Our strategy

Barclays’ roots as a retail bank and a business lender go back 329 years. Over the last 50 years, with the creation and development of Barclaycard, we have built a market-leading payments business. And in the last 20 years, we have developed a strong investment banking franchise.

In March 2016 we set out our current strategy: to build on our strength as a diversified transatlantic consumer and wholesale bank, anchored in our two home markets of the UK and US, with global reach. This is how we will meet the needs of our customers and clients, compete in a changing environment, and deliver for shareholders.

When Barclays’ management team developed that strategy, they considered four major changes that are transforming the banking landscape.

• Regulatory landscape: the programme of regulatory reform following the financial crisis of 2008, which has increased the minimum levels of capital which banks are required to hold against assets on balance sheets, and reduced the maximum leverage banks can use. Recent UK regulation also requires that retail banking (individual and small business banking) is “ring-fenced” from wholesale banking – which led to the creation of Barclays UK and Barclays International as two separate legal entities.

Capital Markets: as a consequence of changing regulation, the increased cost of borrowing from bank balance sheets has led to a shift of corporate lending towards capital markets. As a result, the role and size of capital markets in supporting economic growth has grown significantly in the last decade and that growth is set to continue. Supporting our corporate clients effectively therefore requires us to maintain the scale, breadth and market share necessary to successfully access those capital markets, which are centred in New York and London (where our investment banking operations are focused).

• Digital: the rapid digitisation of banking is fundamentally transforming how we serve every customer and client, from individual personal banking customers right through to the largest institutions. To succeed in this new digital world requires extensive investment, strategic partnerships with technology providers, and protection of intellectual property to maintain and gain a competitive advantage.

• Payments and transactions: the acceleration in payments technology has made it possible to move money for businesses and people faster, with less friction, and at lower cost. As more forms of transaction become digitised, the technology that enables those transactions is becoming an increasingly critical part of a bank’s capability.

Our diversification gives us significant strength and resilience. We service the needs of retail customers and business clients from the newest start-ups to global institutions and governments. They operate across business lines and geographies, which reduces the risk of operating in just one country or just one customer segment. Through economic cycles, wholesale and consumer banks are subject to stress and recovery at different points. Operating both wholesale and retail banks reduces the volatility of our income and earnings, helping to deliver consistent and sustainable returns through the economic cycle.

Within this framework, we retain the flexibility to align our resources to maximise opportunities and support growth in different parts of our business at any given point in the cycle.
In addition, Barclays Execution Services (BX), the service company which supports both operating companies, allows us to run Barclays with lower costs, greater efficiency and increased investment in technology, security and controls.

Barclays’ Board and management team continue to review, test and evolve our strategy to ensure that it remains right for the times, and is executed effectively.

Since 2016, we delivered considerable progress with our strategic restructuring of Barclays, including the following:

Group targets

¹ Excluding litigation and conduct and based on a CET1 ratio of c.13%
² Excluding litigation and conduct

Barclays is now through the period of necessary restructuring and the significant associated costs. Our diversified business is stable and well positioned for current and future market conditions, and we have a seasoned management team delivering improving performance and returns. With the costs of restructuring behind us, we are beginning to generate improved and sustainable returns and distribute excess capital to shareholders. The quality of our earnings is the result of a deliberate choice to maintain diversity in our revenue streams, based on an understanding of structural changes in our sector, and the need to weather cyclical economic forces.

Through our creation of Barclays Execution Services (BX) with its lower operating costs, we are able to increase our investment in key areas including technology, security and controls, while simultaneously reducing our costs and our cost to income ratio. We are also able to flex our investment to a degree to support our RoTE targets if the environment requires us to do so.

Returning capital to shareholders continues to be a priority for us and we will pay a dividend for 2018 of 6.5p, which is more than double the amount paid in 2016 and 2017.
It is our firm intent to return a greater proportion of our earnings to shareholders over time, and we believe that the effective application of our strategy is critical to achieving this.