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  • 1. Submitted by Saad Mazhar Qureshi Sp12-bb-0056
  • 2. ACKNOWLEDGEMENT First of all I thank to ALLAH ALMIGHTY gave me this beautiful life .We are very grateful to our respected Ma’am Zartashia Kiran Imran who gave me this opportunity to make the project on Barclays Bank and helping me to having all the information about the bank I would also thank to my parents and my friends Awais Zaheer, Naveed, Yahya and Usama Mahmood for helping me.
  • 3. Executive Summary Barclays is a British multinational banking and financial services company headquartered in London. It is a universal bank with operations in retail, wholesale and investment banking, as well as wealth management, mortgage lending and credit cards. It has operations in over 50 countries and territories and has around 48 million customers. Barclays had total assets of US$2.42 trillion, the seventh-largest of any bank worldwide. Barclays offers different services to its customers. Barclays is also involved in money laundering and terrorism financing but not in Pakistan.
  • 4. Table of Content Introduction……………………………………………………………………………………..1 History…………………………………………………….……………………………………….1 Functions …………………………………………………….…………………………………..2 Operations…………………………………………………….………………………………….5 Operation Risk………………………………………………….………………………………. 5 Risk Management ………………………………………………………..…………………...6 Terrorism Financing………………………………………………………….………………….9 Money Laundering……………………………………………………………………………..10 Recommendations……………………………………………………………………………..12 Solution……………………………………………………………………………….…………….12 Conclusion………………………………………………………………………………………….13
  • 5. Introduction Barclays is a British multinational banking and financial services company headquartered in London. It is a universal bank with operations in retail, wholesale and investment banking, as well as wealth management, mortgage lending and credit cards. It has operations in over 50 countries and territories and has around 48 million customers. As of 31 December 2011 Barclays had total assets of US$2.42 trillion, the seventh-largest of any bank worldwide. Barclays was one of four banks which collaborated with the International Finance Corporation (IFC), part of the World Bank, to draft the Equator Principles in 2003, based on internationally recognized standards. Since then, they have been adopted by more than 73 banks from 25 countries. Barclays has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 Index. It had a market capitalization of approximately £21.8 billion as of 23 December 2011, the 22nd-largest company of any company with a primary listing on the London Stock Exchange. It has a secondary listing on the New York Stock Exchange. History Barclays is a 300 year old global financial services provider of retail banking, credit cards, corporate & investment banking and wealth management with its functional units present in Europe, America, Africa and Asia. At present, Barclays is operating in over 50 countries providing employment to over 140,000people. Barclays Pakistan started functioning in the country around 3 years back and currently, it is offering an array of banking products and services to the customers and corporate clients with a passion that is distinctly 'Barclays'. Barclays has over 4,750 branches across around 50 countries, of which around 1,600 are in the United Kingdom.
  • 6. Functions In Pakistan, Barclays offers: 1) Personal banking 2) Premier banking 3) Corporate Banking Personal Banking We provide personal banking services to customers in 20 key countries around the world. We're on hand to help people manage their money with a range of bank accounts, products and services to meet their savings, protection and borrowing needs. Personal banking includes  Personal Current with Classic current account your day to day banking becomes much easier as you experience a new style of banking, providing you complete convenience & flexibility.  Personal Saver Personal Saver provides you the convenience of banking transactions along with attractive profit rates** calculated on your daily average balance.  Personal Daily Saver Daily Saver offers you a return on your savings, calculated on your daily balance and paid out on a monthly basis.  Personal Time Place a fixed deposit in a number of tenors and earn attractive returns**.  Personal Junior A specialized current or savings account that with its unique features and benefits are the perfect present for your young ones.  Child Education Plan Barclays has partnered with EFU Life to offer you a tailored plan to secure a promising future of your children.  Retail Internet Banking With Barclays Retail Internet Banking, your Bank travels with you around the world and you have real-time access to your accounts. And with a host of services available on Retail Internet Banking, we invite you to manage your finances with lot more ease.
  • 7. Premier banking We provide an exclusive and preferential banking service to eligible customers in selected countries around the world, including International Premier Banking services.  Premier Current  Premier Saver Saver provides you the convenience of banking transactions along with attractive profit rates** calculated on your daily average balance.  Premier Daily Saver Daily Saver offers you a return on your savings, calculated on your daily balance and paid out on a monthly basis.  Premier Time Premier Time - Term Deposit is our way of saving that you have the opportunity to make more money today. Place a fixed deposit in a number of tenors and earn attractive returns**.  Child Education Plan Barclays has partnered with EFU Life to offer you a tailored plan to secure a promising future of your children.  Premier Life Premier Life is a fresh, innovative way of banking that ensures you get more out of your bank so you can get more out of life. We have gone to extreme lengths to ensure that there's absolutely no better bank to look after your finances. As one of our esteemed customers, you will gain access to exclusive premier privileges, above-par services and implicit attention so you can relax and indulge in the finer side of banking.  Premier Airport Lounge Traveling becomes a luxurious experience for our Premier customers. Exclusive lounge at Jinnah Terminal, Karachi. Relish world-class services exclusively tailored to match your lifestyle.
  • 8. Corporate Banking Are committed to helping your business succeed today and in the future.  Corporate Internet Banking Gain control over your global cash and achieve time and financial efficiencies with our corporate Internet Banking services. Help you choose the Internet Banking tool that is most suited to your business needs.  Cash Management Offer you a range of solutions that would facilitate you for receiving and making payments in Pakistan and overseas easier and effective.  Deposits and Liquidity Number of solutions to help you optimize the return on surplus funds and provide you with the security and liquidity your business needs. Have a range of operational accounts, instant access deposits, fixed deposits and notice deposits.  Working Capital and Trade Services Offer a range of services to assist you with your trading activities, either in domestic or international markets. Legal function Our Legal function is a group of experienced lawyers and documentation specialists who provide counsel exclusively to the bank to maximize revenue and manage legal risk. Our Legal function is a group of experienced lawyers and documentation specialists who provide counsel exclusively to the bank to maximize revenue and manage legal risk. Based in London, New York, Hong Kong, Singapore and Tokyo, our team includes more than 430 people and focuses on:  Advising on relevant laws and regulations  Evaluating the legal risks of new products and structures  Performing legal risk analysis of new products and structures  Developing and implementing risk mitigation policies  Managing disputes and litigation. Legal analysts directly support our in-house counsel, experiencing at least four rotations to gain cross-divisional exposure. We also provide a continuing education program that consists of networking opportunities, product training, and professional development classes.
  • 9. To succeed here, team members need to be thoughtful, resourceful and enthusiastic, with strong technical, analytical, and communications skills. An interest in law and the legal profession is a given. Operations  Operations teams at Barclays have the opportunity to work at the heart of modern investment banking.  Our highly skilled teams work alongside all areas of our complex, fast-moving business. At every step, they redefine process, challenge the status quo, find synergies across the business and improve the performance of people and technology.  Operations is involved in the full spectrum of financial products, from bonds and equity derivatives to swaps and options, and partners almost every group in the firm.  Our teams support the lifecycle of the trade from trade capture, client confirmation and risk management, to settlement, margin, and effective collateral and cash management. Technological progress, in areas such as e-commerce, and globalization mean that Operations is continually evolving. Operation risk Operational Risk is defined as the risk of direct or indirect impacts resulting from human factors, inadequate or failed internal processes and systems or external events. Operational risks are inherent in the Group’s business activities and are typical of any large enterprise. It is not cost effective to attempt to eliminate all operational risks and in any event it would not be possible to do so. Losses from operational risks of small significance are expected to occur and are accepted as part of the normal course of business. Those of material significance are rare and the Group seeks to reduce the likelihood of these in accordance with its risk appetite. Operational Risk is one of six Principal Risks in the EMRF and comprises a number of specific Key Risks defined as follows:  Cyber Security: Risk of loss or detriment to Barclays’ business and customers as a result of actions committed or facilitated through the use of networked information systems;  External supplier: Inadequate selection and ongoing management of external suppliers;  Financial reporting: Reporting mis-statement or omission within external financial or regulatory reporting;  Fraud: Dishonest behavior with the intent to make a gain or cause a loss to others;
  • 10.  Information: Inadequate protection of Barclays’ information in accordance with its value and sensitivity;  Legal: Failure to identify and manage legal risks;  Payments: Failure in operation of payments processes;  People: Inadequate people capabilities, and/or performance/reward structures, and/or inappropriate behaviors;  Premises & security: Unavailability of premises (to meet business demand) and/or safe working environments, and inadequate protection of physical assets, employees and customers against external threats;  Product: Inadequate design, assessment and testing of products/ services;  Regulatory: Failure or inability to comply fully with the laws, regulations or codes applicable specifically to the financial services industry;  Taxation: Failure to comply with tax laws and practice which could lead to financial penalties, additional tax charges or reputational damage;  Technology: Failure to develop and deploy secure, stable and reliable technology solutions; and  Transaction operations: Failure in the management of critical transaction processes. Risk management Risk Management Strategy Barclays has clear risk management objectives and a well-established strategy to deliver them, through core risk management processes. At a strategic level, the risk management objectives are to:  Identify the Group’s significant risks;  Formulate the Group’s risk appetite and ensure that the business profile and plans are consistent with it;  Optimize risk/return decisions by taking them as closely as possible to the business, while establishing strong and independent review and challenge structures;  Ensure that business growth plans are properly supported by effective risk infrastructure;  Manage the risk profile to ensure that specific financial deliverables remain possible under a range of adverse business conditions; and help executives improve.
  • 11. Credit Risk Credit Risk assesses the level of credit risk considered appropriate for a client, group of clients or other legal entity, given the types and nature of the exposure under consideration and the relative financial strength of the client. Our credit risk professionals apply extensive research and analytical skills as well as comprehensive product and market knowledge to client and transactional credit risk evaluation. Market risk: Market Risk assesses the potential impact of changes in the market and evaluates any market moving against the firm and affecting the firm’s financial position. Market Risk is the risk of loss in earnings and capital due to adverse changes in interest rates, foreign exchange rates, equity prices and market conditions. The Board of Directors oversees the Group's strategy for market risk exposures. Asset and Liability Committee (ALCO) which comprises of senior management oversees the statement of financial position of the Group and performs oversight function to ensure sound asset quality, liquidity and pricing. The investment policy amongst other aspects covers the Group asset allocation guidelines inclusive of equity investments. While market risk limits are in place and are monitored effectively, the Group has also formalized liquidity and market risk management policies which contain action plans to strengthen the market risk management system and a middle office function oversees limit adherence. Market risk can be further categorized into Interest Rate Risk, Foreign Exchange Risk and Equity Position Risk Foreign exchange risk: Foreign exchange risk is the probability of loss resulting from adverse movement is exchange rates.
  • 12. The Group’s business model for foreign exchange risk is to serve trading activities of its clients in an efficient and cost effective manner. The Group is not in the business of actively trading and market making activities. A conservative risk approach and the Group’s business strategy to work with export oriented clients gives the ability to meet its foreign exchange needs generally and frequently provide foreign exchange to the inter-bank market. Interest Risk: Interest rate risk is the risk that the value of the financial instrument will fluctuate due to changes in the market interest rates. The Group’s interest rate exposure is low due to the short- term nature of the majority of business transactions. Interest rate risk is also controlled through flexible credit pricing mechanism and variable deposit rates. Optimization of yield is achieved through the Group’s investment strategy which aims on attaining a balance between yield and liquidity under the strategic guidance of ALCO. The advances and deposits of the Group are reprised on a periodic basis based on interest rates scenario. Liquidity Risk: Liquidity risk is the risk that the Group will not be able to raise funds to meet its commitments. ALCO manages the liquidity position on a continuous basis. The Group’s liquidity model is based on “self-reliance” with an extensive branch network to diversify the Bank deposit base. The Bank’s liquidity profile generally comprises of short-term, secured assets, in line with the Bank's credit strategy. The contractual maturities of assets and liabilities at the year-end have been determined on the basis of the remaining period at the statement of financial position date to the contractual maturity date. Assets and liabilities that do not have contractual time / payable on demand have been classified in the first bucket, except that investments in equity securities, certain other liabilities and other assets are assumed to mature on the expected date on which the assets / liabilities will be realized / settled.
  • 13. Terrorism Financing Terrorist financing refers to the processing of funds to sponsor or facilitate terrorist activity. A terrorist group, like any other criminal organization, builds and maintains an infrastructure to facilitate the development of sources of funding, to channel those funds to the providers of materials and or services to the organization, and, possibly, to launder the funds used in financing the terrorist activity or resulting from that same activity. Terrorist organizations derive income from a variety of sources, often combining both lawful and unlawful funding, and where the agents involved do not always know the illegitimate end of that income. The forms of financing can be grouped in two types: 1. Financial support – In the form of donations, community solicitation and other fundraising initiatives. Financial support may come from states and large organizations, or from individuals. 2. Revenue generating activities - Income is often derived from criminal activities such as kidnapping, extortion, smuggling or fraud. Income may also be derived from legitimate economic activities such as diamond trading or real estate investment. The monitoring of financial transactions with the purpose of identifying terrorist financers, therefore, must take into account the intentions of those engaging in the financial transactions observed.
  • 14. Money Laundering Black money or illegal money which cleanliness through banking channels by means of deposits, foreign remittances or pay order is called money laundering. Methods and Stages of Money Laundering There are three stages involved in money laundering; placement, layering and integration. 1) Placement –This is followed by placing it into circulation through financial institutions, casinos, shops, bureau de change and other businesses, both local and abroad. The process of placement can be carried out through many processes including:  Currency Smuggling – This is the physical illegal movement of currency and monetary instruments out of a country.  Bank Complicity – This is when a financial institution, such as banks, is owned or controlled by unscrupulous individuals suspected of conniving with drug dealers and other organized crime groups. This makes the process easy for launderers. The complete liberalization of the financial sector without adequate checks also provides leeway for laundering.  Currency Exchanges – In a number of transitional economies the liberalization of foreign exchange markets provides room for currency movements and as such laundering schemes can benefit from such policies.  Securities Brokers – Brokers can facilitate the process of money laundering through structuring large deposits of cash in a way that disguises the original source of the funds.  Blending of Funds – The best place to hide cash is with a lot of other cash. Therefore, financial institutions may be vehicles for laundering. The alternative is to use the money from illicit activities to set up front companies. This enables the funds from illicit activities to be obscured in legal transactions.  Asset Purchase – The purchase of assets with cash is a classic money laundering method. The major purpose is to change the form of the proceeds from conspicuous bulk cash to some equally valuable but less conspicuous form.
  • 15. 2) Layering – The purpose of this stage is to make it more difficult to detect and uncover a laundering activity. It is meant to make the trailing of illegal proceeds difficult for the law enforcement agencies. The known methods are:  Cash converted into Monetary Instruments – Once the placement is successful within the financial system by way of a bank or financial institution, the proceeds can then be converted into monetary instruments. This involves the use of banker’s drafts and money orders.  Material assets bought with cash then sold – Assets that are bought through illicit funds can be resold locally or abroad and in such a case the assets become more difficult to trace and thus seize.  Integration –This is dissimilar to layering, for in the integration process detection and identification of laundered funds is provided through informants. The known methods used are:  Property Dealing – The sale of property to integrate laundered money back into the economy is a common practice amongst criminals. For instance, many criminal groups use shell companies to buy property; hence proceeds from the sale would be considered legitimate.  Front Companies and False Loans – Front companies that are incorporated in countries with corporate secrecy laws, in which criminals lend themselves their own laundered proceeds in an apparently legitimate transaction.  Foreign Bank Complicity – Money laundering using known foreign banks represents a higher order of sophistication and presents a very difficult target for law enforcement. The willing assistance of the foreign banks is frequently protected against law enforcement scrutiny. This is not only through criminals, but also by banking laws and regulations of other sovereign countries.  False Import/Export Invoices –This involves the overvaluation of entry documents to justify the funds later deposited in domestic banks and/or the value of funds received from exports.
  • 16. Research Research team provides unique ideas to sophisticated global investors to help them drive the outperformance of their portfolios. Believing in independence, quality and long-term relationship development, we offer proprietary products, differentiated market analysis and actionable investment ideas across Research disciplines, asset classes and geographies. We are looking for team players with a passion for the markets and exceptional analytical and communications skills. Recommendation  Increase the number branches all over the country.  Do marketing and advertisements of Barclays bank and its products and services.  Have to give online live chat facilities.  Give importance to all customers.  Control and check every single transaction in the bank Solutions  Maintain proper record of every single transaction.  Records of business relationships and occasional transactions  Identification and scrutiny of complex or unusually large transactions, unusual patterns of transactions with no apparent economic or lawful purpose and other activities.
  • 17. Conclusion Barclays had total assets of US$2.42 trillion, the seventh-largest of any bank worldwide. Barclays bank is trying to control terrorism financing and money laundering in many countries. And is trying to improve its standards in Pakistan and to assure its customers about its services.