment
 
from
the
inappropriate
supply of
financial
 
services.
Conduct robust
reviews of any
current and
emerging
 
risks
arising from the
inappropriate
provision
 
of financial
services, including
instances of wilful
negligent
misconduct.
■ To
 
receive updates from
management
 
on Conduct risk
and consider performance
against key Conduct risk
indicators, and
 
the status of
initiatives in
 
place to address
those risks to further strengthen
the culture
 
of the business;
 
■ To
 
review the effectiveness of
the Conduct
 
risk
 
framework and
approve any
 
amendments to it;
and
 
■ Reviewed
 
the Compliance
function’s annual
 
compliance
plan.
The Committee
 
accepted oversight of Conduct risk
following
 
the disbanding of the Reputation Committee
in September
 
2019. Since then the Committee has
received
 
a deep dive on Conduct risk
 
which provided a
detailed
 
overview of recent developments made in the
area as well as an update
 
on the current Conduct risk
environment,
 
and proposed areas of focus
 
for the
future.
 
The Committee
 
approved the revised Conduct risk
management
 
framework
 
which provided
 
greater clarity
on roles and responsibilities in
 
relation
 
to Conduct risk
compared
 
to previous versions.
 
The Committee
 
also
approved
 
the annual compliance
 
plan which contained
key initiatives which
 
would be
 
implemented in 2020.
*
 
The Risk Committee remit extended to
 
include the oversight
 
of Conduct risk
 
and Compliance
 
on 25 September
 
2019, following
 
the disbanding
 
of the Reputation
Committee.
 
 
33
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
DIRECTORS’
 
REPORT
 
How
 
we comply
 
 
Board leadership and company
purpose
 
Role
 
of the Board
As highlighted
 
earlier in this
 
report,
our governance
 
is structured to
 
deliver
 
an
effective
 
and entrepreneurial board which:
 
 
■ Is
 
effective
 
in providing challenge, advice
and support to management;
 
■ Provides
 
checks and balances and
encourages constructive
 
challenge;
 
■ Drives informed,
 
collaborative and
accountable
 
decision-making; and
■ Creates
 
long
 
-term sustainable value for our
shareholders, having
 
regard to our other
stakeholders.
 
Culture
 
The Barclays Way
sets the framework for
achieving
 
a dynamic and positive culture.
The Board
 
supports
The Barclays Way
 
and the
Barclays Purpose and Values.
 
It promotes
personal accountabili
 
ty and leadership and
monitors our culture
 
to satisfy itself as
 
to the
alignment
 
of Barclays’ culture to its purpose,
values and strategy.
 
See page
 
91
 
for more
details.
 
Our “whistleblowing
 
policy” enables employees
to raise any matters of concern anonymously
and is embedded
 
into our business.
 
For more
detail
 
please refer to page 16
 
of the Audit
Committee
 
Report.
 
Relations with
 
Shareholders
and
 
Stakeholders
The Board
 
recognises the importance of
listening
 
to, and understanding the views
 
of,
our shareholders and stakeholders in order
to inform
 
the Board’s decision
 
-making.
Our comprehensive
 
Investor Relations
engagement
 
helps
 
us
 
to understand
investor views about
 
Barclays, which are
communicated
 
regularly to the Board,
and our Chairman
 
engages with shareholders
on governance
 
and related matters.
Our shareholder communication
 
guidelines
are available
 
on our website at
home.barclays/investorrelations
. Our
approach
 
to stakeholde
 
r
 
engagement is
described on pages 14 to 17 in
 
the Strategic
Report available
 
at
home.barclays/annualreport
.
Institutional investors
 
Our engagement
 
with institutional investors
increased throughout
 
the year as compared
to prior years.
 
In 2019, the
 
Directors, in conjunction with the
senior executive
 
team and Investor Relations
colleagues,
 
participated in investor meetings,
seminars and conferences across many
locations, reflecting
 
the diverse
 
nature of
our equity
 
and debt
 
institutional ownership. We
held
 
conference calls/webcasts for our
quarterly
 
results briefings and an in
 
-person
presentation
 
of our 2018 full year results for
both our equity
 
and fixed income investors.
 
During 2019,
 
discussions
 
with investors
included,
 
but were not limi
 
ted to:
 
 
■ Introducing
 
our new Group Chairman, Nigel
Higgins;
 
■ Addressing
 
shareholder
 
queries relating to
the requisitioned
 
resolution at the AGM to
appoint
 
Mr. Edward Bramson as
 
a Director
of the Company;
 
■ The
 
continued digitisation of Barclays
and the value
 
being created by BX in
improving
 
the efficiency of our cost
 
base;
■ Topics
 
including
 
risk
 
management
 
and
steps taken to mitigate
 
the potential impact
from Brexit, as well as ESG factors, our CIB
strategy, and
 
valuation
 
and capital levels;
and
 
■ Corporate
 
governance
 
policy and practice.
 
Private
 
shareholders
 
During 2019,
 
we continued to communicate
with our private
 
shareholders through our
shareholder
 
mailings and via the information
available
 
on our website and through our AGM.
Shareholders can also choose to sign up to
Shareview
 
so
 
that they receive
 
information
about Barclays PLC and
 
their shareholding
directly
 
by email. We continue to endeavour
to trace shareholders who did not
 
take up their
share entitlement
 
following the Rights
 
Issue in
September
 
2013, and offer a Share Dealing
Service aimed
 
at shareholders with relatively
small shareholdings for whom it
 
might
otherwise be uneconomi
 
cal to deal in Barclays
shares.
 
 
 
34
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
 
Our
 
AGM
 
The Board
 
and the senior executive team
consider our AGM as a key date for
shareholder
 
engagement, particularly with
 
our
private shareholders. A number
 
of Directors,
including
 
the Chairman,
 
are available for
informal
 
discussion
 
before or after the meeting.
 
All of the
 
resolutions proposed by the Board at
the 2019
 
AGM were considered
 
on a poll and
were passed with votes ‘For’ ranging
 
from
70.79%
 
to 99.87%
 
of the total votes cast.
Resolution
 
24 of the AGM was a requisitioned
resolution
 
submitted by Sherborne Investors
Management
 
LP to appoint Mr. Edward
Bramson as a Director of the Company
 
and the
Board recommended
 
shareholders to vote
against it.
 
The resolution was considered on a
poll
 
and was
 
not passed, with votes ‘Against’
being
 
87.21% of the total votes cast.
 
At the 2019 AGM,
 
the vote on the 2018
Directors’ Remuneration
 
Report (Resolution 2)
was passed with 70.79
 
%
 
of votes cast
 
in
favour. For further information
 
on Barclays’
response to the significant
 
vote against the
2018 Directors’ Remuneration
 
Report, please
see page 80
 
.
 
The Board
 
has decided to hold the 2020 AGM
in Glasgow and
 
thereafter expects to alternate
AGM venues between
 
London and a venue
other than
 
London where we have a significant
business or customer presence. The
 
2020
AGM will
 
be held on 7 May 2020 at 11:00am
 
at
the Scottish Events Campus (SEC) in
Glasgow, Scotland.
 
Stakeholder engagement
 
The Board
 
continues to seek
 
to understand
all stakeholders’ views, and the impact
 
of
 
our
behaviour
 
and business
 
on customers and
clients, colleagues,
 
suppliers, communities and
society more broadly.
 
Accordingly, the Board
monitors key indicators across areas such as
culture,
 
citizenship, conduct,
 
and customer and
client
 
satisfaction on an
 
ongoing basis. In
2019, we built
 
on conversations
 
started at the
AGM to engage
 
in a continuing dialogue with
NGOs and other
 
interest groups, to improve
our understanding
 
of emerging and existing
environmental
 
and societal topics. We
 
will
publish
 
the Barclays ESG Report in March
2020, which
 
will be made available on our
website at
home.barclays/annualreport
.
 
Throughout
 
2019, we have engaged with these
stakeholders through participation
 
in forums
and roundtables
 
and joined industry, sector
and topic
 
debates and this will continue in
2020.
 
Colleague
 
engagement
 
The Group
 
has a long-standing commitment to
the importance
 
and value of colleague
engagement.
 
Our colleagues drive our
success. You
 
can read more about
 
our
commitment
 
to colleagues and our workforce
engagement
 
in the Our People and culture
section on page
 
s
 
83 to 86.
 
Conflicts of
 
interest
 
In accordance
 
with the Companies Act 2006
and the Articles
 
of Association,
 
the Board has
the authority
 
to authorise conflicts of interest,
and this ensures that
 
the influence
 
of third
parties does not compromise
 
the independent
judgement
 
of the Board. Directors
 
are required
to declare
 
any potential or actual
 
conflicts
 
of
interest that could
 
interfere with their ability to
act in the best interests of the Group.
 
The
Company
 
Secretary maintains a conflicts
register, which
 
is a record of actual and
potential
 
conflicts, together with any Board
authorisation
 
of the conflict. The authorisations
are for an indefinite
 
period but are reviewed
annually
 
by the Nominations Committee, which
also considers the effectiveness of the process
for authori
 
sing Directors’ conflicts of interest.
The Board
 
retains the power to vary or
terminate
 
these authorisations at any time.
 
Division of
 
Responsibilities
 
 
Roles on
 
the Board
Executive
 
and Non
 
-Executive Directors
share the same duties. However,
 
in line with
the principles
 
of the Code, a clear division
of responsibilities
 
has been established.
The Chairman
 
is responsible for:
 
 
■ Leading
 
the Board and its
 
overall
effectiveness;
 
■ Demonstrating
 
objective judgement;
 
■ Promoting
 
a culture of openness
 
and
constructive challenge
 
and debate between
all
 
Directors;
 
■ Facilitating
 
constructive board relations
and the effective
 
contribution of all Non-
Executive
 
Directors; and
 
■ Ensurin
 
g
 
Directors receive accurate,
clear and timely
 
information.
Responsibility
 
for the day-to-day management
of the Group is delegated
 
to the Group Chief
Executive
 
Officer who is supported in this role
by the ExCo. Further information
 
on the
membership
 
of the ExCo can be found on page
6.
 
As a Board we have set out our expectations of
each Director in
 
Barclays’
Charter of
Expectations
. This includes
 
role profiles and
the behaviours and
 
competencies required for
each role on the
 
Board, namely the Chairman,
Deputy Chairman
 
(to the extent one is
required),
 
SID, Non-Executive Directors,
Executive
 
Directors and Committee Chairs.
Pursuant to the
Charter of Expectations
, Non-
Executive
 
Directors provide effective oversight
and scrutiny,
 
strategic guidance
 
and
constructive challenge,
 
whilst holding the
Executive
 
Directors to account against their
agreed performance
 
objectives. The Non-
Executive
 
Directors, led by the Nominations
Committee,
 
have primary responsibility
for the appointment
 
and removal of the
Executive
 
Directors.
 
The SID provides a sounding
 
board for the
Chairman,
 
acts as
 
an intermediary
 
for the other
Directors when necessary,
 
and is available
 
to
sharehold
 
ers
 
if they have concerns that
 
have
not been
 
addressed through the
 
normal
channels.
 
The
Charter of Expectations
is reviewed
annually
 
to ensure it remains relevant,
and accurately
 
reflects the requirements
of the Code and the
 
Regulations, and
industry best practice. A copy of the
Charter of Expectations
can be found at
home.barclays/corporategovernance
.
 
Information
 
provided
 
to the Board
It is the responsibility
 
of the Chairman,
as set out in our Charter of Expectations,
to ensure that Board agendas
 
are focused on
key strategy, risk,
 
performance
 
and other value
creation
 
issues,
 
and that members
 
of
the Board receive
 
timely and high-quality
information
 
to enable them to make sound
decisions and promote
 
the success
 
of the
Company.
 
Working in collaboration with
the Chairman,
 
the Company Secretary is
responsible for ensuring
 
good governance and
information
 
flow, to ensure an effective Board.
 
Throughout
 
the year, both the Executive
Directors and senior executives
 
keep the
Board informed
 
of key
 
business developments
through
 
regular updates. These are in
addition
 
to the presentations that the Board
and Board Committees receive
 
as
 
part of
their formal
 
meetings. Directors
 
are able to
seek independent
 
and professional advice
at Barclays’ expense, if required,
 
to enable
them to fulfil
 
their obligations as
 
members
of the Board.
 
 
 
 
 
 
 
 
 
 
 
fy2019arbplcp44i0.jpg
 
35
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
DIRECTORS’
 
REPORT
 
How
 
we comply
 
 
Attendance
 
Directors are expected
 
to attend every Board meeting. In 2019, attendance was very
 
strong both
 
at scheduled
 
and additional meetings
 
(including
those called
 
at short notice), reflected in the table below.
 
The Chairman also met privately with the Non-Executive Directors ahead of three Board
meetings.
 
If, owing to excep
 
tional circumstances, a
 
Director was
 
not able
 
to attend a Board meeting they ensured that their views were made
known to the Chairman
 
in advance of the meeting. In addition, the SID met the other Non-Executive Directors individually,
 
without the Chairman, to
appraise the Chairman’s performance,
 
the details
 
of which are included
 
on page 24.
 
Board attendance
 
in 2019*
Independent/Executive
Scheduled
 
meetings
eligible
 
to
attend
Scheduled
meetings
attended
%
attendance
Additional
meetings
eligible
 
to
attend
Additional
meetings
attended
Chairman
 
 
 
 
 
 
Nigel
 
Higgins
on appointment
6
6
100%
0
0
Executive
 
Directors
 
 
 
 
 
 
Jes Staley
Executive
 
Director
7
7
100%
1
1
Tushar Morzaria
Executive
 
Director
7
7
100%
1
1
 
Non-executive
 
Directors
 
 
 
 
 
 
Mike Ashley
Independent
7
7
100%
1
1
Tim
 
Breedon
Independent
7
7
100%
1
1
Sir Ian Cheshire
Independent
7
7
100%
1
1
Mary Anne Citrino
Independent
7
7
100%
1
1
Dawn Fitzpatrick
Independent
3
3
100%
0
0
Mary Francis
Independent
7
7
100%
1
1
Crawford Gillies
Senior
 
Independent Director
7
7
100%
1
1
Matthew
 
Lester
Independent
7
7
100%
1
1
Diane Schueneman
Independent
7
7
100%
1
1
 
Former Chairman
 
 
 
 
 
 
John McFarlane
on appointment
2
3
100%
1
1
 
Former Directors
 
 
 
 
 
 
Sir Gerry Grimstone
Independent
1
1
100%
0
0
Reuben
 
Jeffery
Independent
2
2
100%
1
1
Dambisa Moyo
Independent
2
2
100%
1
1
Mike Turner
Independent
2
2
100%
1
1
 
Secretary
 
 
 
 
 
 
Stephen
 
Shapiro
 
7
7
100%
1
1
 
*
 
Mohamed A. El-Erian and
 
Brian Gilvary did not
 
join the Board until
 
2020.
 
 
As required by the Code, the Chairman
 
was independent
 
on appointment
 
Board Committee
 
Cross
 
membership
 
The table
 
below shows
 
the number
 
of cross-membership of our Non-Executive Directors across
 
our Board Committees
 
as
 
at 31 December 2019
 
.
 
 
 
 
 
 
 
 
 
 
 
 
 
36
 
Barclays PLC
 
2019 Annual Report on Form 20-F
 
 
Composition of
 
the Board
 
In line
 
with the requirements of the Code,
a majority
 
of the Board is comprised of
independent
 
Non-Executive Directors. We
consider the independence
 
of our Non-
Executive
 
Directors annually,
 
having regard to
the independence
 
criteria set
 
out in the Code.
As part of this process, the Board keeps under
review the length
 
of tenure of all Directors,
which can affect
 
independence. The
independence
 
of Tim Breedon, Mike Ashley
and Crawford Gillies
 
– all of whom
 
have served
(or will
 
have by the time of the 2020 AGM) on
the Board for more than
 
six years –
 
was
subjected
 
to a more rigorous review as
recommended
 
by the Code. The Board
remains satisfied
 
that the lengths of their
tenure have
 
no impact on their respective
levels of independence
 
or the effectiveness of
their contributions.
 
During 2019, the previous
Chairman
 
and the following Non-Executive
Directors stepped down
 
from the Board.
 
None
of these Directors raised any concerns about
the operation
 
of the Board management:
 
 
■ John
 
McFarlane
 
■ Dambisa
 
Moyo
 
■ Reuben
 
Jeffery
 
■ Mike
 
Turner
 
■ Sir Gerry
 
Grimstone
 
■ Matthew
 
Lester
 
The Nominations
 
Committee Report describes
the renewal
 
of the Board in
 
2019, and steps
taken to further strengthen the
 
Board.
 
Time commitment
 
All potential
 
ne