Task 1

Introduction

Global Perspective of Financial Performance

Influence of investment on the financial performance of Barclays Bank

Influence of asset valuation on the financial performance

Task 2
Micro –Environment (shareholders)

Macro-Environment

Political and Legal

Economic

Social Analysis

Technological Analysis

Regulatory Capital

Total Shareholder Return

Total Shareholder Return (TSR) is publicly used by Barclays as a way to measure value
created for shareholders. Until 2006, Barclays created significant value for its shareholders:
£100 invested in Barclays’ shares at the end of 2000 would have been worth £179 at the end
of 2006 as the sum of the share price at the time and accumulated dividends, representing a
compound annual growth rate of 10%. Nonetheless, this has been reducing value since then,
as the same shares would be only worth £78 at the end of 2012.

Figure 1: Index of Barclays’ TSR

Main Competitors
Barclays Bank PLCis a financial offering institution operating in a competitive
banking sector of the world. The bank has faced stiff competition from other banks offering
the same products and services across the globe such as Japanese bank known as Mizuho
which is establishing itself in London so as to establish new avenues for growth. Other major
competitors includeCitigroup (C), HSBC Holdings (HBC), Bank of America (BAC) and J P
Morgan Chase.
Barclays Bank PLC. Competitive advantage
The bank enjoys huge asset base globally. It is ranked world’s 3rd largest bank with
respect to assets, containing a core tier 1 ratio of 11%. The Barclays Bank PLC enjoys an
efficient and effective data management system and it’s the first ever bank to produce
statements in colors. The group has a unique brand, historically built and constantly promoted
via its good citizenship like the sponsorship of English football premier league. The bank
enjoys huge spread of risk and economies of scale due to its worldwide presence. The bank
has diverse technological novelties. For instance it established the ever first credit card to be
used in the banking market in the year 1966 & mobile banking. The charts below show how
the composite performance of Barclays’ Discretionary Portfolios over the past five years has
exceeded the ARC peer group average. This demonstrates the power of long-term
compounding returns and the fruits of staying invested though uncertainty periods, which can
precede the most rewarding times for investors.

Figure 2: Cumulative Returns

Factors that influence demand for Barclay’s products and services
There exist high power amongst customers in respect to utilizing the bank’s products
like credit cards, insurance, loans and other services[ CITATION Mat13 \l 1033 ]. The great
customer power is achieved as a result of several banks operating in the market and which are
providing similar services. Nevertheless, the bank is at an advantaged position due to its
insurance services and e-banking.
Price is another major factor that influences demand for the bank’s product. The bank has
ensured that its prices are affordable in relation to certain target customers. For instance, the
bank offers free interest on overdrafts. The bank also offers a discounted global online
disbursement to investment.

Barclays bank position its services & products in away that they will be reachable to
client and customer convenience like the Barclays auxiliary debit card which is delivered to
the client’s home within two working days. They also have Quick Tap contact-less reader in
over fifty thousand stores. The bank has also embraced mobile banking and has increased its
networking in local branches. The bank has placed ATMs points at strategic locations
throughout the country all in its bid to satisfy its customers and clients[ CITATION Mar10 \l
1033 ].

Three Key Stakeholders and their Roles

A stakeholder is any particular entity with a conceivable or declared stake or interest
in a policy concern.
Bank Employees
The employees of the bank are major stakeholders in the business. Their role and
responsibilities are significant to success of the bank. The employees have the duty to offer
excellent services to clients and therefore the bank should have a dedicated workforce that
performs exemplary and is aware that the services they provide to the client do assist the bank
have a positive or negative image[ CITATION How12 \l 1033 ]. The employees of the bank are
professionals who are well and adequately equipped to ensure that the best services are
offered to the clients.
Customers:
Customers and clients are also key stakeholders in a bank or any other kind of
business. Their input is significant to growth and sustainability of the bank. Barclays bank
has an obligation of ensuring the customers and clients they serve are offered products and
services that are appropriate to their needs[ CITATION Rui14 \l 1033 ]. Through their feedback
the bank is able to improve their products &services in order to meet the customer
specifications.
Shareholders:
Shareholders are key stakeholders in any business entity. Their input is very
substantial since they are part of the decision makers of the organization. They make
decisions that are significance in functioning and operation of the bank.

Liquidity/Solvency
From Figure 2, it can deduce the trends in liquidity management ratios during the period
under review. The liquid asset ratios (LAR) have inconsistently changed over the years which
saw and increase from 24% in 2010 to 33% in 2011 and a fall to 30% in 2012. Again, we saw
a rise to a 41% in 2013 and a fall to 38% in 2014. This simply informs us that the Rokel Bank
is consistently following a low liquidity trend throughout the period.
Also, during this period the loan to deposit ratios (LDR) decreased consistently to 18% in
2014 from 63% in 2010, which is the highest figure for all the years under review. The
liquidity management ratios seem to indicate that the bank in particular is parking funds in
Treasury Bills and other liquid assets, which may be due to lack of demand for credit as
indicated by the 42% drop from 2012 to 2013 in loan and advances to customers. A further
29% drop in 2014 was as a result of a semi freeze on lending throughout the year. One would
probably see a change in these ratios once loan demand picks up (Figure 2).
Again the debt ratio (DR) position of the bank signifies that the bank’s solvency position is
shaky. Although the bank’s business of intermediation between

Figure 3: Liquidity Management Ratios

 Credit Risk Management

In Figure 4, the trend in credit risk management ratios indicate that, during the five years
period the bank shows fluctuation in Loan Loss Provisions (LLP) for improvement in credit
quality. The performance of the bank in terms of Risk Adjusted Margin (RAM) has in general
fallen, indicating poor management of assets and hence the risk management system of the
bank (Figure 4).
RAM also shows what is available to meet the non-interest expenses (e.g. staff and
administration expenses) and profit expectations of the shareholders (Figure 4). Improving
asset quality is definitely an important task ahead of the banks as it has pivotal role in the
credit risk management process.
Finally, aside from the fierce competition faced by the bank, the Sierra Leone economy itself
was affected adversely by two major shocks in 2014; the unexpected outbreak of the Ebola
virus and the unexpected drop in the price of Iron Ore both of which weakened the economic
growth potential of the country. The reaping effect is that the bank posted a loss before tax of
Le22 billion, the second time the bank is reporting a loss in its Fifteen years history.

Figure 4: Credit Risk Management Ratio

Conclusion and Recommendation

I have undertaken a critical into the operation and functioning of Barclays group PLC
such as its goals and objectives the group is projected to achieve. I have looked at its
strengths, weaknesses and opportunities and threats, and also the competitor’s analysis.

There is high necessity to reduce the bank’s operating costs and substantially improve the
productivity of the bank’s physical, financial and human resources. In order to do this, there
should be a planned of action programme for re-organising the bank’s operating structure,
staffing levels, technology control systems and operating procedures.
There should also be a segregation of duties among those who transact business, control
receipts and custody of security, transfer and receive funds and control accounting records for
advances made by the bank to its customers.
The general recommendation for the bank vis-à-vis the efficiency of its credit management is
that: the bank credit should be productive, projects and ventures with low capital intensity
should be accorded preference. Likewise, non-performing loans and advances build-up
without adding to profitability/revenue, should be curtailed.

My recommendation is that the bank needs to lay more emphasis on staff and top
management to be more client-centric when it comes to decisions making and also when
effecting strategies along with making effective control and execution so as to achieve the
desired target. The bank also needs to ensure client dominance is in place by being near them
and successfully handling their risks.