Response to PRA capital shortfall exercise

20 Jun 2013 07:07 GMT

Barclays notes the outcome of the Prudential Regulation Authority (PRA) capital shortfall exercise, which calculated a deficit for Barclays as at 31 December 2012 of approximately £3bn against the PRA’s requirement for an adjusted 7% fully loaded Common Equity Tier (CET) 1 ratio. The PRA’s calculation is based on Basel 3 definitions, with further prudential adjustments to capital and risk-weighted assets estimated in the course of their analysis.

Barclays is confident it will exceed this 7% PRA-calculated ratio organically by the end of 2013 through our capital generative businesses and continued progress in executing our Transform programme, including further capital-accretive disposals of legacy assets, which we have accelerated since the start of the year. As agreed with the PRA, this requirement is expected to be met without recourse to equity capital issuance.

We continue to strengthen our capital position and our current plan targets a fully loaded Basel 3 CET1 ratio at 31 December 2013 of approximately 9%, increasing to 10.5% by the end of 2015.

In addition to targeting a fully loaded CET1 ratio of 10.5% in 2015, we continue to transition to a capital structure for the Group which includes further loss-absorbing capital in the form of a 2% layer of contingent capital. Within this, we plan a mix of both Tier 2 instruments, of which we have issued $4bn over the last 12 months, and Additional Tier 1 instruments, as we believe contingent capital is a valuable source of going concern capital that, under some conditions of stress, directly supports CET1.

Additionally, the PRA has introduced a new 3% leverage ratio requirement calculated on a PRA-adjusted CET1 capital base. As previously communicated, the commitments we have made under the Transform programme call for organic reduction in leverage of the Group over time. In accordance with the PRA statement, we remain in discussion about our financial and capital management plans and will keep the market updated as required.

Notes to Editors:

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 certain of the Barclays Group’s (the “Group”) plans and its current goals and expectations relating to its future financial condition and performance. Barclays cautions readers that no forward-looking statement is a guarantee of future performance and that actual results 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. Examples of forward-looking statements include, among others, statements regarding the Group’s future financial position, income growth, assets, impairment charges and provisions, business strategy, capital ratios, leverage, payment of dividends, projected levels of growth in the banking and financial markets, projected costs, commitments in connection with the Transform Programme, estimates of capital expenditures and plans and objectives for future operations 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, including, but not limited to, UK domestic, Eurozone and global macroeconomic and business conditions, the effects of continued volatility in credit markets, market related risks such as changes in interest rates and foreign exchange rates, effects of changes in valuation of credit market exposures, changes in valuation of issued notes, the policies and actions of governmental and regulatory authorities (including requirements regarding capital and Group structures and the potential for one or more countries exiting the Eurozone), changes in legislation, the further development of standards and interpretations under International Financial Reporting Standards (“IFRS”) and prudential capital rules applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards, the outcome of current and future legal proceedings, the success of future acquisitions, disposals and other strategic transactions and the impact of competition, a number of such factors being beyond the Group’s control. As a result, the Group’s actual future results may differ materially from the plans, goals, and expectations set forth in the Group’s forward-looking statements.

Any forward-looking statements made herein speak only as of the date they are made. Except as required by the Prudential Regulation Authority, the Financial Conduct Authority, the London Stock Exchange plc (the “LSE”) or applicable law, Barclays expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Barclays expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any additional disclosures that Barclays has made or may make in documents it has published or may publish via the Regulatory News Service of the LSE and/or has filed or may file with the US Securities and Exchange Commission.

About Barclays

Barclays is an international financial services provider engaged in personal banking, credit cards, corporate and investment banking and wealth management with an extensive presence in Europe, the Americas, Africa and Asia. Barclays’ purpose is to help people achieve their ambitions – in the right way.

With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs approximately 135,000 people. Barclays moves, lends, invests and protects money for customers and clients worldwide.

For further information about Barclays, please visit our website