Becoming the Go-To bank

Barclays Strategic Review Executive Summary 12 February 2013

Contents

Foreword from the Chief Executive Section 1: Turnaround Section 2: Return Acceptable Numbers Breakdown by business divisions Business strategy overview Section 3: Sustain Forward Momentum Our commitments Glossary

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Barclays Bank PLC. Authorised and regulated by the Financial Services Authority. Registered in England. Registered No. 1026167. Registered office: 1 Churchill Place, London E14 5HP.

Foreword

Barclays is changing
Our Strategic Review is the roadmap to achieve our goal of becoming the Go-To bank. It sets out not just what we will do, but how we will do it.

It follows an unprecedented examination of every aspect of our business and an analysis of the profound and permanent trends redefining our industry. These include a prolonged period of lower global growth, a tougher regulatory environment and raised consumer and client expectations. It is also based on the recognition that banking lost its way in recent years, putting the pursuit of short-term profits before long-term interests. We are determined that Barclays will help shape the new era for banking. We have defined our purpose as helping people, whether customers, clients or those in the communities we serve, to achieve their ambitions in the right way. We want them to choose Barclays because of both our performance and our behaviour. At the heart of our strategy is the strong belief that there can be no conflict between good results and good values if we are to build a successful, sustainable business. We have set out a rigorous programme of work to deliver our ambitions. The Transform Programme has three elements Turnaround, Return Acceptable Numbers and Sustain Forward Momentum. This summary explains how we have stabilised the business, how we will put our performance on the right track and how, through a new values-driven culture and direction, we will become the Go-To bank.

Antony Jenkins Group Chief Executive

Barclays Bank PLC. Authorised and regulated by the Financial Services Authority. Registered in England. Registered No. 1026167. Registered office: 1 Churchill Place, London E14 5HP.

Section 1: Turnaround

Section 1: Turnaround
Turnaround was the immediate task of stabilising the business and maintaining momentum after the events of last summer.
This required us to engage and listen to our stakeholders in a way we had not before. One clear message came back: Barclays needs to change. We have taken this message fully on board. The quality and the commitment of the people at Barclays, combined with our underlying financial strength, mean we start this work from a good position. We have begun by delivering our financial objectives for 2012 and managing the legacy issues we face. To sustain this progress we need to embed a culture that delivers the right outcomes for all our stakeholders. We have agreed a common goal, purpose and values to guide us in all we do.

Our Goal is to become the Go-To bank. Our Purpose is helping people achieve their ambitions in the right way. Our Values are simple: Respect, Integrity, Service, Excellence and Stewardship.

Our Values
Respect
Means respecting and valuing those we work with our colleagues and partners. It is about building trust and promoting collaboration.

Excellence
Calls on us to use all our energy, skills and resources to deliver great service for our customers and clients and strong, sustainable results for our shareholders.

Integrity
Demands we act fairly, ethically and honestly. This requires us to have the courage always to behave well and to be accountable for our decisions.

Stewardship
Is about being determined to leave things better than we find them; always working to improve the way we operate as an organisation and the impact we have on society.

Service
Means ensuring our clients and customers are always uppermost in our minds. We must always strive to exceed their expectations.

Barclays Strategic Review Executive Summary

Section 1: Turnaround

Our Purpose and Values define the work we will and will not do, and the value we create. They define the way we hire, develop, promote and reward our people. In future we will assess our people against a balanced scorecard measuring performance against our values alongside other targets. Variable pay will depend on delivering performance in a way that is consistent with our values. This structure will be in place for all senior executives during 2013 and for all colleagues from the middle of 2014.

Barclays Strategic Review Executive Summary

Section 2: Return Acceptable Numbers

Section 2: Return Acceptable Numbers

Returning acceptable numbers means delivering a return on equity (RoE) above the cost of equity (CoE) on a sustainable basis overall and in each of our businesses.
Our new financial plan to achieve this goal is grounded in a detailed performance review. We conducted a rigorous analysis of our business, looking at 75 different performance units globally. We considered each area through both a financial and a reputational lens. We were sensitive to how we delivered returns not just what returns we deliver. Each business was considered against two key criteria: The attractiveness of the market and its changing dynamics  Our ability to generate an ROE in excess of our COE, with no attachment to prior assumptions or goals.

Quadrant 1 Invest and Grow

This quadrant includes 39 of our 75 businesses. These are areas where we will continue to innovate, invest and grow. They will drive most of our growth over the plan period and together, this group generates a return on equity in 2015 sustainably above the current cost of equity.

The strategic review concluded that Barclays will:

 Focus solely on activities that support customers and clients in geographic markets and businesses where Barclays has scale and competitive advantage  Focus investment in the UK, US and Africa, whilst maintaining an appropriate presence across Europe and Asia to support our global Investment Banking franchise  Restructure Barclays European retail operations to focus on the mass affluent customer segment  Reposition Barclays European and Asian Equities and Investment Banking Division businesses to reflect the market opportunities and maintain a relevant proposition for our clients Close the Structured Capital Markets business unit  Manage RWAs more efficiently through a run-off of legacy assets in Europe and the Investment Bank and invest in high-return businesses such as UK mortgages, Barclaycard and Wealth  Reduce total costs significantly across the Group by operating more efficiently.

Quadrant 2 Right-size
A group of 15 businesses which currently generate a little over 4bn of income. We will strategically realign these businesses and expect them to be in Quadrant 1 within the plan period.

Quadrant 3 Transition
Businesses which require more fundamental restructuring. There are 17 businesses in this section, which currently generate over 2bn of income. We plan to reposition these, monetise or sell them off over time. The estimated costs of this are in the plan. These businesses are primarily in Europe or relate to non-client activity in the Investment Bank.

Quadrant 4 Exit
This section includes four uneconomic legacy businesses. These contribute under 0.5bn of income but currently consume over 90bn of RWAs on a pro forma Basel 3 basis. Over the plan period, we expect these to reduce by nearly 50bn.

Barclays Strategic Review Executive Summary

Section 2: Return Acceptable Numbers

Breakdown by business divisions

Investment Bank
The Investment Bank is our largest business division, generating 60% of adjusted PBT in 2012. We intend to maintain its position as one of a small group of full service global investment banks. By putting in place important changes to its composition, we believe we can provide a compelling client proposition and generate appropriate returns to shareholders on a standalone basis. By 2015, we aim to achieve a return on equity of 14 to 15%, driven by RWAs of 210bn to 230bn and a compensation to income ratio in the mid-30s. Fixed Income, Currency and Commodities (FICC) This is a well-diversified business generating 63% of the Investment Banks income in 2012. It has generated attractive returns, grown its market share and has been preparing well for regulatory change. We plan to deal aggressively with legacy FICC positions, move away from non-client businesses and those with reputational challenges and align similar profile assets alongside our remaining credit market assets. For example, we will no longer trade soft commodities (such as agricultural products) for speculative purposes. Equities and Investment Banking These are less capital intensive businesses which can generate high returns over the cycle when they operate at scale. We are now well positioned in the US and the UK and we are confident that we can convert this scale into appropriate returns. There will, though, be some changes needed to deliver these returns. We will find cost savings of 300m per year from front and back office functions, reposition our business in Europe and Asia to fit market opportunities and close our Structured Capital Markets tax planning business unit.

Barclays Strategic Review Executive Summary

Section 2: Return Acceptable Numbers

Breakdown by business divisions

Corporate Banking
Our Corporate Bank is in the middle of a very strong turnaround. We have focused on servicing the cross-border needs of our largest Global Corporates and Financial Institutions clients as well as the needs of our domestic clients in the UK and Africa. The intention is to grow these businesses further by accelerating our plans to build a global cash management platform and expanding the product offering across Africa, especially in trade-related services. We will continue to reduce our European corporate exposures. By 2015, we aim to double PBT in Corporate Banking, with a return on equity over 10%.

Wealth and Investment Management

We are now one of the top ten wealth managers globally. The fragmented global market represents an opportunity to further our position through focusing on improving high return areas and repositioning those with lower returns. Our aim is to double PBT by 2015, as income continues to grow and the return on equity remains in the high teens.

Africa
Africa is the primary emerging market for Barclays. We operate in 12 countries and generated PBT of over 900m across the continent in 2012, which we expect to grow significantly over time. We will integrate our businesses across the continent through our One Africa strategy. By 2015, we aim to increase the return on equity from 3.8% to above the cost of equity in Africa Retail and Business Banking.

UK Retail and Business Banking

This is a leading franchise in our home market. The majority of our businesses here are high performing, despite the economic conditions in the UK. We see an opportunity to create a technology-driven franchise with significant improvements in customer service, controls and costs. There are also income growth opportunities, for example in mortgages. Given the environment, there is also a need to sharpen our focus on costs, to achieve a cost to income ratio in the mid-50s in 2015. Over the plan period to 2015, we expect to maintain the current level of return on equity in the high teens.

Europe Retail and Business Banking

Our European RBB business faces a difficult macroeconomic, sovereign and regulatory environment. We will reposition to focus more on the profitable mass affluent sector, while accelerating the run-off of our legacy assets. We will continue to build our small but profitable cards business. We will substantially reduce the cost to income ratio leading to a return on equity in the low single digits by 2015.

Barclaycard
Barclaycard is the 8th largest consumer payment business globally and is a top-three player in all of its chosen markets, except the US. With our competitive advantage our aim is to capitalise on opportunities in all geographies, driven by technology innovations and evolve Barclaycard into a full service payments business. Our plan is for income growth while maintaining a return on equity of over 20%.

Barclays Strategic Review Executive Summary

Section 2: Return Acceptable Numbers

Business strategy overview

Our strategy also sets out changes we will be making overall in relation to costs, RWAs, capital funding and liquidity.
Costs
Our aim is to generate 1.7bn of cost savings by 2015. Existing cost initiatives have delivered net reductions in operating expenses over the last couple of years, despite a number of unplanned costs. We expect the final effects of these existing initiatives and new actions set out above will take out significant further costs over the plan period. Those cost reductions must offset inflation and investment in growth areas. Performance against estimates will be disclosed each year.

Funding and liquidity

We will seek to maintain a diversified funding base. Our expectation is that our wholesale unsecured funding volumes will come down and the mix will change over the next three years, in particular towards secured funding. Finally, the announced changes to Basel 3 rules on liquidity should allow us to reduce the volume of liquid assets that we hold and include a broader range of high quality assets within the pool. This should reduce its carry cost to 300m.

RWAs
There have been significant management actions to reduce RWAs to provide a buffer for the further regulatory headwinds we expect and our investment in high return RWAs.  Overall we estimate an increase as at 31 December 2012 of 81bn. This gives us a pro forma starting point of 468bn  Aim is for a gross reduction in pro forma Basel 3 RWAs of 75bn by 2015  The net reduction will be less, due to investment in areas of high return, leading to our plan target of around 440bn for total Group RWAs in 2015.

Capital funding
This remains a critical component of Barclays financial strength and, along with our funding and liquidity positions, a source of competitive advantage which we want to preserve. Our aim is for a target capital position, post Basel 3, through the cycle Core Tier One ratio of 10.5%. This implies a 1.5% management buffer above the minimum required by CRD IV (European Union Capital Requirements Directive IV) and the 2% G-SIFI buffer applied by the BCBS to Barclays. The task of transition to an efficient CRD IV capital position will be challenging. Loss absorbing capital instruments will cover around 2% of Barclays RWAs in our target structure. We believe that will provide an appropriate distribution of risk between bond and equity holders. The intention is not to meet all of that with the same write-down structure that we used last year but to diversify and look at other designs.

Barclays Strategic Review Executive Summary

Section 3: Sustain Forward Momentum

Sustain Forward Momentum

This plan sets out a clear path for the first three years of our longer journey to realise our goal of becoming the Go-To bank. That longer journey depends on continuing to adapt Barclays for the future and ensuring that we do not return to a short-term bias as we execute our plans.

Beyond the immediate actions we have set out, we have also set in place longer-term markers in four critical areas: Culture, Rewards, Control and Cost.

Culture
On culture, our challenge is to ensure that we weave our Purpose and Values permanently and inextricably into our day-to-day operations. We have established a new leadership framework to ensure that the Purpose and Values is embedded into hiring, objective setting, performance assessment, reward and disciplinary procedures. At the heart of this will be the balanced scorecard, which will create a single, integrated framework for measuring performance against our values in five dimensions: customers and clients, company, conduct, colleagues and citizenship. As noted above, this scorecard will be in place for all colleagues from the middle of 2014. We will also develop an integrated report card for the bank as a whole, reflecting our values as well as our financial performance, which we will update annually a fundamental shift in our approach to reporting.

Rewards
We will also be making major changes to our reward structure. We will continue to pay for performance and we will continue to pay competitively for the best talent. But in future variable pay will depend on performance against our values as well as other targets. We also need to make a more fundamental shift on pay. Barclays Group compensation to net income ratio fell from 42% in 2011 to 38% in 2012. Over time we want to move to a sustainable compensation to net income ratio in the mid-30s.

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Section 3: Sustain Forward Momentum

Sustain Forward Momentum

Control
A strong culture is the first line of defence against repeating the mistakes of the past. Individuals and business units are responsible for operating in a way that is both compliant with regulatory requirements and consistent with our Purpose and Values. Given the importance of what we do to society, however, we must also have in place world-class controls systems. For the first time all compliance staff will report to a single global function head and will operate completely independently of business and regional management teams. This will be supported by significant new investment, training and process change.

Cost
Finally, we believe that cost will be the strategic battleground for banking over the next decade. For the first time we intend to take a strategic approach to managing cost as an integrated part of our plans to improve controls and the service we offer to our customers and clients. Technology has a critical role to play in cost reduction. For example, we have already made significant progress in pioneering self-service technology. We believe that we will be able to increase self-service rates from low double digits today to at least half of all transactions over time. This will reduce processing volumes as well as complaints while freeing resource to improve the quality of customer interaction in other areas. In addition, the integration of new technologies, including cloud-based platforms, will lead to significant reductions in headcount, physical IT infrastructure and data centres. The granularity of the Strategic Review has also highlighted significant new opportunities to reduce duplication. This will build on existing work to integrate our operations in Africa as well as the further integration of our Corporate Banking business and our Investment Bank.

We are already delivering on many of these pillars in different parts of Barclays. We will now scale that experience across the Group to deliver savings of 1.7bn through our plan period and further sustainable cost reductions over the medium term.

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Section 3: Sustain Forward Momentum

Our commitments
We are making a series of financial and non-financial commitments against which progress can be tracked across the plan period. We will update against these commitments every six months. Non-financial commitments
 Provide greater disclosure and transparency around our financial performance  Embed our purpose and values across Barclays and publish an annual scorecard assessing our performance.

Financial commitments
 Deliver a return on equity for the Group in excess of the Group cost of equity in 2015, which we have assumed will remain at the current 11.5% level  In 2013, reduce headcount by at least 3,700 across the Group, including 1,800 in the Corporate & Investment Bank and 1,900 in Europe Retail and Business Banking. This is expected to result in a restructuring charge of close to 500m in Q1 2013  Reduce the Groups total cost base by 1.7bn to 16.8bn in 2015, including interim cost estimates of 18.5bn and 17.5bn in 2013 and 2014 respectively. This excludes one-time costs to achieve the strategic plan of 1bn in 2013, 1bn in 2014 and 0.7bn in 2015, delivering a Group cost to income ratio in the mid-50s in 2015  Target Risk Weighted Assets (RWAs) of 440bn by the end of 2015, after mitigating the estimated impact of CRD IV (81bn) through legacy asset and other RWA reductions (75bn), enabling RWA investment in selected areas  Report a transitional Common Equity Tier 1 ratio above its target ratio of 10.5% in 2015  From 2014, accelerate our progressive dividend policy, targeting a payout ratio of 30% over time.

For more information on the Transform Programme and Barclays Strategic Review visit barclays.com/transform

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Glossary
Basel 3 The third of the Basel Accords. Developed in response to the financial crisis of 2008, setting new requirements on composition of capital, counterparty credit risk, liquidity and leverage ratios. BCBS A forum for regular co-operation on banking supervisory matters which develops global supervisory standards for the banking industry. Its members are officials from central banks or prudential supervisors from 27 countries and territories. Commission A service charge issued by a bank in return for providing investment advice and/or handling the purchase or sale of a security. It can be a fixed or percentage value of the asset traded. Core Tier One Capital Called-up share capital and eligible reserves plus noncontrolling equity interests, less intangible assets and deductions relating to the excess of expected loss over regulatory impairment allowance and securitisation positions as specified by the FSA. Cost of Equity (COE) The rate of return targeted by the equity holders of a company. CRD IV (Capital Requirements Directive IV) The Fourth Capital Requirements Directive. Proposal for a Directive and an accompanying Regulation that together will (among other things) update EU capital adequacy and liquidity requirements and implement Basel 3 in the European Union. Currency A system of money issued by a government and circulated in a particular economy. Fixed Income Fixed income is any type of investment that yields a regular (fixed) payment and the eventual return of the principal investment at maturity. G-SIFI (Global Systemically Important Financial Institution) A list of global banks that are required to hold extra capital equal to between 1-2.5% of their assets because of their importance to the global financial system. Mass affluent A term used to refer to the wealthiest end of the mass market. Profit Before Tax (PBT) Profit before tax (PBT) is a profitability measure that looks at companys profits before the company has paid corporate income tax. Pro-forma Projected or estimated financial statement that attempts to present a reasonably accurate figure of a firms financial situation should present trends or certain assumptions hold true. Often used to formulate business plans or reflect a planned transaction. Proprietary trading When a financial institution trades for direct gain using its own capital and resources, rather than on behalf of a customer. Soft commodities A traded commodity that is often categorised as an agricultural product or livestock, such as coffee, cocoa, pork and corn. This term generally refers to commodities that are grown or reared, rather than mined. Return on Equity (ROE) Return on Equity measures the rate of return the management of a company have been able to generate on the equity funds given to them by the shareholders. Risk Weighted Assets (RWA) A measure of a banks assets adjusted for their associated risks. Risk weightings are established in accordance with the Basel Capital Accord as implemented by the FSA. Run-rate A metric used to show a companys financial performance if you were to extrapolate the current results out over a certain period of time.

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