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Barclays PLC

Barclays PLC . Presented by: Jon Weber Ali Ahesteh Khiyabani Emmanuel Okeke Nobuhiko Yamazaki David Harris Cameron Keyte. Overview. Performance after 2001 Current Organization Structure Corporate Strategy after 2001 Financial Industry Structure Future Directions for Barclays.

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Barclays PLC

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  1. Barclays PLC Presented by: Jon Weber Ali AhestehKhiyabani Emmanuel Okeke Nobuhiko Yamazaki David Harris Cameron Keyte

  2. Overview Performance after 2001 Current Organization Structure Corporate Strategy after 2001 Financial Industry Structure Future Directions for Barclays

  3. Performance after 2001 • Examine 4 components to measure performance • Through Profit and Growth • Through comparing short-term results to long-term opportunities • Through competition comparison • Through observing opportunities and attention points

  4. Profit and Growth Barclay’s traded on both the London and New York Stock Exchange • Current close ~240 on common stock • (-25.7%) change from last year 2010 data based on Barclay’s Annual Report • Profit –$6.06Billion USD • half of which from global retail banking market – $2.89b USD • Experienced 11% growth in overall profits from 2009 • Return on equity ~7.2% • Revenue – $49.8 billion USD

  5. Short-Term ResultsLong-Term Opportunities 2002- improvements in business infrastructure (retail sector) 2003 - acquired Juniper Lending Bank in US (Barclaycard) 2006 – difficulties gaining foothold in booming housing market Mass Mergers and Acquisitions Absorbed S. Africa’s largest retail bank 2008 - Acquired footholds in Russia and Pakistan 2009 – Bailout from Bank of England 2009- default acquisition of Lehman Brothers *Stock Price measured 2002-present 2006 Total Assets = $1.6 trillion USD 2010 Total Assets = $1.9 trillion USD

  6. Short-Term ResultsLong-Term Opportunities • Recent Years • Barclay’s has relatively weak mortgage and credit brands • Mortgage Market experiencing negative lending before and through recession • Mortgage balances fell 3% at a time when the market grew 10% (2006) • Credit profits falling 19% in the last year (2010) • Barclay’s becomes UK’s most complained against bank (2011) • 276,000 complaint calls from June-December 2010 • Currently employs 147,500 people globally • Cut 3,000 jobs in past year • Barclay’s receives half of its income outside of it’s home market • Operates in over 50 countries • Over 48 million customers

  7. Barclays plc (2000) Retail Financial Services (61%) Corporate Banking (26%) Barclays Capital (11%) Barclays Global Investors (2%) • Mid-size corporate banking • Large corporate banking • Government bonds • Corporate bonds • Money markets • Foreign exchange • Credit products • Securitization • Private equity • Equity derivates • Management quant. Active • Indexed asset management • Securities lending Retail Banking (38%) Wealth Management (14%) Barclaycard (9%) • Personal banking (c17%) • Woolwich mortgages (11%) • Small business banking (c7%) • Africa (3%) • Premier banking (2%) • Offshore (4%) • European retail (3%) • Caribbean (2%) • Private banking (1%) • Stockbrokers (2%) • UK • Germany • France • Spain

  8. Barclays plc (2010) Global Financial Services Provider Barclays Capital Investment Management Barclays Corporate • Large corporate banking • Government bonds • Corporate bonds • Money markets • Securitization • Management quant. Active • Indexed asset management • Securities lending Global Retail Banking Wealth Management Barclaycard • UK • Western Europe • Africa • ABSA (South Africa) • Premier banking • Fiduciary services • Brokerage • Private banking • 22 countries throughout the world

  9. 2001

  10. Currently

  11. Competition Comparison • Barclay’s is: • 3rd largest bank in world (assets) • 10th largest financial banking group • 21st largest company in world Relative Return on Equity BNP Paribas – 12.3% HSBC – 9.5% Barclays – 7.2% RBS – 13% *based on 2010 data

  12. Opportunities and Attention Points Opportunities • Barclay’s establishing itself in emerging markets • Foreign Mergers/Acquisitions • Proactive internal restructuring allowing for increased stability Attention • Placing more resources into already existing markets • Increasing ROE to satisfy shareholder needs within industry

  13. Corporate Strategy 2003 - 2005 • In 2003, Barclays bought the American credit card company Juniper Bank, changed its name to "Barclays Bank Delaware" • The same year, Barclays acquired BancoZaragozano, the 11th bank in Spain • In 2005 Barclays acquired 54% of stake from Absa Group Limited, the largest back in South Africa

  14. 2006 - 2007 • In 2006, Barclays purchased the HomEq Servicing Corporation for $469 million in cash • The same year, saw the acquisition of the financial website “Comparetheloan” • In March 2007, Barclays announced to merge with ABN AMRO, the largest bank in the Netherlands • In 2007, Barclays agreed to purchase Equifirst Corporation for $225 million

  15. Lehman Brothers acquisition in 2008 • On 16 September, Barclays announced to purchase the investment-banking and trading divisions of Lehman Brothers. In the deal, Barclays also acquired the New York headquarters building of Lehman Brothers. • On 20, Acquire the core business of Lehman Brothers (mainly Lehman's $960 million Midtown Manhattan office skyscraper, with responsibility for 9,000 former employees),

  16. 2009 to present • In 2009, Barclays sold its Global Investors unit, which includes its exchange traded fund business, iShares, to BlackRock for $13.5bn • The same year, Barclays bought Standard Life Bank • Also, Barclays bought consumer finance division from First Data, a global technology provider of information commerce • Barclay cut 3,000 jobs

  17. BARCLAYS PLC • Global Financial Services Provider • Retail Banking / Credit cards • Corporate and Investment Banking • Wealth Management • Nine Segments: • UK Retail Banking & Barclaycard • Western Europe Retail Banking • Barclays Africa (Absa) • Barclays Capital • Barclays Corporate/ Barclays Wealth & Investment Management • Recent Activities: • March 2010 – Company was reorganized into Three Business Groups: • Global Retail Banking (GRB) (including Absa/African Subsidiary) • Corporate and Investment Banking • Wealth Management (CIBWM) • 2011 Acquired “The Mill” (Digital Effects Co.) • 2011 Acquired “Eggs” a U.K Credit Card Firm

  18. Structure of Commercial Banking IndustryIndustry SIC: #6029 - Commercial Banking Barclays Key Competitors: Deutsche BankLargest German Bank/CEO Changes / E.U Debt Crisis2011 - 4th Qtr Income (- 69%) HSBC3rd largest U.K Competitor / U.S. Senate Investigation – Money Laundering - Terrorism Royal Bank of ScotlandRanked 7th Globally / Assets 2.1 Bn. /2009 Govt. Bail Out

  19. Porters Five Forces Entry Barriers (High): • Economies of Scale – Banking Firms are large providing lower operating costs • Commercial Banking - Well regulated (Domestic & Foreign) • E.U., Western Countries, India and Africa are all highly regulated by Local Governments/Central Banks • Govt. Decisions: Regulate interest’s rates • Loans/Bank deposits Controlled tightly. • India Govt. and other countries control number of offices/branches opened. (Distribution) • Oversight/Control kept on Deposits/Loan Lending / Fees • Barclays Brand Identity is not wide spread (in Africa or India) as well as the other foreign banks • Customers like to invest in government or public sector banks (worried about the deposit safety) • Rural areas tend to remain untapped/ Governments keep firms from expanding (Limited Distribution)

  20. Porters Five Forces • Rivalry - Existing Competitors (High) • Emerging markets – such as India or Africa • Substitute banking products • public agencies & smaller private banks – • NBFC’s (Non-banking financial companies) - run under separate regulation standards • Microfinance lenders - fund small investments in rural areas • Large Institutions make Acquisitions • (E.G) Barclays purchasing Absa – an African retail banking firm. • Brand Identity is blurred • Many large firms have similar products

  21. Porters Five Forces • Bargaining Power of Suppliers (Medium) • Bank Suppliers = Institutions / People • Raise capital or funds • Emerging markets - Barclays is a non listed company • Major sources of capital or funds comes from its immediate customers or depositors • These are considered Barclays main suppliers for their emerging markets. • According to Scribd.com - Depositors have a High Bargaining Power in Emerging Markets • Barclays and other foreign banks usually need to offer a higher interest rate on consumer deposits than the local banks.

  22. Porters Five Forces • Bargaining Power of the Customers (Medium) • Customers in Emerging Markets = Suppliers (Non-listed Banking Firms) • Power of Customers = Power of Suppliers. • Customer has a High BargainingPower • Many types’ of Banks/ Lenders operating in the Market • Offer similar banking services • Intense Competition Means Need for Higher Interest Rates • better lending terms • Increased Customer Service • Must retain customer loyalties. • According to Scribd.com - Barclays is reported to rank high on their quality of services provided by them.

  23. Porters Five Forces • Threat From Substitute Products (High) • Substitutes in the retail banking industry • Private money lenders • NBFCs / Microfinance Programs • Numerous Insurance companies • Banks offer hundreds of Financial Products • Other Retail / Business Services • Not just Deposits / Lend Money • Domestic Commerce / Emerging Markets /Globalization • High chance a chief competitor or non-banking financial services company will be offering similar products and services • Increasing competition (Unconventional companies) • Sony, General Motors and Microsoft • Preferred Financing • CarCompanies offering competitive - 0% financing • Highly Fragmented Markets (India /Africa) • Customers = Higher chance of switching to other substitutes.

  24. Possible Future Directions • Retail and Business Banking • Aggressively expanding globally • Making Barclaycard a name recognized worldwide • Reaching further around Europe • Developing Africa • Corporate and Investing Banking, and Wealth Management • Use Strategic Advisory experience globally • Barclays Wealth • Greatest opportunity for expansion into new markets.

  25. Future of Retail Business Banking • Strong presence in the UK, Spain, and Africa • 1,600 branches in the UK • Approximately 550 in Spain • Majority share in Absa, an African Securities company • Continued expansion Barclaycard • Currently partnered with Visa, MasterCard, and Apple Card.

  26. Future of Retail Business Banking Continued • Currently has branches in Spain, Italy, Portugal and France • Must reach to countries such as Germany, Norway, Sweden, Switzerland, etc. • Developing interests in Africa • Absa Group: Largest bank in South Africa • Some presence in former colonies

  27. Future of Corporate and Investing Banking, and Wealth Management • Utilize Strategic Advisory services globally • Concentrate on Asia, specifically China • Focus on Wealth Management

  28. Wealth Management • China’s Income level, especially among the wealthy, is rising • Nearly the highest percentage of savings in the world

  29. An Uncertain Future? • Unusually high turnover for CEOs • Who’s really running Barclays? • Is the Group Center still viable • Reporting practices • Transparency

  30. Thank You • Questions • Comments • Concerns

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