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Shareholders’ funds increased by £4,687m before favourable
exchange differences of £17m. This increase resulted from
shares issued in respect of The Woolwich acquisition
(£3,359m) and profit retentions of £1,546m, offset by share
buy-backs, including costs, of £311m.
The increase in minority interests in Barclays PLC Group
reflects the issue by Barclays Bank PLC of s 850m (£510m) and
US $1,250m (£860m) Reserve Capital Instruments on 3rd May
and 19th September 2000 respectively. This increase is
reflected in shareholders’ funds in Barclays Bank PLC Group.
17,920,000 outstanding Series C1 and C2 Non cumulative
Dollar Denominated Preference Shares of $0.01 each were
redeemed on 30th June 2000. The aggregate redemption cost
was $224m (£149m).
Loan capital rose by £1,773m reflecting raisings of £861m,
loan capital of The Woolwich on acquisition of £957m and
exchange rate movements of £169m. This was offset by
repayments of £214m.
Capital ratios
Capital adequacy and the use of regulatory capital are
monitored by the Group, employing techniques based on the
guidelines developed by the Basel Committee on Banking
Supervision (the Basel Committee) and European Community
Directives, as implemented by the Financial Services Authority
(FSA) for supervisory purposes.
These techniques include the risk asset ratio calculation, which
the FSA regards as a key supervisory tool. The FSA sets ratio
requirements for individual banks in the UK at or above the
internationally agreed minimum of 8%. The ratio calculation
involves the application of designated risk weightings to
reflect an estimate of credit, market and other risks associated
with broad categories of transactions and counterparties.
Regulatory guidelines define three ‘tiers’ of capital resources.
Tier 1 (‘core’) capital, comprising mainly shareholders’ funds
and including Reserve Capital Instruments (included in
minority and other interests in Barclays PLC Group and within
shareholders’ funds in Barclays Bank PLC Group) is the highest
tier and can be used to meet trading and banking activity
requirements. Tier 2 includes perpetual, medium-term and
long-term subordinated debt, general provisions for bad and
doubtful debts and fixed asset revaluation reserves. Tier 2
capital can be used to support both trading and banking
activities. Tier 3 capital comprises short-term subordinated
debt with a minimum original maturity of two years. The use
of tier 3 capital is restricted to trading activities only and it is
not eligible to support counterparty or settlement risk. The
aggregate of tiers 2 and 3 capital included in the risk asset
ratio calculation may not exceed tier 1 capital.
The following table analyses capital resources at
31st December 2000, as defined for regulatory purposes:
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