Barclays

Barclays Bank plc

Company type	Public (LSE: BARC, NYSE: BCS, TYO: 8642)
Industry	Banking
Founded	1690
Headquarters	London, England, UK
Area served	Worldwide
Key people	Marcus Agius (Chairman) John S. Varley (Group Chief Executive) & (Executive Director) Robert Diamond (President)
Products	Commercial banking Investment banking Investment management
Revenue	£28,010 million (2008)
Operating income	£6,077 million (2008)
Net income	£5,287 million (2008)
Number of employees	147,000 (2008)
Website	www.barclays.com

The Barclays Group is based in One Churchill Place, Canary Wharf.

Barclays plc is a major global financial services provider operating in Europe, North America, the Middle East, Latin America, Australia, Asia and Africa. It is a holding company that is listed on the London, New York and Tokyo stock exchanges. It is also a constituent of the FTSE 100 Index. It operates through its subsidiary Barclays Bank plc.

Barclays PLC is ranked as the 25th largest company in the world according to Forbes Global 2000 (2008 list) and the fourth largest financial services provider in the world according to Tier 1 capital ($32.5 billion). It is the second largest bank in the United Kingdom based on asset size, although its share price of about 50p in January 2009 is considerably lower as a result of a fall in investor confidence.

The bank's headquarters are at One Churchill Place in Canary Wharf, in London's Docklands, having moved there in May 2005 from Lombard Street in the City of London. The company also operates Barclays Bank of Delaware, which issues Juniper credit cards, one of the largest issuers of credit cards in the United States.

History

Early years

This bank traces its roots back to 1690 when John Freame and Thomas Gould started trading as Goldsmith bankers in Lombard Street London. The name "Barclays" became associated with the business in 1736, when James Barclay, son-in-law of John Freame, one of the founders, became a partner in the business. In 1728, the bank moved to 54 Lombard Street, which was identified by the 'Sign of the Black Spread Eagle', over the years becoming a core part of the bank's identity.

In 1896 several banks in London and the English provinces, notably Backhouse's Bank of Darlington and Gurney's Bank of Norwich, united under the banner of Barclays and Co., a joint-stock bank. Between 1905 and 1916 Barclays extended its branch network by making acquisitions of small English banks.

Further expansion followed in 1918 when Barclays amalgamated with the London, Provincial and South Western Bank and in 1919 when the British Linen Bank was acquired by Barclays Bank, although the British Linen Bank retained a separate board of directors and continued to issue its own bank notes. Then in 1924 the planned takeover of National Bank of Kingston reached near-completion but was halted three days before finalisation.

Post War

In 1965 Barclays established a US affiliate, Barclays Bank of California in San Francisco.

Barclaycard, the first credit card in the UK, was launched in 1966 and in 1967 Barclays unveiled the first ATM cash machine at Enfield, north London.

In 1969 the planned merger with Martins Bank and Lloyds Bank was blocked by the Mergers and Monopolies Commission but the acquisition of Martins Bank on its own was allowed. Also that year the British Linen Bank subsidiary was sold to the Bank of Scotland in exchange for a 25% stake, a transaction that became effective from March 1971.

In 1980, Barclays Bank International expanded its business to include commercial credit and took over American Credit Corporation, renaming it BarclaysAmerican.

Barclays became the first bank to re-open branches on Saturday mornings in 1982, twenty years after the practice ended. Two years later, in 1984, Barclays posted record profits.

The following year Barclays Bank and Barclays Bank International merged: as part of the corporate reorganisation, the former Barclays Bank PLC became a group holding company, renamed as Barclays PLC and UK retail banking was integrated under the former BBI, and renamed Barclays Bank PLC.

In 1985 Barclays introduced Connect, the first debit card in the United Kingdom.

Then in 1986 Barclays sold its South African business operating under the Barclays National Bank name after protests against Barclays' involvement in South Africa and its apartheid government. Also that year Barclays bought de Zoete & Bevan and Wedd Durlacher to form BZW and to take advantage of the Big Bang on the London Stock Exchange. And in 1988 Barclays sold Barclays Bank of California to Wells Fargo Bank, N.A.

Edgar Pearce, the "Mardi Gras Bomber", began a terror campaign against the bank and the supermarket chain Sainsbury's in 1994.

In 1996 Barclays bought Wells Fargo Nikko Investment Advisors (WFNIA) and merged it with BZW Investment Management to form Barclays Global Investors.

Two years later - in 1998 - the BZW business was broken up and parts were sold to Credit Suisse First Boston: Barclays retained the debt business which formed the foundation of what is now Barclays Capital.

In 1999 in an unusual move as part of the trend at the time for free ISPs, Barclays launched an internet service called Barclays.net: this entity was acquired by British Telecom in 2001.

The new millennium

Barclays on Queen Street in Morley, West Yorkshire

The year 2000 saw the acquisition of Woolwich plc (formerly the Woolwich Building Society). Then in 2001 Barclays closed 171 branches in the UK, many of them in rural communities: Barclays called itself "THE BIG BANK" but this name was quickly given a low profile after a series of embarrassing PR stunts.

In 2003 Barclays bought the American credit card company Juniper Bank from CIBC, re-branding it as "Barclays Bank Delaware". The same year saw the acquisition of Banco Zaragozano, the 11th Spanish bank.

Barclays took over sponsorship of the Premier League from Barclaycard in 2004.

In 2005 Barclays sealed a £2.6bn takeover of Absa Group Limited, South Africa's largest retail bank, acquiring a 54% stake on 27 July 2005.

Then in 2006 Barclays purchased the HomEq Servicing Corporation for $469 million in cash from Wachovia Corp. That year also saw the acquisition of the financial website Comparetheloan and Barclays announcing plans to rebrand Woolwich branches as Barclays, migrating Woolwich customers onto Barclays accounts and migrating back-office processes onto Barclays systems - the Woolwich brand was to be used for Barclays mortgages.

In January 2007 Barclays announced that it has purchased the naming rights to the Barclays Center, a proposed 18,000-seat arena in Brooklyn, New York, where the New Jersey Nets planned to relocate.

Planned merger with ABN AMRO

In March 2007 Barclays announced plans to merge with ABN AMRO, the largest bank in the Netherlands. However, on 5 October 2007 Barclays announced that it had abandoned its bid, citing inadequate support by ABN shareholders. Fewer than 80% of shares had been tendered to Barclay's cash-and-shares offer. This left the consortium led by Royal Bank of Scotland free to proceed with its $99.9 billion counter-bid for ABN AMRO.

To help finance its bid for ABN AMRO, Barclays sold a 3.1% stake to China Development Bank and a 3% stake to Temasek Holdings, the investment arm of the Singaporean government.

Also in 2007 Barclays agreed to purchase Equifirst Corporation from Regions Financial Corporation for $225 million. That year also saw Barclays Personal Investment Management announcing the closure of their operation in Peterborough and its re-siting to Glasgow, laying off nearly 900 members of staff.

Financing

On 30 August 2007, Barclays was forced to borrow £1.6bn ($3.2bn) from the Bank of England sterling standby facility. This is made available as a last-resort when banks are unable to settle their debts to other banks at the end of daily trading. Despite rumours about liquidity at Barclays, the loan was necessary due to a technical problem with their computerised settlement network. A Barclays spokesman was quoted as saying "There are no liquidity issues in the U.K markets. Barclays itself is flush with liquidity."

On 9 November 2007, Barclays shares dropped 9% and were even temporarily suspended for a short period of time, due to rumours of a £4.8bn ($10bn) exposure to bad debts in the US. However, a Barclays spokesman denied the rumours. Subsequent write-downs at the bank were announced to be £1 billion ($1.9 billion), much less than feared.

In July 2008, Barclays attempted to raise £4.5bn through a non-traditional rights issue to shore up its weakened Tier 1 capital ratio, which involved a rights offer to existing shareholders and the sale of a stake to Sumitomo Mitsui Banking Corporation. Only 19% of shareholders took up their rights leaving investors China Development Bank and Qatar Investment Authority with increased holdings in the bank.

In 2008 Barclays bought the credit card brand Goldfish for $70 million gaining 1.7 million customers, and $3.9 billion in receivables. Barclays also bought a controlling stake in the Russian retail bank Expobank for $745 million. Later in the year Barclays commenced its Pakistan operations with initial funding of $100 million. Barclays Looks to Sell Asset Management Unit (March 16, 2009)

Lehman Brothers acquisition

On September 16, 2008, Barclays announced its agreement to purchase, subject to regulatory approval, the investment-banking and trading divisions of Lehman Brothers, a United States financial conglomerate that had filed for bankruptcy. In the deal, Barclays will also acquire the New York headquarters building of Lehman Brothers.

On September 20, 2008, a revised version of the deal, a $1.35 billion (£700 million) plan for Barclays plc to acquire the core business of Lehman Brothers (mainly Lehman's $960 million Lehman's Midtown Manhattan office skyscraper, with responsibility for 9,000 former employees), was approved. Manhattan court bankruptcy Judge James Peck, after a 7 hour hearing, ruled: "I have to approve this transaction because it is the only available transaction. Lehman Brothers became a victim, in effect the only true icon to fall in a tsunami that has befallen the credit markets. This is the most momentous bankruptcy hearing I've ever sat through. It can never be deemed precedent for future cases. It's hard for me to imagine a similar emergency."

Luc Despins, the creditors committee counsel, said: "The reason we're not objecting is really based on the lack of a viable alternative. We did not support the transaction because there had not been enough time to properly review it." In the amended agreement, Barclays would absorb $47.4 billion in securities and assume $45.5 billion in trading liabilities. Lehman's attorney Harvey R. Miller of Weil, Gotshal & Manges, said "the purchase price for the real estate components of the deal would be $1.29 billion, including $960 million for Lehman's New York headquarters and $330 million for two New Jersey data centers. Lehman's original estimate valued its headquarters at $1.02 billion but an appraisal from CB Richard Ellis this week valued it at $900 million." Further, Barclays will not acquire Lehman's Eagle Energy unit, but will have entities known as Lehman Brothers Canada Inc, Lehman Brothers Sudamerica, Lehman Brothers Uruguay and its Private Investment Management business for high net-worth individuals. Finally, Lehman will retain $20 billion of securities assets in Lehman Brothers Inc that are not being transferred to Barclays. Barclays had a potential liability of $2.5 billion to be paid as severance, if it chooses not to retain some Lehman employees beyond the guaranteed 90 days.

Recent developments

Reuters later reported that the British government would inject £40 billion ($69 billion) into three banks including Barclays, which might seek over £7 billion. Barclays later confirmed that it rejected the Government’s offer and would instead raise £6.5 billion of new capital (£2 billion by cancellation of dividend and £4.5 billion from private investors).

In January 2009 the press reported that further capital may be required and that while the government might be willing to fund this, it may be unable to do so because the previous capital investment from the Qatari state was subject to a proviso that no third party might put in further money without the Qataris receiving compensation at the value the shares had commanded in October 2008.

In March 2009 it was reported that in 2008, Barclays received billions of dollars from its insurance arrangements with AIG, including $8.5bn from funds provided by the United States taxpayers to bail out AIG.

Operations

Constituents of the Barclays Group

• Barclays Bank PLC
• Mercers Debt Collection Agency
• Barclays Bank Delaware (formerly Barclaycard US, originally Juniper Bank, acquired 2003)
• Barclays Retail Bank — UK clearing bank
• Barclays Commercial Bank — Dealing with medium and larger corporate UK business.UK banks
• Barclays Wealth — Stockbrokers, Offshore and Private bank
• Barclays Private Clients International Ltd. — subsidiary based in the Isle of Man with branches in the Channel Islands
• Barclays Private Equity
• Barclaycard — Global credit card business
• Barclaycard US — Separate from the Barclaycard global operation, this is the corporation's US credit card operation (formerly known as "Juniper Bank"). Issues branded credit cards such as US Airways, Midwest Airlines, Frontier Airlines MasterCard, Airtran Airways Visa card, and Apple Store Visa and MasterCard accounts.
• Barclays Capital — Investment bank
• Barclays Global Investors — Investment management company
• Woolwich plc — UK mortgage brand
• Barclays Africa — To be transferred to ABSA (South Africa)
• Barclays Spain (550 branches)
• Barclays Portugal (162 branches)
• Barclays France
• Barclays Morocco
• Barclays Pakistan
• Absa Group Limited (South Africa)
• Firstplus Financial Group PLC
• Barclays Partner Finance (formerly Clydesdale Financial Services)
• Barclays India
• PT Bank Akita (due to be rebranded Barclays Bank Indonesia)

Organisational structure

Barclays is headed by Marcus Agius, the Group Chairman, who joined the Board on 1 September 2006 and succeeded Matthew Barrett as Chairman from 1 January 2007. Agius is also the senior executive Director of the BBC and was formerly Chairman of BAA PLC, Chairman of Lazard in London and a Deputy Chairman of Lazard LLC until 31 December 2006.

Reporting directly to the Group Chairman is John Varley, the Group Chief Executive, who is responsible for the strategic direction and planning of all Barclays operations. Varley was appointed to the role in September 2004 prior to which he served as Deputy Chief Executive (January-September 2004) and Group Finance Director (2000-2003).

The operating units of Barclays are grouped under two umbrellas; Investment Banking and Investment Management (IB&IM) and Global Retail and Commercial Banking (GRCB). IB&IM oversees three core operating units: Barclays Capital, Barclays Global Investors (BGI) and Barclays Wealth.

GRCB oversees multiple operating units. Principally it has responsibility for UK Retail Banking (UKRB), Barclays Commercial Bank (formally UK Business Banking), Barclaycard and International Retail and Commercial Banking (IR&CB).

Branch of Barclays in Westminster

Board of Directors

Barclays is headed by Group Chief Executive John Varley. Within the Group CEO's office are housed the central corporate functions of Human Resources, General Counsel, Corporate Affairs, Internal Audit and Group Chief of Staff. The company has no COO or CIO. Paul Idzik, the former COO, completed an organisational redesign that saw IT functions devolved to the core business divisions - Global Retail & Commercial Banking and Investment Banking - and, following completion Idzik resigned from his post.

Serving alongside Mr. Varley on the Group's ExCo are:

• Chris Lucas - Group Finance Director
• Bob Diamond - President, Barclays PLC; CEO, Investment Management & Investment Banking
• Frederik (Frits) Seegers - CEO, Global Retail & Commercial Banking

The Board Members are:

• Marcus Agius - Chairman
• Sir Richard Broadbent - Senior Independent Director
• David Booth - Non Executive Director
• Richard Leigh Clifford - Non Executive Director
• Professor Dame Sandra Dawson - Non Executive Director
• Professor Sir Andrew Likierman - Non Executive Director
• Stephen Russell - Non Executive Director
• Sir John Sunderland - Non Executive Director
• Fulvio Conti - Non Executive Director
• Sir Michael Rake - Non Executive Director
• Sir Nigel Rudd - Non Executive Director (Until AGM in April 2009 when he will retire)
• Patience Wheatcroft - Non Executive Director
• Simon Fraser - Non Executive Director

Branches

Barclays has over 1800 UK high street branches (including former Woolwich branches) and it has also joined up with the Post Office Ltd to provide personal banking services to customers who live near a Post Office branch and those who need financial services such as secured or unsecured loans.

Worldwide, Barclays has over 4,750 branches in over 50 countries.

Most Barclays branches have 24/7 ATMs. Barclays' customers and customers of many other banks can use Barclays ATMs free of charge.

Barclays is a member of the Global ATM Alliance.

Sponsorships

Since 2004, Barclays has sponsored the Premier League and, from 2006, the Churchill Cup. Barclays also sponsored the Football League from 1987 until 1993, succeeding Today newspaper and being replaced by Endsleigh Insurance. It also sponsored the 2008 Dubai Tennis Championships.

Controversy

Involvement with South Africa under apartheid

Barclays bank was known by many in the 1980s as 'Boerclaysbank', due to its continued involvement in South Africa during the Apartheid regime. A student boycott of the bank led to a drop in its share of the UK student market from 27 per cent to 15 per cent by the time it pulled out in 1986.

In 2006 a South African activist group, the Jubilee South Africa backed Khulumani Support Group, sought reparations from Barclays in addition to Citigroup, BP, Royal Dutch Shell, Ford, GM, and Deutsche Bank for their roles indirectly supporting the apartheid government in South Africa during the 1970s and 1980s. The legal proceedings are being heard at the Second Circuit Court of Appeals in New York, and the South African Ministry of Justice is seeking dismissal of the case on the grounds that it undermines its national sovereignty.

Financial support for the Mugabe regime in Zimbabwe

Barclays helps to fund President Robert Mugabe's regime in Zimbabwe. The most controversial of a set of loans provided by Barclays is the £30m it gives to help sustain land reforms that saw Mugabe seize white-owned farmland and drive more than 100,000 black workers from their homes. Opponents have called the bank's involment a 'disgrace' and an 'insult' to the millions who have suffered human rights abuses. Barclays spokesmen say the bank has had customers in Zimbabwe for decades and abandoning them now would make matters worse, 'We are committed to continuing to provide a service to those customers in what is clearly a difficult operating environment".

Barclays also provides two of Mugabe’s associates with bank accounts, ignoring European Union sanctions on Zimbabwe. The men are Elliot Manyika and minister of public service Nicholas Goche. Barclays has defended its position by insisting that the EU rules do not apply to its 67%-owned Zimbabwean subsidiary because it was incorporated outside the EU.

Accusations of money laundering

In March 2009, Barclays was accused of violating international anti-money laundering laws. According to the NGO Global Witness, the Paris branch of Barclays held the account of Equatorial Guinean President Teodoro Obiang's son, Teodorin Obiang, even after evidence that Obiang had siphoned oil revenues from government funds emerged in 2004. According to Global Witness, Obiang purchased a Ferrari and maintains a mansion in Malibu with the funds from this account.

Senior management bonuses

Robert Diamond, a US-born banker on the board of Barclays, was set to receive a £14.8m bonus in 2008 even though the subprime mortgage crisis in the US forced his group to take a £1.6bn hit in 2007.

Tax avoidance

In March 2009 Barclays obtained an injunction against The Guardian to remove from its website confidential leaked documents describing how SCM, Barclays' structured capital markets division, planned to use more than £11bn of loans to create hundreds of millions of pounds of tax benefits, via "an elaborate circuit of Cayman Islands companies, US partnerships and Luxembourg subsidiaries". In an editorial on the issue, the Guardian pointed out that due to the mismatch of resources tax-collectors (HMRC) have now to rely on websites such as Wikileaks to obtain such documents, and indeed the documents in question have now appeared on Wikileaks. Separately, another Barclays whistleblower revealed several days later that the SCM transactions had produced between £900m and £1bn in tax avoidance in one year, adding that "The deals start with tax and then commercial purpose is added to them."

Links to the arms trade

In December 2008 the British anti-poverty charity War on Want released a report documenting the extent to which Barclays and other UK commercial banks invest in, provide banking services for and make loans to arms companies. The charity writes in its report that Barclays is the world's largest arms investor, holding £7.3 billion in shares in the arms manufacturers. The report also details Barclays' dealings with known producers of cluster munitions and depleted uranium.

Bibliography

• Barclays Bank Limited 1926-1969: Some Recollections by A W Tuke and R J H Gillman.
• The Eagle Looks Back: A Silver Jubilee Anthology of Twenty-Five years Contributions to "The Spread Eagle" (Staff magazine which first appeared in 1926)

See also

• European Financial Services Roundtable
• PINsentry
• List of banks in the United Kingdom
• Subprime mortgage crisis

References

• "The Forbes Global 2000". 2008 list. Retrieved 2008-04-13.
• "Top 1000 World Banks 2006". The Banker. Retrieved 2006-09-03.
• "Barclays Newsroom". Barclays plc. Retrieved 2007-01-27.

External links

• "Barclays' corporate website".
• "Barclays UK Branch Locations".
• "Profile for Barclays plc". Yahoo! Finance.
• "Profile for Barclays plc". Google Finance.