Investment Management Firm
The Barclays Bank
Investment Management Firm
The Barclays Bank
Business Environment
Industry of Operations
The Barclays Bank is a public limited company and operates in the banking and financial services industry. The Barclays Bank is a key global provider of financial services and engages in commercial and retail banking, investment management and wealth management services, investment banking and credit cards. The financial institution has an extensive international presence in Asia Pacific, the Americas, the Middle East and Europe. The Barclays Bank has a history of over 300 years with immense expertise in banking. The institution operates in more than 50 countries and has more than 140,000 employees. The financial institution performs moving, lending, investing and protecting services for its clients, customers and wider stakeholders worldwide.
The Barclays Bank has diverse global operations and recognizes the significance of achieving sustainable development in all the regions they operate. This financial institution has both direct and indirect influences to its clients and customers through its procurement, investing and lending services.
Customers
The Barclays Bank operates in more than 50 countries worldwide. Individuals in these countries constitute the customers of the bank. The financial institution has more than 48 million customers in all these regions and operations. These customers exist in all the business clusters of the institution. The customers include individuals and institutions with bank accounts or savings in the bank. The customers include individuals and institutions that have been beneficiaries or wish to use the financial services offered by the Barclays Bank.
The customers include individuals, small size and medium size businesses, corporates, banks and other financial institutions, sovereign and institutions. The bank offers a variety of services to its customers including providing a safer environment for saving, investing and managing their cash. In order to do so, the bank evaluates the current overdrafts and accounts of the customers. Other functions include providing funds for growth and purchases, managing financial and business risks of the customers and providing business and financial support for the customers.
Partners and Suppliers
The Barclays Bank has various partners and investors who act as suppliers. Some of the partners include the Temasek Holdings and the China Development Bank that bought stake from the bank. Many of the partners are subsidiaries of the Bank. These partners promote the financial operations of the institution by assisting in financial decisions and providing financial operations like insurance and investment.
Competitors and Products
The Barclays Bank faces competition from other financial and banking institutions. Some of these institutions include JP Morgan Chase, the Princeton Financial Systems, the QED Financial Systems and the State Street. Others include Citco, SimCorp, Advent Software, SunGard and the Bank of New York Mellon. These competitors offer their products and services in the financial and banking industry. The
Barclays Bank also has various products and services in its operations. The financial institution offers products and services in its operations around the world including the Americas, Europe, Asia Pacific, Africa and the Middle East. The banking services of Barclays bank cover everything including credit cards and corporate banking around the globe.
The Bank offers its products and services for individuals, for small and medium businesses and for corporates and institutions. The aim of offering these products and services is to enable them to meet their financial needs. For the individuals, Barclays Bank assists them to manage their money with a given range of their bank accounts, the products and the services in order to meet their savings, protect them and borrow needs.
The products include mortgages, investments and ISAs, bank accounts, insurance and loans. In regions like the UK, there are premier accounts for the qualifiers of premier banking. For the small and medium businesses, the bank offers specialist services, products and advice. Products for the small and medium businesses include business loans, cards and payments, and business bank accounts.
For the corporates and institutions, Barclays Bank offers its products and services to assist these corporates and institutions to meet their financial needs. The bank offers corporate banking services to businesses, both local and international companies, and multinationals and financial institutions. Products include financial solutions originating from across Barclays, trade solutions, financing, online banking solutions, risk solutions and cash management.
Legal and Regulatory Environment
The legal team of Barclays works with the compliance and team and both the external and internal stakeholders of the banking institution to advice on regulatory, corporate and litigation issues affecting the business activities and assets of the organization. The legal team ensures that Barclays stay in line with the legislation and regulations of the international financial services. The team collaborates with the compliance team and the stakeholders across the world to handle a range of crucial business issues including investigations and litigations especially during acquisitions and mergers (Barclays Bank & Barclays Bank, 2007, p. 27). For long, the Barclays Bank has had numerous legal issues and controversies in its operations. Some of these legal allegations include accusations for money laundering and tax avoidance.
Operations
Functions
The Barclays bank conducts a variety of functions including banking, insurance, lending, borrowing and offering financial assistance. The operational functions facilitate the business activities at the financial institution and promote the overall business undertaken by the institution. The Barclays bank functions in various ways.
First, the Barclays Bank aims to promote the relationship its relationship with the customers, the clients and the stakeholders. In order to do so and maintain its credibility, the Barclays Bank has elaborate measures that of focusing on driving high levels of ethical standards and integrity. As such, Barclays Bank has an elaborate Business Way that depicts the focus and outlines the values and principles of the institution, and the manner in which to conduct business. The Code of Conduct of the Barclays Bank outlines the elemental value and principles that govern the business activities of the financial institution globally.
Second, the Barclays Bank has three distinct business clusters within which it undertakes its operational functions. These business clusters comprise of the Retail and Business Banking, the Corporate and Investment Banking and the Wealth and Investment Management. These three businesses clusters have their distinct units and facilitate the function of the business clusters and the entire financial institution at large. Three business units make up the Wealth and Investment Management cluster and the Corporate and Investment Banking. The three business units comprise of the wealth and investment management unit, the investment-banking unit and the corporate banking unit.
On the other hand, the Retail and Business Banking business cluster has four distinct business units. These units include Retail and Business Banking institutions in Africa, Europe and the United Kingdom, and the Barclaycard.
Assets and Liabilities
The Barclays has various assets that are the source of the funds for the financial institutions. The first asset is the cash and balances at the central bank. Other assets include items in the course of collection from other financial institutions, trading portfolio assets, derivative financial instruments, available for sale instruments, and loans and advances to other banks. Other assets include loans and advances to customers, reverse repurchase agreements and secured lending, prepayments and accrued income, investment in associates as well as joint ventures, deferred tax assets, current tax assets and goodwill and intangible assets.
On the other hand, there are various liabilities to the financial institution. These liabilities include deposits from other banks, customer accounts, derivative financial instruments, provisions, subordinated liabilities and debt securities in issues.
Revenues and Expenses
The Barclays Bank raises revenue and profits from its activities of investment management, wealth management, credit cards, investment banking, wholesale banking and retail banking. In 2013, the total income of the financial institution stood at £ 11,600m (Barclays Bank, 2007, p. 19). As such , the profits realized by the company are converted to other operational functions at the company including employee payments, retirements benefit expenses and research.
Risks and Risk Management
The Barclays Bank has certain faces certain risks in its operations. These risks include credit risks, market risks, funding risks, operational risks, reputation risks and conduct risks. Credits risks refer include the risks of suffering financial losses should the market counterparties, clients and customers of the financial institution fail fulfill their stipulated contractual obligations. The risks surface in the deteriorating conditions in the economy.
The credit risks include increase in the interest rate, decline in residential prices in the United Kingdom, South Africa and Western Europe, political instability leading to economic uncertainty and the assets of corporate banking held at fair level. Market risks are the risks that arise because of the failure of Barclays Bank lacking the ability to hedge its balance sheets at the prevalent market levels. The market risks include reduced activity from the client and decreased liquidity of market and pension fund risks.
Funding risks include risks that arise if the Barclays Bank does not manage it leverage ratios, liquidity and capital effectively. Some of the risks include maintaining the strength of capital in the increasingly challenging environment, changes in the availability of funding and costs and changes in the interest rates and foreign exchange. The operational risks of Barclays Bank may occur at the financial institution because of human factors, external events and failed internal systems and processes. They include technology and infrastructure resilience, capacity to appropriately hire and retain qualified employees and risks arising from regulatory, competition and legal matters.
Inappropriate judgment in executing business activities at Barclays can lead to detriment to its customers, employees, counterparties and clients, which encompass conduct. Barclays has a reputation risk if there is damage of its brand, which could arise from action, inaction or association perceived by the stakeholders to be unethical or inappropriate.
Risk Management
The Barclays Bank has clear objectives of risk management and a well-developed strategy to deliver these objectives through processes of core risks management. At a strategic level, the objectives of the risk management process include identifying the significant risks of the financial institution, formulating the appetite of the institution’s risks and ensure that the plans and profiles of business are consistent. The institution then optimizes the risks by closely taking them to the business operations while developing independent and strong challenge and review structures. The risk management team ensures that Barclays Bank’s business growth plan is supported properly by the existent risk infrastructures (Barclays Bank, 2010, p. 11).
Barclays Bank employs a risk management infrastructure that encompasses evaluation, response and monitoring. The evaluation of the risk involves individuals and teams in the risk management department who critically identify and assess the possible risks. Evaluation also includes the individuals and teams responsible for delivering the goals under review.
Under response, the prompt risk management response efficiently and effectively ensures that the risks are kept with the appetite, which refers to the degree of risks that the financial institution is prepared to acknowledge while pursuing its business strategies. There are three distinct types of respond. First, accept the potential risk but take the required actions of mitigation. Second, stop the existent activity and third, continue the activity but avoid risks to other parties such as insurance.
Monitor is the third aspect of the risk management infrastructure that the Barclays Bank employs. Once there has been the identification and measurement of the risks, there financial institution puts control measures in place and tracks the progress towards the goals. Monitoring is an ongoing initiative and can prompt the re-evaluation of the identified risks in responses. The Barclays Bank carries out monitoring proactively to ensure that there is maintenance of the risks within the risk appetite.
Performance
The profitability and performance ratios of the Barclays Bank are essential in the analysis of the recent performance of the financial institution.
Profitability
Profit Margin
The customer net income for Wealth and Investment Management, the Corporate Banking, Barclaycard and RBB increased by 4% to £2, 613 m. this increase in the net income reflected the net profit margin of the financial institution reflecting the growth in business in the United Kingdom RBB, Corporate Banking and the Barclaycard. As such, the net income and profit margin remained stable. The movements of foreign exchange in Africa RBB and withdrawal from some of the business lines of the Europe RBB partially offset the stability.
The net income of the entire financial institution including the contributions for the Investment Bank and other operations rose by 8% to £3,098m. This increase was predominantly because of the higher increase in the net income in the United Kingdom RBB and the existent Investment Bank. The total contribution to the net interest income and profit margin of the Barclays Bank was £ 0.4 bn.
The return on assets for the financial institution varied across the business segments. The total return on assets by the RBB, the Barclaycard, the Corporate and the Wealth were £324, 086m. The return on equity amounted to £1,014 m attributed to ordinary equity and other equity holders.
The basic earnings per ordinary share from the continuing operations of the financial institution were 5.9p. The dividends per share were 1.0p. The P/E ratio was 2:15. From this information, the Barclays Bank realized positive profit margins and net income (Giliker, 2009, p. 14). The expenses of the financial institutions surfaced in the business clusters of the institution. The financial institution has an elaborate trend in the financial services, which encompasses the identification of market potentials and activities.
References
Barclays Bank., & Barclays Bank. (2007). Barclays Bank review. London: Barclays Bank Ltd.
Barclays Bank. (2007). An Eagle displayed: A short history of Barclays Bank. Place of publication not identified: publisher not identified.
Barclays Bank. (2010). Barclays Bank review. London: Barclays Bank Ltd.
Giliker, P. (2009). Barclays Bank v O'Brien Revisited: What a Difference Five Years Can Make. Modern Law Review. doi:10.1111/1468-2230.00227
