UNITED STATES

SECURITIES

AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 20-F

(Mark One)

☐

REGISTRATION

STATEMENT PURSUANT

TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

☑

ANNUAL REPORT PURSUANT TO

SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

For the fiscal year ended

December 31,

2019

☐

TRANSITION REPORT PURSUANT

TO SECTION 13 OR

15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period

from

☐

SHELL COMPANY REPORT PURSUANT

TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring

this shell

company

report

Commission file number

Barclays PLC

1-09246

BARCLAYS PLC

(Exact Name of Registrant as Specified in its Charter)

ENGLAND

(Jurisdiction of Incorporation

or Organization)

1 CHURCHILL PLACE, LONDON E14 5HP,

ENGLAND

(Address of Principal Executive Offices)

GARTH WRIGHT, +44 (0)20 7116

3170, GARTH.WRIGHT@BARCLAYS.COM

1 CHURCHILL PLACE, LONDON E14 5HP,

ENGLAND

(Name, Telephone,

E-mail and/or Facsimile number

and Address of Company

Contact Person)

Securities registered or to be registered

pursuant to Section 12(b)

of the Act:

Title of each class

Trading

symbol(s)

Name of each exchange

on which registered

25p ordinary

shares*

Not applicable*

New York

Stock Exchange*

Title of each class

Trading

symbol(s)

Name of each exchange

on which registered

American Depositary Shares, each representing

four 25p

ordinary shares

BCS

New York

Stock Exchange

4.338% Fixed

-to-Floating Rate Senior Notes due 2024

BCS24A

New York

Stock Exchange

Floating Rate Senior Notes due 2024

BCS24B

New York

Stock Exchange

4.972%

Fixed-to-Floating Rate Senior Notes due 2029

BCS29

New York

Stock Exchange

4.610%

Fixed-to-Floating Rate Senior Notes due 2023

BCS23B

New York

Stock Exchange

Floating Rate Senior Notes due 2023

BCS23C

New York

Stock Exchange

4.375%

Fixed Rate Subordinated Notes due 2024

BCS24

New York

Stock Exchange

3.65% Fixed Rate Senior Notes due 2025

BCS25

New York

Stock Exchange

2.875%

Fixed Rate Senior Notes due 2020

BCS20B

New York

Stock Exchange

5.25% Fixed Rate Senior Notes due 2045

BCS45

New York

Stock Exchange

3.25% Fixed Rate Senior Notes due 2021

BCS21B

New York

Stock Exchange

4.375%

Fixed Rate Senior Notes due 2026

BCS26

New York

Stock Exchange

5.20% Fixed Rate Subordinated

Notes due 2026

BCS26A

New York

Stock Exchange

3.20% Fixed Rate Senior Notes due 2021

BCS21

New York

Stock Exchange

Floating Rate Senior Notes due 2021

BCS21A

New York

Stock Exchange

Floating Rate Senior Notes due 2023

BCS23

New York

Stock Exchange

3.684% Fixed Rate Senior Notes due 2023

BCS23A

New York

Stock Exchange

4.337%

Fixed Rate Senior Notes due 2028

BCS28

New York

Stock Exchange

4.950% Fixed Rate Senior Notes due 2047

BCS47

New York

Stock Exchange

4.836% Fixed Rate Subordinated

Callable

Notes due 2028

BCS28A

New York

Stock Exchange

3.250% Fixed Rate Senior Notes due 2033

BCS33

New York

Stock Exchange

3.932%

Fixed-to-Floating Rate Senior Notes due 2025

BCS25A

New York

Stock Exchange

5.088%

Fixed-to-Floating Rate Subordinated Notes due 2030

BCS30

New York

Stock Exchange

Not for trading, but in connection with the registration of

American Depository Shares, pursuant to the requirements

to the Securities and Exchange

Commission.

Securities registered or to be registered

pursuant to Section 12(g)

of the Act:

None

Securities for which there is a reporting

obligation pursuant to Section 15(d)

of the Act:

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common

stock as

of the close of the period covered

by the annual

report

25p ordinary

17,322,057,836

Indicate by check mark if the registrant is a well-known

seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes

☐

☑

If this report is an annual or transition report,

indicate by check mark if the registrant is not required

to file

reports pursuant

to Section 13 or 15(d)

of the

Securities Exchange Act 1934.

Yes

☐

☑

Note – Checking the box above

will not relieve any registrant required

to file

reports pursuant

to Section 13 or 15(d)

of the Securities

Exchange Act of 1934

from their obligations under

those Sections.

Indicate by check mark whether

the registrant (1) has filed all reports required

to be filed by Section 13 or 15(d)

of the Securities

Exchange Act of 1934

during the preceding

12 months (or for such shorter

period that the

registrant was required

to file

such reports), and (2)

has been subject to

such filing

requirements for

the past 90 days.

Yes

☑

☐

Indicate by check mark whether

the registrant has submitted electronically every Interactive Data File required

to be submitted pursuant to Rule 405 of

Regulation S-T

(§ 232.405

of this

chapter) during

the preceding 12 months (or for such shorter period that the registrant was required to submit and

submit such files).

Yes

☑

☐

Indicate by check mark whether

the registrant is a large accelerated filer, an accelerated filer,

a non-accelerated filer, or an emerging

growth

company. See

definition of “large accelerated filer”, “accelerated

filer” and “emerging

growth

company” in Rule 12b

-2

of the Exchange Act:

Large Accelerated Filer

☑

Accelerated Filer

☐

Non-Accelerated

Filer

☐

Emerging

growth

company

☐

If an emerging growth

company

that prepares its

financial statements in accordance

with U.S.

GAAP,

indicate by check mark if the registrant has elected

not to use the extended transition period

for complying

with any new or revised financial accounting standards† provided

pursuant to Section

13(a)

of the

Exchange Act.

☐

† The term “new or revised financial accounting

standard” refers to any update issued by the Financial Accounting

Standards Board

to its

Accounting

Standards Codification after April 5, 2012.

*Indicate by check mark which

basis of accounting the registrant has used to prepare

the financial

statements included in this filing:

U.S. GAAP

☐

International Financial Reporting Standards as issued by

the International Accounting

Standards Board

☑

Other

☐

*If “Other” has been chec

ked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to

follow:

Item 17

☐

Item 18

☐

If this is an annual report, indicate by check mark

whether the registrant is a shell company (as defined in Rule 12b

-2

of the Exchange Act).

Yes

☐

☑

(APPLICABLE

ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PAST

FIVE YEARS)

Indicate by check mark whether

the registrant has filed all documents and reports required

to be filed by Section 12, 13 or 15(d)

of the Securities

Exchange

Act of 1934

subsequent to the distribution of securities under a plan confirmed by a court.

Yes

☐

SEC Form 20-F Cross

reference information

Form 20-F item number

Page and caption references

in this document*

Identity of Directors, Senior Management and Advisers

Not applicable

Offer Statistics and Expected Timetable

Not applicable

Key Information

Selected financial data

181,

183,

303

Capitalization and indebtedness

Not applicable

Reason for the offer and use

of proceeds

Not applicable

Risk factors

90-100

Information on the Company

History and development of the company

i (Notes), 178

-199, 268

-271 (Note 26), 297 (Note

41), 299,

311

Business overview

ii (Market and other data), 171

-177,

185

-192, 219-

220 (Note

Organizational structure

286

-290 (Notes 34 and

35), 321

-324

Property,

plants and equipment

257

-261

(Notes 20 and 21)

Unresolved

staff

comments

Not applicable

Operating and Financial Review and Prospects

Operating results

90-100,

103

-107,

139, 165,

167-177,

179-

192,

236

-243

(Note 14)

Liquidity and capital resources

137

-138, 145

-158, 165-166, 210,

212-

213, 236-

243

(Note 14), 272

-275 (Notes 27 and 28), 286-

287 (Note

34), 291

-292 (Note 37), 316

-326

Research and development,

patents and licenses, etc.

Trend

information

-100, 146

-169, 178

-199

Off-balance sheet arrangements

109

-111,

267 (Note 25), 287-

290 (Note 35)

Tabular disclosure of contractual

obligations

327

Safe harbor

(Forward

-looking statements)

Directors, Senior Management and Employees

Directors and senior management

3-5, 313

-316

Compensation

45-47,

63, 73

-76, 79, 163

-164, 279

-285 (Notes 32

and 33), 294

-296 (Note 39), 471

Board

practices

3-5, 11

-19, 38, 59

-61, 79

-81

Employees

83-86, 185,

187,

191,

219-

220 (Note 2)

Share ownership

78, 279

-280 (Note

32), 294-

296 (Note 39), 319-

320

Major Shareholders

and Related Party

Transactions

Major shareholders

-43, 312

Related party transactions

Interests of experts and counsel

294

-296 (Note 39), 345

Not applicable

Financial Information

Consolidated statements and other financial information

201

-214,

214

-298,

300

-301

Significant changes

Not applicable

The Offer and Listing

Offer and listing details

303

-304,

311

Plan of distribution

Not applicable

Markets

303

-304,

311

Selling shareholders

Not applicable

Dilution

Not applicable

Expenses of the issue

Not applicable

Additional

Information

Share capital

Not applicable

Memorandum

and Articles of Association

-43, 299

-302

Material contracts

48, 52

-62, 79

Exchange controls

308

Taxation

305

-308

Dividends and paying agents

Not applicable

Statement by experts

Not applicable

Documents on display

308

Subsidiary information

286

-287 (Note

34), 321-

324

Quantitative and Qualitative Disclosure

about Market

Risk

87-1

77,

237

-255 (Notes 14-17)

Description of Securities

Other than Equity Securities

Debt Securities

Not applicable

Warrants and Rights

Not applicable

Other Securities

Not applicable

American Depositary Shares

303

309

Defaults, Dividends Arrearages and Delinquencies

Not applicable

Material Modifications to the Rights of Security Holders

and Use of Proceeds

Not applicable

Controls and Procedures

Disclosure controls and

procedures

312

Management’s annual report on

internal control over

financial reporting

Attestation report

of the registered public accounting firm

201

-204

Changes in internal control over

financial reporting

16A

Audit Committee Financial Expert

16B

Code of Ethics

16C

Principal

Accountant Fees and

Services

-19, 296

(Note 40)

16D

Exemptions from the Listing Standards

for Audit Committees

Not applicable

16E

Purchases of Equity Securities by the Issuer

and Affiliated Purchasers

16F

Change in Registrant’s Certifying Accountant

Not applicable

16G

Corporate Governance

311

16H

Mine Safety Disclosure

Not applicable

Financial Statements

Not applicable (See Item 8)

Financial Statements

Not applicable (See Item 8)

Exhibits

Exhibit Index

Captions have been included

only in respect of pages with multiple sections on the same page in order to identify the relevant caption on

that page

covered

by the corresponding

Form 20-

item number.

Delivering for our stakeholders

Barclays

PLC

2019 Annual Report on Form 20-F

Notes

The terms Barclays or Group refer to Barclays PLC together

with its subsidiaries. Unless otherwise stated, the income statement analysis compares the

year ended 31

Decem

ber 2019 to the corresponding twelve months of 2018 and balance sheet analysis as

at 31 December 2019

with comparatives

relating

to 31 December 2018. The abbreviations ‘£m’ and ‘£bn’ represent millions and thousands of millions of Pounds Sterling respectively; the

abbreviations ‘$m’ and

‘$bn’ represent millions and thousands of millions of US Dollars respectively

;

and the abbreviations

‘€m’ and ‘€bn’ represent

millions and

thousands of millions of Euros respectively.

Non-IFRS performance measures

Barclays management

believes that the non

-IFRS performance measures

included in

this

document

provide valuable information to the readers of the

financial

statements

they enable

the reader to identify a more consistent basis for comparing the businesses’

performance

between financial periods

and provide

more detail concerning the elements of performance which the manag

ers

of these businesses are most directly able

to influence or

are

relevant

for an assessment

of the Group. They

also reflect an important aspect of the way in which operating targets are defined and performance is

monitored

by Barclays management. However

any non-IFRS performance measures

in this document

are not a substitute for IFRS

measures and

readers should consider

the IFRS measures as well. Refer to the appendix on pages 193 to 199 for further information

and calculations

of non-IFRS

performance

measures

included

throughout this document, and the most directly comparable IFRS measures.

Key non

-IFRS measures

included

in this

document,

and the most directly comparable IFRS measures, are:

– Attributable

profit excluding litigation and conduct represents attributable profit excluding litigation and conduct charges. The comparable IFRS

measure is attributable

profit. A reconciliation is provided on pages 197-199;

– Average allocated

equity represents the average shareholders’ equity that is allo

cated to

the businesses.

The comparable

IFRS measure is average

equity.

A reconciliation is provided on pages 197-199

;

– Average allocated

tangible equity is calculated as

the average

of the previous month’s period end allocated tangible equity and the cu

rrent month’s

period

end allocated tangible equity.

The average allocated tangible equity for the period is the average of the monthly averages within that period.

Period

end allocated tangibl

equity is

calculated

13.0% (2018:

13.0%) of RWAs

for each b

usiness,

adjusted

for capital deductions, excluding

goodwill

and intangible assets,

reflecting

the assumptions the Group uses

for capital

planning purposes. Head Office allocated tangible equity represents

the difference

between the Group’s

tangible

shareholders’ equity and the amounts allocate

to businesses.

The comparable

IFRS measure is

average

equity.

A reconciliation is provided on pages 197-199

;

– Average tangible

shareholders’ equity is calculated as the average of the previous month’s period end

tangible equity and the current month’s period

end tangible

equity.

The average tangible shareholders’

equity

for the period is

the average

of the monthly averages within that period. The comparable

IFRS measure is average equity.

A reconciliation is

provid

ed on pages

197

-199;

– Basic earnings

per share excluding litigation and conduct

is calculated by dividing statutory profit after tax attributable to ordinary shareholders

excluding

litigation and conduct charges, by the basic weighted average number of shares.

The comparable

IFRS measure is basic earnings per share.

A reconciliation

is provided on pages 197-199;

– Cost: income

ratio excluding litigation and conduct represents operating expenses excluding

litigation and conduct charges, divided by total income.

The comparabl

IFRS measure is cost:

income

ratio. A reconciliation is provided on pages 197-199

;

– Operating

expenses

excluding

litigation and conduct represents operating expenses

excluding

litigation and conduct charges. The comparable IFRS

mea

sure is operating expenses. A

reconciliation

is provided on pages 197-199

;

– Operating

expenses

excluding

litigation and conduct, and a Guaranteed Minimum Payments (GMP)

charge of £140m

for 2018 represents operating

expenses excluding

litigation and conduct charges, and a GMP charge of £140m for 2018.

The comparable IFRS measure is operating expenses. A

reconciliation

is provided on page 181;

– Profit before

tax excluding litigation and conduct

represents profit before tax excluding litigation and conduct charges. The comparable IFRS measure

is profit before

tax. A reconciliation is provided on pages 197-199;

– Return on average allocated

equity represents

the return on shareholders’ equity

that is allocated to the businesses.

The comparable

IFRS measure is

return on equity.

A reconciliation is provided on page 197;

– Return on average allocated

tangible equity is calculated as

the annualised

profit after tax attributable to ordinary equity holders of the parent, as a

proporti

on of average allocated tangible equity. The comparable

IFRS measure is return on equity. A reconciliation is provided on page 196

;

– Return on average allocated

tangible equity excluding litigation and conduct is calculated as the annualised profit after tax attributable to ordina

equity

holders of the parent excluding litigation

and conduct charges,

a proportion

of average allocated tangible equity. The comparable IFRS

measure is return on equity.

A reconciliation is provided on page 196;

– Return on average tangible

shareholders’

equity

is calculated as the annualised profit after tax attributable to ordinary equity holders of the parent, as

proportion

of average shareholders’

equity

excluding non

-controlling interests

and other equity

instruments

adjusted

for the deduction of intangible

assets and goodwill.

The comparable IFRS measure is return on equity. A reconciliation is provided on

page 196;

and

– Tangible

net asset

value

per share is calculated

by dividing shareholders’

equity,

excluding non-controlling interests

and other equity

instruments, less

goodwill

and intangible assets,

by the number

of issued ordinary shares. The components of the calculation have been included on page 199

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 the Group. Barclays cautions readers that no forward-looking statement

is a guarantee

of future performance and that actual results or

other financial

condition or performance measures 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.

Forward-looking statements can be made in writing but also may

be made

verbally by members of the management

of the Group (including, without limitation, during management presentations to financial analysts)

connection

with this document. Examples of forward-looking statements include, among others, statements or guidance regarding or relating to the

Group’s future financial

position, income growth, assets,

impairment

charges, provisions, business

strategy, capital,

leverage and other regulatory ratios,

payment

of dividends (including dividend payout ratios and expected payment strategies), projected levels of growth in the

banking and financial

markets, projected

costs

or savings, any commitments

and

targets, estimates of capital expenditures, plans and objectives for future operations,

projected

employee numbers, IFRS impacts 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. The forward

-looking statements

speak only as at the date on which they

are made

and such statements may be affected

by changes in legislation, the development of standards and interpretations under IFRS, including evolving

practices with regard to the

interpretation and

application of accounting and regulatory standards, the outcome of current and future legal proceedings

and regulatory

investigations, future levels of conduct provisions, the policies and actions of governmental and regulatory authorities, geopolitical risks

and the impact

of competition. In addition, factors including (but not limited to) the following may have an effect: capital, leverage and other regulatory

rules applicable

to past, current and future periods; UK, US,

Eurozone

and global macroeconomic and business conditions; the effects of any volatility in

credit markets; market related

risks

such as changes

in interest rates and foreign exchange

rates; effects of changes

in valuati

on of credit market

exposures; changes in

valuation

of issued securities; volatility in capital markets; changes in credit ratings of any entity within the Group or any securities

issued by such entities;

the potential for one or more countries exiting the Eurozone; instability as a result of the exit by the UK from the European Union

and the disruption

that may subsequently result in the UK and globally; and the success

of future acquisitions,

disposals and other strategic transactions.

A number of these i

nfluences and factors are beyond the Group’s control.

a result, the Group’s actual financial

position, future results,

dividend

payments, capital,

leverage or other regulatory ratios

or other financial

and non-financial metrics or

performance

measures

may differ

materially from the

statements or guidance

set forth in the Group’s forward-looking statements.

Subject

to our obligations under the applicable laws and regulations of any relevant jurisdiction, (including,

without limitation, the UK and the US), in

relation

to disclosure and ongoing information, we undertake no obligation to update publicly or revise any forward-looking statements, whether as a

result of new information,

future events

or otherwise.

Market and other data

This document

contains information, including statistical data, about certain Barclays markets

and its competitive

position. Except as otherwise

indicated,

this

information is taken or derived from Datastream

and other external sources. Barclays cannot guarantee the accuracy of information taken

from external

sources,

or that, in respect of internal

estimates,

a third party using different methods would obtain

the same estimates as

Barclays.

Uses of Internet addresses

This document

contains inactive textual addresses

to internet

websites operated by us and third parties. Reference

to such websites

is made for

information

purposes only, and

information found at such websites

is not incorporated

by reference into this

document.

References

to Strategic Report

and Pillar

3 Report

This document

contains references throughout to the Barclays

PLC Strategic

Report and Pillar 3 Report.

References

to the aforementioned report

are

made for information

purposes

only,

and information found in said report

is not incorporated by reference into this document.

Barclays

PLC 2019

Annual Report

on Form

20-F.

Contents

What’s

inside this

report

Governance

●

Governance

contents

●

Directors’ report

●

Remuneration

report

●

Colleagues

Risk review

●

Risk review contents

●

Risk management

●

Material

existing and emerging risks

●

Principal

Risk

management

102

●

Risk performance

108

●

Supervision

and regulation

171

Financial

review

●

Financial

review contents

178

●

Key performance

indicators

179

●

Consolidated

summary income statement

181

●

Income

statement commentary

182

●

Consolidated

summary balance sheet

183

●

Balance

sheet commentary

184

●

Analysis of results by business

185

●

Non-IFRS performance

measures

193

Financial

statements

●

Financial

statements contents

200

●

Consolidated

financial statements

205

●

Notes to the financial

statements

214

Shareholder

information

●

Key dates, Annual

General Meeting, Dividends, and useful information

299

Barclays PLC

2019 Annual Report on Form 20-F

OUR GOVERNANCE

Contents

Welcome to our Governance report. This report

explains who we are, at Board and Executive

Committee (“ExCo”) level how our

governance

framework operates, and our key areas of focus in

2019.

Our primary aim

is that our governance:

Is effective

in providing challenge, advice and support to management; Provides checks

and balances and

encourages constructive challenge; Drives informed, collaborative

and accountable

decision

-making; and Creates

long

-term sustainable value for our

shareholders, having

regard to our other stakeholders.

We are in a new regime

for 2019, with the revised 2018 UK Corporate Governanc

Code (the “Code”) and the Companies

(Miscellaneous Reporting) Regulations 2018

(the

“Regulations”) now in force, and

our Governance Report reflects these requirements.

view our specific compliance

against the

Code, please see

pages 33 to 38.

Certain additional

information, signposted throughout this report, will be available at

barclays.com/ourgovernance

Page

Directors’

Report

•

Board of Directors: a year of renewal

•

Executive

Committee: strategically enhanced and strengthened

•

Striving

for simplicity and effectiveness

•

Our key areas of focus in 2019

•

Key priorities

•

Board Audit

Committee report

•

Board Nominations

Committee report

•

Board Risk Committee

report

•

How we comply

•

Other statutory information

Remuneration Report

Barclays PLC

2019 Annual Report on Form 20-F

DIRECTORS’

REPORT

Board

of Directors:

a year of

renewal

Relevant

skills and experience:

Nigel is the Group Chairman. He

is also Chairman

Barclays

Bank PLC.

Nigel has extensive

experience

in, and understanding of, banking

and financial

services,

gained

through a

36-year career at

Rothschild

& Co. where

he was most recently

Deputy

Chairman. Prior to that he was Chairman

of the Group

Executive

Committee and

Managing Partner

Rothschild

& Co. He is a

seasoned

business leader

with a strong track record in leading

and chairing

range of organisations and in acting as

a strategic

adviser

to multiple major

international

corporations

and governments. The breadth of

Nigel’s knowledge

and operational experience with international

banking

groups, building teams and culture,

and growing

businesses

are all hugely

beneficial to

Barclays, and

enables Nigel to contribute to the strategic

direction

and long-term sustainable success of

Barclays.

Key current appointments

Chairman, Sadler’s Wells; Non-Executive

Director,

Tetra Laval

Group

Committee membership

Board Nominations Committee (Chair)

Relevant

skills and experience

Jes has nearly four decades of extensive

experience

in banking and financial services.

He brings a

wealth

of investment banking knowledge

to the Board

as well

as strong executive leadership, and this

contribution

is reflected in Barclays strategy and

long-term

sustainable success of the business.

He previously

worked for more than 30 years at

JP Morgan where

he initially trained as a commercial banker,

later

advancing

to the leadership

of major businesses

involving

equities, private

banking and

asset

management,

and ultimately

heading

JP Morgan’s

Global Investment Bank.

Key current appointments

Board Member, Bank Policy Institute; Board

Member,

Institute

of International

Finance

Committee membership

None

Relevant

skills and experience

Crawford has extensive business

and management

experience at executive and board level

spanning

over 30 years. Beneficial to the Board

and to

Barclays’ strategy and long-term

sustainable success

is his key

understanding

of stakeholder

needs and his

experience in international and cross-sector

organisations, strong leadership and

strategic

decision-making. Crawford brings to the

Board robust

remuneration experience gained

from his former

remuneration committee chairmanships

at Standard

Life plc and other current positions.

Key current appointments

Non-Executive Director, SSE plc; Chairman,

Edrington Group

Committee membership

Board Audit Committee, Board Nominations

Committee,

Board Remuneration

Committee (Chair)

Relevant

skills and experience

Mike has deep knowledge

of accounting, auditing

and

associated

regulatory

issues, having

previously

worked at KPMG

for over 20 years. Mike’s former

roles include acting as the lead engagement

partner

on the audits of large financial services

groups

including HSBC, Standard Chartered

and the Bank

England, as Head of Quality and Risk

Management

for KPMG Europe LLP and

as KPMG UK’s Ethics

Partner. The Board benefits from his extensive

experience in accounting, auditing

and financial

reporting and therefore Mike continues

to contribute

to the long-term sustainable success

of the business.

Key current appointments

Member, Cabinet Office Board; Member, International

Ethics Standards Board for Accountants;

Member,

ICAEW Ethics Standards Committee;

Member,

Charity

Commission

Committee membership

Board Audit Committee (Chair), Board

Nominations

Committee,

Board Risk

Committee

Full Director biographies can be

found on pages

313 to 315.

Barclays PLC

2019 Annual Report on Form 20-F

Relevant

skills and experience

Tim’s continued contribution to Barclays’

strategy

and

long-term sustainable success comes

from his

extensive

financial

services experience,

knowledge

risk management and UK and EU

regulation, as

well

as an understanding of key investor

issues. He

had a

distinguished career with Legal &

General, where,

among other roles, he was the Group

CEO until June

2012, and this experience enables

Tim to provide

challenge, advice and support to management

business performance and decision-making.

Key current appointments

Chairman, Apax Global Alpha Limited

Committee membership

Board Audit Committee, Board Nominations

Committee,

Board Remuneration

Committee,

Board

Risk Committee (Chair)

Relevant

skills and experience

Sir Ian is a member of the Board and

is also Chair of

Barclays

Bank UK PLC.

He contributes

to the Board

substantial

business experience

particularly in

the

international retail sector from his lengthy

executive

career at the Kingfisher Group, as

well as experience

in sustainability and environmental matters

which are

important

to the Group’s

strategy

and long-term

sustainable success. Sir Ian holds strong

credentials

in leadership, is involved with many

charitable

organisations, such as The Prince of Wales’s

Charitable Foundation, and is highly regarded

by the

Government for his work with various

Government

departments

Key current appointments

Chairman, Maisons du Monde; Chairman,

Menhaden

plc; Lead Non-Executive Director for the

Government;

Trustee, Institute for Government

Committee membership

Board Nominations Committee

Relevant

skills and experience

Mary Anne is an experienced Non-Executive

Director

with considerable financial services and

investment

banking experience, following an executive

career

spanning over 20 years with Morgan

Stanley. This

enables her to contribute to the effectiveness

Barclays

’

operations, strategy

and long-term

sustainable success of the business.

Her current

other Non-Executive positions and

Senior Advisory

role with Blackstone, coupled with

her previous board

and senior management level positions

(with Dollar

Tree Inc., Health

Net, Inc.,

and Blackstone

Advisory

Partners), contribute to the wide-ranging

global,

strategic

and advisory

experience

she can provide to

the Board.

Key current appointments

Non-Executive Director, HP Inc.; Non-Executive

Director,

Ahold Delhaize

N.V.; Non-Executive

Director,

Alcoa Corporation;

Senior Advisor, The

Blackstone

Group L.P.

Committee membership

Board Risk Committee

Relevant

skills and experience

Mohamed is a highly respected economist

and

investor,

with considerable

experience

in the asset

management industry and multilateral

institutions.

is chief

economic advisor

at Allianz

SE, the corporate

parent of PIMCO (Pacific Investment

Management

Company LLC) where he formerly

served as Chief

Executive

and Co-Chief

Investment

Officer. As well

serving

on several advisory

committees

and boards,

Mohamed is a regular

columnist for Bloomberg

Opinion and a

contributing editor at the Financial

Times. He has also published widely on international

economic and financial topics. He

spent 15 years

the IMF where he

served

as Deputy Director

before

moving

to the private

sector and

financial services.

Mohamed’s acute knowledge and understanding

international economics and the financial

services

sector strengthens the Board’s capacity

for

overseeing

the strategic

direction

and development

the Group. Mohamed’s knowledge and

experience

enables him to contribute to the long-term

sustainable

success

and strategy

of the business.

Key current appointments

Board Member (Non-Executive),

Under Armour Inc.;

Chief

Economic Advisor,

Allianz SE; Senior

Advisor,

Gramercy Fund

Management;

Senior Advisor,

Investcorp Bank BSC

Committee membership

None

Relevant

skills and experience

Dawn is a highly experienced financial

executive who

holds the role of Chief Investment

Officer at Soros

Fund Management LLC.

Her previous

experience

includes 25 years with UBS and its predecessor

organisations, most recently as Head

of Investments

for UBS Asset Management. Her

knowledge of

the

businesses

and markets

in which the Group

operates

further

strengthens

the depth and

range of relevant

sector skills and experience across the

Board. This

enables Dawn to challenge and contribute

effectively

to the Group’s operations and the long-term

sustainable success of the business.

Key current appointments

Chief

Investment Officer at Soros

Fund Management

LLC;

Member of The New York Federal Reserve’s

Investor

Advisory Committee

on Financial

Markets;

Member of Advisory Board and Investment

Committee of the Open Society Foundations’

and

their Economic Justice Programme

Committee membership

Board Risk Committee

Relevant

skills and experience

Mary has extensive and diverse board-level

experience across a range of industries,

including her

Non-Executive

Directorships of the

Bank of

England, Alliance & Leicester, Aviva, Centrica and

Swiss Re Group. Through her

former senior executive

positions with HM Treasury, the Prime Minister’s

Office,

and as Director

General of

the Association

British Insurers, she brings to the Board

a strong

understanding of the interaction between

public and

priv

ate sectors, skills in

strategic

decision-making

and

reputation management and promotes

strong board

governance

values, which

enables her

to continue

contribute effectively to the long-term

sustainable

success

of the Group.

Key current appointments

Non-Executive Director, Valaris PLC; Member of

Advisory

Panel, The

Institute of Business

Ethics;

Member, UK Takeover

Appeal Board

Committee membership

Board Remuneration Committee

Barclays PLC

2019 Annual Report on Form 20-F

DIRECTORS’

REPORT

Board

of Directors:

a year of

renewal

Relevant

skills and experience

Brian has served as Chief Financial Officer

for BP

p.l.c.

since 2012. He

joined BP in

1986 after obtaining

a PhD in Mathematics. After performing

a broad

range of commercial and financial roles

across all

facets

of the group, he

became chief executive

BP’s integrated supply and trading function

(2005 –

2009). Brian will

retire fro

BP in June

2020. His

experience outside BP includes serving

as a

Non-

Executive

Director and

audit committee

member of

Air

Liquide S.A., the Royal Navy, and the Francis Crick

Institute.

Brian also

chairs the ‘100 Group’

of the

FTSE 100 Finance Directors. Brian brings

to the

Board his extensive experience of

management,

finance

and strategy gained

at BP

and other public

and private boards. His experience

with, and

understanding of, the challenges

and opportunities

inherent in advancing a sustainable

energy future

will

be invaluable as Barclays considers

how it can help

to accelerate the transition to a

low carbon world.

Key current appointments

Chief

Financial Officer, BP p.l.c.;

Non-Executive

Director,

Air Liquide S.A.;

Non-Executive Director,

the

Royal

Navy; Senior Independent

Director, the Francis

Crick Institute; Chairman, the 100 Group

of the FTSE

100 Finance Directors

Committee membership

None

Relevant

skills and experience

Tushar is a chartered accountant with over

25 years

of strategic

financial

management,

investment

banking, operational and regulatory

relations

experience, which enables him to

contribute to the

long-term sustainable success and strategy

of the

business.

He joined

Barclays from

JP Morgan,

where

he held various senior roles including

the CFO

of its

Corporate & Investment Bank at the

time of the

merger of the investment bank and

the wholesale

treasury/security services business.

Key current appointments

Member, the 100 Group of the FTSE 100

Finance

Directors

;

Main Committee Chair,

Sterling Risk Free

Reference Rates Working Group

Committee membership

None

Relevant

skills and experience

Diane is a member of the Board, Chair

of Barclays

Execution Services Limited and a

member of the

Board of Barclays US LLC. She brings

to Barclays a

wealth of experience in managing

global, cross-

discipline business operations, client services

and

technology in the financial services

industry, which

enables her to robustly challenge

the Group’s

strategy

and support the

long-term sustainable

success

of Barclays.

Diane had

an extensive career

at Merrill Lynch,

holding

a variety of senior

roles,

including responsibility for banking, brokerage

services

and technology

provided to the

company’s

retail and middle market clients.

Key current appointments

None

Committee membership

Board Audit Committee, Board Nominations

Committee,

Board Risk

Committee

Company Secretary

Relevant

skills and experience

Stephen was appointed Company

Secretary in

November 2017 having previously

served as the

Group Company Secretary and Deputy

General

Counsel of

SABMiller plc.

Prior to

this, he practised

law as a partner in a

law firm in South Africa, and

subsequently

in corporate

law and

M&A at Hogan

Lovells

in the UK. Stephen

has extensive

experience

in corporate governance, legal, regulatory

and

compliance matt

ers.

Stephen serves as

Vice Chair of

the GC100, the association of General

Counsel

and

Company Secretaries working in FTSE

100

companies,

and has

previously served

as Chairman

of the ICC UK

’s Committee

on Anti-Corruption.

Barclays PLC

2019 Annual Report on Form 20-F

Executive

Committee:

strategically

enhanced

and strengthened

We have changed

the composition of the

ExCo, removing

a management layer and

bringing

key

business areas closer

to, and

making their

leaders a part of, the most senior

management

forum for the Group.

The following

new roles

and additions to the

ExCo mean that

it now has a stronger

and

closer strategic focus on, and

oversight over,

the businesses comprising

our CIB and our

global

consumer banking and payments

businesses:

New roles

President of Barclays Bank PLC

Paul Compton

Global Head of Consumer Banking and

Payments

Ashok Vaswani

Paul and

Ashok

were previously members of

the ExCo in their

capacities as

Chief Operating

Officer and

CEO of Barclays UK respectively

Roles elevated to the ExCo

Global Head of Banking

Joe McGrath

Global Head of Markets

Stephen

Dainton

Head of Corporate Banking

Alistair

Currie

Group Executive

Committee biographies can

be found

on pages 314 to 316.

Barclays PLC

2019 Annual Report on Form 20-F

Striving

for simplicity

and effectiveness

Barclays is a large, diversified organisation. We are committed, through

our governance model, to driving four key features: simplification,

collaboration, accountability and quality of decision-making.

Our governance framework

Our Group-wide governance

framework

has

been designed

to facilitate the effective

management

of the Group by our CEO and his

ExCo whilst preserving the constructive

challe

nge, support and oversight of our major

subsidiary boards in the UK, Ireland

and the

US, consistent with their respective

legal and

regulatory

responsibilities. The Barclays PLC

(BPLC) Board sets the strategic direction

and

risk appetite

of the Group and is

the ultimate

decision

-making body for matters of

Group-

wide strategic,

financial, regulatory or

reputational

significance.

BPLC is the group parent

company and has a

premium

listing on the London Stock

Exchange.

Each of our main operating entities,

Barclays Bank PLC (BBPLC), Barclays Bank

UK PLC (BBUKPLC), Barclays Bank Ireland

PLC, Barclays US LLC and Barclays Bank

Delaware,

has its

own board

comprising

Executive

and

Non-Executive

Directors.

Each also has its

own board committees.

During the year,

we consolidated

and

streamlined

membership of the BPLC and

BBPLC boards, such that membership

of the

BBPLC board is now a subset of the BPLC

Board, with

all members of the BPLC Board

except the Senior

Independent Director (SID),

the Chairm

an of BBUKPLC and one Non

Executive

Director now also serving on the

board of BBPLC.

This partial

consolidation has

significantly

increased coordination and

efficiency,

and reduced complexity and

duplication.

The revised BBPLC board

composition

vests

oversight over the activities

of BBPLC in a board the

members of which

also have direct

accountability to BPLC

’s

shareholders through

their separate

responsibilities

members of the BPLC

Board.

Board composition

In 2019, we welcomed

our new

Chairman,

Nigel

Higgins. We also announced

the

appointment

of two new Non-Executive

Directors:

■

Dawn Fitzpatrick, who joined

the Board on

25 September

2019;

and

■

Mohamed

A. El-Erian, who joined the Board

on 1 January 2020.

In January 2020,

we announced the

appointment

of Brian Gilvary who joined the

Board on 1 February 2020.

All of these appointments bring

tremendous

insight

and experience relevant to the markets

in which we operate.

In accordance with the

recommendation

of the Code, Reuben Jeffery

and Dr. Dambisa

Moyo, each

having served on

the Board for nine

years, stepped down, as did

Sir Gerry Grimstone

and Mike Turner.

Matthew

Lester stepped down

on 1 January

Board Governance Framework

Barclays PLC

2019 Annual Report on Form 20-F

2020. We also bade

farewell to John

McFarlane,

who stepped down after four years

as Chairman,

including a period where he was

Executive

Chairman. We are grateful to them all

for their service to Barclays.

We are actively

seeking to complement the

current range of skills on our Board, ideally

with

individuals

who can bring additional retail

banking

and technology

experience. Our strong

belief

in the benefits of diversity – of gender,

ethnicity

and thought – underpins

our search. In

the report of our Nominations

Committee we

address the continuing

evolution of our Board.

Principal committees

The principal

Committees of the BPLC Board,

and the core responsibilities

of each, are

described in

the “Board Governance

Framework” table

at the foot of the previous

page. The

remit of each Committee is set

out in

brief in the

table, and you can read more

about

the Committees

and their work

on pages

and 80 to 82

In September

2019, the Board reviewed the

responsibilities

of the Reputation Committee

and reallocated

them mainly to the Board so

that it could

itself directly oversee the critical

topics of culture,

the environment and

reputation.

Responsibility for the oversight of

Conduct risk and Compliance

was

transferred

from the Reputation

Committee to the Risk

Committee.

We measure our effectiveness

An effective

Board is one that delivers for

stakeholders. We assess the effectiveness of

our Board, its Committees

and Board members

each year, as required

by the Code. Although

the Code only

requires an externally facilitated

evaluation

every three years,

for each of the

past four years we have used the services of an

external

agency to facilitate the assessment of

the effectiveness of the Board.

This year, the

Nominations

Committee decided to ask our

SID, with the support of the Company

Secretary,

to conduct the

assessment.

They are

well placed

to do this, having been closely

involved

in the transition to a new Chairman

and the evolving

composition of the Board and

the way it operates. You

can read more about

our 2019 process and our progress against the

2018 review

on page

23 to 24.

Barclays PLC

2019 Annual Report on Form 20-F

DIRECTORS’

REPORT

Our key

areas

of focus

in 2019

We think of governance as how we govern the organisation and make

decisions to promote its success for the long-term benefit of our

stakeholders. Effective governance makes possible the delivery of our

purpose and our strategy.

Governance in action: our

programme of prioritised deep

dives

underpin

informed and sound decision-

making,

the Board needs to have a deep and

granular

understanding of the Group as a

whole and

each of its significant businesses –

where the key risks lie, how and

where

resources are allocated

and the contribution

made by each

part of the business.

Led by

the Chairman,

the Board and the

ExCo have agreed

a prioritised series of deep

dives which now form a significant

part of

each Board meeting,

with two to four deep

dives on the agenda

for a typical Board

meeting.

The materials for each deep dive

facilitat

an in-depth understanding of the

issues and generate

meaningful discussion,

debate,

support to management and

challenge

on key topics, allowing the Board

exercise effective

oversight and assist

the

delivery

of the Group’s strategy.

Through

this process,

the Board considers

strategy at every meeting,

rather than in a set

piece

event once

a year.

The Board

has discharged its responsibilities

as described in this high

-level flow diagram.

Barclays PLC

2019 Annual Report on Form 20-F

Key priorities

Core areas of focus

Our programme

of deep dives is outlined below

and in the

“Governance

in action” section on

the previous page.

This programme

commenced

in July 2019, following the

appointment

of Nigel Higgins as

Chairman.

The deep

dives held this year

included

consideration

of a wide range of topics,

covering

selected individual business units as

well as Group-wide

matters such as

our capital

allocation

framework, our

costs, our societal

purpose, our culture,

the environment and our

risk profile.

Feedback from our shareholders and

wider

stakeholders has been taken into

account

arriving

at and prioritising our deep dives.

The Board

received updates on the

performance

of the business

and execution

of the strategy at every meeting,

and the

approval

of our MTP,

in which our strategy is

embedded,

was

a key Board responsibility

its November

and December 2019 mee

tings.

We also gave considerable

focus to

developments in

the regulatory environment,

and to engagement

with our regulators in the

UK and the US in particular.

The oversight of

risk and of our control environment

is also

a core Board responsibility

and has

been

addressed at meetings through

the year.

The Board

believes

the right

culture

and

values,

supported

effective

leadership

and a consistent

tone

from the

top, are

crucial

to the success

of the Group.

Stakeholder engagement

We have enjoyed

extensive engagement with

our shareholders in 2019

through a variety of

mechanisms,

including:

■

In February, March

and April

2019, Nigel

Higgins held

around 50 meetings with

shareholders and other

stakeholders. This

was a “listening

tour”, the aim of which was

for Nigel to introduce

himself to a wide

range of stakeholders, including

our

institutional

shareholders,

and to hear

directly

from them their views on the

Company

before he became Chairman in

May 2019.

We also engaged with activist

investor Sherborne

Investors

Management

LP as part of this process;

■

Our AGM, where the Board engaged

extensively

with shareholders, both

formally

during the meeting and

informally

before and after the AGM; and

■

Through

our intensive Investor Relations

programme

of conference calls, webcasts

and meetings

at the time

of each of our

quarterly

results releases.

Our broader stakeholder engagement

described in

the Strategic Report

available at

home.barclays/annualreport

. Specifically

with regard to our workforce, engagement

with

our colleagues

has long been

a part of our

DNA as an organisation.

The Board conducted

a full review

of our existing engagement model

and concluded

that this, with certain

enhancements,

would be the best and most

effectiv

means to ensure sustained

engagement

with our workforce

whilst also

meeting

the objectives of the Code’s

new

workforce engagement

requirements. Our

workforce engagement

model is described in

the People

section on page

83 to 86.

Purpose, culture and values

Our purpose, adopted

in May 2018, is

“Creating opportunities to rise”. This is

underpinned

by our values: respect, integrity,

service, excellence

and stewardship, and by

the behaviours associated with

them. Our

purpose, values and

behaviours are designed

to support each other,

to drive our culture

and

to guide

our strategy and decision

-making.

The Board

has recently examined

our purpose

and concluded

that whilst it is fully integrated

into many

of our key

processes and decision-

making forums, we have further

work to do to

bring to life:

to express

and apply

it consistently

across the Group, and

for it to better connect

all of our stakeholders, our businesses, ESG

activities and

ambitions. This work is under

way.

Our values were adopted

in January 2013.

They were, and

remain, fully

embedded and

integrated

into the Group.

Our culture is a core area of focus for the

Board, which

bel

ieves

that the right

culture and

values, supported

by effective leadership and a

consistent tone from

the top, are crucial to the

success of the Group.

How

does the

Board review

our culture?

The Board

reviews our culture in a number of

ways, including:

■

Quantitative

and qualitative feedback on

how our culture aligns with

our purpose,

values and strategy through

Culture

Dashboards, so the Board can

see the

effect our people

engagement has on our

performance,

and the continued strength

of our culture;

■

Analysis of employee

survey results;

■

Face-to-face engagement

with employees

locally

to hear what they think; and

■

Review of people

policies, which are

designed

to provide equal opportunities

and create an inclusive

culture, in line with

our values and i

support of our long term

success.

Barclays PLC

2019 Annual Report on Form 20-F

DIRECTORS’

REPORT,

BOARD AUDIT

COMMITTEE REPORT

Ensuring

reporting

integrity

and

an effective

controls

environment

The Board Audit Committee has a central role in maintaining and

challenging the quality of Barclays external disclosures and its internal

control environment.

Dear Fellow

Shareholder

2019 was a year of steady progress for

the Group both

in enhancing its control

environment

and embedding new financial

reporting

requirements, particularly in relation

to the expected

credit loss

(ECL) model

introduced

by the implementation of IFRS 9

in 2018.

Ensuring focus on strengthening

the

Barclays

internal

control environment

has continued to

be a key activity

for the Committee. 2019 was

an important

year for

the Barclays Internal

Control Environment

Programme (BICEP)

which commenced

in January 2017 and is

track to complete

by the end of March 2020. As

at the end of 2019,

94% of issues

were either

closed or in validation

with 96% of the BICEP

milestones

achieved. When BICEP is fully

completed,

the Group’s control environment

will

be in a much stronger position, but

inevitably,

expect

ations and standards

change

and new control events occur, work is

still required

both to maintain and to further

develop

it. The Committee is therefore working

to ensure that as we transition

to “business

usual”, management

has a robust

framework

for identifying

and responding to control issues

with appropriate

reporting to the Committee

and other Board

Committees. A key

component

of this will be the work

the Chief

Controls Office

is doing to further streamline

and automate

the Risk

and Controls Self-

Assessment (RCSA) process to make it more

dynamic.

In assessing general

control issues for

disclosure in this Annual

Report, the

Committee

continued to apply similar concepts

to those used for assessing internal

financial

controls for the purposes of the US Sarbanes-

Oxley Act. The

conclusion we reached is that

there are no control

issues that are considered

to be a material

weakness

and which

therefore

merit specific

disclosure.

IFRS 9

continued

to be a major focus for the

Committee

this year as

models conti

nue to be

validated

and refined. In addition disclosures

have been

enhanced, although more work is

required

to develop the ability to generate and

disclose more meaningful

sensitivity analyses.

Following

the introduction of the time bar by

the FCA at the e

nd of August, the level

subjectivity

of the PPI provision at 31

December 2019

has been considerably

reduced.

However the Committee did consider

whether the “spike” in complaints received

just

before the

deadline

might have been

anticipated

and was satisfied that there was no

evidence

that would have justified an earlier

significant

increase in the provision.

I continued

my regular meetings with the

Chairs of the main

subsidiary audit

committees,

including the Chair of the BBPLC

audit

committee until the partial consolidation

of the BPLC and BBPLC

boards. Since that

time

I have also met with the

Chair of the

Barclays US LLC audit

committee, attended

a meeting

of the Barclays Bank

Ireland

PLC

audit

committee, and attended

the meeting of

the BBUKPLC au

dit committee which

considered

the main year

-end accounting

issues. The Chair

of the BBUKPLC audit

committee

also attends the meeting of the

Committee

where we consider the control

environment

of BBUKPLC as

part of our year-

end evaluation.

I also continued to meet

frequently

with members of senior

management,

including the Group Finance

Director and Chief

Internal Auditor.

In relation

to the latter,

I am pleased that the Committee

approved

the appointment in September 2019

of Lindsay O’Reilly

the new Chi

ef Internal

Auditor

following a joint reco

mmendation from

myself and the

Group Chief

Executive Officer.

As she was appointed

to this

role from a first

line

of defence function, the Committee have

taken steps to understand

and safeguard

against potential

and

perceived conflicts of

interest that may

arise in order to support BIA’s

continued

independence from the business.

BIA is a key component

in supporting the

Committee’s work and I am pleased

with

the way that the function

has continued to

develop

throughout the year in scoping,

performing

and reporting the outcomes

of its work both to management

and

the Committee.

I have also continued

my regular engagement

with the Group’s regulators both

in the UK and

US. This has encompassed not

only my work

as the Chair of the Committee,

but also my role

as the Group’s Whistleblowing

Champion. In

that respect, I also oversaw the production

the first of three annual

reports which we have

agreed to submit

to the FCA and PRA in the

UK and also the New York Department

Financial

Services containing certain

information

regarding our whistleblowing

programme.

Committee

performance

The performance

of the Committee was

assessed internally

part of the annual

effectiveness review of the Board.

In line

with

the approach

adopted for all Board

Committees in

2019, the process involved

completion

of a tailored questionnaire by

Committee

members

and standing

attendees.

The results confirm

that the Committee is

operating

effectively, and the Board takes a

high

level of assurance from the technical

and commercial

competence and diligence

of the Committee’s work. It is considered

well-

constituted,

with the right balance of skills

and

experience

to provide an appropriately broad

level

of challenge and oversight of the areas

within

its remit. Consideration will need to be

given

to adding an

additional member of the

Committee

with recent and relevant financial

experience

following the departure of Matthew

Lester at the end

of the year.

Last year’s review commented

on the improved

focus of the Committee

on key issues

in the

context of managing

a demanding agenda

efficiently

that time is allocated to the

most

significant

items for discussion. As

the

Committee

has taken on additional

responsibilities

during the year,

for example the

oversight of tax matters, continued

focus on

this area will

be beneficial.

In response to a request to provide

feedback

on the interaction

with subsidiary audit

committees,

the review highlighted that

interaction

with the BBUKPLC audit committee

had

been helpful

and effective. Following the

consolidation

of the membership of the

Committee

with the BBPLC audit committee,

coverage of BBPLC

matters within concurrent

meetings

was

considered

adequate, noting that

it will

benefit from further embedment.

Looking ahead

In 2020 the Committee

will still continue to

monitor

the embedment of IFRS 9 processes

and further enhancements

to our disclosure,

particularly

regards sensitivities.

We will

also be looking to assess

the reporting

of control issues after the conclusion

of BICEP

as well as monitor

the satisfactory completion

of remediation

programmes which are due to

extend beyond

31 March 2020, in particular the

Designated

Markets

Activity

remediation plan.

Mike Ashley

Chair, Board

Audit Committee

February 2020

Barclays PLC

2019 Annual Report on Form 20-F

Committee

composition

and meetings

The Committee

is composed solely of

independent

Non-Executive Directors, with

membership

designed to provide the

breadth

of financial

expertise

and

commercial

acumen it needs to fulfil its

responsibilities.

Its

members as a whole

have recent and

relevant experience of the

banking

and financial services sector, in

addition

to general management and

commercial

experience, and are financially

literate.

In particular, Mike Ashley, who is

the designated

financial expert on the

Committee

for the purposes of the US

Sarbanes

-Oxley Act, is a former audit

partner who, during

his executive career,

acted as lead

engagement partner on the

audits of a number

of large financial

services groups. Matthew

Lester, who

resigned from the

Committee on 1 January

2020, held

a number

of senior finance roles

across a range of business sectors,

including

financial services, during his

executive

career. You

can find more details

of the experience

of Committee members

their biographies

on pages 3 to 6.

During 2019,

the Committee met 10 times

and the chart opposite

shows

how it

allocated

its time. Attendance by members

at Committee

meetings is

also shown

opposite.

Committee meetings were

attended

by representatives

from

management,

including the Group Chief

Executive

Officer, Group Finance Director,

Chief Internal

Auditor,

Chief Controls

Officer,

Chief Risk

Officer,

Chief Operating

Officer,

Group General Counsel

and Group

Chief Compliance

Officer, as well as

representatives from the

businesses

and

other functions.

The lead audit engagement

partner of KPMG,

Michelle Hinchliffe, also

attended

Committee meetings. The

Committee

held a number of separate

private sessions with each of the Chief

Internal

Auditor and the lead audit

engagement

partner, which were not

attended

by management.

Committee

role

and responsibilities

The Committee

is responsible for:

■

Assessing the integrity

of the Group’s

financial

reporting and satisfying itself

that any significant

financial

judgements

made by management

are sound;

■

Evaluating

the effectiveness

of the

Group’s internal

controls,

including

internal

financial controls;

■

Scrutinising

the activities

and

performance

of the internal and

external

auditors, including monitoring

their independence

and objectivity;

■

Overseeing the

relationship with the

Group’s external

auditor;

■

Reviewing

and monitoring the

effectiveness of the Group’s

whistleblowing

policies and procedures;

and

■

Overseeing significant

legal and

regulatory

investigations, including the

proposed litigation

statement for

inclusion

in the statutory accounts.

Barclays PLC

2019 Annual Report on Form 20-F

DIRECTORS’

REPORT,

BOARD AUDIT

COMMITTEE REPORT

Ensuring

reporting

integrity

and

an effective

controls

environment

Area of focus

Reporting

issue

Role of the Committee

Conclusion/action

taken

Fair, balanced and

understandable

reporting

(including

Country-by-

Country Reporting

and

Modern

Slavery

Statement)

In light

of the Board’s obligation

under the Code,

the Committee

assesses external

reporting to

ensure it is fair, balanced

and

understandable.

In addition

to this Annual Report and

associated year-end

reports, the

Committee

also reviewed the Group’s

quarterly

reports and the GFD’s

presentations to analysts.

The Committee

informed these

reviews by:

■ Consideration

of reports of the

Disclosure Committee

which

included

views on content,

accuracy and tone;

■ Direct

questioning

of management

including

the CEO and GFD on the

transparency and accuracy

disclosures;

■ Consideration

of management’s

response to letters issued by the

FRC;

■ Evaluation

of the output of the

Group’s internal

control

assessments and Sarbanes

-Oxley

s404 internal

control process;

and

■ Consideration

of the results of

management’s processes relating

to financial

reporting matters

and

to evidence

the representations

provided

to the external auditors.

The Committee

noted specifically that

whilst the disclosures regarding

IFRS9 met nearly

all the

recommendations from the

Enhanced

Disclosure Task

Force these were

still evolving.

The Committee

encouraged

management to continue

to enhance

the disclosure particularly

as the ability

to analyse

sensitivities

was developed.

Having evaluated

all of the available

information,

the assurances

management

and underlying

processes used to prepare the

published

financial information, the

Committee

concluded and advised

the Board that

the 2019

Annual

Report and financial

statements are

fair balanced

and understandable.

Going concern

and

long-term

viability

Barclays is required

to assess

whether it is appropriate

to prepare

the financial

statements on a going

concern basis and also, in

accordance

with the Code, Barclays

must provide a statement

of its

viability.

The Committee

considered both the

going

concern assumption and the

form and content

of the viability

statement

having regard to:

■ The

MTP and

WCR;

■ The

forecasted liquidity

and

funding

profile;

■ The

results of

stress tests based

on both internal

and regulatory

specified

assumptions as reviewed

by the Risk Committee;

and

■ Current risk and

strategy

disclosures.

The Committee

recommended to the

Board that the

financial statements

should be prepared

on a going

concern basis and that there were no

material

uncertainties

that may cast

significant

doubt on the Group’s

ability

to continue as

a going

concern.

The Committee

also agreed that the

appropriate

time frame for the viability

statement

continued to be three

years

and recommended

the viability

statement

to the Board for approval.

Barclays PLC

2019 Annual Report on Form 20-F

Area of focus

Reporting

issue

Role of the Committee

Conclusion/action

taken

Impairment

(refer to Note 7

to the

financial

statements)

Following

implementation of IFRS9,

ECLs

are modelled

using a range of

forecast economic

scenarios. The

key areas of judgement

include

setting the modelling

assumptions,

developing

the macroeconomic

scenarios and the

methodology for

weighting

them, establishing the

criteria

to determine significant

deterioration

in credit quality and the

application

of management

adjustments

to the modelled output.

As part of their

monitoring the

Committee

considered a number of

reports from management

on:

■ The

continued development and

embedding

of controls over the

internal

processes

supporting

the

ECL calculation

and related

assessment of SOx compliance

(including

by the external

auditors);

■ Model

changes and refinements to

the staging

criteria;

■ Regeneration

of the

macroeconomic

variables

and

associated weighting;

■ Adjustments

made to the

modelled

output

to reflect updated data and

known model

deficiencies;

■ Comparisons

betwe

en actual

experience

and forecast losses;

and

■ Single

name exposures.

Having considered

and scrutinised

the reports, the Committee

agreed

with management’s

conclusion that

the impairment

provision (including

specifically

the £150m for anticipated

economic

uncertainty in the UK) was

appropriate.

Going

forward the Committee also

agreed with

management that it

would be

appropriate to review the

frequency

of regenerating the

macroeconomic

scenarios.

Conduct provisions

(refer to Note 24

to the

financial

statements)

Barclays makes certain

assumptions and estimates,

analysis of which underpins

provisions made

for the costs of

customer redress, such as for PPI.

With a view to evaluating

adequacy of

the provision,

the Committee

analysed

the judgements and

estimates made

with regard to

Barclays’ provisioning

for PPI claims,

taking into

account:

■ Forecasts

and assumptions made

for PPI complaints;

■ Actual

claims levels and validity of

claims; and

■ Increased

levels of claims based

on the August 2019

time bar for

claims (including

claims from the

Official

Receiver).

In light

of information received, the

Committee

agreed with management

that the PPI provision

was

adequate

during

H1 2019 and did not

need to

be increased.

The PPI provision

was

increased in

Q3 2019 by £1.4bn

due

to the exceptionally

high volume of

claims received

in late August 2019

prior to the time

bar. The Committee

agreed with

this increase and that

the

level

of provision at the end of the

year was appropriate.

The Commit

tee also made

recommendations regarding

the

sensitivity disclosures.

Legal, competition

and

regulatory

provisions

(refer to Notes 24

and 26

to the financial

statements)

Barclays is engaged

in various

legal,

competition and regulatory

matters which may give

rise to

provisioning

based on the facts.

The level

of provisioning is subject

to management

judgement on the

basis of legal

advice and is,

therefore,

an area of focus for the

Committee.

Evaluated

advice on the status of

current legal,

competition and

regulatory

matters and assessed

management’s judgements

on the

levels of provisions to be taken and

accompanying

disclosure.

The Committee

discussed provisions

and utilisation

and having reviewed

the information

available to determine

what was both probable

and could be

reliably

estimated, the Committee

agreed that

the level of provision at

the year-end was appropriate.

The

Committee

also considered that the

disclosures made

provided the

appropriate

information for investors

regarding

the legal, comp

etition and

regulatory

matters being addressed

by the Group.

Barclays PLC

2019 Annual Report on Form 20-F

DIRECTORS’

REPORT,

BOARD AUDIT

COMMITTEE REPORT

Ensuring

reporting

integrity

and

an effective

controls

environment

Area of focus

Reporting

issue

Role of the Committee

Conclusion/action

taken

Valuations

(refer to Notes 13 to 17 to

the financial

statements)

Barclays exercises judgement

in the

valuation

and disclosure of financial

instruments, derivative

assets

and

certain

portfolios, particularly where

quoted

market prices are not

available.

The Committee:

■ Evaluated

reports from the Group

Financial

Controller;

■ Monitored

the valuation methods

applied

by management requiring

significant

judgement such as

the

ESHLA portfolio;

and

■ Reviewed

the restructuring of the

long

-dated derivative portfolio

which had

previously

given rise to

a significant

valuation disparity

with the counterparty.

The Committee

noted that there were

no new significant

valuation

judgements

at the end of the year.

The Committee

was

satisfied with the

accounting

treatment on an amortised

cost basis of the investments now

held

a result of the restructuring

the long

-dated derivative portfolio.

The Committee

was

also satisfied

that the day one

valuation ascribed to

resultant instruments

was

appropria

by reference both

to the existing

valuation

methodology and the

ongoing

profitability of the instruments

now held.

Tax

(refer to Note 9

to the

financial

statements)

Barclays is subject to taxation

in a

number

of jurisdictions globally

and

makes judgements

with regard to

provisioning

for tax at risk,

and on

the recognition

and measurement of

deferred tax assets.

The Committee

is responsible for

considering

the Group’s tax

strategy

and overseeing

compliance with the

Group’s Tax

Code of Conduct.

In this

regard the Committee

received

reports from the Tax

Management

Oversight Committee

and in particular

considered

the utilisation of the

Luxembourg

tax losses

and revised

US holding

company structure.

The Committee

reviewed the

appropriateness of provisions made

for uncertain

tax positions, including

the retrospective

de-grouping of

certain entities from the

UK VAT

group.

The Committee

also confirmed that

the estimates and

assumptions used

in assessing the recoverability

deferred tax assets were supported

by the MTP.

The Committee

was

satisfied that

specific strategies were in line

with

the Group’s Tax

Code of Conduct

and

on behalf

of the Board approved the

UK Tax

Strategy statement

published

as part of the Country-by-Country

Report.

The Committee

noted that the

uncertain

tax positions covered a

diverse range of issues and as a

consequence

agreed with

management’s view that

there was

not a significant

risk

of a material

adjustment

during the next year.

The Committee

was

also satisfied

that deferred

tax assets

recognition

was appropriate.

Barclays PLC

2019 Annual Report on Form 20-F

Area of focus

Reporting

issue

Role of the Committee

Conclusion/action

taken

Internal

controls

and

business

control environment

Category

Criteria

Performance

Outcome

Society

Environmental

and social

financing

Facilitate

£150bn

over

2018

-25

■

£95bn

of environmental

and social financing was

facilitated

over the period (of which

£63bn

in 2018 and 2019)

exceeding annual targets. We have seen good growth

across our product set in all

our businesses

including

the investment, corporate and

retail

bank

People

upskilled

Upskill 10m

from 2018

-22

■

6.5m people

were upskilled through our LifeSkills programme (of which 4.6 million in

2018 and

2019)

consistently exceeding annual targets

and making

good progress

towards our aspiration

of helping 10m people by 2022

Carbon

emissions

reduction

30% by 2018

80% by 2025

■

Carbon emissions reduced

by 38% by 2018 (over 2015 baseline), exceeding

the

original

2018 target (-30%). Further year-on

-year

reduction of 53% in 2019, making

very good

progress

towards the new target of 80%

reduction vs 2018 baseline

2025.

Total

15%

10.0%

The LTIP

award is also subject to a discretionary underpin whereby the Committee must be satisfied with the underlying financial health of the

Group. The

Committee was satisfied that this underpin was met, and accordingly determined

that the award should vest

at 48.5% of the maximum

number

of shares under the total

award, to be released in five equal tranches annually, starting from June 2020. After release, the shares are

subject to an additional

six month holding period.

Outstanding LTIP

awards

LTIP

awards granted during 2018

The performance

measures

for the awards made under

the 2018-2020 LTIP cycle are as follows:

Performance measure

Weighting

Threshold

Maximum vesting

Average return

tangible

equity (RoTE)

excluding

material

items

50%

10% of award vests for RoTE of 7.75%

RoTE of 10.25%

(based on an assumed CET1

ratio at the target of c.13.5%)

Vesting

of this element

will depend on CET1 levels during the performance period:

■

if CET1 goes below

the MDR hurdle

(12.1% as

at 31 December 2019) in

any year of the period, no part

of the RoTE element

will vest

■

if CET1 goes below

the MDR hurdle

+150bps

but remains above the

hurdle during the period, the

Committee

will exercise its

discretion

to determine what portion of the RoTE element should vest, based

on the causes of the CET1 reduction.

Average cost: income

ratio excluding

material

items

20%

4% of award vests for average

cost: income ratio of 62.5%

Average cost: income

ratio of 58%

Risk Scorecard

15%

The Risk Scorecard captures a range of risks and is aligned

with the annual incentive risk

alignment

framework reviewed with

the regulators. The

current framework

measures performance

against three broad

categories – Capital

and Liquidity, Control Environment

and Conduct – using a combination of quantitative

and qualitative

metrics. The framework may be updated from time to time in line with the

Group’s

risk

strategy. Specific

targets

within

each of the categories are

deemed to be commercially sensitive.

Retrospective disclosure

will

be made in the 2020 Remuneration Report, subject to commercial sensitivity no

longer

remaining.

Strategic

non

financial

15%

The evaluation

will focus

on key performance measures from the Performance Measurement Framework,

with a detailed

retrospective narrative on progress

throughout

the period against each category. Performance

against the

strategic non

-financial measures

will

be assessed

by the Committee

to determine th

percentage

of the award that may vest between

0% and 15%. The measures are organised around

three main

categories:

Customers and Clients, Colleagues and Society.

Each of the three main categories has equal

weighting.

Measures

will

likely include, but wil

not be limited to, the following:

■

Customers and Clients:

NPS for consumer businesses, client rankings and market shares for the CIB,

complaints

performance and volume of lending provided to customers and clients

■

Colleagues:

Diversity and Inclusion

statistics (including women in senior leadership), Employee

sustainable

engagement survey scores

and conduct

and culture measures

■

Society:

Delivery against our Shared Growth Ambition, Colleague engagement in Citizenship

activities

and external

benchmarks

and surveys.

Straight

-line vesting applies

between

the threshold and maximum points in respect of the financial measures.

Barclays PLC

2019 Annual Report on Form 20-F

Annual

report on

Directors’

remuneration

LTIP

awards granted during 2019

An award was made

to Jes

Staley

and Tushar Morzaria

on 8 March 2019 under the 2019-2021 LTIP at a share price of £1.2288,

which has been

discounted

to reflect the absence of dividend equivalents during the vesting period, in accordance with our DRP.

This is the price used to calculate

the number

of shares

below.

% of Total

fixed pay

Number of

Face value

at grant

Performance

period

Jes Staley

120%

2,681,618

3,295,200

2019

-2021

Tushar Morzaria

120%

1,806,625

2,220,000

2019

-2021

The performance

measures

for the 2019

-2021 LTIP awards are as follows:

Performance measure

Weighting

Threshold

Maximum vesting

Average return

tangible

equity (RoTE)

ex litigation

and

conduct

and other

material

items

50%

10% of award vests for RoTE of 8.5%

(based on an assumed CET1

ratio at the target of c.13.5%)

RoTE of 10.5%

Vesting

of this element

will depend on CET1 levels during the performance period:

■

if CET1 goes below

the MDR hurdle

(12.1% as

at 31 December 2019) in

any year of the performance

period,

no part of the RoTE element will vest

■

if CET1 goes below

the target (c.13.5%) but remains above the hurdle

during the year, the Committee

will

exercise its discretion to determine

what portion of the RoTE element should vest, based on the

causes of the CET1

reduction.

2021 Cost: income

ratio ex litigation

and

conduct

and other

material

items

20%

4% of award vests for cost: income

ratio of 60%

Cost: income

ratio of 58.5%

Risk Scorecard

15%

The Risk Scorecard captures a range of risks and is aligned

with the annual incentive risk

alignment

framework shared with the regulators. The

current framework

measures performance

against three broad

categories – Capital

and Liquidity, Control Environment

and Conduct – using a combination of quantitative

and qualitative

metrics. The framework may be updated from time to time in line with the

Group’s

risk

strategy. Specific

targets

within

each of the categories are

deemed to be commercially sensitive.

Retrospective disclosur

will

be made in the 2021 Remuneration Report, subject to commercial sensitivity

no longer

remaining.

Strategic

non

-financial

15%

The evaluation

will focus

on key performance measures from the Performance Measurement Framework,

with a detailed

retrospective narrative on progress

throughout

the period against each category.

Performance

against the strategic non-financial measures will be assessed

by the Committee

to determine

the percentage

of the award that may vest between 0% and 15%. The measures are

organised

around

three main

categories: Customers

and Clients,

Colleagues and Society. Each

of the three main categories

has equal

weighting. Measures

will

likely include, but not be limited to, the following:

■

Customers and Clients:

NPS for consumer businesses, Client rankings and market shares for the

Corporate and

Investment

Bank,

complaints performance and volume of lending provided to customers

and clients

■

Colleagues:

Diversity and Inclusion

statistics (including women in senior leadership), Employee

sustainable

engagement survey scores

and conduct

and culture measures

■

Society:

Delivery against our Shared Growth Ambition, Colleague engagement in Citizenship

activities

and external

benchmarks

and surveys.

Straight

-line vesting applies

between

the threshold and maximum points in respect of the financial measures.

Barclays PLC

2019 Annual Report on Form 20-F

LTIP awards

to be

granted

during

2020

The Committee

decided to make an award under the 2020-2022 LTIP

cycle to Jes Staley and Tushar Morzaria (based on their performance

in 2019) with

a face value at grant of 120%

of their respective Total fixed pay at 31 December 2019.

The key objective

of the LTIP is to incentivise the Executive Directors to deliver on the

long-term strategy. The LTIP

should support a competitive

pay package for achieving

good performance, while the calibration maximum should incentivise a stretch level of performance without encouraging

excessive risk-taking.

In its deliberations

on the threshold and maximums for the LTIP

financial measures,

the Committee

considered progress

against the

external

targets. The Committee

increased the threshold for the RoTE measure from 8.5% to 9.0%.

The 2020

-2022 LTIP award will be subject to the following forward-looking performance measures.

Performance measure

Weighting

Threshold

Maximum vesting

Average return

tangible

equity (RoTE)

ex litigation

and

conduct

and other

material

items

50%

10% of award vests for RoTE of 9.0%

RoTE of 10.5%

(based on an assumed CET1

ratio at the target of c.13.5%)

Vesting

of this element

will depend on CET1 levels during the performance period:

■

in line

with regulatory requirements, if the CET1 ratio goes below the MDR hurdle during the

performance

period, the Committee will consider what part, if any,

of this

element should

vest.

Average cost: income

ratio ex litigation

and

conduct

and other

material

items

20%

4% of award vests for cost: income

ratio of 60%

Cost: income

ratio of 58.5%

Risk Scorecard

15%

The Risk Scorecard captures a range of risks and is aligned

with the annual incentive risk

alignment

framework shared with the regulators. The

current framework measures

performance

against three broad

categories – Capital

and Liquidity, Control Environment

and Conduct – using a combination of quantitative

and qualitative

metrics. The framework may be updated from time to time in line with the

Group’s

risk

strategy. Specific

targets

within

each of the categories are

deemed to be commercially sensitive.

Retrospective disclosure

will

be made in the 2022 Remuneration Report, subject to commercial sensitivity

no longer

remaining.

Strategic

non

-financial

15%

The evaluation

will focus

on key performance measures from the Performance Measurement Framework,

with a detailed

retrospective narrative on progress

throughout

the year against each category. Performance

against the

strategic non

-financial measures

will

be assessed

by the Committee

to determine the

percentage

of the award that may vest between 0% and 15%. The measures are

organise

around three

main

categories: Customer and Client, Colleagues and Society.

Each of the three main categories has

equal

weighting.

Measures

will

likely include, but not be limited to, the following:

■

Customers & Clients:

Improve Net Promoter Score

Reduce UK customer complaints, Increase digital

engagement,

Maintain client rankings and increase market shares within CIB

■

Colleagues:

Continue

to increase the % of women in leadership roles, Maintain engagement at healthy

levels, Improve

key

metrics from 2019,

including Enable scores

■

Society:

Grow social and environmental financing, Reduce carbon footprint and increase use of

renewable

energy, Continue investing in our communities

Barclays PLC

2019 Annual Report on Form 20-F

Annual

report on

Directors’

remuneration

Executive

Directors: Statement

of implementation

of remuneration

policy in 2020

The following

chart provides an illustrative indication of how 2020 remuneration will be delivered to the Executive Directors.

2020 Annual bonus performance measures

Performance

measures

with appropriately

stretching targets have been selected to cover a range of financial and non

-financial goals

that support

the key strategic objectives

of the Company.

The performance measures

and weightings are shown below.

Financial

(60% weighting)

A performance

target

range has been set for

each financial

measure

■

Profit before

tax excluding litigation and conduct and other material items (50% weighting).

Payout of this element

will depend on the CET1 ratio during the performance year:

–

in line

with regulatory requirements, if the CET1 ratio goes below the MDR hurdle during the performance year,

the Committee

will consider what part if any of this element should pay out.

■

Cost: income

ratio excluding litigation and conduct and other material items (10% weighting).

Strategic non-

financial

(20% weighting

)

The evaluation

will focus

on key performance measures from the Performance Measurement Framework, with a

detailed

retrospective narrative on progress

throughout

the year against each category. Performance against the

strategic non

-financial measures will be assessed

by the Committee

to determine the percentage of the award that

may vest between

0% and 20%. The measures are organised around three main categories: Customer and Client,

Colleagues

and Society.

Each of the three main categories has

equal

weighting. Measures

will

likely include, but not

be limited

to, the following:

■

Customers & Clients:

Improve Net Promoter Score

Reduce UK customer complaints, Increase digital

engagement,

Maintain client rankings and increase market shares within CIB

■

Colleagues:

Continue to increase the % of women in leadership roles, Maintain engagement at healthy

levels,

Improve key metrics from 201

9, including scores

relating

to tools and resources

■

Society:

Grow social and environmental financing, Reduce carbon footprint and increase use of renewable

energy,

Continue

investing in our communities

Barclays PLC

2019 Annual Report on Form 20-F

Personal

(20% weighting)

The Executive

Directors have the following joint personal objectives for

2020:

■

Continue

to deliver improving shareholder returns, including a focus on delivering a RoTE improvement versus

2019

■

Maintain

robust capital ratios

across the Group and within

the main operating entities

■

Seek opportunities

for further cost efficiencies, enabling

reinvestment into strategic priorities and growth

initiatives

■

Continue

to drive our technology agenda across

the Group, to support improving

customer and client

experience

■

Continue

to focus on external societal and environmental stewardship

Jes Staley

■

Oversee the effective

management of the risk and controls agenda, including cyber risks

■

Ensure continued

focus on customer and client outcomes, in particular further reductions in complaints

■

Continue

to develop a high performing culture in line with our Values, with a focus on employee

engagement,

succession planning,

talent and diversity

■

Drive growth in fee

-based, technology

-led annuity businesses

with lower capital

intensity

■

Effectively

manage relationships

with all

external stakeholders

Tushar Morzaria

■

Continue

to optimise financial management and reporting (particularly through technolog

y) to drive benefits

across the Group

■

Further improve

capital productivity through enhancing capital allocation and the measurement of capital

returns

■

Oversee the effective

management of the risk and controls agenda in Group Finance, Strategy,

Tax

and

Treasury

■

Continue

to focus on employee engagement, talent and diversity in Group Finance, Strategy, Tax

and Treasury

■

Effectively

manage relationships

with key stakeholders including

regulators and investors

Additional

remuneration

disclosures

Group performance graph and Group

CEO remuneration

The performance

graph below illustrates the performance of Barclays over the financial years from 2009 to 2019 in terms of total shareholder

return compared

with that of the companies comprising the FTSE 100 index. The index has been selected because it represents a cross-section

of leading

UK companies.

The table

below presents

the single

figure for remuneration and annual incentive and long

-term incentive plan outcomes

for the Group Chief

Executive

over the past 10 years.

Year

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Group Chief Executive

John

Varley

Robert

Diamond

Robert

Diamond

Antony

Jenkins

Antony

Jenkins

Antony

Jenkins

Antony

Jenkins

John

McFarlane

Jes

Staley

Jes

Staley

Jes

Staley

Jes

Staley

Jes

Staley

Single

total remuneration figure CEO

4,567

11,070

1,892

529

1,602

5,467

3,399

305

277

4,233

3,873

3,362

5,929

Annual

bonus award as

a % of

maximum

100%

80%

57%

48%

N/A

60%

48.5%

48.3%

75.0%

Long

-term incentive plan vesting as

a % of maximum

16%

N/A

30%

39%

N/A

48.5%

Notes

This figure

includes

£5,745k tax equalisation

as set out

in the 2011 Remuneration

Report. Robert

Diamond was tax

equalised on

tax above

the UK rate where

that

could not be offset by a double tax treaty.

Not a participant in a long-term incentive

award which

vested in

the period.

Antony

Jenkins’ 2014

pay is higher

than in earlier years

since he declined a

bonus in

2012 and 2013

and did not have

LTIP vesting in

those years.

Barclays PLC

2019 Annual Report on Form 20-F

Annual

report on

Directors’

remuneration

Group Chief Executive

Pay ratio

The table

below shows

the ratios of the Group Chief

Executive’s total remuneration to the remuneration of UK employees since 2017. The change

in the pay ratios for 2019

is explained

in more detail below.

Option

25th percentile

Median

75th percentile

2019

213 x

140 x

77 x

2018

126 x

85 x

45 x

2017

153 x

106 x

54 x

The regulations

provide

three options

which may be used to calculate

the pay for the employees at the 25th percentile, median and 75th percentile.

We have used Option

A, following guidance issued by some

proxy advisers and institutional

shareholders.

Option

A calculates pay for all

employees on the

same basis

as the single figure

for remuneration calculated for Executive Directors. The period for which employee pay has been

calculated

under Option A is the 2019 calendar year.

The CEO pay ratios published in 2017 and 2018 were calculated using the year end salary

and bonus for the relevant

performance year only. These have now been recalculated using

Option A methodology.

The single

figure for remuneration for each employee includes earned salary and allowances, annual incentive awarded for the 2019 calendar year,

and an estimate

of pension and benefits for

2019. Other

elements of pay such as

overtime

and shift allowances have been excluded on the basis

that they are not compa

rable with the pay structure

for the CEO. The estimate of pension

for each employee is based on 10% of salary, given that

this is the percentage

currently available to new hires in the UK. The estimate of benefits is

based on the cost of core benefits

avai

lable at each

Corporate Grade,

being private medical insurance, income protection

and life assurance. The pay for part-time employees has

been grossed-up to

1 FTE.

The pay at each

quartile is set

out in the table

below:

25th percentile

Median

75th percentile

Total pay

Of which is salary

Total pay

Of which is salary

Total pay

Of which is salary

2019

27,875

23,000

42,362

34,432

77,488

61,158

2018

26,587

21,624

39,390

31,461

74,685

57,466

2017

25,341

20,223

36,568

28,978

71,628

55,000

The pay ratios have

increased between

2018 and 2019, due to an increase in the CEO single figure of remuneration, though employee pay at the

LQ, median

and UQ has

also increased (up 5%, 8% and 4% respectively).

The CEO single

figure of remuneration for 2019 is increased significantly,

largely as

a result of two exceptional

circumstances:

■

Due to the long

-term nature of LTIP awards, the CEO has not received any vesting

LTIP for his first four years of

service at Barclays. He will

receive an LTIP

payout for the first time in respect of 2019. This forms

part of his remuneration

package, as approved by shareholders. In 2019

the LTIP

vested at 48.5% of maximum. Going

forward, any change in LTIP will be as a result

of changes in the amount

vesting, rather than

entitlement

to receive an award.

■

In 2018, there

was

a reduction

of £500,000 applied to the single figure of remuneration as a

result of malus adjustment

made to the CEO’s

2016 incentive

award during 2018. This decreased the CEO pay ratio in 2018.

Excluding

these items, the median pay ratios would be 105x in 2019 and 98x in 2018.

The annual

bonus for

the CEO has also increased during

2019, while the overall incentive pool has decreased. While recognising that this was not

an unusual

occurrence, given

the structured formulaic approach applied to Executive Directors’

incentives (e.g. in

2018, Executive Directors’

outcomes were down slightly

on 2017 and the overall incentive pool was

up over the same period),

the Remuneration Committee reduced the

formulaic

bonus outcome against pre-determined performance measures

by 10%.

Over the period

2017 to 2019, median employee

pay has

gone up from

£36,568 in 2017 to £42,362 in 2019, up almost 16%. This is

aligned

with the

CEO increase over the same period,

excluding the LTIP

(up 15%).

Barclays remuneration

philosophy is set

out earlier

in this report, and all remuneration decisions for Executive Directors and the wider workforce are

made within

this framework. The CEO pay ratio is one of the outcomes of these decisions, which are explained

in more detail in the Chairman’s

statement.

Barclays PLC

2019 Annual Report on Form 20-F

Total

remuneration of the employees

in the Barclays

Group

The table

shows

the number

of employees in the Barclays Group as

at 31 December 2018

and 2019 in bands by

reference to total

remuneration.

Total

remuneration comprises salary, RBP, other

allowances, bonus and the value

at award of LTIP awards.

Barclays is a global

business.

Of those employees

earning above £1m in total

remuneration for 2019 in the table below, 56% are based in the US,

36% in the UK and 8% in the

rest

of the world.

Number

of employees

Remuneration band

2019

2018

£0 to £25,000

26,706

31,846

£25,001

to £50,000

26,989

25,770

£50,001

to £100,000

18,266

18,478

£100,001

to £250,000

11,428

10,804

£250,001

to £500,000

2,259

2,197

£500,001

to £1,000,000

884

916

£1,000,001

to £2,000,000

290

306

£2,000,001

to £3,000,000

£3,000,001

to £4,000,000

£4,000,001

to £5,000,000

£5,000,001

to £6,000,000

Above £6,000,000

Percentage change in Group Chief Executive’s

remuneration

The table

below shows

how the percentage

change in the Group Chief Executive’s salary, benefits and bonus between

2018 and 2019 compared

with the percentage

change in the average of each of those components of pay for UK

based employees.

We have chosen UK based employees

the comparator

group as it is

the most representative

for pay structure comparisons.

Fixed Pay

Benefits

Annual

bonus

2019

Group CEO

55%

Average

employee

-12%

The percentage

change in the average fixed pay and the average annual bonus for

UK employees

is impacted by the rebalancing

of a proportion of

annual

bonus into fixed pay for c.19,500 customer facing staff in Barclays UK. Without this rebalancing, the percentage change is +4%

for fixed

pay and -10%

for annual

bonus. While the average bonus is

down by 10%, junior

populations have been protected in line with our Fair Pay

agenda.

Relative importance of spend on

pay

A year on year comparison

of Group compensation costs

and distributions

to shareholders are shown

below.

Barclays PLC

2019 Annual Report on Form 20-F

Annual

report on

Directors’

remuneration

Chairman

and Non-Executive

Directors

Remuneration

for Non-Executive Directors reflects their responsibilities, time commitment and the level of fees paid to Non-Executive Directors

of comparable

major UK companies.

Non-Executive

Directors

are reimbursed expenses that are incurred

for business

reasons. Any tax that arises on these reimbursed expenses

is paid

by Barclays.

Chairman and Non-Executive

Directors: Single total figure

for 2019 fees

(audited)

Fees

Benefits

Total

2019

£000

2018

£000

2019

£000

2018

£000

2019

£000

2018

£000

Chairman

Nigel

Higgins

541

–

544

–

John McFarlane

272

800

278

801

Non-Executive

Directors

Mike Ashley

c, d, e

222

215

–

222

215

Tim

Breedon

d, e

238

225

–

238

225

Sir Ian Cheshire

480

–

480

Mary Anne Citrino

113

–

113

Dawn Fitzpatrick

d, g

–

Mary Francis

d, h

155

154

–

155

154

Crawford Gillies

231

222

–

231

222

Sir Gerry Grimstone

498

–

498

Reuben

Jeffery III

120

–

120

Matthew

Lester

143

135

–

143

135

Dambisa Moyo

135

–

135

Diane Schueneman

d, l

377

337

–

377

337

Mike Turner

105

–

105

Total

3,004

3,465

3,013

3,466

Notes

Nigel Higgins joined the Board as

a Non-Executive

Director on

1 March 2019

and assumed

the role of

Chairman with effect

from the

conclusion of the

2019 AGM

2 May 2019. Nigel Higgins was paid

an annual fee of

£80,000 for the period

from 1 March

2019 to 2 May

2019, and an all-inclusive

annual fee of

£800,000 with

effect

from

3 May 2019. He was

provided with

private

medical cover and

the use of a

Company vehicle

and driver

when required

for business

purposes during 2019.

does not receive a fee in respect

of his role as Chairman

of Barclays Bank

PLC.

John McFarlane retired from the

Board with effect

from the conclusion

of the AGM on

2 May 2019.

Mike Ashley was a member of the

Board Reputation

Committee until

25 September

2019, when the Committee

was disbanded. His

additional fee

in respect of

the

Board Reputation Committee is therefore

pro-rated for the

period of his

service in

2019.

These Non-Executive Directors were

appointed to the Board

of Barclays Bank PLC

from 25 September

2019. They receive

an additional

annual fee of

£30,000, paid

by Barclays Bank PLC in respect

of this appointment

(pro-rata for

2019). From

25 September 2019,

all Non-Executive

Directors

of Barclays Bank

PLC are also

Directors

of Barclays PLC.

Until that date,

Non-Executive Directors

of Barclays Bank

PLC served

only on that Board

and received

a base fee of

£75,000 in respect

that role.

With effect from 25 September 2019 these

Non-Executive Directors

received a fee of

£20,000 for their

services to Barclays

Capital

Securities Limited

(pro-rata for

2019).

Sir Ian Cheshire’s figures include fees of £400,000

for his role

as Chairman

of Barclays Bank

UK PLC.

Dawn Fitzpatrick joined the Board as

a Non-Executive

Director with

effect from 25

September

2019. Her fees

are pro-rated

for the period

of her appointment

during

2019.

Mary Francis

was the

Chair of the Board

Reputation

Committee until 25

September

2019, when

the Committee was

disbanded.

Her additional fee

in respect of

the

Board Reputation Committee is therefore

pro-rated for the

period of her service

in 2019.

Sir Gerry Grimstone retired from the Board

with effect from

28 February 2019.

His fee is

pro-rated for the period

of his service and

includes

an annual fee of £400,000

for his role as the Chairman of Barclays

Bank PLC.

These Non-Executive Directors retired

from the Board with

effect

from 2 May 2019.

Matthew Lester retired from the Board

with effect from

1 January 2020.

Diane Schueneman is Chair of Barclays

Execution Services

Limited (the Group

Service Company)

and is a member

of the Barclays US

LLC (the US Intermediate

Holding Company) Board. The 2019

figure includes

fees of £70,000

for her

role on the Barclays

Execution Services

Limited Board

and $210k (£164k)

for her

role on

the Barclays US LLC Board.

Barclays PLC

2019 Annual Report on Form 20-F

Chairman and Non-Executive

Directors: Statement of implementation

of remuneration

policy in

2020

Fees for the Chairman

and Non

-Executive Directors

for 2020 are shown below.

The Board approved increases to the fees for Board members, the

Chair of the Audit

and Risk

Committees and

the members of the Board Risk

Committee

to take effect from1 January 2020

These increases

were

made in

line with policy and following careful review of time spent on Board and Committee matters, to

reflect increased time

commitment and

responsibilities

The basic Board fee was last revised in 2011.

1 January 2020

1 January 2019

£000

Chairman

800

Board member

Additional responsibilities

Senior

Independent Director

Chairman

of Board Audit or Risk

Committee

Chairman

of Board Remuneration Committee

Chairman

of Board Reputation Committee

–

Membership

of Board Audit or Remuneration Committee

Membership

of Board Risk

Committee

Membership

of Board Nominations Committee

Membership

of Board Reputation Committee

–

Notes

The Chairman does not receive any fees

in addition

to the Chairman

fees.

Directors’ shareholdings

and share

interests

Interests in

Barclays PLC

shares (audited)

The table

below shows

shares owned beneficially

by all the Directors

(including

any shares

owned beneficially

by their connected persons) and

shares over which Executive

Directors

hold

awards, which are subject to either deferral terms and/or performance measures. The shares shown

below that

are subject to

performance measures are the maximum number of shares

that may be released.

Unvested

Total as at

31 December 2019

(or date of retirement

from the Board, if earlier)

Owned

outright

as at

31 December 2019

(or date of

retirement

from the Board, if

earlier)

Subject to

performance

measures

Not subject

performance

measures

Total as at

11 February

2020

Executive

Directors

Jes Staley

5,284,924

6,221,464

999,491

12,505,879

Tushar Morzaria

3,603,326

4,130,048

638,569

8,371,943

Chairman

Nigel

Higgins

1,010,092

–

1,010,092

John McFarlane

119,279

–

119,279

–

Non-Executive

Directors

Mike Ashley

130,858

–

130,858

Tim

Breedon

112,475

–

112,475

Sir Ian Cheshire

103,530

–

103,530

Mary Anne Citrino

13,700

–

13,700

Dawn Fitzpatrick

909,000

–

909,000

Mary Francis

33,251

–

33,251

Crawford Gillies

127,463

–

127,463

Sir Gerry Grimstone

125,643

–

125,643

–

Reuben

Jeffery III

308,553

–

308,553

–

Matthew

Lester

29,222

–

29,222

–

Dambisa Moyo

73,977

–

73,977

–

Diane Schueneman

56,477

–

56,477

Mike Turner

71,947

–

71,947

–

Barclays PLC

2019 Annual Report on Form 20-F

Annual

report on

Directors’

remuneration

Executive

Directors’ shareholdings and share interests

(audited)

The chart below

shows

the value

of Barclays’ shares held beneficially by Jes Staley and

Tushar Morzaria as

at 11

February 2020 that

count

towards the shareholding

requirement of, as

a minimum,

Barclays’

worth 200%

of Total

fixed pay (Fixed Pay and pension). The current

Executive

Directors have five years from their respective date of appointment to meet this requirement. At close of business on 11

February 2020,

the market value

of Barclays’ ordinary shares was

£1.79

Service

contracts and

letters of

appointment

All Executive

Directors have a service contract, whereas all Non

-Executive Directors

have a letter

of appointment. Copies of the service contracts

and letters of appointment

are available for inspection at the Company’s registered office. The effective dates of the current Directors’

appointments

disclosed in their service contracts or letters of appointment

are shown in the table below.

As stated in the letters of appointment,

the Chairman and Non-Executive Directors

are appointed for an initial

term of three years and are subject

to annual

re-election by shareholders. On expiry of the initial term and subject to the needs of the Board, Non

-Executive Directors

may be invited

to serve a further three years. Non-Executive

Directors

appointed

beyond six years

will

be at the discretion of the Board Nominations Committee.

Effective

date of appointment

Chairman

Nigel

Higgins

1 March 2019 (Non

-Executive Director),

2 May 2019 (Chairman)

Executive

Directors

Jes Staley

1 December 2015

Tushar Morzaria

15 October 2013

Non-Executive

Directors

Mike Ashley

18 September

2013

Tim

Breedon

1 November 2012

Sir Ian Cheshire

3 April 2017

Mary Anne Citrino

25 July 2018

Mohamed

A El-Erian

1 January 2020

Dawn Fitzpatrick

25 September

2019

Mary Francis

1 October 2016

Crawford Gillies

1 May 2014

Dr Brian Gilvary

1 February 2020

Diane Schueneman

25 June 2015

Payments

to former Directors

(audited)

Former Group Finance Director: Chris

Lucas

In 2019, Chris Lucas continued

to be eligible to receive life assurance

cover, private

medical cover and payments under the Executive Income

Protection

Plan (EIPP). Full details of

his eligibility

under the EIPP were disclosed in the 2013 Directors’

Remuneration

Report (page 115

of the

2013 Annual

Report). Chris Lucas

did not receive

any other payment or benefit in 2019.

Former Chairman: John

McFarlane

John McFarlane

stepped down as

Chairman on 2 May 2019.

In accordance with his letter of appointment John McFarlane continued to receive

monthly

payments equivalent to his monthly fees until 7 November 2019 (being the date his notice period would have ended

). These

payments

were made in

monthly cash instalments and were subject to mitigation in

the event that he obtained alternative employment and/or

appointments.

He also received benefits in accordance with his appointment

letter for the same period.

Former

Non-Executive:

Sir Gerry Grimstone

stepped down as Non-Executive Director

of Barclays PLC

and Chairman

of Barclays Bank

PLC on 28 February 2019.

relation

to his

role as Chairman of Barclays Bank PLC and under

the terms of his appoi

ntment

letter, a payment of six months’ fees was

paid

to him

in lieu

of notice in March 2019. No payment in lieu of notice was made in relation to his role as Director of Barclays PLC.

Barclays PLC

2019 Annual Report on Form 20-F

Former Non-Executive:

Reuben Jeffery III

Reuben

Jeffery III was appointed as a member of the

Barclays US

LLC (the US Intermediate

Holding Com

pany)

Board on 15 October 2019. He

received

fees of $150,000 per annum

for his role on the Barclays LLC Board, pro-rated for his period of service in 2019.

AGM Statement

At the 2019 AGM,

the vote on the 2018 Directors’ Remuneration Report (Resolution 2) was

passed with 70.79%

of votes cast

in favour.

describe below

what we have done to identify and address the concerns of shareholders who voted against this resolution

last

year.

We offered

to engage with

those of

our top 30 shareholders who voted against Resolution

2, or who withheld their vote in relation to it, and were

able

to meet with

a significant proportion of those shareholders. We

understand from

those shareholders who we

have spoken to that they voted

against Resolution

2 because of concerns over the malus adjustment applied in relation to the 2016 incentive award for the Group

CEO, particularly

in light

of the penalty levied against the company by the New York Department

for Financial Services (“NYDFS”).

Having reflected

on the views

expressed by the relevant

shareholders,

and as discussed with them during engagement,

we are satisfied that the

malus adjustment

was

appropriate.

However, in light of the feedback from our shareholders, we acknowledge th

at we

could

have provided further

information

regarding the factors the Board and Remuneration Committee took into account. In particular,

this could have addressed the fact that no

material

new facts

came to light

through the investigations conducted by the regulators that had not been taken into account by the Board in its

determination

of the appropriate malus

adjustment,

and the fact that the NYDFS penalty was directed against the bank in relation to failings in its

controls, and not

against the individ

ual in question.

We will

take this into account in all of our external disclosures going forward, to ensure that we provide all of the

information needed to properly

explain

our decisions.

AGM voting outcomes

For

% of votes cast

Against

% of votes cast

Withheld

Shareholder

votes on remuneration

Number

Vote on

the 2018

Remuneration Report

70.79%

29.21%

at the 2019 AGM

8,849,675,682

3,652,341,337

477,285,142

Vote on

the Directors’ Remuneration

Policy

97.91%

2.09%

at the 2017 AGM

12,062,616,141

257,416,828

51,369,054

At the AGM held

on 24 April 2014, 96.02% (10,364,453,159 votes) of shareholders of Barclays PLC

voted for the resolution

in respect of a

fixed

to variable

remuneration ratio of 1:2 for ‘Remuneration Code Staff ’ (now known

as MRTs).

On 14 December 2017,

the Board of Barclays

PLC

as shareholder of Barclays Bank PLC approved

the resolution that Barclays Bank PLC and any of its current and future subsidiaries be authorised

to apply

a ratio of the fixed to variable components of total remuneration

of their MRTs that exceeds 1:1, provided

the ratio does

not exceed

1:2.

On 15 November 2018,

the Board of Barclays PLC

as shareholder of Barclays Bank UK PLC approved an

equivalent resolution in relation to MRTs

withi

Barclays Bank UK PLC

and any of its subsidiaries.

Barclays

Board Remuneration

Committee

The Board

Remuneration Committee is responsible for overseeing Barclays’ remuneration

described in

more detail below.

Terms of Reference

The role

of the Committee is to:

set the overarching

principles and parameters of remuneration policy across

the Group;

consider and approve

the remuneration arrangements of (i)

the Chairman,

(ii) the Executive Directors, (iii) members of the Barclays Group

Executive

Committee and any other senior executives specified by the Committee from time to time, and (iv) all other Group employees whose

total

annual compensation

exceeds an amount determined by the Committee from time to time (currently £2m); and

exercise oversight for remuneration

issues.

The Committee

considers the overarching objectives, principles and parameters of remuneration policy across the Group to ensure it is

adopting

a coherent approach

in respect of all employees. In discharging this responsibility the Committee seeks

to ensure that the

policy is fair and

transparent, avoids

complexity and

assesses,

among

other things, the impact of pay arrangements in supporting the Group’s culture, values and

strategy and on all

elements of risk

manag

ement. The Committee also approves incentive pools for each of the Group, Barclays Bank PLC,

Barclays Bank UK PLC and operations

and functions, periodically

reviews

(at least annually)

all material matters of retirement benefit design and

governance,

and exercises

judgement

in the application of remuneration policies to promote the long

-term success

of the Group for the benefit

shareholders. The

Committee and its members work

as necessary with other

Board Committees, and

is authorised to select and appoint its own

advisers as required.

Barclays PLC

2019 Annual Report on Form 20-F

Annual

report on

Directors’

remuneration

Remuneration Committee in

2019

The performance

of the Committee was

assessed internally

part of the annual

effectiveness review of the Board of Barclays PLC. In line with the

approach

adopted for all Board committees in 2019,

the process

involved

completion of a tailored questionnaire by Committee members

and

standing

attendees.

The results confirm

that the Committee is operating

effectively. The Committee continues to be well

constituted and provides an effective level of

challenge

and oversight of the areas within its

remit. Consideration

will be given to adding an additional member of the Committee following the

departure

of Dr

Dambisa Moyo

earlier in the

year.

The Committee’s focus has moved

towards oversight of an existing

and effective policy and management system, having addressed a number of

important

remuneration related issues

in prior years.

The Committee’s interaction

with the Board, Board Committees and senior management is considered effective.

In response to a

request to provide

feedback on interaction

with subsidiary committees, the Committee’s interaction with the

principal subsidiary remuneration committees was

also

considered

effective,

and in line with regulatory requirements.

Advisers to the

Remuneration Committee

The Committee

appointed PricewaterhouseCoopers (PwC)

as the independent

adviser in October 2017. The Committee is

satisfied that the

advice

provided

by PwC to

the Committee

is independent and objective. PwC is

a signatory to the voluntary

UK Code of Conduct for executive

remuneration

consultants.

PwC was paid £112,000

(excluding VAT) for their advice

to the Committee in 2019

relating to the Executive Directors (either exclusively or along

with other employees within

the Committee’s Terms of Reference).

In addition to advising the Committee, PwC provided unrelated consulting

advice

to the Group in respect of strategic advice

on business,

operational

models and cost,

corporate taxation,

climate-related financial

disclosures, data

strategy, technology

consulting and internal audit.

Throughout

2019, Willis Towers Watson (WTW) continued

to provide the Committee with market data on

compensation when considering incentive

levels and

remuneration

packages.

WTW were paid £66,000

(excluding VAT)

in fees for

their services. In addition

to the services provided to the

Committee,

WTW also provides pensions and benefits advice, insurance brokerage and pensions advice and administration

services

to the

Barclays Bank UK Retirement

Fund.

In the course of its deliberations,

the Committee

also considers

the views of the Group Chief Executive,

the Group Human Resources Director

and the Group

Reward and Performance

Director. The Group Finance Director and the Chief Risk

Officer provide

regular updates on Group and

business financial

performance and risk

profiles respectively.

No Barclays’ employee

or Director participates in discussions with, or decisions of, the Committee relating to his or her own

remuneration.

No other advisers provided

services

to the Committee

in the year.

Barclays PLC

2019 Annual Report on Form 20-F

Remuneration Committee activity

in 2019

The following

provides

a summary of the Committee’s activity

during 2019 and at the January and February 2020 meetings at which 2019

remuneration

decisions

were finalised.

The Committee is also provided with updates at each scheduled meeting on: operation of the Committee’s

Control Framework on hiring,

retention and termination, headcount and employee attrition, and extant LTIP performance.

January

February

June

October

December

January

February

2019

2020

Overall

remuneration

Incentive

funding proposals including

risk adjustments

2018 Remuneration

Report

Group fixed

pay budgets

Finance

and Risk

updates

Incentive

funding approach

Barclays’ Fair Pay agenda

and Report

2019 Remuneration

Report

Wider workforce considerations

Executive

Directors’ and

senior executives’

remuneration

Executive

Directors’ and senior executives’ bonus

outcomes

Review of Directors’ Remuneration

Policy

Annual

bonus and LTIP

performance measures

and target

calibration

Governance

Regulatory

and stakeholder matters

Discussion with independent

advisor

Remuneration

Review Panel update

Review of Committee

effectiveness

There were two additional

Remuneration Committee meetings during the course of 2019. The Committee met on 25 March 2019 and on 31 May

2019 to consider

leadership changes across

the organisation.

Barclays PLC

2019 Annual Report on Form 20-F

Our people

and culture

We believe that the culture of Barclays is

built and shaped by the thousands of

professionals around the world who serve

our customers and clients with a shared

purpose and values.

Our people

make a critical difference to our

success, and our investment

in them protects

and strengthens our culture.

We increasingly

draw on the latest thinking

from behavioural

science and data science to

identify

what’s most

likely to be effective in

hiring,

developing and engaging our people,

and then

track

effectiveness over time.

We’re

also starting to use the same data

-driven

approach

to give us a much more accurate

picture of how people

progress

through

our

organisation.

Hiring the best people

We continue

to focus

on hiring

people with

the skills that will

help us accelerate the

digital

transformation of our organisation, as

well as adapt more

quickly to the changing

needs of our customers and clients.

We have increased

hiring across

our core

strategic locations

globally.

Building a

modern,

scale presence in a smaller number

of sites enables us to make signifi

cant

investments in

the workplace that would

not

otherwise be possible.

The transition to

having

more of our people work

from these

strategic sites means change

for our existing

colleagues.

We recognise the disruption that

this can create and we are managi

ng the

impacts thoughtfully.

Within

BX, we continue to rebalance

the mix

of contractors and permanent

colleagues,

that more people

work

directly

for us.

believe

this

is a

competitive

advantage and

further strengthens our culture.

People

with different

perspectives

and

life

experiences

make our

organisation

stronger.

We want to hire from

within

and are

increasingly

using data and analytics to

identify

and support high performers and

potential

future leaders

– particularly

from

those groups that are currently

underrepresented

amongst our

senior

colleagues.

34% of our vacancies were filled

by internal

candidates during 2019.

Just under 900 graduates joined

in 2019,

enabling

to develop our pipeline

of future

leaders in

-house. The percentage of

graduate

female hires was

34%. We also

provided

over 300 people with the

opportunity

to complete a structured

apprenticeship.

We have continued

to put additional effort

into supporting

people who have been in

the armed

forces to find a career at

Barclays, through

the ‘After’ programme.

We have also supported

those returning to

the workforce after a career break, through

our ‘Encore’ programme.

People

with different perspectives and life

experiences

make our organisation

stronger.

We are committed

to attracting, developing

and retaining

a diverse

and inclusive

workforce, and providing

equal opportunities.

We aim

to make sure

our hiring

is as

diverse

as possible. Our policies require

to give

full

and fair consideration to all populations

based on their aptitudes

and abilities. We’re

using data and

analytics to better understand

how we can improve

our hiring process.

We recognise

the importance of measuring

progress around

our gender diversity agenda

and believe

that setting targets is

an effective

way to do this. We’ve set ourselves a target

of 28% female

Managing Directors

and

Directors by the end of 2021,

and have

signed up to the Ha

mpton

Alexander targets

of 33% female

representation on each of our

Board

and Group Executive

Committee and

their direct

reports by the end of 2020. We

continue

to report on our results

part of

the Hampton

Alexander Review and HM

Treasury Women in

Fina

nce Charter.

Barclays PLC

2019 Annual Report on Form 20-F

Developing talent for the future

We operate

in a highly

-regulated

environment,

it’s critical to our success

that our people

understand the rules that

govern how we operate.

We invested £36m

in training

last year to ensure we

get this

right.

A wide range of development

opportunities

are available

to help all our people build

their career,

delivered

both in-person and

through

our new digital learning

platform,

Learning

Lab, which is making

development

more available than ever.

We also launched

two new flagship

leadership

development programmes during

2019. This

is a

significant

investment in our

future leaders,

driven by our core belief that

quality

leadership makes

a difference

to our

success. We track the progression of people

that have partic

ipated in these programmes

to see how effective

they are.

We remain

committed to closing pay gaps at

Barclays; the difference

in seniority between

male

and female colleagues, and between

BAME and

non

-BAME colleagues. You can

find out

more about this in our Pay Gaps

Report, available

at barclays.com.

Colleague engagement

We have an established

approach to

engaging

colleagues which includes the

majority

of recommended actions by

the

UK’s Financial

Reporting Council (FRC),

and

is in line

with new governance requirements

in 2019.

This ensures

that we understand

their perspective,

take it into account in our

decision

making at the

most

senior level,

and share with them

our strategy and

progress.

That extends

to those who work

for us

indirectly

well,

such as contractors,

although

in a more limited way.

In 2020, our

supplier

code of conduct will require

organisations with

more than

250 employees

to demonstrate

that they have an effective

workforce engagement

approach of their

own.

It’s important

to us

that our Board

members are engaged

with our people –

directly,

and indirectly through our

management

team.

We regularly

report on our

colleague

engagement activity to

our Boards.

Together

with direct engagement, this

comprehensive

reporting approach and

dedicated

time at board meetings helps

our Board take the issues of interest to our

colleagues

into account

in their decision

making.

This has enabled

them to confirm that our

workforce engagement

approach is

effective.

Listening to our people

Our regular colleague

survey formally

captures the views of all

our people and is a

key part of how we track colleague

engagement.

Our overall engagement score

reduced slightly

to 77% in 2019, but 80% of

our colleagues

would still recommend

Barcla

as a good

place

to work.

Our

colleagues

also shared that 79% of them

feel

it’s safe to speak up to share their views.

89% of colleagues

told us they believe

Barclays is focused on achieving

good

customer and client

outcomes and 86%

said they are proud of the contribution

Barclays makes to the community

and

society.

Only 61% of our people

said the stress

levels

at work are manageable,

and 53% believe

that we have been

successful

in eliminating

obstacles to efficiency.

Improving these

scores is a key prio

rity and we are working

on the underlying

problems.

The results from the survey are an important

part of the conversations our leaders have

about

how we run the business,

and it’s a

specific focus for our Executive

Committee

and our Board. The

Executive Committee

holds a dedicated

town hall for colleagues

each year specifically

to talk about their

feedback and

the actions we’re taking in

response and there are many

follow up

communications and

action plans built

across the Group.

We monitor

our culture across

the

organisation,

and in individual business

areas, through

culture dashboards. These

combine

colleague survey

data with

other

metrics about

our business, so

that we can

see the effect

our people’s engagement

has

on our performance,

and on the continued

strength of our culture.

82% of our people

have heard

or read senior leaders talking

about

the character and

culture of Barclays.

Barclays PLC

2019 Annual Report on Form 20-F

Keeping our people informed

addition

these

data

sources,

our

leaders, including

our Board, engage face to

face

with

colleagues

locally

hear

what

they think.

That might

be through site visits, large-scale

town halls, training

and development

activity,

mentoring, informal breakfast

sessions, committee

membership, diversity

and wellbeing

programmes, or focus

and

consultative

groups.

We make sure we’re regularly

keepin

everyone up to date

on the strategy,

performance

and progress

of the

organisation

through a strategically-

coordinated,

multi-

channel approach across

a combination

of leader-led engagement,

and digital

and print communication,

including

blogs, vlogs and podcasts.

We also engage

with our people

collectively

through a strong and effective

partnership

with Unite, as well as the

Barclays Group European

Forum, which

represents all

colleagues within the

European

Union.

These

conversations

help

deliver

thi

ngs like a collective pay

deal for our

Unite

covered colleagues,

who represent 84%

our

UK-based

colleagues,

as well

as more

complex

business

change

and

our

long-

term focus on colleague

wellbeing.

We regularly

brief our union partners on the

strategy and progress of the business and

seek their input

on ways

in which we can

improve

the colleague experience of working

for Barclays. The collective

bargaining

coverage of Unite

in the UK represents

c.52% of our global

workforce.

When we make significant

changes to our

business, they can affect

our people and

can

mean that

redundancies are necessary.

consult in detail

with colleague

representatives on major

change

programmes affecting

our people. We do this

to help us minimise

compulsory job losses

wherever possible, including

through

voluntary

redundancy and redeployment.

We are

committed

paying

people fairly

–

in a way

that

balances

the needs

all our stakeholders.

Our people policies

Another way we shape the culture

of our

organisation

is through our people policies,

which are reviewed

regularly,

including by

our Board.

Our policies

are designed to provide equal

opportunities and

create an inclusive

culture,

in line with our values and in

support of our long

-term success.

They

also reflect relevant

employment law,

including

the provisions of the Universal

Declaration

of Human Rights and ILO

Declaration

on Fundamental Principles and

Rights at Work.

We expect our people

to treat each other

with dignity

and respect, and do not tolerate

discrimi

nation, bullying, harassment or

victimisation

on any grounds.

We are committed

to paying our people fairly

and equitably

relative to their role, skills,

experience

and performance – in a way that

balances

the needs of all

our stakeholders.

That means

our remuneration policies reward

sustainable

performance that’s in line with

our purpose and values, as well as our risk

expectations.

You

can find more information

in our Fair Pay Report, available

barclays.com.

We encourage

our people to benefit

from Barclays’ performance

by enrolling

in our share plans, further

strengthening

their commitment

to the organisation.

The Directors’ Remuneration

Report sets

out

updates on remuneration

outcomes and

developments during

2019. It also explains

our plans for 2020, i

ncluding our proposed

new Directors’ Remuneration

Policy, which

will

be subject to a vote at the next AGM.

Barclays PLC

2019 Annual Report on Form 20-F

Building a

supportive culture

Diversity of thought

and experience works

best when everyone

feels included. People

who feel they

can be themselves at work

are happier

and more productive, so we

believe

that creating an inclusive and

diverse culture

isn’t just the right thing to do,

but is also best for our business.

We focus on five areas: disability,

gender,

LGBT+,

multicultural, and multigenerational.

Each of these is represented and

championed

by a senior leader, and

embedded

deeply into the organisation

through

colleague

networks

organised

our people

and funded by Barclays.

Our networks provide

colleagues with

valuable

support and advice, create

development

opportunities, and raise

awareness of issues and challenges.

Our

networks also influence

our people policies,

teaching

how we need to adapt

to give

our people

the support they need to

succeed. 85% of our colleagues

say

that

they feel

included within their teams.

Our policies

require managers to give full and

fair consideration

to those with a disability on

the basis of their aptitudes

and abilities; both

when hiring

and through ongoing people

management,

well as ensuring

opportunities for training,

career development

and promotion

are available to all. As

part of

the UK government

Disability Confident

scheme, we encourage

applications from

people

with a disability, or a physical or

mental

health condition.

We encourage

everyone working at Barclays,

or thinking

about joining us, to tell us

what

support and adjustments

they need to be

their best at work. We’re working hard to

make the processes that support this more

effective,

recognising that at times getting the

support colleagues

need can be slow.

We track the ever-changing

composition of

our people

through online dashboards, to

make sure that our senior leaders

understand

the diverse makeup and

needs

of the organisation

they lead. We’re also an

inaugural

signatory of the UK’s

Race at

Work Charter.

Through

our BeWell programme, we provide

expert advice

and guidance on the practical

steps colleagues can take to look after their

physical and

mental health. In 2020, our

Mental

Health Awareness

training

will

become

mandatory for all colleagues. We

were one of the first businesses to sign up to

the Men

tal Health at Work

Commitment.

74%

of colleagues

say

that Barclays supports

employee

efforts to enhance their wellbeing.

The tools to succeed

We provide

tools, programmes and support

that enable

colleagues to balance their work

life

with their personal commitments,

supporting

career development opportunities

at each life

stage.

We offer enhanced

maternity, paternity,

adoption

and shared parental

entitlements.

We’re continuing

to shape a more agile,

technology

-led culture through dynamic

working, so that we can meet our

people’s desire to work more flexibly.

88% of colleagues

say

they are able

work dynamically

and this is

one of the

biggest drivers for overall

engagement,

with more favourable

scores

across all

questions.

However, our people

also told us

that we

need to invest more

in the technology and

services we use internally.

Only 56% of

people

said they have the work

tools and

resources they need

to achieve excellent

performance

and this is

a reduction

year over

year. We’ve made

significant progress

particularly

in our new strategic campus sites,

but we

need to get the

balance right between

required

investment and cost discipline focus

in order to effectively

balance the needs of all

of our stakeholder groups.

We’re replacing

the old devices that we know

our people

can find frustrating, and we’re

updating

our software and connectivity so

that getting

work

done is easier. We’ve

also

invested in

the technology

support we

provide

to our people, so that when things do

go wrong, we can put them

right more

quickly.

Over the next few years, our focus will

be on

enabling

much greater collaboration, right

across the organisation,

that we can

unlock the power of the connections

between

our people.

Risk review

Content

Barclays PLC

2019 Annual Report on Form 20-F

The management of risk is a critical underpinning to the execution of Barclays’

strategy.

The

material risks and uncertainties the Group faces across

its business and portfolios are key areas of

management focus.

Barclays’ risk disclosures are provided

in the Annual Report and in the Barclays PLC Pillar 3 Report 2019.

Risk

management strategy

Annual

Report

Pillar 3

Report

Overview of Barclays’ approach

to risk

management. A detailed overview

together

with more

specific information on policies that

the Group determines to be of particular

significance in the current

operating

environment

can be found in the Barclays PLC

Pillar 3 Report

2019

or at Barclays.com.

◾

Enterprise Risk Management Framework

(ERMF)

◾

Segregation of duties – the “Three Lines of Defence” model

◾

Principal risks

◾

Risk appetite for the principal risks

◾

Risk committees

◾

Frameworks, policies and standards

◾

Assurance

◾

Effectiveness of risk management

arrangements

◾

Learning from

our mistakes

◾

Barclays’ risk culture

◾

Group

-wide risk management tools

◾

Risk management in the setting of strategy

n/a

149

150

151

152

156

Material existing

and emerging

risks

Insight into the level of risk across our

business

and portfolios, the material existing and

emerging

risks and uncertainties

we face and

the key areas of management

focus.

◾

Material existing and emerging

risks potentially impacting more

than one principal risk

n/a

◾

Credit risk

n/a

◾

Market risk

n/a

◾

Treasury

and capital risk

n/a

◾

Operational risk

n/a

◾

Model risk

n/a

◾

Conduct risk

n/a

◾

Reputation risk

n/a

◾

Legal risk and legal, competition and regulatory

matters

n/a

Climate

change risk management

Overview of Barclays’ approach

to managing

climate change risk.

◾

Overview, organisation and

structure

◾

Risk management policy

101

n/a

Principal risk

management

Barclays’ approach

to risk management for

each principal risk with focus on organisation

and structure and roles and responsibilities.

◾

Credit risk management

102

157

◾

Management of credit risk mitigation techniques and counterparty

credit risk

n/a

175

◾

Market risk management

103

178

◾

Management of securitisation exposures

n/a

187

◾

Treasury

and capital risk management

104

191

◾

Operational risk management

105

198

◾

Model risk management

106

202

◾

Conduct risk management

106

205

◾

Reputation risk management

107

207

◾

Legal risk management

107

209

Risk review

Content

Barclays PLC

2019 Annual Report on Form 20-F

Risk

performance

Annual

Report

Pillar 3

Report

Credit risk:

The risk of loss to the Group

from

the failure of clients, customers or

counterparties, including sovereigns,

to fully

hono

ur their obligations to the Group,

including

the whole and timely payment of principal,

interest, collateral and other receivables.

◾

Credit risk overview and

summary of performance

109

n/a

◾

Maximum exposure

and effects of netting, collateral and risk

transfer

109

n/a

◾

Expected Credit Losses

112

n/a

◾

Movements in gross exposure

and impairment allowance including

provisions for loan

commitments and financial guarantees

115

n/a

◾

Management adjustments to models for impairment

120

n/a

◾

Measurement uncertainty and sensitivity analysis

121

n/a

◾

Analysis of the concentration

of credit risk

◾

The Group’s

approach

to management and representation of credit

quality

◾

Analysis of specific portfolios and asset types

127

129

133

n/a

◾

Forbearance

136

n/a

◾

Analysis of debt securities

138

n/a

◾

Analysis of derivatives

139

n/a

Market risk:

The risk of a loss arising from

potential adverse changes in the value of the

Group

’s assets

and liabilities from fluctuation in

market variables including, but not limited to,

interest rates, foreign

exchange, equity prices,

commodity prices, credit spreads, implied

volatilities and asset correlations.

◾

Market risk overview

and summary of performance

◾

Balance sheet view of trading

and banking books

◾

Review of management

measures

◾

Review of regulatory

measures

141

n/a

141

n/a

122

123

124

125

Treasury and capital risk – Liquidity:

The risk that the Group

is unable to meet its

contractual or contingent

obligations or that it

does not have the appropriate

amount, tenor

and composition of funding

and liquidity to

support its assets.

◾

Liquidity risk overview and summary

of performance

◾

Liquidity risk stress testing

◾

Liquidity pool

◾

Funding structure

and funding relationships

◾

Contractual maturity of financial assets and liabilities

◾

Asset encumbrance

145

147

148

151

n/a

220

Treasury and capital risk – Capital:

The risk that the Group

has an insufficient level

or composition of capital to support its normal

business activities and to meet its regulatory

capital requirements under

normal operating

environments

or stressed conditions (both

actual and as defined for internal planning

regulatory testing purposes). This also includes

the risk from the Group

’s pension plans.

◾

Capital risk overview and

summary of performance

◾

Regulatory minimum

capital and leverage requirements

◾

Analysis of capital resources

◾

Analysis of risk weighted assets

◾

Analysis of leverage ratio and exposures

◾

Minimum requirement

for own funds and

eligible liabilities

◾

Foreign

exchange risk

◾

Pension risk review

155

157

159

160

161

162

163

n/a

Treasury and capital risk – Interest rate risk in

the banking book:

The risk that the Group

exposed to capital or income volatility because

of a mismatch between the interest rate

exposures of its (non

-traded) assets and

liabilities.

◾

Interest rate risk in the banking book

overview and

summary of

performance

◾

Net interest income sensitivity

◾

Analysis of equity sensitivity

◾

Volatility of the fair value

through

other comprehensive income

(FVOCI) portfolio

in the liquidity

pool

165

166

Operational risk:

The risk of loss to the Group

from inadequate or

failed processes or systems,

human factors or due to external events (for

example fraud) where

the root cause is

not due

to credit or market

risks.

◾

Operational risk overview

and summary of performance

◾

Operational risk profile

167

144

146

Model risk:

The risk of the potential adverse

consequences from

financial assessments

decisions based on incorrect

or misused model

outputs and reports.

◾

Model risk overview

and summary of performance

170

n/a

Conduct risk:

The risk of detriment to

customers, clients, market integrity,

effective

competition or Barclays from

the inappropriate

supply of financial services, including instances

of wilful or negligent misconduct.

◾

Conduct risk overview and summary

of performance

170

n/a

Reputation risk:

The risk that an action,

transaction, investment, event, decision, or

business relationship will reduce trust in the

Group’s

integrity and/or competence.

◾

Reputation risk overview

and summary of performance

170

n/a

Risk review

Content

Barclays PLC

2019 Annual Report on Form 20-F

Annual

Report

Pillar 3

Report

Legal risk:

The risk of loss or imposition of

penalties, damages or fines from the failure of

the Group to meet its legal obligations

including regulatory

or contractual

requirements.

◾

Legal risk overview and summary

of performance

170

n/a

Supervision and

regulation

The Group’s

operations, including its overseas

offices, subsidiaries and associates, are subject

to a significant body of rules and regulations.

◾

Supervision of the Group

◾

Global regulatory

developments

◾

Financial regulatory

framework

171

172

n/a

Pillar 3

Report

Contains extensive information

on risk as well

as capital management.

◾

Summary of risk and capital profile

◾

Notes on basis of preparation

◾

Scope of application of Basel rules

n/a

Risk and capital position

review:

Provides a

detailed breakdown

of Barclays’ regulatory

capital adequacy and how

this relates to

Barclays’ risk management

◾

Group

capital resources, requirements, leverage and

liquidity

◾

Analysis of credit risk

◾

Analysis of counterparty

credit risk

◾

Analysis of market risk

◾

Analysis of securitisation exposures

◾

Analysis of operational risk

n/a

104

122

129

144

Risk review

Risk management

Barclays’ risk management

strategy

Barclays PLC

2019 Annual Report on Form 20-F

Barclays’ risk

management

strategy

This section introduces the Group’s

approach

to managing and identifying risks, and for fostering a strong risk culture.

Enterprise Risk Management Framework (ERMF)

The ERMF sets the strategic approach

for risk management by defining

standards, objectives and responsibilities

for all areas of the Group.

It is then

approved

by the Barclays PLC Board

on recommendation

of the Group Chief Risk

Officer. It supports senior management

in effective risk

management and developing

a strong risk culture.

The ERMF sets out:

◾

Segregation of duties: The ERMF defines a Three Lines of Defence model

◾

Principal risks faced by the Group.

This list guides the organisation of the risk management function, and the identification, management and

reporting

of risks.

◾

Risk appetite requirements

This helps define the level of risk we are willing to undertake in our business.

◾

Roles and responsibilities for risk management:

The ERMF sets out the accountabilities of the Group CEO and other senior managers, as well as

Barclays PLC

committees

The ERMF is complemented

by frameworks,

policies and standards which are

mainly aligned to individual principal risks:

◾

Frameworks cover

the management approach for

a collection of related activities

and define the associated policies used to govern

them.

◾

Policies set out principles and other core

requirements

for the activities of

the Group

Policies describe “what” must be done.

◾

Standards set out the key control objectives that describe how

the requirements set out in the policy are met, and who needs to carry them out.

Standards describe “how” controls should be undertaken.

Segregation of duties - the "Three Lines of Defence" model

The ERMF sets out a clear lines of defence model. All colleagues are responsible for

understanding

and managing risks within the context of

their

individual roles and responsibilities, as set out below:

◾

First line comprises all employees engaged

in the revenue generating

and client facing areas of the

Group

and all associated support functions,

including Finance, Treasury,

and Human Resources. The first line is responsible for identifying and managing

the risks they generate, establishing

a control

framework,

and escalating risk

events to Risk and Compliance.

◾

Second line is comprised of the Risk and Compliance functions. The role of the second line is to establish the limits, rules and

constraints under

which first line activities shall be performed,

consistent with

the risk appetite of the Group

and to monitor the performance

of the first

line

against these limits and constraints. Note that limits for

a number of first line activities, related to operational risk, will be set by the first line and

overseen by

the Chief Controls Office. These will remain subject to supervision by

the second line.

◾

Third line of defence is Internal Audit, who are responsible

for providing

independent assurance over the effectiveness of governance,

risk

management and control

over current, systemic and evolving risks.

◾

The Legal function provides support

to all

areas of the bank

and is not formally part of any of the three lines. However

it is subject to second line

oversight.

Principal

risks

The ERMF identifies eight principal risks and sets out associated responsibilities an

expectations around risk management standards.

Each of the principal risks is overseen

by an accountable executive within the Group

who is responsible for the framework, policies and standards

that detail the related requirements.

Risk reports to executive and Board

committees are clearly organised by p

rincipal risk. In addition, certain risks

span more than one principal

risk; these are also subject to the ERMF and are reported

to executive and Board

committees.

Risk appetite for the principal risks

Risk appetite is defined as the level of risk which the Group’s

businesses are prepared

to accept in the

conduct of their activities. It sets the ‘tone

from the top’ and provides

a basis for ongoing

dialogue between management and Board

with respect to the

Group’s

current and

evolving risk

profile, allowing strategic and financial decisions to be made on

an informed basis.

Risk appetite is approved

by the Barclays PLC Board

and disseminated across legal

entities. Total Group

risk appetite

is supported

by limits

control exposures

and activities that have material concentration risk implications.

Risk review

Risk management

Barclays’ risk management

strategy

Barclays PLC

2019 Annual Report on Form 20-F

Risk committees

Various

committees also fulfil important roles and responsibilities. Barclays business level product/risk

type committees consider risk matters

relevant to their business, and escalate as required

to the Group Risk Committee (GRC), whose Chairman, in turn, escalates to the Barclays PLC

Board

Committees and the Barclays PLC Board.

In addition to setting the risk appetite of the Group,

the Board is responsible for approving

the ERMF, and reviewing all reputation risk matters. It

receives regular information

on the risk profile of the bank, and has ultimate responsibility for risk appetite and capital plans.

Further

there are three Board

-level committees which oversee the application of the ERMF and implementation of key

aspects. Membership of

these committees is comprised

solely of non-executive directors providing

independent oversight and challenge. These are detailed below:

◾

The Barclays PLC

Board

Risk Committee

(BRC): The BRC monitors

the Group’s risk profile against the agreed appetite. Where

actual performance

differs from

expectations, the actions taken by management are reviewed

to ascertain that the

BRC is comfortable

with them. The BRC also

reviews certain key risk methodologies,

the effectiveness of risk management,

and the Group’s risk profile,

including the material issues affecting

each business portfolio and forward

risk trends.

The committee also commissions in-depth analyses of significant risk topics, which are

presented by the Group

CRO or senior risk managers.

◾

The Barclays PLC

Board

Audit Committee (BAC): The BAC receives regular

reports on the effectiveness of internal control systems, quarterly

reports on material control issues of significance, and quarterly papers

on accounting

judgements (including impairment). It also receives a half-

yearly review of the adequacy

of impairment allowances, which it reviews relative to the risk inherent in the portfolios, the business environment,

Barclays policies and methodologies.

◾

The Barclays PLC

Board

Remuneration

Committee (RemCo): The RemCo receives a report

on risk management performance and risk profile, and

proposals on ex-ante and ex-post risk adjustments to variable remuneration.

These inputs are considered in the setting of performance

incentives.

The terms of reference

and additional details on membership and activities

for each of the principal

Board

committees are available from the

corporate

governance section of the Barclays website at: home.barclays/about

-barclays/barclays

-corporate-governance.html.

The Group

Risk Committee (GRC) is the most senior executive body responsible for

reviewing and monitoring

the risk profile of the

Group.

This

includes coverage

of all principal risks, and any other material risks, to which the Group

is exposed. The GRC reviews and recommends

the

proposed

risk appetite

and relative limits to the BRC. The committee covers

all business units and legal entities with the Group

and incorporates

specific coverage

of Barclays Bank Group.

Barclays’ risk culture

Risk culture can be defined as the norms, attitudes and

behaviours related to risk awareness, risk taking and risk

management.

This is reflected in

how the Group

identifies, escalates and manages risk

matters.

Barclays is committed

to maintaining a robust risk culture in which:

◾

management expect, model and reward

the right behaviours from

a risk

and control perspective;

◾

colleagues identify, manage and

escalate risk and control matters, and meet their responsibilities around

risk management.

Specifically, all employees

regardless of their positions, functions or

locations must play their part in the Group’s

risk management. Employees are

required

to be familiar with risk

management policies which are

relevant to their responsibilities, know how

to escalate actual or potential risk

issues, and have a role-appropriate

level of awareness of the risk management process as defined by the ERMF.

Our Code of Conduct – the Barclays Way

Globally,

all colleagues must attest to the “Barclays Way”,

our Code of Conduct, and

comply with all frameworks, policies and standards applicable

to their roles. The Code of Conduct outlines the purpose

and values which govern

our “Barclays Way” of working

across our business globally. It

constitutes a reference

point covering

the aspects

of colleagues’ working relationships, with other Barclays employees,

customers and clients,

governments

and regulators, business partners, suppliers, competitors and the broader

community.

Risk review

Material existing

and

emerging risks

Barclays PLC

2019 Annual Report on Form 20-F

Material existing

and emerging

risks

the Group’s

future performance

The Group

has identified

a broad

range of risks to which its businesses

are exposed.

Material risks are those to which senior management

pay

particular attention and

which could cause the delivery of the Group’s strategy,

results of operations, financial condition and/or

prospects to differ

materially from expectations. Emerging risks are those which have

unknown

components, the impact of which could crystallise over a longer time

period. In addition, certain other factors beyond

the Group’s control,

including escalation of terrorism or global conflicts, natural disasters,

epidemic

outbreaks and similar events, although

not detailed below, could have a similar impact on the Group.

Material existing

and emerging

risks

potentially

impacting

than one

principal

risk

Business

conditions, general economy and geopolitical

issues

The Group’s

operations are subject to potentially unfavourable

global and local economic and market conditions, as well as geopolitical

developments, which may have

a material effect on the Group’s

business, results of operations, financial condition and prospects.

A deterioration in global or local economic

and market conditions may lead to (among

other things): (i) deteriorating business, consumer or

investor confidence and

lower levels of fixed asset investment and productivity

growth, which

in turn may lead to lower client activity, including

lower demand

for borrowing

from creditworthy customers; (ii) higher default rates, delinquencies, write-offs and impairment charges as borrowers

struggle with the burden

of additional debt; (iii)

subdued asset prices and payment patterns, including

the value of any collateral held by

the Group;

(iv) mark-to-market losses in trading portfolios resulting from

changes in factors such as credit ratings, share prices and solvency of counterparties;

and (v) revisions to calculated expected credit losses (ECLs) leading to increases in impairmen

allowances. In addition, the Group’s

ability to

borrow

from other financial institutions

or raise funding from

external investors may be affected by deteriorating economic

conditions and market

disruption.

Geopolitical events may lead to further financial

instability and affect economic growth.

In particular:

◾

the UK,

the decision to leave the European

Union (EU)

may give rise to further economic and political consequences including

for investment

and market confidence in the UK and the remainder

of EU.

See “(ii) Process of UK withdrawal from

the EU”

below for further

details.

◾

A significant proportion

of the Group’s portfolio

is located

in the US, including a major credit card portfolio

and a range of corporate and

investment banking

exposures. The possibility of significant continued changes in US policy in certain sectors (including trade, healthcare and

commodities), may have an impact

on the Group’s associated portfolios. Stress in

the US economy,

weakening GDP and the associated exchange

rate fluctuations, heightened

trade tensions (such as the current dispute between the US and China),

an unexpected

rise in unemployment

and/or an increase in interest rates could

lead to increased levels of impairment, resulting in a negative impact on

the Group’s profitability.

◾

Global GDP growth

weakened in 2019,

as elevated

policy uncertainty weighed on

manufacturing

activity

and investment. As a result, a number of

central banks, most notably the Federal

Reserve and European

Central Bank (ECB), pursued monetary

easing. Growth is expected to stabilise

2020,

but macroeconomic

risks remain skewed to the

downside, while concerns around

the efficacy of existing

policy tools to counter

these risks

persist. An escalation in geopolitical tensions, increased use of protectionist measures

or a disorderly withdrawal

from the EU may negatively

impact the Group’s

business in the affected regions.

◾

In China the pace of credit growth

remains a concern, given the high level of leverage and despite government

and regulatory

action. A stronger

than expected slowdown

could result if authorities fail to appropriately

manage growth

during the transition from manufacturing towards

services and the end of the investment and credit-led bo

om. Deterioration in emerging

markets could affect the Group if it results in

higher

impairment charges via sovereign

or counterparty

defaults.

ii)

Process of UK withdrawal from the EU

The manner

in which

the UK

withdraws

from

the EU

will likely have

a marked

impact on

general

economic

conditions in

the UK and the EU. The

UK’s future

relationship with

the EU

and its trading

relationships with the

rest of the world could take a number of years to resolve. This may lead to

a prolonged

period

of uncertainty, unstable economic conditions

and market volatility, including fluctuations in

interest rates

and foreign

exchange

rates.

Whilst the exact impact of

the UK’s withdrawal

from

the EU is

unknown,

the Group continues to monitor

the risks

that may have a more immediate

impact for its business, including

but not limited to:

◾

Market volatility, including

in currencies and interest rates, might increase which could

have an impact on the value of the Group’s

trading book

positions.

◾

Credit spreads could

widen leading to reduced

investor appetite for the Group’s debt securities. This could negatively impact the Group’s

cost of

and/or access to funding. In

addition, market and interest rate volatility could affect the underlying

value of

assets in the banking book and

securities held by the Group

for liquidity purposes.

◾

A credit rating agency downgrade

applied directly to the Group, or indirectly as a result of a credit rating agency downgrade

to the UK

Government,

could significantly increase the Group’s cost of and/or

reduce its access to funding, widen credit spreads and materially adversely

affect the Group’s

interest margins and liquidity position.

◾

A UK recession with lower

growth, higher

unemployment and falling UK property

prices could lead to

increased impairments in relation to a

number

of the Group’s portfolios, including, but not limited to, its UK mortgage

portfolio, UK unsecured

lending portfolio (including credit cards)

and its commercial real estate exposures.

◾

The ability to attract, or prevent

the departure of, qualified and skilled employees may be

impacted by the UK’s and the EU’s future approach

the EU freedom

of movement and immigration

from the EU countries and this

may impact the Group’s

access to the EU talent pool.

◾

A disorderly exit from the EU may

put a strain on the capabilities of the Group’s

systems, increasing the risk of failure of those systems and

potentially resulting in losses and reputational damage for

the Group.

◾

Changes to current EU ‘Passporting’ rights may require

further adjustment to the current model for

the Group’s cross

-border banking

operation

which could increase operational

complexity and/or costs for the Group.

Risk review

Material existing

and

emerging risks

Barclays PLC

2019 Annual Report on Form 20-F

◾

The legal framework

within which the Group operates could

change and become more uncertain if the UK takes

steps to replace or repeal

certain

laws currently

in force, which are based on EU legislation and regulation

(including EU regulation

of the banking sector) following its withdrawal

from the EU. Certainty around

the ability

to maintain existing contracts, enforceability of certain

legal obligations and uncertainty around

the

jurisdiction of the UK courts may be affected

until the impacts of the loss of the current legal and regulatory

arrangements between the UK and

EU and the enforceability of UK judgements

across the EU are fully known.

◾

Should the UK see reduced

access to

financial markets infrastructures

(including exchanges, central counterparties

and payments services, or

other support services provided

by third party suppliers

)

service provision for

clients

could be impacted,

likely resulting in reduced market share

and revenue

and increased operating

costs for the Group.

iii)

The impact of interest rate changes on the Group’s profitability

Any changes to interest rates are

significant for the Group,

especially given the uncertainty as to the direction of interest rates and the pace at

which interest rates may change

particularly in the Group’s main markets of the UK and the US.

A continued period

of low interest rates and flat yield curves, including any further cuts, may affect and

continue to put pressure on the Group’s

net

interest margins (the difference

between its lending income and borrowing

costs) and could adversely affect the profitability

and prospects of the

Group.

However,

whilst interest rate rises could positively impact the Group’s

profitability as retail and corporate

business income increases due to margin

de-compression,

further increases in interest rates, if larger or

frequent than expected, could lead to generally weaker

than expected growth,

reduced

business confidence and higher unemployment,

which in turn could cause stress in

the lending portfolio and underwriting

activity

of the

Group.

Resultant higher credit losses driving an increased impairment charge

would most notably impact retail unsecured portfolios and

wholesale

non-investment grade

lending and could have

a material

effect on the Group’s business, results of operations, financial condition

and prospects.

In addition, changes in interest rates could have

an adverse impact on the value of the securities held in the Group’s

liquid asset portfolio.

Consequently, this could create more

volatility than expected through

the Group’s FVOCI reserves.

iv)

The competitive environments of the banking and financial services industry

The Group’s

businesses are conducted in competitive environments

(in particular, in the UK and US), with increased competition scrutiny, and the

Group’s

financial performance depends

upon the Group’s ability to respond effectively to competitive pressures whether

due to competitor

behaviour,

new entrants to the market, consumer demand,

technological changes or otherwise.

This competitive environment,

and the Group’s response

to it, may have a material adverse effect on the Group’s

ability to maintain existing or

capture additional market share, business, results of operations, financial

condition and prospects.

Regulatory change agenda and impact on business

model

The Group

remains subject to ongoing significant levels of regulatory change

and scrutiny in many of the countries in which it operates (including,

in particular,

the UK and the US). As a result, regulatory risk will remain a focus for

senior management. Furthermore,

a more intensive regulatory

approach

and enhanced requirements together with the potential lack of international regulatory co-

ordination as enhanced supervisory standards

are developed

and implemented may adversely affect the Group’s

business, capital and risk management strategies and/or

may result in the Group

deciding to modify its legal entity, capital and funding

structures and business mix, or to exit certain business activities altogether or not to expand

in areas despite otherwise attractive potential.

There are several significant pieces of legislation

and areas of focus which will require

significant management attention, cost and resource,

including:

◾

Changes in prudential requirements

may impact minimum requirements

for own funds and

eligible liabilities

(MREL) (including requirements

for

internal MREL), leverage, liquidity or

funding requirements, applicable buffers

and/or add

-ons to

such minimum requirements and risk weighted

assets calculation methodologies all as may be set by international, EU or

national authorities. Such or similar changes to prudential requirements

or additional supervisory and prudential

expectations, either individually

or in aggregate, may result in, among

other things, a need for further

management actions to

meet the changed requirements, such as:

increasing capital, MREL or liquidity resources, reducing

leverage and risk weighted assets;

restricting distributions on capital instruments;

modifying the terms of outstanding capital instruments;

modifying legal entity structure (including

with regard to issuance and deployment

of capital,

MREL and funding);

changing the Group’s

business mix

or exiting other businesses;

and/or undertaking

other actions to strengthen the Group’s position.

◾

The derivatives market has been

the subject of particular focus for regulators

in recent years across the G20 countries and beyond,

with

regulations introduced

which require

the reporting and clearing of standardised over the counter (OTC)

derivatives and the mandatory margining

of non-cleared

OTC derivatives. These regulations

may increase costs for

market participants, as well as reduce liquidity in the derivatives

markets. More broadly,

changes to the regulatory framework

(in particular, the review of the second Markets in

Financial Instruments Directive

and the implementation of the Benchmarks Regulation)

could entail significant costs for market participants and may have a significant impact

on certain markets in which the Group

operates.

◾

The Group

and certain of its members are subject to supervisory stress testing exercises in a number

of jurisdictions.

These exercises currently

include the programmes

of the BoE, the European Banking Authority

(EBA),

the Federal Deposit Insurance Corporation

(FDIC)

and the Federal

Reserve Bank (FRB)

Failure to meet the requirements

of regulatory stress tests, or the failure by regulators

to approve

the stress

test results and

capital plans of the Group,

could result in the Group or cert

ain of its members being required

to enhance their capital position,

limit capital

distributions or position additional capital in specific subsidiaries.

For further

details

on the regulatory

supervision of, and regulations applicable to, the Group, see Supervision and regulation

on pages 171

to 177

Risk review

Material existing

and

emerging risks

Barclays PLC

2019 Annual Report on Form 20-F

vi)

The impact of climate change on the Group’s business

The risks associated with climate change are subject to rapidly increasing societal, regulatory

and political focus, both in

the UK and internationally.

Embedding

climate risk into the

Group’s

risk framework

in line with

regulatory

expectations, and adapting the Group’s operations and

business

strategy to address both the financial risks resulting from:

(i) the physical risk of climate change; and (ii) the risk from the transition to a low carbon

economy

could have a significant impact on the Group’s

business.

Physical risks from

climate change arise from a number of factors and relate to specific weather events and longer

-term shifts

in the climate.

The

nature and timing of extreme weather events

are uncertain but they are increasing in frequency

and their impact on the economy is predicted to be

more acute in the future. The potential impact on the economy

includes, but is not limited to, lower GDP growth,

higher unemployment and

significant changes in asset prices and profitability of industries. Damage to the properties

and operations of borrowers

could impair asset values

and the creditworthiness of customers leading to increased default rates,

delinquencies, write-offs and impairment charges in the Group’s

portfolios.

In addition, the Group’s

premises and resilience may also suffer physical damage due

to weather events leading to increased costs for

the Group.

As the economy

transitions to

a low-carbon

economy,

financial institutions

such as the Group

may face significant

and rapid development

stakeholder expectations, policy, law

and regulation which could

impact the lending activities

the Group

under

takes,

as well

as the risks associated

with its lending portfolios,

and the value of the Group’s

financial assets.

As sentiment towards

climate change shifts and societal preferences

change, the Group

may face greater scrutiny of the type of business it conducts, adverse media coverage

and reputational damage, which may in

turn impact customer demand

for the Group's

products, returns on certain business activities

and the value of certain assets and

trading positions

resulting in impairment charges.

In addition, the impacts of physical and transition climate risks can lead

to second order

connected risks, which have the potential to affect the

Group’s

retail and wholesale portfolios. The impacts of climate change may increase losses

for those sectors sensitive to the effects of physical and

transition risks. Any subsequent increase in defaults

and rising unemployment

could create recessionary pressures, which

may lead to wider

deterioration in the creditworthiness of the Group’s

clients, higher ECLs, and increased charge

-offs and defaults among retail customers.

If the Group

does not adequately embed risks associated

with climate change into its risk framework

to appropriately measure, manage

and

disclose the various financial and operational risks it faces as a result of climate change, or

fails to adapt its strategy and business model to the

changing regulatory

requirements and market expectations on a timely basis, it may have a material and adverse impact on the Group’s

level of

business growth,

competitiveness, profitability, capital requirements,

cost of funding, and financial condition.

For further

details

on the Group’s

approach

to climate

change, see page 101

of climate change risk management.

vii)

Impact of benchmark interest rate reforms on the Group

For several years, global

regulators and central banks have

been driving international efforts to reform

key benchmark

interest rates

and indices,

such as the London

Interbank

Offered Rate (“LIBOR”), which are used to determine the amounts payable under

a wide range of transactions and

make them more

reliable and robust. This has resulted in significant changes to the methodology

and operation

of certain benchmarks and indices,

the adoption of alternative “risk-free” reference

rates and the proposed discontinuation of certain reference

rates (including LIBOR), with further

changes anticipated.

Uncertainty as to the nature of such potential changes, the availability

and/or suitability of alternative “risk-free” reference

rates and other reforms

may adversely affect a

broad

range of transactions (including any

securities,

loans and derivatives which use LIBOR to determine

the amount of

interest paya

ble that are included in the Group’s financial assets and

liabilities) that use these reference rates and indices and introduce

a number of

risks for the Group,

including, but not limited to:

◾

Conduct risk:

in undertaking actions to transition away from

using certain reference rates (including

LIBOR), the Group faces conduct risks,

which may lead to customer complaints, regulatory

sanctions or reputational impact if the Group is (i) considered to be undertak

ing market

activities that are manipulative or

create a false or misleading impression, (ii) misusing sensitive information

or not identifying or appropriately

managing or

mitigating conflicts

of interest, (iii) providing

customers with inadequate advice, misleading information, unsuitable products or

unacceptable service, (iv) not taking an appropriate

or consistent response to remediation activity or customer complaints, (v) providing

regulators with inaccurate regulatory

reporting

or (vi) colluding or inappropriately sharing information with competitors;

◾

Financial risks:

the valuation of certain of the Group’s financial assets and liabilities may change. Moreover,

transitioning to alternative “risk-free”

reference

rates may impact the ability of members of

the Group

to calculate

and model amounts receivable by

them on certain financial assets

and determine the amounts payable on

certain financial liabilities (such as debt securities issued by them) because currently alternative “risk-

free” reference rates (such as the

Sterling Overnight Index Average

(SONIA) and the Secured Overnight Financing Rate (SOFR)) are look-back

rates whereas term rates (such

as LIBOR) allow borrowers

to calculate

at the

start of any interest period

exactly how much is payable at the end

of such interest period. This may have

a material adverse effect on the Group’s

cashflows;

◾

Pricing

risk:

changes to existing reference rates and indices, discontinuation of any reference

rate or indices and transition to alternative “risk-

free” reference rates may

impact the pricing mechanisms used by the Gr

oup on certain transactions;

◾

Operational risk:

changes to existing reference

rates and indices,

discontinuation of any reference

rate or index and transition to alternative “risk-

free” reference rates may

require

changes to the Group’s IT systems, trade reporting

infrastructure, operational

processes,

and controls. In

addition, if any reference

rate or index (such as LIBOR) is no longer available to calculate amounts payable,

the Group may

incur additional

expenses in amending documentation

for new and existing transactions and/or effecting the transition from the original reference

rate or index

to a new reference

rate or index; and

◾

Accounting risk:

an inability to apply hedge accounting in accordance

with IFRS could lead to increased volatility

in the Group’s

financial results

and performance.

Any of these factors may have a

material adverse effect on

the Group’s business, results of operations, financial condition

and prospects.

For further

details

on the impacts of benchmark

interest rate reforms on the Group,

see Note 14 on pages 236

to 243

Risk review

Material existing

and

emerging risks

Barclays PLC

2019 Annual Report on Form 20-F

viii)

Holding

company structure of Barclays PLC

and its dependency on distributions

from its subsidiaries

Barclays PLC

is a holding company

and its

principal sources of income are, and are expected

to continue to be, distributions (in the form of

dividends and interest payments)

from operating

subsidiaries which also

hold the principal assets of the Group.

As a separate legal entity, Barclays

PLC relies on such distributions in order

to be able to meet its obligations

as they fall due (including

its

payment obligations with respect to its debt

securities) and to create distributable reserves for payment

of dividends to ordinary

shareholders.

The ability of Barclays PLC’s subsidiaries to pay dividends and

interest and Barclays PLC’s ability

to receive such distributions from its investments in

its subsidiaries and other entities will be subject not only to such subsidiaries’ and other

entities' financial performance

but also to applicable

local

laws and other restrictions. These laws and restrictions

could limit the payment of dividends and distributions to Barclays PLC by

its subsidiaries

and any other entities in which it holds an investment

from time to time, which could restrict Barclays PLC’s ability to

meet its obligations and/or to

pay dividends to ordinary

shareholders.

ix)

Application

of resolution measures and stabilisation

powers under the Banking Act

Under the Banking

Act 2009, as amended, (the “Banking Act”) substantial powers are granted

to the Bank of England (or, in certain circumstances,

HM Treasury), in consultation with the PRA,

the FCA and HM Treasury, as appropriate,

as part of a special resolution regime (the “SRR”). These

powers enable the relevant UK resolution

authority to implement resolution measures and stabilisation options with respect to a UK bank

investment firm and certain of its affiliates (currently

including Barclays PLC) (each

a “relevant entity”) in circumstances in which the relevant UK

resolution authority is satisfied that the resolution conditions are met. The SRR consists of

five stabilisation options: (i) private sector transfer of all

or part of the business or shares of the relevant entity,

(ii) transfer of all or part of the business of the relevant entity

to a “bridge bank” established

by the Bank of England, (iii) transfer to

an asset management vehicle wholly or partly owned

by HM Treasury

or the Bank of England, (iv) the

cancellation or transfer of the relevant entities' equity and write-

down or

conversion

of the relevant entity’s

capital instruments and liabilities (the

bail-in tool) and (v)

temporary

public ownership (i.e. nationalisation).

In addition, the relevant UK resolution

authority may, in certain circumstances, in accordance

with the Banking Act require the permanent

write-

down or

conversion

into equity of any outstanding tier 1 capital

instruments and tier 2 capital instruments prior

to the exercise of any stabilisation

option (including

the bail-in tool), which may lead to the cancellation, transfer or dilution of Barclays PLC’s ordinary

share capital.

Shareholders should

assume that, in

a resolution situation, public financial support

will only be available to a relevant entity as a last resort after the

relevant UK resolution authorities have

assessed and used, to the maximum extent practicable, the resolution tools,

including the bail-in tool (the

Bank of England’s preferred

approach

for the resolution of the Group is a

bail-in strategy with a single point of entry at Barclays PLC). The exercise

of any of such powers

under the Banking

Act or any suggestion of any such exercise could materially adversely affect the value of Barclays PLC

ordinary

shares and could lead to shareholders losing some or all of their investment.

In addition, any safeguards within the Banking

Act (such as the ‘no creditor worse off' principle

)

may not result in compensation to shareholders

that is equivalent to the full losses incurred

by them in the resolution and there can be no assurance that shareholders would

recover

such

compensation promptly.

Material existing

and emerging

risks

impacting

individual

principal risks

Credit risk

Credit risk is the risk of loss to the Group

from the failure of clients, customers or counterparties, including sovereigns,

to fully honour their

obligations to members of the Group,

including the whole and timely payment of principal, interest, collateral and other

receivables.

Impairment

The introduction

of the impairment requirements of IFRS 9

Financial Instruments

resulted in impairment loss allowances that are recognised

earlier, on a more

forward

-looking basis

and on a broader

scope of financial instruments,

and may continue to have a material impact on the

Group’s

business, results of operations, financial condition and prospects.

Measurement involves complex

judgement and impairment

charges could be volatile, particularly under

stressed conditions. Unsecured products

with longer

expected lives, such

as credit cards, are the most impacted. Taking

into account the transitional regime, the capital treatment on the

increased reserves has the potential to adversely impact

the Group’s regulatory

capital ratios.

In addition, the move from incurred

losses

to ECLs has the potential to impact the Group’s

performance

under stressed economic conditions or

regulatory

stress tests. For more information,

refer to Note 1

on pages 214

to 222.

Specific sectors and concentrations

The Group

is subject to risks

arising from changes in credit quality and recovery

rates

of loans and advances due from borrowers

and

counterparties in any specific portfolio.

Any deterioration

in credit quality could lead to lower recoverability and highe

impairment in a specific

sector.

The following are areas of uncertainties to the Group’s

portfolio which could

have a material impact on performance:

◾

UK retail, hospitality & leisure

Softening demand, rising costs and a structural shift to online shopping is fuelling pressure on the UK High Street

and other sectors heavily reliant on consumer

discretionary spending

As these

sectors continue to reposition themselves,

the trend represents a

potential risk in the Group’s UK

corporate

portfolio from

the perspective of the its

interactions with both retailers and their landlords.

◾

Consumer affordability

has remained a key area of focus, particularly in unsecured

lending. Macroeconomic

factors, such as

rising

unemployment,

that impact a customer’s ability

to service unsecured

debt payments could lead to increased arrears in unsecured

products.

◾

UK real estate market.

UK property

represents a significant portion of the overall Group retail and corporate

credit exposure. In 2019,

property

price growth

across the UK has slowed, particularly in London

and the South East

where the Group’s

exposure has high concentration.

The Group

is at risk of increased impairment from

a material fall in property prices.

◾

Leverage finance underwriting.

The

Group

takes on sub-investment grade underwriting exposure, including

single name risk,

particularly in the

US and Europe. The Group

is exposed to credit events

and market volatility during

the underwriting period. Any

adverse events during this period

may potentially result in loss for the

Group,

or an increased capital requirement should

there be a need to hold the exposure for an extended

period.

Risk review

Material existing

and

emerging risks

Barclays PLC

2019 Annual Report on Form 20-F

◾

Italian mortgage portfolio.

The Group

is exposed to a

decline in the Italian economic environment

through a mortgage

portfolio in run-off and

positions to wholesale customers. Growth

in the Italian economy remained

weak in 2019

and should the economy deteriorate further,

there

could be a material adverse effect on

the Group’s results including,

but not limited to, increased credit losses and higher

impairment charges.

The Group

also has

large individual exposures to single name counterparties,

both in its lending activities and in its

financial services and trading

activities, including transactions in derivatives and transactions

with brokers, central clearing houses, dealers, other banks, mutual and hedge

funds

and other institutional clients. The default of such counterparties

could

have a significant impact on the carrying value of these assets. In addition,

where such counterparty

risk has

been mitigated by taking collateral, credit risk may remain high if

the collateral held cannot be realised, or has to

be liquidated at prices which are insufficient to recover

the full

amount of the loan or derivative exposure.

Any such defaults could have a material

adverse effect on the Group’s

results due to, for example, increased credit losses and higher

impairment charges.

For further

details

on the Group’s

approach

to credit risk,

see credit risk management on pages 102

to 103

and credit risk performance on pages

109

to 139

ii)

Market risk

Market risk is the risk of loss arising from potential adverse change

in the value of the Group’s

assets and liabilities from fluctuation in market

variables including, but not limited to, interest rates, foreign

exchange, equity prices, commodity prices, credit spreads, implied volatilities and asset

correlations.

A broadening

in trade tensions between the US

and its major trading partners, slowing global

growth

and political concerns in the US and Europe

(including Brexit)

are some of the factors that could heighten market risks for the Group’s

portfolios. In addition, the Group’s trading

business is

generally exposed to a prolonged

period of elevated asset

price volatility,

particularly if it negatively affects the depth of marketplace liquidity.

Such

a scenario could impact the Group’s

ability to execute client trades and may also result in lower

client flow-driven income and/or

market-based

losses on its existing portfolio of market risks. These can include having

to absorb higher

hedging costs from rebalancing risks that need to be

managed dynamically as market levels and their associated volatilities change.

It is difficult to predict changes in market conditions, and such changes could

have a material adverse effect on

the Group’s business, results of

operations, financial condition and

prospects.

For further

details

on the Group’s

approach

to market risk,

see market risk management on pages 103

to 104

and market risk performance

pages 14

to 142

iii)

Treasury and capital risk

There are three primary

types of treasury and capital

risk faced by the

Group:

a) Liquidity

risk

Liquidity risk

is the risk that the Group

is unable to meet its

contractual or contingent

obligations or that it does not have the appropriate amount,

tenor and composition of funding

and liquidity to support its

assets. This could cause the Group

to fail

to meet regulatory

liquidity standards or be

unable to support day

-to-day banking

activities.

Key liquidity risks that the Group

faces include:

◾

The stability of the Group’s current funding profile:

particular, that part

which is based on accounts and deposits payable on demand

or at

short notice, could be affected by

the Group failing to preserve the current

level of customer and investor confidence. The Group

also regularly

accesses the money and capital markets to provide

short-term and long

-term funding to support its operations. Several factors,

including

adverse macroeconomic

conditions, adverse outcomes in conduct and legal, competition and regulatory matters and loss of confidence by

investors, counterparties

and/or customers in the Group,

can affect the ability of

the Group

to access

the capital markets and/or

the cost and

other terms upon which

the Group is able to obtain market funding

◾

Credit rating changes and the impact on funding costs

: Rating agencies

regularly review

credit ratings given to Barclays PLC

and certain

members of the Group.

Credit ratings are based on a number of factors, including some which are not within the Group’s

control (such as

political and regulatory

developments, changes in rating methodologies, macro

-economic conditions and the sovereign credit ratings of the

countries in which the Group operates

Whilst the impact of a credit rating change will depend

on a number of factors (including

the type of issuance

and prevailing market conditions),

any reductions in a credit rating

(in particular, any downgrade

below investment grade)

may affect the Group’s access to the

money or capital

markets and/or

terms on which the Group is able to obtain market funding, increase costs of funding and credit spreads, reduce

the size

of the

Group’s

deposit base, trigger additional collateral or other requirements

in derivative contracts and other secured funding

arrangements or limit

the range of counterparties who

are willing to enter into transactions with the Group. Any

of these factors

could have a material adverse effect

the Group’s business, results of

operations, financial condition and prospects.

b) Capital risk

Capital risk is the risk that the Group

has an insufficient level or composition of capital to support its normal business activities and to meet its

regulatory

capital requirements under

normal operating environments or

stressed conditions (both actual and as

defined for internal planning or

regulatory

stress testing purposes). This includes the risk from the Group’s pension plans. Key capital risks

that the Group faces include:

◾

Failure to meet prudential capital requirements

: This could lead to the Group being unable to support

some or all of its

business activities, a

failure to pass regulatory

stress

tests, increased cost of funding

due to deterioration in investor appetite or credit ratings, restrictions on

distributions including the ability to meet dividend

targets, and/or the need to take additional measures to strengthen the Group's

capital or

leverage position.

◾

Adverse changes in FX rates impacting

capital ratios

: The Group has capital resources, risk weighted assets and leverage exposures

denominated in foreign

currencies. Changes in foreign

currency exchange rates may adversely impact the Sterling equivalent value of these

items. As a result, the Group’s

regulatory

capital ratios

are sensitive to

foreign currency

movements. Failure to appropriately manage the Group’s

balance sheet to take account of foreign

currency

movements could result in an adverse impact on the Group’s regulatory

capital and leverage

ratios.

Risk review

Material existing

and

emerging risks

Barclays PLC

2019 Annual Report on Form 20-F

◾

Adverse movements in the pension fund

Adverse movements

in pension assets and liabilities for defined benefit pension schemes could

result

in deficits on a funding and/or

accounting basis. This could lead to

the Group making

substantial additional contributions to its pension plans

and/or a deterioration

in its capital position.

Under IAS 19,

the liabilities discount rate is derived from

the yields

of high quality corporate

bonds.

Therefore,

the valuation of the Group’

defined benefits schemes would be adversely affected by a prolonged

fall in

the discount rate due to a

persistent low interest rate and/or

credit spread environment. Inflation is another significant risk driver to the pension fund as the liabilities are

adversely impacted by an increase

in long-term inflation expectations.

Interest rate risk in the banking book

is the risk

that the Group

is exposed to capital or income volatility because of a

mismatch between the interest

rate exposures of its (non

-traded) assets and liabilities. The Group’s hedge

programmes for

interest rate risk

in the banking book rely on

behavioural

assumptions and, as a result, the success of the hedging strategy cannot be guaranteed.

A potential mismatch

in the balance or

duration of the hedge assumptions could lead to earnings deterioration. A decline in interest

rates in G3 currencies may

also compress net interest

margin on retail portfolios. In addition, the Group’s

liquidity pool is exposed to potential capital and/or income volatility due to movements in

market rates and prices.

For further

details

on the Group’s

approach

to treasury and capital risk,

see treasury and capital risk management on pages 104

to 105

and treasury

and capital risk performance

on pages 145 to 166

iv)

Operational risk

Operational risk is the risk of loss to the Group

from inadequate or

failed processes or systems,

human factors or due to external events where

the

root cause is not due to credit or market risks. Examples include:

Operational resilience

The loss of or disruption to business processing is a material inherent

risk within the Group and across the financial services industry,

whether

arising through

impacts on the Group’s technology

systems,

real estate services including its retail branch

network, or availability of personnel or

services supplied by third parties. Failure

to build resilience and recovery

capabilities

into business processes or into the services of technology,

real

estate or suppliers on which the Group’s

business processes depend, may result in significant customer detriment, costs to reimburse losses

incurred

by the Group’s

customers, and reputational damage.

Cyber threats

The frequency

of cyber-attacks continues to grow and

is a

global threat that is inherent

across all industries.

The financial sector remains a primary

target for cyber criminals, hostile nation states, opportunists and

hacktivists and there is an increasing level of sophistication in criminal hacking for

the purpose of stealing money,

stealing, destroying

or manipulating data (including customer

data) and/or disrupting operations, where multiple

threats exist including threats arising from

malicious emails, distributed denial of service (DDoS) attacks, payment

system compromises, insider

attackers, supply

chain and vulnerability exploitation. Cyber events have a compounding

impact on services and customers, e.g.

data breaches in

social networking

sites,

retail companies and payments

networks.

Any failure in the Group’s

cyber-

security policies,

procedures

or controls and/or its IT systems,

may result in significant financial losses, major

business disruption, inability to deliver customer services, or loss of data or

other sensitive information (including

as a

result of an outage) and may

cause associated reputational damage. Any

of these factors could increase costs (including, but not limited to, costs relating to notification of, or

compensation for customers)

or may affect the Group’s ability to retain

and attract customers. Regulators in the UK, US and Europe

continue to

recognise cyber

-security as an

increasing systemic risk to the financial sector and have highlighted

the need for financial institutions to improve

their monitoring and

control of, and resilience (particularly of critical services) to cyber-attacks, and to provide

timely notification of them,

appropriate. Given

the Group’s reliance on

technology,

a cyber-attack could have a material adverse effect on its business, results of

operations,

financial condition and prospects.

For further

details

on the Group’s

approach

to cyber threats, see

operational risk performance

on pages 167

to 169

New and emergent technology

Technological

advancements present opportunities

to develop new and innovative

ways of doing business across the Group, with new solutions

being developed

both in-house and in association with third-party companies. Introducing

new forms of technology, however,

also has

the

potential to increase inherent risk. Failure to

evaluate, actively manage and closely monitor risk exposure

during all phases of business development

could introduce

new vulnerabilities and security flaws and have a material adverse effect on the Group’s

business, results of operations, financial

condition and prospects

External fraud

The level and nature of fraud

threats continues to evolve, particularly with the increasing use of digital products

and the greater functionality

available online. Criminals continue to adapt their techniques and are

increasingly focused on targeting

customers and clients through ever more

sophisticated methods of social engineering. External data breaches also provide

criminals with the

opportunity

to exploit the

growing

levels of

compromised

data. These

fraud threats could lead to customer detriment, loss of business, missed business opportunity

and reputational damage,

all of which could have a material adverse effect

on the Group’s

business, results of operations, financial condition and prospects. Furthermore,

recent changes in the regulatory landscape has seen increased levels of liability being

taken by the Group

as part of a voluntary code in the UK to

provide

additional protection to customers and clients who are victims of Authorised Push Payment scams.

Data management and information protection

The Group

holds and processes large volumes of data, including personally identifiable information, intellectual property,

and financial data.

The

General Data Protection

Regulation (GDPR) has strengthened

the data protection rights of customers and increased the accountability of the

Group

in its management of such data. Failure to accurately collect and maintain

this data, protect it from breaches

of confidentiality and interference

with its availability exposes the Group

to the risk

of loss or unavailability of data (including

customer data discussed under “vi) Conduct risk, c)

Data protection and privacy”

below) or

data integrity issues.

Any of these failures could

have a material adverse effect on the Group’s

business,

results of operations, financial condition and prospects.

Algorithmic

trading

In some areas of the investment banking

business, trading algorithms are used to price and risk manage client and principal transactions. An

algorithmic error

could result in erroneous

or duplicated transactions,

a system outage, or impact the Group’s pricing

abilities, which could have a

material adverse effect on

the Group’s business, results of operations, financial condition

and prospects and reputation

Risk review

Material existing

and

emerging risks

Barclays PLC

2019 Annual Report on Form 20-F

Processing

error

As a large, complex financial institution, the Group

faces the

risk of material errors

in existing

operational processes,

or from new

processes as a

result of on-going

change activity, including payments and client transactions. Material operational or

payment errors

could disadvantage the

Group’s

customers, clients or counterparties and could

have a material adverse effect on the Group’s business, results of operations, financial

condition and prospects

Supplier

exposure

The Group

depends on suppliers for the provision

of many of its

services and the development of technology.

Whilst

the Group depends

suppliers, it remains fully accountable for

any risk arising from the actions of suppliers. The dependency

on suppliers and sub-contracting of

outsourced

services introduces concentration risk where

the failure of specific

suppliers could have

an impact on the Group’s ability to continue to

provide

material services to its customers. Failure to adequately manage supplier risk could have a material adverse effect

on the Group’s business,

results of operations, financial condition and prospects.

Critical accounting estimates and judgements

The preparation

of financial statements in accordance with IFRS requires the use of estimates. It also requires management

to exercise judgement

in applying relevant accounting

policies. The key areas involving a higher degree

of judgement or complexity,

or areas where assumptions are

significant to the consolidated and individual financial statements, include credit impairme

nt charges for amortised cost assets, taxes, fair value of

financial instruments, pensions and post-retirement benefits, and provisions

including conduct

and legal, competition and regulatory matters.

There is a risk that if the judgement exercised, or the estimates or assumptions

used, subsequently turn out to be incorrect, this could result in

material losses to the Group, beyond

what was anticipated

or provided

for.

Further development of standards and interpretations under IFRS could

also materially impact the financial results, condition and

prospects of the Group. For

further details on the accounting estimates and policies, see

the Notes to the audited financial statements on pages 214

to 298.

Tax risk

The Group

is required to comply with the domestic and international tax laws and practice of all countries in which it has business operations.

There is a risk that the Group

could suffer losses due to additional tax charges, other financial costs or reputational damage as a result of failing to

comply with such laws and practice, or by

failing to manage its tax affairs in an appropriate

manner,

with much of this

risk attributable to the

international structure of the Group.

In addition, increasing reporting

and disclosure requirements around the world and the digitisation of the

administration of tax has potential to increase the Group’s

tax compliance obligations further.

Ability to hire and retain appropriately qualified employees

As a regulated financial institution, the Group

requires diversified and specialist skilled colleagues. The Group’s ability to attract, develop

and retain

a diverse mix of talent is key to the delivery of its core business

activity and strategy. This

is impacted by a range of external and internal factors,

such as the UK’s decision to leave the EU and the enhanced

individual accountability applicable to the banking industry.

Failure to attract or prevent

the departure of appropriately

qualified and skilled

employees could have

a material adverse effect on the Group’s

business, results of operations,

financial condition and prospects

Additionally, this may result in disruption to service

which could in turn lead to disenfranchising certain customer

groups, customer

detriment and reputational damage.

For further

details

on the Group’s

approach

to operational risk, see

operational risk management on pages 105

to 106

and operational risk

performance

on pages 167

to 169.

Model risk

Model risk is the risk of potential adverse consequences

from financial assessments or decisions based on incorrect or misused model outputs and

reports. The Group

relies on models to support a broad range

of business and risk

management activities, including informing business decisions

and strategies, measuring

and limiting risk, valuing exposures (including the calculation of impairment), conducting

stress

testing, assessing capital

adequacy,

supporting

new business acceptance and risk and reward evaluation, managing client assets, and meeting reporting

requirements.

Models are, by their nature, imperfect

and incomplete representations of reality because they rely on assumptions

and inputs, and so they may be

subject to errors affecting the accuracy

of their outputs. For instance, the quality of the data used in models across the Group

has a material impact

on the accuracy and completeness of its risk and financial metrics. Models may also be misused. Model errors

or misuse may result in (among

other things) the Group

making inappropriate business decisions and/or inaccuracies or errors

being identified in the Group’s risk management

and regulatory

reporting

processes.

This could result in significant financial loss, imposition of additional capital requirements, enhanced

regulatory

supervision and reputational damage, all of which could

have a material adverse effect on the Group’s

business, results of operations, financial

condition and prospects.

For further

details

on the Group’s

approach

to model risk, see

model risk management on page 106

and model risk performance on page

170.

vi)

Conduct risk

Conduct risk is the risk of detriment to customers, clients, market integrity,

effective competition or

the Group from

the inappropriate supply of

financial services, including instances of wilful or negligent misconduct. This risk could

manifest itself in a variety of ways:

Employee misconduct

The Group’s

businesses are exposed to risk from potential non

-compliance with its

policies and instances of wilful and negligent misconduct by

employees, all of which

could result in enforcement action or reputational

harm. It is

not always possible to deter employee

misconduct, and the

precautions we take to prevent

and detect this activity may not always be effective. Employee

misconduct could have

a material

adverse effect on

the Group’s customers, clients, market integrity

as well as reputation, financial condition and prospects.

Product governance and life cycle

The ongoing

review, management

and governance

of new and amended products has

come under

increasing regulatory focus (for example, the

recast of the Markets in Financial Instruments Directive

and guidance in relation to the adoption of the EU Benchmarks

Regulation) and the Group

expects this to continue. The following could

lead to poor customer outcomes: (i) ineffective product

governance, including

design, approval and

review of products, and (ii) inappropriate

controls over

internal and third party sales channels

and post sales services, such as complaints handling,

collections and recoveries.

The Group

is at

risk of financial loss and reputational damage as a result.

Risk review

Material existing

and

emerging risks

Barclays PLC

2019 Annual Report on Form 20-F

Financial crime

The Group

may be adversely affected if it fails to effectively mitigate the

risk that third parties or its employees facilitate,

or that its products and

services are used to facilitate, financial crime (money

laundering, terrorist financing and proliferation

financing, breaches of economic and financial

sanctions, bribery and

corruption,

and the facilitation

of tax evasion). UK and US regulations covering

financial institutions

continue to focus on

combating financial crime. Failure

to comply may lead to enforcement

action by the Group’s regulators,

including severe penalties, which may have

a material adverse effect on the Group’s

business, financial condition and prospects.

Data protection and privacy

Proper

handling of personal data is critical

to sustaining long

-term relationships with our customers and clients and complying with privacy laws

and regulations.

Failure to protect

personal data can lead to potential detriment to our customers and clients, reputational damage

enforcement

action and financial loss, which may be substantial (see “iv) Operational

risk, (e) Data management and information protection”

above).

Regulatory focus on culture and accountability

Regulators around

the world continue to emphasise the importance of culture and personal accountability and enforce

the adoption of adequate

internal reporting

and whistleblowing procedures

to help to promote appropriate conduct and drive

positive

outcomes for customers, colleagues,

clients and markets. The requirements

and expectations of the UK Senior Managers Regime, Certification Regime and Conduct Rules have driven

additional accountabilities for individuals across the Group

with an increased

focus on governance

and rigour. Failure to meet these

requirements

and expectations may lead to regulatory

sanctions, both for the individuals and the Group.

For further

details

on the Group’s

approach

to conduct risk,

see conduct risk management on page

106

and 107

and conduct risk

performance

pages 17

vii)

Reputation risk

Reputation risk is the risk that an action, transaction, investment,

event, decision or business relationship will reduce

trust in the

Group’s

integrity

and/or competence.

Any material lapse in standards of integrity,

compliance, customer service or operating

efficiency may represent a potential reputation risk.

Stakeholder expectations constantly evolve,

and so reputation risk is dynamic and varies between geographical

regions, groups

and individuals. A

risk arising in one business area can have an

adverse effect upon

the Group’s overall

reputation and any one

transaction, investment or event (in

the perception of key stakeholders) can reduce

trust in the Group’s integrity and competence.

The

Group’s

association with sensitive topics and

sectors has been, and in some instances continues to be, an area of concern

for stakeholders, including (i) the financing of, and investments in,

businesses which operate in sectors that are sensitive

because of their relative carbon

intensity

or local environmental impact; (ii)

potential

association with human rights violations (including combating

modern

slavery) in the Group’s operations or supply chain and by

clients

and

customers; and (iii) the financing of businesses which manufacture

and export military and riot control goods

and services.

Reputation risk could also arise from

negative public opinion about

the actual,

or perceived,

manner in which the Group

conducts its

business

activities, or the Group’s

financial performance, as well as actual or perceived practices in banking

and the financial services industry generally.

Modern

technologies, in particular online social media channels and other broadcast tools that facilitate communication with large audiences in

short time frames and with minimal costs, may significantly enhance

and accelerate the distribution and effect of damaging

information and

allegations. Negative public opinion

may adversely affect the Group’s

ability to retain and attract customers, in particular,

corporate

and retail

depositors, and to retain and motivate staff, and could

have a material adverse effect on

the Group’s

business, results of operations, financial

condition and prospects.

In addition to the above, reputation

risk has

the potential to arise from

operational issues or conduct matters which cause detriment to customers,

clients, market integrity,

effective competition or

the Group (see “iv) Operational risk” above).

For furth

er details

on the Group’s

approach

to reputation risk, see

reputation risk management on page

107

and reputation risk performance on

page 170

viii)

Legal risk and legal, competition and regulatory matters

The Group

conducts activities in a

highly regulated global market

which exposes it and its employees to legal risk arising from

(i) the multitude of

laws and regulations that apply to the businesses it operates, which are highly

dynamic,

may vary between jurisdictions, and are

often unclear in

their application to particular circumstances especially in new and

emerging

areas; and (ii) the

diversified and evolving nature of the Group’s

businesses and business practices. In each case, this exposes the Group

and its employees to the risk of loss or the imposition of penalties,

damages or fines from

the failure of members of the Group to meet their respective legal obligations, including legal or contractual

requirements.

Legal risk may arise in relation to a n

umber of the risk factors identified above, including (without limitation) as a result of (i) the UK’s withdrawal

from the EU, (ii) benchmark

reform, (iii) the regulatory

change agenda, and (iv) rapidly evolving

rules

and regulations in relation to data protection,

privacy and cyber

-security.

A breach of applicable legislation and/or

regulations by the Group

or its employees could result in criminal prosecution, regulatory censure,

potentially significant fines and other sanctions in the jurisdictions in which the Group

operates. Where clients,

customers or other third parties are

harmed by

the Group’s conduct,

this may also give rise

to civil legal proceedings,

including class actions. Other legal disputes

may also arise

between the Group

and third parties relating to matters such as breaches or enforcement

of legal rights or obligations arising under contracts,

statutes or common

law. Adverse findings in any such matters may result in

the Group being

liable to

third parties or may

result in the Group’s

rights not being enforced

as intended.

Details of legal, competition and regulatory

matters to which the Group is currently exposed are set out in Note 26.

In addition to matters

specifically described in Note 26

the Group is engaged in various other

legal proceedings which arise in the ordinary course

of business.

The Group

is also subject to requests for

information, investigations and other reviews by regulators, governmental

and other public bodies in connection with

business activities in which the Group

is,

or has been, engaged.

Risk review

Material existing

and

emerging risks

100

Barclays PLC

2019 Annual Report on Form

20-F

The outcome of legal, competition and regulatory

matters, both those to which the Group is currently exposed

and any others which may arise in

the future, is difficult to predict. In connection

with such matters, the Group

may incur significant expense, regardless of the ultimate outcome, and

any such matters could expose

the Group to any of the following outcomes

substantial monetary damages, settlements and/or

fines;

remediation

of affected customers and clients; other penalties and injunctive relief;

additional litigation; criminal prosecution; the loss of any existing agreed

protection from

prosecution; regula

tory restrictions on the Group’s business operations including the withdrawal of authorisations; increased

regulatory

compliance requirements or

changes to laws or regulations; suspension of operations; public reprimands; loss of significant assets or

business; a negative effect on the Group’s

reputation; loss of confidence by

investors, counterparties, clients and/or customers; risk of credit rating

agency downgrades;

potential negative impact on the availability and/or cost of funding and liquidity; and/or

dismissal

or resignation of key

individuals. In light of the uncertainties involved

in legal, competition and regulatory

matters, there can be no assurance that the outcome of a

particular matter or matters

will not have a material adverse effect on the Group’s

business, results of operations, financial condition and prospects.

Risk review

Climate

change

risk management

101

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Climate

change risk management

Overview

The Group

has a longstanding commitment to Environmental Risk Management (ERM) and its approach,

aided by regulatory

initiatives,

has

continued to evolve

incorporating

climate change in recent years as

the understanding of associated risks has grown.

In 2018,

a dedicated

Sustainability team was created to consider

how the Group

approaches wider sustainability and ESG

matters, working

closely with the ERM

function.

In 2019,

the Group published

an Energy & Climate Change Statement

(

https://home.barclays/statements/barclays-energy-and-climate-change-

statement

) which articulates our

focus on three areas: financing growth

of renewables and bu

sinesses

addressing environmental

challenges; taking

a responsible approach

to financing energy sources with a greater carbon

intensity;

and reducing

our own carbon footprint. It is

supported by

internal standard containing guidelines for restricting or

supporting

financing activities

in carbon

-intensive energy sectors, as

well as enhanced

due

diligence requirements for

environmentally or

socially sensitive

sectors.

For more

detail on how climate change risks arise and their impact on the Group, refer

to material existing and emerging risks on page 92

Organisation and structure

On behalf of the Board, the BRC reviews

and approves

the Group’s approach

to managing the financial

and operational risks associated with

climate change.

Broadly,

climate change matters are co-ordinated

by the Sustainability team, including reputation risks linked to the Group’s financial and societal

impact. In 2019,

reputation risk became the responsibility of the

Board, where

the most material issues facing the Group are escalated to and

directly handled by the Board.

Risk management – Policy

In 2019,

the Group published

‘Climate Change

Financial Risk and Operational Risk Policy’

. This

introduced

climate change as

an overarching

risk

impacting certain principal risks: credit risk, market

risk, treasury & capital risk and operational

risk. The policy is jointly owned by the relevant

Principal Risk Leads with oversight by

the BRC.

Each relevant Principal Risk Lead has developed

a methodology and

implementation plan for quantifying climate change risk.

Risk re

view

Principal risk

management

102

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2019 Annual Report on Form

20-F

Credit

risk

management (audited)

The risk of loss to the Group

from the failure of clients, customers or counterparties, including sovereigns,

to fully honour their obligations to the

Group

including the whole and timely payment of principal, interest, collateral and other

receivables.

Overview

The credit risk that the Group

faces arises from wholesale and retail loans and advances together with the counterparty

credit risk arising from

derivative contracts with clients; trading

activities, including: debt securities, settlement balances with market counterparties, FVOCI assets and

reverse repurchase

loans.

Credit risk management objectives are to:

◾

maintain a framework

of controls to oversee credit risk;

◾

identify, assess and measure credit

risk clearly and accurately across the Group

and within each separate business, from the level of individual

facilities up to the total portfolio;

◾

control and plan credit risk taking in line with external stakeholder

expectations and avoiding undesirable

concentrations;

◾

monitor credit risk and adherence

to agreed controls

Organisation, roles and responsibilities

The first line of defence has primary

responsibility for managing credit risk within the risk appetite and limits set by the Risk function, supported by

a defined set of policies, standards and controls. In the entities, business risk committees

(attended by the first line) monitor

and review the credit

risk profile of each business unit where the most material issues are escalated

to the Retail Credit Risk Management

Committee, Wholesale Credit

Risk Management Committee and Group

Risk Committee.

Wholesale and retail portfolios are managed

separately to reflect the differing nature of the assets; wholesale balances tend to be larger

and are

managed on an individual basis, while retail balances are greater

in number but lesser in value and are, therefore,

managed in aggregated

segments.

The responsibilities of the credit risk management teams in the businesses, the

sanctioning team and other shared services include: sanctioning

new credit agreements (principally

wholesale); setting strategies for approval

of transactions (principally retail); setting risk appetite; monitoring

risk against limits and other parameters;

maintaining robust processes, data gathering, quality, storage and

reporting

methods for effective credit

risk management; performing

effective turnaround and

workout scenarios for wholesale portfolios via dedicated restructuring and recoveries

teams; maintaining robust collections and recovery

processes/units for retail portfolios; and review and validation of credit risk measurement

models. The credit risk management teams in each legal entity are accountable

to the relevant Legal Entity CRO, who reports

to the Group CRO.

For wholesale portfolios,

credit risk managers are organised

in sanctioning teams by geograp

hy, industry and/or product.

In wholesale portfolios,

credit risk approval

is undertaken by experienced

credit risk professionals operating within a clearly defined delegated authority framework, with

only the most senior credit officers assigned the

higher

levels of

delegated authority. The largest

credit exposures, which are outside the Risk

Sanctioning Unit or Risk Distribution Committee authority,

require

the support of a legal entity Senior Credit Officer. For

exposures in excess of the

legal entity Senior Credit Officer’s authority,

approval

by Group

Senior Credit Officer/Board Risk Committee is also required. The Group

Credit Risk

Committee, attended by

legal entity Senior Credit Officers,

provides a formal mechanism for

the Group Senior

Credit Officer

to exercise the highest

level of credit authority over

the most material Group single name exposures.

Credit risk mitigation

The Group

employs a range of techniques and strategies to actively mitigate credit risks. These can broadly

be divided into three

types:

◾

netting and set-off

◾

collateral

◾

risk transfer.

Netting and set-off

Credit risk exposures can be reduced

by applying netting and

set-off. For derivative transactions, the Group’s

normal practice is, on a legal entity

basis, to enter into standard master agreements with counterparties

(e.g. ISDAs). These master agreements typically allow for

netting of credit risk

exposure to a counterparty

resulting from derivative transactions against the obligations to the counterparty

in the event of default, and so produce

a lower

net credit exposure. These agreements may also reduce settlement exposure

(e.g. for foreign

exchange transactions) by allowing

payments

on the same day in the same currency

to be set-off against

one another.

Collateral

The Group

has the ability to

call on collateral in the event of default of the

counterparty,

comprising:

◾

home loans:

a fixed charge

over residential property

in the form of houses, flats

and other dwellings;

◾

wholesale lending:

a fixed charge over

commercial property and other ph

ysical

assets,

in various forms;

◾

other retail lending:

includes charges

over motor

vehicles

and other physical assets; second lien

charges over

residential property

;

and finance

lease receivables;

◾

derivatives:

the Group

also often seeks

to enter into a margin agreement

(e.g. Credit Support Annex)

with counterparties with which the

Group

has master netting agreements

in place. These annexes to master agreements provide

a mechanism for further reducing

credit risk,

whereby

collateral (margin)

is posted on a

regular basis (typically daily) to collateralise the mark to market exp

osure of a derivative portfolio

measured on

a net basis;

◾

reverse repurchase agreements:

collateral typically comprises highly liquid securities which have been

legally transferred

to the Group subject to

an agreement to

return them for

a fixed price; and

◾

financial guarantees and similar

off-balance sheet

commitments:

cash collateral may be held against these arrangements

Risk review

Principal risk

management

103

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2019 Annual Report on Form

20-F

Risk transfer

A range of instruments including guarantees, credit insurance, credit

derivatives and securitisation can be used to transfer

credit risk from one

counterparty

to another. These mitigate credit risk in two main ways:

◾

if the risk is transferred to a counterparty

which is more creditworthy

than the original counterparty, then overall

credit risk is

reduced

◾

where recourse

the first counterparty remains, both counterparties must default before a loss materialises. This is less likely than the default of

either counterparty

individually so credit risk

is reduced.

Detailed policies are in place to appropriately

recognise and record

credit risk mitigation.

For more

information, refer

to pages 175

to 177

the

Barclays PLC

Pillar 3 Report 2019

(unaudited).

Governance and oversight of ECLs under IFRS 9

The Group’s

organisational structure and internal governance

processes oversee the estimation of

ECL across several areas, including: i) setting

requirements in policy,

including key assumptions and the application of key judgements; ii) the design and execut

ion of models; and iii) review of

ECL results.

Impairment policy requirements

are set and reviewed regularly,

at a

minimum annually, to maintain adherence

to accounting standards. Key

judgements inherent in policy, including

the estimated life of revolving

credit facilities

and the quantitative criteria for assessing

the significant

increase in credit risk (SICR),

are separately supported

by analytical study. In particular, the quantitative

thresholds used for assessing SICR are

subject to a number

of internal validation criteria,

particularly in retail portfolios where

thresholds decrease as the origination PD of each facility

increases. Key policy requirements

are also typically aligned to the Group’s credit risk management strategy and practices,

for example, wholesale

customers that are risk managed

on an individual basis are assessed for ECL on an individual basis upon entering Stage 3; furthermore,

key

internal risk management indicators of high risk are used to set SICR policy, for

example, retail customers identified as High Risk Management

Accounts are automatically deemed to have

met the SICR criteria.

ii)

ECL is estimated in line with internal policy requirements using models which are validated by a

qualified independent party to the model

development area, the Independent

Validation Unit (IVU),

before first use

and at a minimum annually thereafter. Each model is designated an

owner who

is responsible for:

◾

Model maintenance: monitoring

of model performance including

backtesting by comparing predicted ECL

versus flow into stage

3 and

coverage

ratios; proposing material changes for independent

IVU approval; and recalibrating

model parameters on more timely data;

and

◾

Proposing

post-model adjustments (PMA) to address model weaknesses or to account for situations where known or

expected risk factors and

information have not been

considered in the modelling process. Each PMA

above an absolute and relative threshold is approved

by the IVU for

a set time period

(usually a maximum of six months) together with a plan for remediation where related to a model deficiency.

The most

material PMAs are also approved

by the CRO.

Models must also assess ECL across a range of future

economic conditions. These economic

scenarios are generated via an independent model

and ultimately set by the Senior Scenario Review Committee.

Economic scenarios are regenerated

at a

minimum annually, to align with the

Group’s

medium term planning exercise, but also if the external consensus of the UK or

US economy materially worsen. Each model used in the

estimation of ECL, including key inputs, are governed

by a series of

internal controls, which include

the validation of completeness and accuracy

of data in golden source

systems, documented data transformations and documented

lineage of data transfers

between systems.

iii)

The Group

Impairment Committee, formed

of members from both Finance and Risk and attended by both the Group

Finance Director and the

Group

CRO,

is responsible for overseeing

impairment policy and practice across the Group

and will approve impairment

results.

Reported results

and key messages are communicated

to the BAC,

which has an oversight role and provides

challenge of key assumptions, including the basis of

the scenarios adopted. Impairment

results are then factored into management decision making, including but not limited to, business planning,

risk appetite setting and portfolio

management.

Market risk

management

(audited)

The risk of loss arising from potential adverse changes

in the value of the Group’s assets and liabilities from fluctuation in market variables

including, but not limited to, interest rates, foreign

exchange, equity prices, commodity prices, credit spreads, implied volatilities and asset

correlations.

Overview

Market risk arises primarily

as a result of client facilitation in wholesale markets, involving

market making activities, risk management solutions and

execution of syndications. Upon

execution of a trade with a client, the Group will look to hedge against the risk of the trade moving

in an adverse

direction. Mismatches between client transactions and

hedges result in market risk due to changes in asset prices, volatility or

correlations.

Organisation, roles and responsibilitie

Market risk in the businesses resides primarily in Barclays

International and Treasury.

These businesses have the mandate to assume market risk.

The front office and Treasury

trading desks are responsible for managing

market risk on a day-to-day basis, where they are required

to understand

and adhere to all limits applicable to their businesses. The Market Risk team support

the trading desks with the day-

to-day limit management of

market risk exposures through

governance processes which are

outlined in supporting market risk policies and standards.

Market risk oversight and challenge

is provided

by business committees and Group committ

ees, including the Market Risk Committee.

The objectives of market risk management

are to:

◾

identify, understand

and control market risk by robust

measurement, limit setting, reporting

and oversight

◾

facilitate business growth

within a controlled and transparent risk management framework

◾

control market risk in the businesses according

to the allocated

appetite.

To meet the above

objectives, a governance

structure is in place

to manage these risks consistent with the ERMF.

Risk re

view

Principal risk

management

104

Barclays PLC

2019 Annual Report on Form

20-F

The BRC recommends

market risk

appetite to the Board for

their approval. The Market Risk Principal Risk Lead (PR Lead)

is responsible for the

Market Risk Control

Framework

and, under delegated authority from the Group CRO, agrees with the business CROs a limit framework within the

context of the approv

ed market risk appetite.

The Market Risk Committee approves

and makes recommendations

concerning the group

-wide market risk profile. This

includes overseeing the

operation of the Market Risk Framework

and associated standards and policies; reviewing market or regulatory

issues

and limits and utilisation. The

committee is chaired

by the PR Lead and attendees include the business heads of market risk and business aligned market risk managers.

The head of each business is accountable for all market risks associated with its activities, while the head

of the market risk team covering

each

business is responsible for implementing the risk control

framework

for market risk.

For more

information on market risk management

refer to the Barclays PLC Pillar 3 Report 2019

(unaudited)

Management value at risk (VaR)

VaR is an estimate of the

potential loss arising from unfavourable

market movements if the current positions were to be held unchanged

for one

business day. For

internal market risk management purposes, a historical simulation methodology

with a two-year equally weighted historical

period, at the 95% confidence

level is used for all trading books and some banking

books.

In some instances, historical data is not available for particular

market risk factors for the entire look

-back period, for

example, complete historical

data would not be available for an equity security

following an initial public offering. In these cases, market risk managers

will proxy

the unavailable

market risk factor data with available data

for a related market risk factor.

Limits are applied at the total level as well as by

risk factor type, which are then cascaded down

to particular trading desks and businesses by the

market risk management function.

See page 141

for a review of management VaR

in 2019.

Treasury and capital

risk

management

This comprises:

Liquidity risk:

The risk that the Group is unable to meet its contractual or contingent

obligations or that it

does not have the appropriate

amount,

tenor and composition of funding

and liquidity to support its

assets.

Capital risk:

The risk that the Group

has an insufficient level or composition of capital to support its normal business activities and to meet its

regu

latory capital requirements under normal

operating environments or stressed conditions (both actual and as defined for internal planning or

regulatory

testing purposes). This also includes the risk from the Group

’s pension plans.

Interest rate risk in the banking book:

The risk that the Group

is exposed to capital

or income volatility because of a mismatch between

the

interest rate exposures of its (non

traded) assets

and liabilities.

The Treasury

function manages treasury and capital risk exposure on

a day-to-day basis with the Group

Treasury

Committee acting as

the principal

management body.

The Treasury

and Capital Risk

function is responsible for oversight

and provide

insight into key capital,

liquidity,

interest rate

risk in

the banking

book (IRRBB) and

pension risk management activities.

Liquidity risk management (audited)

Overview

The efficient management of liquidity is essential to Group

in order to retain the confidence of the financial markets and maintain the sustainability

of the business. The liquidity risk control framework

is used

to manage all liquidity risk exposures under

both BAU

and stressed conditions. The

framework

is designed to maintain liquidity resources that are sufficient in amount, quality and funding tenor

profile to support the liquidity risk

appetite as expressed by the Barclays PLC

Board. The liquidity risk appetite is monitored

against both internal and regulatory liquidity metrics.

Organisation, roles and responsibilities

Treasury

has the primary responsibility for managing

liquidity risk

within the set risk appetite. Both Risk and Treasury

contribute to the production

of the Internal Liquidity Adequacy

Assessment

Process (ILAAP)

The Treasury

and Capital Risk

function is responsible for the management

and

governance

of the liquidity

risk mandate, as defined by the Board.

The liquidity risk control framework

is designed to deliver the

appropriate

term and structure of funding, consistent with the liquidity risk appetite

set by the Board.

The control framework

incorporates a

range of ongoing

business management tools to

monitor,

limit

and stress test the Group’s

balance sheet, contingent liabilities and the recovery

plan. Limit

setting and transfer pricing

are tools that are designed to control the level of

liquidity risk taken and drive the appropriate

mix of funds. Together,

these tools reduce the likelihood that a liquidity stress event could lead to an

inability to meet Group’

obligations as they fall due.

The Board

approves

the Group funding plan, internal stress tests,

regulatory

stress test results, and recovery

plan. The Group Treasury

Committee

is responsible for monitoring

and managing liquidity risk in line

with the Group’s

funding management

objectives, funding plan and risk framework.

The Treasury

and Capital Risk Committee monitors and reviews the liquidity risk profile and control

environment,

providing

second line

oversight of

the management of liquidity risk. The BRC reviews the risk profile, and

annually reviews risk appetite

and the impact of stress scenarios on the

Group

funding plan/forecast in order

to agree the Group’s projected funding abilities.

Capital risk management (audited)

Overview

Capital risk is managed through

ongoing monitoring and management of the capital position,

regular stress testing and a robust capital

governance

framework. The

objectives of the framework are to maintain adequate capital for the Group and legal entities to withstand the

impact

of the risks that may arise under

normal and stressed conditions, and maintain adequate capital to cover current

and forecast business needs and

associated risks to provide

a viable and sustainable business offering.

Risk review

Principal risk

management

105

Barclays PLC

2019 Annual Report on Form

20-F

Organisation, roles and responsibilities

Treasury

has the primary responsibility for managing

and monitoring capital. The Treasury and Capital Risk function provides oversight

of capital

risk and is an independent risk function that reports to the Group

CRO. Production

of the Barclays PLC Internal Capital

Adequacy

Assessment

Process (ICAAP)

is the

responsibility of Treasury.

Capital risk management is underpinned

by a control framework

and policy. The capital management strategy, outlined in the Group and legal

entity capital plans, is developed in alignment with the control

framework

and policy for capital risk,

and is implemented consistently in order to

deliver on the Group’s

objectives.

The Board

approves

the Group capital plan, internal stress tests and results of regulatory stress tests, and the Group recovery

plan. The Group

Treasury

Committee is responsible for monitoring

and managing capital risk in line with

the Group’s

capital management objectives, capital plan

and risk frameworks.

The Treasury

and Capital Risk

Committee monitors and

reviews the capital risk profile and control environment

providing

second line oversight of the management

of capital risk. The BRC reviews the risk profile, and annually reviews risk appetite and the impact of

stress scenarios on the Group

capital plan/forecast in order

to agree the Group’s projected

capital adequacy.

Local management assures compliance with an entity’s minimum regulatory

capital requirements by reporting

to local Asset

and Liability

Committees (ALCOs) with oversight

by the Group

Treasury

Committee, as

required.

In 2019,

Barclays complied with

all regulatory minimum capital

requirements.

Pension risk

The Group

maintains a

number

of defined benefit pension schemes for past and current employees. The ability of schemes to meet pension

payments is achieved with investments

and contributions.

Pension risk arises because the market value

of pension fund assets might decline; investment returns might reduce;

or the estimated

value of

pension liabilities might increase. The Group

monitors the pension risks arising from its defined benefit pension schemes and works with Trustees

to address shortfalls. In these circumstances, the Group

could be required

or might choose to make extra contributions to the pension fund. The

Group’s

main defined benefit scheme was closed to new entrants in 2012

Interest rate risk in the banking book management (IRRBB)

Overview

Interest rate risk in the banking book

is driven by customer deposit taking and lending activities, investments in the liquid asset portfolio

and

funding activities. As per the Group’s policy

to remain within the defined risk appetite, businesses and Treasury

execute hedging strategies to

mitigate the risks. However,

the Group remains susceptible to interest rate risk and other

non-traded

market risks from key sources:

◾

Interest rate and repricing risk:

the risk that net interest income could be adversely impacted by

a change in interest rates, differences in the

timing of interest rate changes between assets and liabilities,

and other constraints on interest rate changes as per p

roduct terms and conditions.

◾

Customer behavioural risk:

the risk that net interest income could be adversely impacted by

the discretion that customers and counterparties

may have in respect of being

able to vary their contractual obligations with Barclays. This risk is often

referred

to by industry regulators as

‘embedded

option risk’.

◾

Investment risks

in the liquid asset portfolio:

the risk that

the fair value of assets held in the liquid asset portfolio

and associated risk

management portfolios could

be adversely impacted by market volatility, creating

volatility in capital directly.

Organisation, roles and responsibilities

The entity ALCOs, together with the Group

Treasury

Committee, are responsible for monitoring

and managing IRRBB risk in

line with the Group’s

management objectives and risk frameworks.

The GRC and Treasury

and Capital Risk

Committee monitors and

reviews the IRRBB risk profile and

control environment,

providing second

line oversight of the management of IRRBB. The BRC reviews the interest rate risk profile, including annual

review of the risk appetite and the impact of stress

scenarios on the interest rate risk of the Group’s

banking books.

In addition, the Group’s IRRBB

policy sets out the processes and key controls required

to identify all IRRBB risks

arising from banking

book

operations, to monitor the risk exposures via a set of metrics with a frequency

in line with

the risk management horizon,

and to manage these risks

within agreed

risk appetite

and limits.

Operational risk

management

The risk of loss to the Group

from inadequate or

failed processes or systems,

human factors or due to external events (for

example fraud) where

the root cause is not due to credit or market risks.

Overview

The management of operational

risk has three key objectives:

◾

deliver an operational risk capability owned

and used by business leaders to enable sound risk decisions over the long term;

◾

provide

the frameworks, policies and standards to enable management to meet their risk management responsibi

lities while

the second line of

defence provides

robust, independent, and

effective oversight and challenge; and

◾

deliver a consistent and aggregated

measurement of operational risk that will

provide

clear and relevant insights, so that the right management

actions can be taken to keep the operational risk profile

consistent with the Group’s

strategy, the stated risk appetite and stakeholder needs.

The Group

operates within a system of internal controls that enables business to be transacted and risk taken without exposing it to unacceptable

potential losses or reputational damages.

Organisation, roles and responsibilities

The prime responsibility for the management

of operational risk and the compliance with control requirements

rests within

the business and

functional units where the risk arises. The operational risk profile and control

environment

is reviewed by management through

business risk

committees and control

committees. Legal entities, businesses and functions are required

to report their operational

risks on both a regular and an

event-driven

basis. The reports include a profile of the material risks that may threaten the achievement of their objectives and

the effectiveness of

key controls, operational risk events and a review

of scenarios.

Risk re

view

Principal risk

management

106

Barclays PLC

2019 Annual Report on Form

20-F

The Group

Head of Operational Risk

is responsible for

establishing, owning and maintaining an appropriate

group-

wide Operational Risk

Management Framework

and for overseeing

the portfolio of operational risk across the

Group.

Operational Risk Management (ORM) acts in a second line of d

efence capacity, and is responsible for defining

and overseeing

the implementation

of the framework

and monitoring

the Group’s operational risk profile. ORM alerts

management when risk levels exceed acceptable tolerance in

order

to drive timely decision making and actions by the first line of defence.

Operational risk issues escalated from these meetings are considered

through

the second line of defence review meetings. Depending on their nature, the outputs of these meetings are presented to the operational risk

profile forum, the BRC or the BAC. In addition, specific reports

are prepared

by Operational Risk on a regular basis for the GRC and the BRC.

Operational risk categories

Operational risks are grouped

into risk categories to

support effective

risk management, measurement and reporting.

These comprise:

Data

Management & Information

Risk;

Financial Reporting

Risk;

Fraud Risk;

Payments Process Risk;

People Risk;

Premises Risk;

Physical Security Risk;

Supplier Risk;

Tax

Risk;

Technology

Risk;

Transaction Operations Risk

and Execution Risk.

In addition to the above, operational

risk encompasses risks associated with prudential regulation. This includes the risk of failing to: adhere to

prudential regulatory

requirements, provide

regulatory submissions; or monitor and manage adherence

to new prudential regulatory requirements.

Enterprise risk themes

Barclays also recognises that there

are certain threats/risk drivers that are more

thematic and have the potential to impact the

Group’s

strategic

objectives. These are Enterprise Risk Themes which require

an overarching

and integrated risk management approach. The Group’s

enterprise risk

themes include Cyber,

Data, and Resilience.

For definitions of the Group’s

operational risk categories and enterprise risk themes, refer to pages 198

to 201 of the Barclays PLC Pillar 3 Report

2019.

Model risk

management

The risk of the potential adverse consequences from

financial assessments

or decisions based on incorrect

or misused model outputs and reports.

Overview

The Group

uses models to

support a broad

range of activities, including informing business decisions and strategies, measuring and limiting risk,

valuing exposures, conducting

stress

testing, assessing capital adequacy, managing

client assets, and meeting reporting

requirements.

Since models are imperfect and incomplete representations

of reality, they may be subject to errors

affecting the accuracy

of their output. Model

errors and

misuse are the

primary sources of model

risk.

Organisation,

roles and responsibilities

The Group

has a dedicated Model Risk Management (MRM) function that consists of two main units: the Independent Validation

Unit (IVU),

responsible for model validation and approval,

and Model Governance

and Controls (MGC), covering model risk governance, controls and reporting,

including

ownership of model

risk policy and the model inventory.

The model risk management framework

consists

of the model risk policy and standards. The policy prescribes

Group

-wide, end-to-end

requirements for

the identification, measurement and management of model risk, covering

model documentation, development, implementation,

monitoring, annual review,

independent validation and approval,

change and reporting processes. The policy is supported by global standards

covering

model inventory,

documentation, validation, complexity and materiality, testing and monitoring, overlays, risk appetite, as well as vendor

models and stress testing challenger

models.

The function reports to the Group

CRO and operates a global framework. Implementation of best practice standards is a central objective of the

Group.

The key model risk management

activities include:

◾

Correctly identifying models across all relevant areas of

the Group, and recordin

models in

the Group Models Database (GMD), the Group

-wide

model inventory.

◾

Enforcing

that every model has a model owner who is accountable for the model. The model owner

must sign off models prior to submission to

IVU for

validation and maintain that the model presented to IVU is and remains fit for purpose.

◾

Overseeing that every model is subject to validation and approval

by IVU, prior

to being implemented and on a continual basis.

◾

Defining model risk appetite in terms of risk tolerance, and qualitative metrics which are used to track

and report

model risk.

Conduct risk

management

The risk of detriment to customers, clients, market integrity, effective

competition or Barclays from

the inappropriate supply of financial services,

including instances of wilful or negligent misconduct.

Overview

The Group

defines,

manages and mitigates

conduct risk

with the objective of providing

good customer

and client outcomes,

protecting market integrity

and promoting effective competition.

Product

Lifecycle, Culture

and Strategy and

Financial Crime

are the risk categories

under the

Group definition

of conduct risk.

Organisation, roles and responsibilities

The governance of conduct risk within the

Group is

fulfilled through

management

committees

and forums operated by

the first

and second lines

defence with clear escalation

and reporting lines

to the Board.

The Group

Risk Committee

is the

most senior executive

body responsible

for reviewing

and monitoring

the effectiveness

of the Group’s management

conduct risk.

The Conduct Risk Management Framework

(CRMF)

outlines

how the Group manages

and measures its

conduct risk profile.

Risk review

Principal risk

management

107

Barclays PLC

2019 Annual Report on Form

20-F

Senior managers have accountability

for managing conduct

risk in their

areas of responsibility.

This is

expressed in their Statements

of Responsibilities.

The primary responsibility for managing

conduct risk

sits

with the business

where the risk arises.

The first line

business control committees

provide

oversight of controls relating to conduct

risk.

The Group

Chief Compliance

Officer

is responsible

for owning and maintaining

an appropriate

group-wide CRMF. This

includes defining and

owning

the relevant conduct risk policies

and oversight of

the implementation

of controls

to manage and

escalate

the risk.

The Group

and the Barclays

UK Risk Committees

are the primary

second line

governance committees

for oversight of conduct

risk profile

and

implementation of the CRMF. The responsibilities

of these risk

committees in relation to the

trading

entities

includes the identification

and discussion

any emerging

conduct risks

exposures which have

been identified.

Reputation risk

management

The risk that an action, transaction, investment, event, decision, or business relationsh

ip will reduce trust in the Group

’s integrity

and/or

competence.

Overview

A reduction of trust in the Group’s

integrity and competence may reduce

the attractiveness

of the Group

to stakeholders and could lead to negative

publicity,

loss of revenue, regulatory

or legislative action, loss of existing and potential

client business, reduced

workforce morale

and difficulties

recruiting talent. Ultimately it may destroy shareholder

value.

Organisation, roles and responsibilities

The GRC is

the most senior executive

body responsible

for reviewing

and monitoring

the effectiveness

of the Group’s management

of reputation

risk.

The Group

Chief

Compliance

Officer

is accountable

for developing

a Reputation

Risk Management

Framework

(RRMF),

and the

Head of

Corporate

Relations is

responsible for developing

a reputation

risk

policy and

associated standards,

including

tolerances

against

which data

is monitored,

reported

on and escalated, as

required. The

RRMF sets

out what

is required

manage reputation

risk across

the Group.

The primary responsibility

for identifying

and managing

reputation

risk

and adherence

to the control

requirements

sits

with the business

and support

functions where the risk

arises.

Barclays Bank Group and Barclays

Bank UK Group

are required

to operate

within established

reputation

risk appetite,

and their

component

businesses

prepare

reports

for their

respective

Risk and Board

Risk Committees

highlighting

their

most

significant

current and

potential

reputation

risks

and issues

and how they are being managed.

These reports

are a key internal

source of

information for

the

quarterly

reputation

risk reports

which are

prepared for

the GRC and the Board.

Legal risk

management

The risk of loss or imposition of penalties, damages or fines from the failure of the Group

to meet its legal obligations including regulatory

contractual requirements.

Overview

The Group

has no tolerance for wilful breaches of laws, regulations or other

legal obligations. However, the multitude of laws and

regulations

across the globe are highly

dynamic and their application to particular circumstances is often unclear; this results in a level of inherent legal risk, for

which the Group

has limited tolerance.

Organisation, roles and responsibilities

The Group’s

businesses and functions have primary responsibility for identifying, managing

and escalating legal risk in their area as well as

responsibility for adherence

to minimum control requirements.

The Legal Function organisation and coverage

model aligns expertise to

businesses, functions, products, activities and geographic

locations so that

the Group receives legal support from

appropriate

legal professionals. The senior management of the Legal

Function oversees, monitors and

challenges legal risk across the Group.

The Legal Function does not sit

in any of the three

lines of defence but supports them all.

The Grou

General Counsel is responsible for maintaining an appropriate Group

-wide legal risk

management framework. This includes defining the

relevant legal risk policies and oversight

of the implementation of controls to manage and escalate legal risk.

The legal risk profile and control environment

is reviewed by management through

business risk

committees and control committees. The Group

Risk Committee is the most senior executive body

responsible for reviewing

and monitoring

the effectiveness of

risk management across the

Group.

Escalation paths from this committee exist to the Barclays PLC Board

Risk Committee.

Risk review

Risk performance

Credit risk

108

Barclays PLC

2019 Annual Report on Form

20-F

Summary of

contents

Page

Credit risk represents a significant risk and

mainly arises

from exposure

to wholesale and retail

loans and

advances together with the counterparty

credit risk

arising from derivative contracts entered

into with

clients.

◾

Credit risk overview and

summary of performance

◾

Maximum exposure

and effects of netting, collateral and risk transfer

109

This section outlines the expected credit loss

allowances, the movements in

allowances during the

period, material management adjustments to model

output and measurement uncertainty

and sensitivity

analysis.

◾

Expected Credit Losses

-

Loans and advances at amortised cost by stage

-

Loans and advances at amortised cost by product

-

Movement in gross exposure

and impairment allowance for

loans and

advances at amortised cost

-

Stage 2 decomposition

-

Stage 3 decomposition

◾

Management adjustments to models for impairment

◾

Measurement uncertainty and sensitivity analysis

112

114

115

119

120

121

The Group

reviews and monitors risk concentrations in

a variety of ways. This section outlines performance

against key concentration

risks.

◾

Analysis of the concentration

of credit risk

-

Geographic

concentrations

-

Industry concentrations

◾

Approach

to management and representation of credit quality

-

Asset credit quality

-

Debt securities

-

Balance sheet credit quality

-

Credit exposures by internal PD grade

127

129

131

Credit risk monitors exposure

performance

across a

range of significant portfolios.

◾

Analysis of specific portfolios and asset types

-

Secured home

loans

-

Credit cards, unsecured

loans and other retail lending

-

Exposure to UK commercial

real estate

133

134

135

The Group

monitors exposures to assets where there is

a heightened

likelihood of default and assets where an

actual default has occurred.

From time to time,

suspension of certain aspects of client credit

agreements are agreed,

generally during

temporary

periods of financial difficulties where

the Group is

confident that the client will be able to remedy

the

suspension. This section outlines the current exposure

to assets with this treatment.

◾

Forbearance

-

Retail forbearance

programmes

-

Wholesale forbearance

programmes

136

137

138

This section provides an analysis of credit risk on

debt

securities and derivatives.

◾

Analysis of debt securities

◾

Analysis of derivatives

138

139

Risk review

Risk performance

Credit risk

109

Barclays PLC

2019 Annual Report on Form

20-F

All disclosures in this section (pages 109

to 139)

are unaudited unless otherwise stated.

Overview

Credit risk represents a significant risk to the Group

and mainly arises from exposure

to wholesale and retail

loans and advances together

with the

counterparty

credit risk arising from derivative contracts entered into with clients.

Credit risk disclosures include many

of the recommendations of the Taskforce

on Disclosures about Expected Credit Losses (DECL) and it is

expected that relevant disclosures will continue

to be developed in future periods.

Further detail can be found in the Financial statements section in Note 7 Credit impairment

charges. Descriptions of terminology can be found

the glossary, available

at home.barclays/annualreport.

Summary of

performance

in the

period

Credit impairment charges increased to £1,912m

(2018:

£1,468m). The 2019

charge includes the impact of macroeconomic

scenario updates and

an overall reduction

in unsecured gross exposures.

Prior year

comparatives included the impact of favourable macroecon

omic scenario updates

and a £150m

charge regarding

the anticipated economic uncertainty in the UK.

The Group

loan loss rate

was 55bps (2018:

44bps).

Refer to the credit risk management

section on pages 102

and 103

for details of governance, policies and procedures.

Key metrics

Reduction in impairment allowances

£411m

◾

Impairment allowances on

loans and advances at amortised cost, including off

-balance sheet elements of the allowance, decreased by

£411m

to £6,630m

(2018:

£7,

041m). The decrease is driven by Barclays UK £300m,

Barclays International £92m and

Head Office £19m. Refer to

the Expected Credit Losses section on page 112

for further details.

Maximum exposure

and effects

of netting,

collateral

and risk

transfer

Basis of preparation

The following tables present a reconciliation between the

maximum exposure

and its

net exposure to credit risk, reflecting the financial effects

risk mitigation reducing the exposure.

For financial assets recognised

on the balance sheet, maximum exposure to credit risk represents the balance sheet carrying

value after allowance

for impairment. For

off-balance sheet guarantees, the maximum exposure

is the

maximum amount that the Group

would have to pay

if the

guarantees were to be called upon.

For loan commitments and other

credit related commitments that are irrevocable over

the life

of the respective

facilities, the maximum exposure

is the full amount of the committed facilities.

This and subsequent analyses of credit risk exclude other

financial assets not subject to credit risk, mainly equity securities.

The Group

mitigates

the credit risk to which it is exposed through

netting and set-off, collateral and risk transfer.

Further detail on the Group’s

policies to each of these forms of credit enha

ncement is presented on pages 175

to 177

of the Barclays PLC Pillar 3 Report 2019

(unaudited)

Overview

As at 31 December

2019,

the Group’s net exposure

to credit risk,

after taking into account credit risk mitigation, decreased 0.9% to £800.3

bn.

Overall, the extent to which the Group

holds mitigation against

its total exposure

remained unchanged

at 43% (2018:

43%).

Of the unmitigated on balance sheet exposure, a significant portion

relates to cash held at central banks, cash collateral and settlement balances,

and debt securities issued by governments

all of

which are considered

to be lower risk.

The decrease in the Group’s

net exposure to credit risk is

due to decreases in cash held at central banks and trading

portfolio assets, offset by increases in cash collateral and settlement balances,

financial

assets at fair value through

other comprehensive income

and off balance sheet loan commitments.

Trading

portfolio liability positions, which to a

significant extent economically hedge

trading portfolio

assets

but which are not held specifically for

risk management purposes, are excluded

from

the analysis. The credit quality of counterparties to derivatives, financial investments

and wholesale loan assets are predominantly

investment

grade. Further

analysis

on the credit quality of assets is presented

on pages 129

to 131

Collateral obtained

Where collateral has been obtained in the event of default, the Group

does not, ordinarily, use such assets for its own operations

and they are

usually sold on a timely basis. The carrying

value of assets held by the Group as at 31

December 2019,

as a

result of the enforcement of collateral,

was £6m

(2018:

£6m).

Risk review

Risk performance

Credit risk

110

Barclays PLC

2019 Annual Report on Form

20-F

Maximum exposure and effects of netting, collateral and risk transfer (audited)

Maximum

exposure

Netting and

set-off

Cash

collateral

Non-cash

collateral

Risk transfer

Net exposure

As at 31 December 2019

£m

On-balance sheet:

Cash and balances at central banks

150,258

Cash collateral and settlement balances

83,256

Loans and advances at amortised cost:

Home loans

154,479

(294)

(153,939)

(70)

176

Credit cards, unsecured

loans and other retail lending

55,296

(778)

(5,283)

(258)

48,977

Wholesale loans

129,340

(7,636)

(148)

(39,981)

(12,071)

69,504

Total loans and advances at amortised cost

339,115

(7,636)

(1,220)

(199,203)

(12,399)

118,657

Of which credit

-impaired

(Stage 3):

Home loans

1,809

(2)

(1,785)

(14)

Credit cards, unsecured loans

and other retail lending

1,074

(12)

(250)

(2)

810

Wholesale loans

1,812

(9)

(909)

(20)

874

Total

credit

-impaired loans and advances at amortised cost

4,695

(23)

(2,944)

(36)

1,692

Reverse repurchase agreements and other similar

secured lending

3,379

(3,379)

Trading portfolio

assets:

Debt securities

52,739

(423)

52,316

Traded

loans

5,378

(134)

5,244

Total trading portfolio assets

58,117

(557)

57,560

Financial assets at fair value through the income statement:

Loans and advances

22,692

(14)

(16,580)

(57)

6,041

Debt securities

5,249

Reverse repurchase

agreements

96,887

(1,132)

(95,736)

Other financial assets

763

Total financial assets at fair value through the income statement

125,591

(1,146)

(112,316)

(57)

12,072

Derivative financial instruments

229,236

(175,998)

(33,411)

(5,511)

(5,564)

8,752

Financial assets at fair value through other comprehensive

income

64,727

(305)

(1,051)

63,371

Other assets

1,375

Total on-balance sheet

1,055,054

(183,634)

(35,777)

(321,271)

(19,071)

495,301

Off-balance sheet:

Contingent liabilities

24,527

(400)

(4,412)

(159)

19,556

Loan commitments

334,455

(84)

(47,008)

(1,950)

285,413

Total off-balance sheet

358,982

(484)

(51,420)

(2,109)

304,969

Total

1,414,036

(183,634)

(36,261)

(372,691)

(21,180)

800,270

Off-balance sheet exposures are shown

gross of provisions of £322m

(2018:

£271m). See Note 25 for further

details.

In addition to the above, the Group

holds forward

starting reverse repos with notional contract amounts of £31.1

bn (2018: £35.5bn). The balances

are fully collateralised.

For further

information on credit risk mitigation techniques, refer to page 102

within the Credit risk management section.

Risk review

Risk performance

Credit risk

111

Barclays PLC

2019 Annual Report on Form

20-F

Maximum exposure and effects of netting, collateral and risk transfer (audited)

Maximum

exposure

Netting and

set-off

Cash

collateral

Non-cash

collateral

Risk transfer

Net exposure

As at 31 December 2018

£m

On-balance sheet:

Cash and balances at central banks

177,069

Cash collateral and settlement balances

77,222

Loans and advances at amortised cost:

Home loans

150,284

(295)

(149,679)

(132)

178

Credit cards, unsecured

loans and other retail lending

56,431

(725)

(5,608)

(451)

49,647

Wholesale loans

119,691

(7,550)

(65)

(41,042)

(4,454)

66,580

Total loans and advances at amortised cost

326,406

(7,550)

(1,085)

(196,329)

(5,037)

116,405

Of which credit

-impaired

(Stage 3):

Home loans

2,125

(3)

(2,083)

(31)

Credit cards, unsecured loans and other retail

lending

1,249

(6)

(232)

(38)

973

Wholesale loans

1,762

(895)

(17)

850

Total

credit

-impaired loans and advances at amortised cost

5,136

(9)

(3,210)

(86)

1,831

Reverse repurchase agreements and other similar

secured lending

2,308

(17)

(2,261)

Trading portfolio

assets:

Debt securities

57,283

(451)

56,832

Traded

loans

7,234

(154)

7,080

Total trading portfolio assets

64,517

(605)

63,912

Financial assets at fair value through the income statement:

Loans and advances

19,524

(11)

(11,782)

(89)

7,642

Debt securities

4,522

(445)

4,077

Reverse repurchase

agreements

119,041

(2,996)

(115,601)

444

Other financial assets

542

Total financial assets at fair value through the income statement

143,629

(3,007)

(127,828)

(89)

12,705

Derivative financial instruments

222,538

(172,001)

(31,402)

(5,502)

(4,712)

8,921

Financial assets at fair value through other comprehensive

income

51,694

(399)

51,295

Other assets

1,006

Total on-balance sheet

1,066,389

(179,551)

(35,511)

(332,525)

(10,237)

508,565

Off-balance sheet:

Contingent liabilities

20,303

(399)

(1,418)

(190)

18,296

Loan commitments

324,223

(124)

(42,117)

(1,395)

280,587

Total off-balance sheet

344,526

(523)

(43,535)

(1,585)

298,883

Total

1,410,915

(179,551)

(36,034)

(376,060)

(11,822)

807,448

Risk review

Risk performance

Credit risk

112

Barclays PLC

2019 Annual Report on Form

20-F

Expected Credit

Losses

Loans and advances at amortised cost by stage

The table below presents an analysis of loans and advances at amortised cost by

gross exposure, impairment

allowance, coverage

ratio and

impairment charge

by stage allocation and business segment as at 31 December

2019

Also included are off-balance sheet loan commitments and

financial guarantee contracts by

gross exposure

and impairment allowance and coverage

ratio by stage allocation as

at 31 December

2019.

Impairment allowance

under IFRS 9 considers both the drawn

and the undrawn counterparty exposure.

For retail portfolios, the total

impairment

allowance is allocated to the drawn

exposure to the extent that the allowance does not exceed the exposure

as ECL is

not reported

separately. Any

excess is reported

on the liability side of the

balance sheet as a provision.

For wholesale portfolios, the impairment allowance on the undrawn

exposure is reported

on the liability side of the

balance sheet as a provision.

Loans and advances at amortised cost by stage (audited)

Gross exposure

Impairment allowance

Net

exposure

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

As at 31 December 2019

£m

Barclays UK

143,097

23,198

2,446

168,741

198

1,277

974

2,449

166,292

Barclays International

27,886

4,026

1,875

33,787

352

774

1,359

2,485

31,302

Head Office

4,803

500

826

6,129

305

346

5,783

Total Barclays Group retail

175,786

27,724

5,147

208,657

555

2,087

2,638

5,280

203,377

Barclays UK

27,891

2,397

1,124

31,412

108

162

31,250

Barclays International

92,615

8,113

1,615

102,343

136

248

447

831

101,512

Head Office

2,974

3,011

2,976

Total Barclays Group wholesale

123,480

10,510

2,776

136,766

152

286

590

1,028

135,738

Total loans and advances at

amortised cost

299,266

38,234

7,923

345,423

707

2,373

3,228

6,308

339,115

Off-balance sheet loan commitments

and financial guarantee contracts

321,140

19,185

935

341,260

170

322

340,938

Total

620,406

57,419

8,858

686,683

804

2,543

3,283

6,630

680,053

Loan impairment charge

and loan loss

rate

Coverage ratio

Loan

impairment

charge

Loan loss

rate

Stage 1

Stage 2

Stage 3

Total

As at 31 December 2019

£m

bps

Barclays UK

0.1

5.5

39.8

1.5

661

Barclays International

1.3

19.2

72.5

7.4

999

296

Head Office

0.1

7.2

36.9

5.6

Total Barclays Group retail

0.3

7.5

51.3

2.5

1,687

Barclays UK

0.1

1.6

9.6

0.5

Barclays International

0.1

3.1

27.7

0.8

113

Head Office

94.6

1.2

Total Barclays Group wholesale

0.1

2.7

21.3

0.8

146

Total loans and advances at

amortised cost

0.2

6.2

40.7

1.8

1,833

Off-balance sheet loan commitments

and financial guarantee contracts

0.9

5.9

0.1

Other financial assets subject to

impairment

Total

0.1

4.4

37.1

1.0

1,912

Notes

Includes

Wealth and

Private Banking

exposures measured

on an individual customer exposure

basis.

Excludes

loan commitments

and financial

guarantees

of £17.7bn carried at fair

value.

Other financial

assets subject

to impairment not included

in the table above include cash

collateral and settlement

balances, financial assets

at fair value through other

comprehensive

income and other

assets.

These have a total gross exposure

of £149.3bn and impairment

allowance of £24m.

This

comprises £12m

ECL on £148.5bn Stage 1

assets,

£2m

on £0.8bn Stage 2 fair value

through other

comprehensive

income assets

cash collateral and

settlement assets and £10m on £10m

Stage 3 other assets.

The loan loss

rate is 55bps after

applying

the total impairment charge

of £1,912m.

Risk review

Risk performance

Credit risk

113

Barclays PLC

2019 Annual Report on Form

20-F

Loans and advances at amortised cost by stage (audited)

Gross exposure

Impairment

allowance

Net

exposure

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

As at 31 December 2018

£m

Barclays UK

134,911

25,279

3,040

163,230

183

1,389

1,152

2,724

160,506

Barclays International

26,714

4,634

1,830

33,178

352

965

1,315

2,632

30,546

Head Office

6,510

636

938

8,084

306

362

7,722

Total Barclays Group retail

168,135

30,549

5,808

204,492

544

2,401

2,773

5,718

198,774

Barclays UK

22,824

4,144

1,272

28,240

117

203

28,037

Barclays International

87,344

8,754

1,382

97,480

128

244

439

811

96,669

Head Office

2,923

2,964

2,926

Total Barclays Group wholesale

113,091

12,898

2,695

128,684

144

314

594

1,052

127,632

Total loans and advances at

amortised cost

281,226

43,447

8,503

333,176

688

2,715

3,367

6,770

326,406

Off-balance sheet loan commitments

and financial guarantee contracts

309,989

22,126

684

332,799

150

271

332,528

Total

591,215

65,573

9,187

665,975

787

2,865

3,389

7,041

658,934

Loan impairment

charge

and loan loss

rate

Coverage ratio

Loan

impairment

charge

Loan loss

rate

Stage 1

Stage 2

Stage 3

Total

As at 31 December 2018

£m

bps

Barclays UK

0.1

5.5

37.9

1.7

830

Barclays International

1.3

20.8

71.9

7.9

844

254

Head Office

0.1

7.4

32.6

4.5

Total Barclays Group retail

0.3

7.9

47.7

2.8

1,689

Barclays UK

0.1

1.7

9.2

0.7

Barclays International

0.1

2.8

31.8

0.8

(142)

Head Office

92.7

1.3

(31)

Total Barclays Group wholesale

0.1

2.4

22.0

0.8

(99)

Total loans and advances at

amortised cost

0.2

6.2

39.6

2.0

1,590

Off-balance sheet loan commitments

and financial guarantee contracts

0.7

3.2

0.1

(125)

Other financial assets subject to

impairment

Total

0.1

4.4

36.9

1.1

1,468

Notes

Included

in the

above analysis are

Wealth and Private

Banking exposures

measured on an individual customer exposure

basis.

Excludes

loan commitments

and financial

guarantees

of £11.7bn carried at fair

value.

Other financial

assets subject

to impairment not included

in the table above include cash

collateral and settlement

balances, financial assets

at fair value through other

comprehensive

income and other

assets.

These have a total gross exposure

of £129.9bn

and impairment

allowance of £12m. This

comprises £10m ECL on £129.3bn Stage 1

assets

and £2m on £0.6bn Stage 2 fair

value through

other comprehensive

income assets.

The loan loss

rate is 44bps after

applying

the total impairment

charge of £1,468m.

Risk review

Risk performance

Credit risk

114

Barclays PLC

2019 Annual Report on Form

20-F

Loans and advances at amortised cost by product (audited)

The

table

below

presents

breakdown

loans

and

advances

at amortised

cost

and

the

impairment

allowance

with stage allocation by

asset

classification.

Loans and advances at amortised cost by product

(audited)

Stage 2

As at 31 December 2019

Stage 1

Not past due

<=30 days

past due

>30 days past

due

Total

Stage 3

Total

Gross exposure

£m

Home loans

135,713

14,733

1,585

725

17,043

2,155

154,911

Credit cards, unsecured

loans and other retail lending

46,012

9,759

496

504

10,759

3,409

60,180

Wholesale loans

117,541

9,374

374

684

10,432

2,359

130,332

Total

299,266

33,866

2,455

1,913

38,234

7,923

345,423

Impairment allowance

Home loans

346

432

Credit cards, unsecured

loans and other retail lending

542

1,597

159

251

2,007

2,335

4,884

Wholesale loans

143

284

302

547

992

Total

707

1,918

182

273

2,373

3,228

6,308

Net exposure

Home loans

135,691

14,696

1,571

712

16,979

1,809

154,479

Credit cards, unsecured

loans and other retail lending

45,470

8,162

337

253

8,752

1,074

55,296

Wholesale loans

117,398

9,090

365

675

10,130

1,812

129,340

Total

298,559

31,948

2,273

1,640

35,861

4,695

339,115

Coverage ratio

Home loans

0.3

0.9

1.8

0.4

16.1

0.3

Credit cards, unsecured

loans and other retail lending

1.2

16.4

32.1

49.8

18.7

68.5

8.1

Wholesale loans

0.1

3.0

2.4

1.3

2.9

23.2

0.8

Total

0.2

5.7

7.4

14.3

6.2

40.7

1.8

As at 31 December 2018

Gross exposure

£m

Home loans

130,066

15,672

1,672

862

18,206

2,476

150,748

Credit cards, unsecured

loans and other retail lending

45,785

11,262

530

437

12,229

3,760

61,774

Wholesale loans

105,375

12,177

360

475

13,012

2,267

120,654

Total

281,226

39,111

2,562

1,774

43,447

8,503

333,176

Impairment allowance

Home loans

351

464

Credit cards, unsecured

loans and other retail lending

528

1,895

169

240

2,304

2,511

5,343

Wholesale loans

129

300

329

505

963

Total

688

2,251

198

266

2,715

3,367

6,770

Net exposure

Home loans

130,035

15,616

1,659

849

18,124

2,125

150,284

Credit cards, unsecured

loans and other retail lending

45,257

9,367

361

197

9,925

1,249

56,431

Wholesale loans

105,246

11,877

344

462

12,683

1,762

119,691

Total

280,538

36,860

2,364

1,508

40,732

5,136

326,406

Coverage ratio

Home loans

0.4

0.8

1.5

0.5

14.2

0.3

Credit cards, unsecured

loans and other retail lending

1.2

16.8

31.9

54.9

18.8

66.8

8.6

Wholesale loans

0.1

2.5

4.4

2.7

2.5

22.3

0.8

Total

0.2

5.8

7.7

15.0

6.2

39.6

2.0

Risk review

Risk performance

Credit risk

115

Barclays PLC

2019 Annual Report on Form

20-F

Movement in

gross

exposures and

impairment

allowance

including

provisions for

loan

commitments

and financial

guarantees

The following tables present a reconciliation of

the opening to the closing balance of the exposure

and impairment allowance. An explanation of

the terms: 12-month

ECL,

lifetime ECL and credit-impaired is included

on page 225

The disclosure has been enhanced in 2019

to provide further

granularity by

product. Transfers

between stages in the

tables have

been reflected as if they had taken place at the beginning

of the year. The

movements are measured

over a 12

-month period.

Loans and advances at amortised cost (audited)

Stage 1

Stage 2

Stage 3

Total

Gross

exposure

ECL

Gross

exposure

ECL

Gross

exposure

ECL

Gross

exposure

ECL

£m

Home loans

As at 1 January 2019

130,066

18,206

2,476

351

150,748

464

Transfers from

Stage 1 to Stage 2

(9,051)

(1)

9,051

Transfers from

Stage 2 to Stage 1

8,000

(8,000)

(28)

Transfers to

Stage 3

(199)

(510)

(15)

709

Transfers from

Stage 3

294

(337)

(5)

Business activity in the year

24,935

734

25,672

Changes to models used for calculation

Net drawdowns,

repayments, net re-

measurement and movements due

exposure and risk parameter

changes

(6,931)

(38)

(843)

(214)

(7,988)

Final repayments

(10,427)

(2)

(1,827)

(4)

(454)

(13)

(12,708)

(19)

Disposals

(723)

(1)

(62)

(4)

(2)

(787)

(5)

Write-offs

(26)

As at 31 December 2019

135,713

17,043

2,155

346

154,911

432

Credit cards, unsecured loans and other retail lending

As at 1 January 2019

45,785

528

12,229

2,304

3,760

2,511

61,774

5,343

Transfers from

Stage 1 to Stage 2

(3,604)

(72)

3,604

Transfers from

Stage 2 to Stage 1

4,522

701

(4,522)

(701)

Transfers to

Stage 3

(857)

(21)

(1,264)

(448)

2,121

469

Transfers from

Stage 3

144

103

(172)

(117)

Business activity in the year

9,664

120

704

123

10,457

282

Changes to models used for calculation

(110)

(7)

(101)

Net drawdowns,

repayments, net re-

measurement and movements due

exposure and risk parameter

changes

(5,975)

(779)

351

806

373

1,836

(5,251)

1,863

Final repayments

(3,667)

(54)

(371)

(53)

(290)

(74)

(4,328)

(181)

Disposals

(777)

(627)

(777)

(627)

Write-offs

(1,695)

As at 31 December 2019

46,012

542

10,759

2,007

3,409

2,335

60,180

4,884

Wholesale loans

As at 1 January 2019

105,375

129

13,012

329

2,267

505

120,654

963

Transfers from

Stage 1 to Stage 2

(3,419)

(11)

3,419

Transfers from

Stage 2 to Stage 1

5,213

(5,213)

(84)

Transfers to

Stage 3

(501)

(2)

(650)

(19)

1,151

Transfers from

Stage 3

473

205

(678)

(60)

Business activity in the year

40,837

1,757

42,625

Changes to models used for calculation

(9)

(19)

(28)

Net drawdowns,

repayments, net re-

measurement and movements due

exposure and risk parameter

changes

5,929

(104)

321

122

334

6,372

315

Final repayments

(34,081)

(30)

(2,419)

(53)

(372)

(91)

(36,872)

(174)

Disposals

(2,285)

Write-offs

(162)

As at 31 December 2019

117,541

143

10,432

302

2,359

547

130,332

992

Notes

Changes to models used for

calculation

include

a £101m movement in

Credit cards,

unsecured

loans and

other

retail lending

and a £28m

movement in

Wholesale

loans. These

reflect

methodology changes made

during

the year. Barclays

continually

review

the output

of models

to determine

accuracy

of the

ECL

calculation

including

review of

model monitoring,

external

benchmarking and experience

of model

operation over

an extended

period of

time.

This ensures

that the models

used

continue

to reflect

the risks

inherent

across the

businesses.

The £787m movement of gross

loans

and advances

disposed of

across Home

loans

relates to

the sale

of a portfolio

of mortgages

from the

Italian loan

book.

The £777m

disposal

reported

within

Credit cards,

unsecured

loans and

other

retail lending

portfolio

relates to

debt sales

undertaken

during

the year. Finally,

disposals

of £2,285m

within

Wholesale

loans relate

to the

sale of

debt securities as part

of the Group’s

Treasury operations.

In 2019, gross write-offs amounted

to £1,883m

(2018: £1,891m) and post

write-off

recoveries

amounted

to £124m

(2018: £195m). Net write-offs

represent

gross write-offs

less post

write-off

recoveries and amounted

to £1,759m

(2018: £1,696m).

Other financial assets

subject

to impairment

not included

in the table

above include

cash collateral

and settlement

balances,

financial

assets

at fair

value through

other

comprehensive

income

and other

assets.

These have

a total

gross exposure

of £149.3bn (December

2018: £129.9bn)

and impairment

allowance

of £24m (December

2018: £12m). This

comprises

£12m ECL

Risk review

Risk performance

Credit risk

116

Barclays PLC

2019 Annual Report on Form

20-F

(December 2018: £10m) on £148.5bn

Stage 1 assets

(December

2018: £129.3bn),

£2m (December

2018: £2m) on

£0.8bn

Stage

2 fair

value through

other

comprehensive

income

assets, cash

collateral and settlement

assets

(December

2018: £0.6bn)

and £10m (December

2018: £nil)

on £10m Stage

3 other assets

(December

2018: £nil).

Reconciliation of ECL movement to impairment charge/(release) for the period

£m

Home loans

(1)

Credit cards, unsecured loans and

other retail lending

1,863

Wholesale loans

191

ECL movement excluding assets derecognised

due to disposals and write-offs

2,053

Post write-off

recoveries

(124)

Exchange and other

adjustments

(96)

Impairment charge

on loan commitments and financial guarantees

Impairment charge

on other financial assets

Income statement charge for the period

1,912

Notes

Includes

foreign exchange

and interest

and fees in suspense.

Other financial

assets subject

to impairment not included

in the table above include cash

collateral and settlement

balances, financial assets

at fair value through other

comprehensive

income and other

assets.

These have a total gross exposure

of £149.3bn (December 2018: £129.9bn)

and impairment

allowance of £24m (December 2018:

£12m).

This

comprises

£12m ECL (December 2018: £10m)

on £148.5bn

Stage 1 assets

(December 2018: £129.3bn),

£2m (December 2018:

£2m) on £0.8bn

Stage 2 fair value

through other

comprehensive

income assets,

cash collateral and settlement

assets (December 2018: £0.6bn) and £10m (December

2018:

£nil) on

£10m Stage 3 other assets

(December 2018:

£nil)

Loan commitments and financial guarantees (audited)

Stage 1

Stage 2

Stage 3

Total

Gross

exposure

ECL

Gross

exposure

ECL

Gross

exposure

ECL

Gross

exposure

ECL

£m

Home loans

As at 1 January 2019

6,948

546

7,507

Net transfers between stages

(39)

(8)

Business activity in the year

2,848

Net drawdowns,

repayments, net re-

measurement and movement

due to exposure

and risk parameter

changes

(40)

(39)

Final repayments

(216)

(53)

(1)

(270)

As at 31 December 2019

9,542

500

10,046

Credit cards, unsecured loans and other retail lending

As at 1 January 2019

124,611

9,016

267

133,894

126

Net transfers between stages

117

(1,082)

(43)

965

(1)

Business activity in the year

14,619

218

14,843

Net drawdowns,

repayments, net re-

measurement and movement

due to exposure

and risk parameter

changes

(1,151)

(48)

(1,172)

(874)

(9)

(3,197)

(3)

Final repayments

(12,437)

(4)

(742)

(6)

(114)

(2)

(13,293)

(12)

As at 31 December 2019

125,759

6,238

250

132,247

120

Wholesale loans

As at 1 January 2019

178,430

12,564

404

191,398

145

Net transfers between stages

(875)

580

(8)

295

Business activity in the year

53,685

2,779

56,480

Net drawdowns,

repayments, net re-

measurement and movement

due to exposure

and risk parameter

changes

(487)

(1)

1,190

232

935

Final repayments

(44,914)

(24)

(4,666)

(36)

(266)

(3)

(49,846)

(63)

As at 31 December 2019

185,839

12,447

681

198,967

202

Risk review

Risk performance

Credit risk

117

Barclays PLC

2019 Annual Report on Form

20-F

Gross exposure for loans and advances at amortised cost (audited)

Stage 1

Stage 2

Stage 3

Total

£m

As at 1 January 2018

265,617

49,592

9,081

324,290

Net transfers between stages

1,385

(3,602)

2,217

Business activity in the year

74,419

2,680

374

77,473

- of which: Barclays

29,467

1,493

326

31,286

- of which: Barclays

International

42,346

1,164

43,554

Net drawdowns

and repayments

(13,140)

136

162

(12,842)

- of which: Barclays

(10,269)

(980)

(322)

(11,571)

- of which: Barclays

International

(1,305)

1,348

561

604

Final repayments

(41,946)

(5,359)

(1,071)

(48,376)

- of which: Barclays

(11,728)

(1,753)

(478)

(13,959)

- of which: Barclays

International

(29,421)

(3,520)

(549)

(33,490)

Disposals

(5,109)

(369)

(5,478)

Write-offs

(1,891)

As at 31 December 2018

281,226

43,447

8,503

333,176

Impairment allowance on loans and advances at amortised cost (audited)

Stage 1

Stage 2

Stage 3

Total

£m

As at 1 January 2018

608

3,112

3,382

7,102

Net transfers between stages

798

(1,182)

384

Business activity in the year

223

173

491

Net re-measurement

and movement due

to exposure and risk

parameter changes

(865)

638

1,918

1,691

UK economic uncertainty

adjustment

150

Final repayments

(76)

(176)

(152)

(404)

Disposals

(369)

Write-offs

(1,891)

As at 31 December 2018

688

2,715

3,367

6,770

Reconciliation of ECL movement to impairment charge/(release) for the period

ECL movement excluding

assets derecognised due to disposals and

write-offs

1,928

Post write-off

recoveries

(195)

Exchange and other

adjustments

(143)

Impairment release on loan commitments and financial guarantees

(125)

Impairment charge

on other financial assets

Income statement charge/(release) for the period

1,468

Notes

Other financial

assets subject

to impairment not included

in the table above include cash

collateral and settlement

balances, financial assets

at fair value through other

comprehensive

income and other

assets.

These have a total gross exposure

of £129.9bn (1 January 2018: £128.1bn)

and impairment

allowance of £12m (1 January

2018: £9m).

This

comprises

£10m ECL on £129.3bn Stage 1 assets

and £2m on £0.6bn Stage 2 fair

value through

other comprehensive

income assets.

Impairment

release of £

125m

on loan commitments

and financial

guarantees

represents reduction in

impairment allowance

of £149m

partially

offset

by exchange and other

adjustments

of £24m.

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Credit risk

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Gross exposure for loan commitments and financial guarantees (audited)

Stage 1

Stage 2

Stage 3

Total

£m

As at 1 January 2018

275,364

38,867

1,442

315,673

Net transfers between stages

13,521

(13,552)

Business activity in the year

65,404

811

66,215

Net drawdowns

and repayments

(14,491)

4,298

(473)

(10,666)

Final repayments

(29,809)

(8,298)

(316)

(38,423)

As at 31 December 2018

309,989

22,126

684

332,799

Provision

on loan commitments and financial guarantees (audited)

Stage 1

Stage 2

Stage 3

Total

£m

As at 1 January 2018

133

259

420

Net transfers between stages

(43)

Business activity in the year

Net remeasurement

and movement due

to exposure and risk

parameter changes

(79)

(22)

(57)

Final repayments

(15)

(44)

(51)

(110)

As at 31 December 2018

150

271

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Stage

2 decomposition

Loans and advances at amortised cost

2019

2018

Gross exposure

Impairment

allowance

Gross exposure

Impairment

allowance

As at 31 December

£m

Quantitative test

24,034

2,059

30,665

2,506

Qualitative test

12,733

278

12,206

183

30 days past due backstop

1,467

576

Total Stage 2

38,234

2,373

43,447

2,715

Note

Where balances satisfy

more than one of the

above three criteria

for determining a significant

increase in credit risk,

the corresponding gross exposure

and ECL has been assigned

in order of categories

presented.

Stage 2 exposures are predominantly

identified using quantitative

tests where the lifetime PD has deteriorated

more than a pre-

determined amount

since origination. This is augmented by inclusion of accounts meeting the designated

high risk criteria (including watchlist) for the portfolio under

the qualitative test. Qualitative tests predominantly

include £9.3bn

in Barclays UK of which £7.4bn

relates to

UK Home Finance, £1.1bn

relates to

Business Banking and £0.4bn

relates to

Barclaycard

UK. A further £3.4bn

relates to

Barclays International of which £1.7bn

relates to

Corporate

and

Investment Bank, £0.9bn

relates to Barclaycard

International and £0.7bn

relates to

Private Bank.

A small number of other

accounts (2% of impairment allowances and 4% of gross exposure)

are included in Stage 2. These accounts are not

otherwise identified by the quantitative or qualitative tests but are more

than 30 days past due. The percentage

triggered

by these backstop criteria

is a measure of the effectiveness of the

Stage 2 criteria in identifying deterioration prior to delinquency

These balances include items in the

Corporate

and Investment Bank for reasons

such as outstanding interest and fees rather than principal balances.

For further

detail on the three criteria for determining a significant increase in credit risk required

for Stage 2 classification, refer to Note 7 on page

225

Stage

3 decomposition

Loans and advances at amortised cost

2019

2018

Gross exposure

Impairment

allowance

Gross exposure

Impairment

allowance

As at 31 December

£m

Exposures not charged

-off including within cure period

3,540

857

4,589

916

Exposures individually assessed or in recovery

book

4,383

2,371

3,914

2,451

Total Stage 3

7,923

3,228

8,503

3,367

Notes

Includes

£2.5bn of gross exposure

in a cure

period that must remain

in Stage 3 for a minimum of 12 months before moving to Stage

Exposures

individually

assessed or in recovery

book

cannot cure

out of Stage 3.

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Credit risk

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Management adjustments

models

for impairment

(audited)

Management adjustments to impairment models are applied in order

to factor in certain conditions or changes in policy that are not fully

incorporated

into the impairment models, or to reflect additional

facts and circumstances at the period

end. Management adjustments are

reviewed and incorporated

into future model development where applicable.

Total management

adjustments to impairment allowance are presented b

product

below.

Management adjustments to models for impairment

(audited)

2019

2018

Management

adjustments

impairment

allowances

Proportion

total impairment

allowances

Management

adjustments

impairment

allowances

Proportion of total

impairment

allowances

As at 31 December

£m

Home loans

13.2

12.7

Credit cards, unsecured

loans and other retail lending

308

6.3

385

7.2

Wholesale loans

(25)

(2.5)

(6)

(0.6)

Total

340

5.4

438

6.5

Note

Positive values

relate to an increase

in impairment

allowance.

Home loans:

The low average LTV

nature of the UK Home Loans portfolio means that modelled ECL estimates are low in all but the most severe

economic scenarios. An adjustment is held to maintain an appropriate

level of ECL.

Credit cards, unsecured loans

and other retail lending:

Management adjustments primarily relate to UK Cards where model

adjustments have

been made to maintain adequacy

of Loss Given Default and Probability of Default estimates.

Following recent

portfolio analysis and industry benchmarking,

releases were applied to the

UK cards and US card

portfolios

to account for

changes in the modelled lifetime of credit cards in

Stage 2.

These adjustments will be removed

once updates to the model have been incorporated

A £100m

ECL adjustment

is held in UK Cards for the anticipated impact of

economic uncertainty in the UK, first taken in December

2018

and

retained as at 2019

year-end.

Wholesale loans:

Adjustments include a release in Investment Bank to reduce

inappropriate

ECL sensitivity

to a macroeconomic

variable and model

adjustments in Corporate

and Investment Bank related to Probability of Default at origination and Loss Given Default floors.

A £50m ECL adjustment is held in Corporate and Investment

Bank for the anticipated impact of economic

uncertainty in the UK, first taken in

December 2018

and retained as at

2019

year-end.

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Measurement

uncertainty

and sensitivity

analysis

The measurement of ECL involves complexity and judgement, including

estimation of probabilities of default (PD), loss given default (LGD), a range

of unbiased future economic

scenarios, estimation of expected lives, estimation of exposures at default (EAD) and assessing significant increases in

credit risk.

The Group

uses a

five-scenario model to calculate ECL. An external consensus forecast is

assembled from key sources, including HM Treasury

(short and medium term forecasts)

Bloomberg

(based on median of economic forecasts) and the Urban

Land Institute (for US House Prices),

which forms the Baseline scenario. In addition, two adverse scenarios

(Downside 1 and Downside

2) and two favourable

scenarios (Upside 1 and

Upside 2) are derived, with associated probability

weightings. The adverse scenarios are calibrated to a similar severity to internal stress

tests,

whilst also considering IFRS 9 specific sensitivities and non

-linearity. Downside 2 is benchmarked

to the Bank of England’s annual cyclical

scenarios

and to the most severe scenario from Moody’s inventory,

but is not designed to be the same. The favourable scenarios are calibrated to be

symmetric to the adverse scenarios, subject to a ceiling calibrated to relevant

recent favourable

benchmark

scenarios. All

scenarios are regenerated

at a minimum annually. The scenarios include

eight economic variables, (GDP,

unemployment,

House Price Index (HPI)

and base rates

in both the

UK and US markets), and expanded

variables using statistical

models based on

historical correlations. The upside and downside shocks are

designed to evolve over

a five-year stress horizon,

with all five scenarios converging

to a steady

state after approximately eight years.

Scenario weights (audited)

The methodology

for estimating probability weights for each of the scenarios involves a comparison

of the distribution of key historical UK and US

macroeconomic

variables against the

forecast paths of the five scenarios. The methodology

works such that the Baseline (reflecting current

consensus outlook) has the highest weight and the weights of adverse and favourable

scenarios depend on the deviation from

the Baseline;

the

further from

the Baseline,

the smaller the weight. This is

reflected in the table below where the probability weights of the

scenarios as of 31

December 2019

are shown. A single set

of five scenarios is used across all portfolios and all five weights are normalised

to equate to 100%. The

same scenarios and weights that are used in the estimation of expected credit losses are

also used for Barclays internal planning purposes.

The

impacts across the portfolios are different

because of the sensitivities of each of the portfolios to specific macroeconomic

variables, for example,

mortgages are highly sensitive to house prices and base ra

tes, credit cards and unsecured

consumer loans are highly sensitive to unemployment.

The tables below show the macroeconomic

variables for each scenario and their respective scenario weights. Macroeconomic

variables are

presented using the most relevant basis for each variable.

5-year average

tables and movement over time graphs provide

additional transparency.

Scenario probability

weighting (audited)

Upside 2

Upside 1

Baseline

Downside

As at 31 December 2019

Scenario probability weighting

10.1

23.1

40.8

22.7

3.3

As at 31 December 2018

Scenario probability weighting

9.0

24.0

41.0

23.0

3.0

The weights of Upside 2 and Downside

2 have increased slightly reflecting the small decrease in dispersion in the scenarios. The impact on

ECL is

immaterial.

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Macroeconomic variables

used in the calculation of ECL

(specific bases)

(audited)

Upside 2

Upside 1

Baseline

Downside

As at 31 December 2019

UK GDP

4.2

2.9

1.6

0.2

(4.7)

UK unemployment

3.4

3.8

4.2

5.7

8.7

UK HPI

46.0

32.0

3.1

(8.2)

(32.4)

UK bank rate

0.5

0.7

2.8

4.0

US GDP

4.2

3.3

1.9

0.4

(3.4)

US unemployment

3.0

3.5

3.9

5.3

8.5

US HPI

37.1

23.3

3.0

0.5

(19.8)

US federal funds rate

1.5

1.7

3.0

3.5

As at 31 December 2018

UK GDP

4.5

3.1

1.7

0.3

(4.1)

UK unemployment

3.4

3.9

4.3

5.7

8.8

UK HPI

46.4

32.6

3.2

(0.5)

(32.1)

UK bank rate

0.8

1.0

2.5

4.0

US GDP

4.8

3.7

2.1

0.4

(3.3)

US unemployment

3.0

3.4

3.7

5.2

8.4

US HPI

36.9

30.2

4.1

(17.4)

US federal funds rate

2.3

2.7

3.0

3.5

Macroeconomic variables

used in the calculation of ECL

(5-year averages)

(audited)

Upside 2

Upside 1

Baseline

Downside

As at 31 December 2019

UK GDP

3.2

2.4

1.6

0.8

(0.7)

UK unemployment

3.5

3.9

4.2

5.4

7.7

UK HPI

7.9

5.7

3.1

(1.1)

(6.5)

UK bank rate

0.5

0.7

2.5

3.7

US GDP

3.5

2.8

1.9

1.0

(0.5)

US unemployment

3.1

3.6

3.9

5.0

7.5

US HPI

6.5

4.3

3.0

1.3

(3.7)

US federal funds rate

1.6

1.7

2.9

3.4

As at 31 December 2018

UK GDP

3.4

2.6

1.7

0.9

(0.6)

UK unemployment

3.7

4.0

4.3

5.1

7.9

UK HPI

7.9

5.8

3.2

0.9

(6.4)

UK bank rate

0.8

1.0

2.3

3.7

US GDP

3.7

3.0

2.1

1.1

(0.5)

US unemployment

3.1

3.5

3.7

4.7

7.4

US HPI

6.5

5.4

4.1

2.4

(2.6)

US federal funds rate

2.3

2.7

3.0

3.4

Notes

UK GDP

= Real

GDP growth

seasonally

adjusted;

UK unemployment

= UK unemployment

rate 16-year+; UK HPI = Halifax

All Houses,

All Buyers

Index; US GDP = Real GDP growth

seasonally adjusted;

US unemployment

= US civilian unemployment

rate 16-year+; US HPI = FHFA house

price index.

Highest

annual

growth in Upside

scenarios; 5-year average in Baseline;

lowest annual growth in

Downside scenarios.

Lowest yearly average

in Upside

scenarios;

5-year average in Baseline;

highest yearly average

in Downside scenarios.

Cumulative

growth (trough-to-peak) in

Upside

scenarios;

5-year average in Baseline;

cumulative fall (peak

-to-trough) in Downside

scenarios.

Over the year,

the macroeconomic

baseline variables have worsened in the US, in part due to the trade dispute with China. Baseline expectations for

the US federal funds rate have also moved

lower from

2.7% to 1.7% averaged

over the first five years.

Macroeconomic

baseline variables in

the UK

have remained

fairly flat with a small decrease in bank rates driven

by market expectations of lower interest rates in the

next few years. The other

scenarios are generally unchanged

from 2018,

with the exception of UK HPI in the Downside 1 scenario where the cumulative fall in house prices

now represents a more

severe fall of 8.2% versus 0.5% in 2018.

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The graphs below

plot the historical data for GDP growth rate and unemployment

rate in the UK and US as

well as the forecasted data under

each

of the five scenarios.

ECL under 100% weighted scenarios

for modelled portfolios

(audited)

The table below shows the ECL assuming scenarios have been

100%

weighted. Model exposures are allocated to a stage based on the individual

scenario rather than through

a probability-weighted

approach as required for Barclays reported

impairment allowances. As

a result, it is not

possible to back solve to the final reported

weighted ECL from the individual scenarios as

a balance may be assigned

to a different stage dependen

on the scenario. Model exposure uses exposure

at default (EAD) values and is not directly comparable

to gross exposure used in prior

disclosures.

For Credit cards, unsecured

loans and other retail lending, an average EAD measure is used (12

month or lifetime, depending

on stage allocation in

each scenario). Therefore,

the model exposure movement

into Stage 2 is

higher than the corresponding

Stage 1 reduction.

All ECL using a Model is included, with the exception of Treasury

assets (£9m of ECL),

providing

additional coverage

as compared to the 2018

year-

end disclosure.

Non-modelled

exposures and management

adjustments are excluded. Management adjustments can be found on page 120

The

prior year

comparative includ

es key principal portfolios amounting to circa

80% of total impairment allowance.

Model Exposures allocated to Stage 3 do not change in any of the scenarios as the transition criteria

relies only on observable

evidence of default as

at 31 December

2019

and not on macroeconomic scenarios.

The Downside 2 scenario represents a severe global recession

with substantial falls in both UK and US GDP.

Unemployment

in both markets rises

towards 9% and there are

substantial falls in asset prices including h

ousing.

Under the Downside 2

scenario, model exposure

moves between stages as

the economic

environment

weakens. This can be seen

in the movement

of £29bn

of model exposure into Stage 2 between the Weighted and Downside

2 scenario. ECL increases in Stage 2 predominantly due to

unsecured

portfolios as economic conditions deteriorate.

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Scenarios

As at 31 December 2019

Weighted

Upside 2

Upside 1

Baseline

Downside

Stage 1 Model Exposure (£m)

Home loans

137,929

139,574

138,992

138,249

136,454

132,505

Credit cards, unsecured

loans and other retail lending

68,619

69,190

69,012

68,388

68,309

67,015

Wholesale loans

160,544

162,717

162,058

161,111

157,720

143,323

Stage 1 Model ECL (£m)

Home loans

Credit cards, unsecured

loans and other retail lending

505

490

495

511

528

Wholesale loans

209

162

174

188

271

297

Stage 1 Coverage (%)

Home loans

Credit cards, unsecured

loans and other retail lending

0.7

0.8

Wholesale loans

0.1

0.2

Stage 2 Model Exposure (£m)

Home loans

16,889

15,245

15,826

16,570

18,364

22,314

Credit cards, unsecured

loans and other retail lending

13,406

11,449

12,108

13,075

15,663

19,615

Wholesale loans

15,947

13,773

14,433

15,380

18,770

33,168

Stage 2 Model ECL (£m)

Home loans

170

Credit cards, unsecured

loans and other retail lending

1,844

1,412

1,562

1,771

2,384

4,285

Wholesale loans

414

285

323

374

579

1,427

Stage 2 Coverage (%)

Home loans

0.2

0.3

0.8

Credit cards, unsecured

loans and other retail lending

13.8

12.3

12.9

13.5

15.2

21.8

Wholesale loans

2.6

2.1

2.2

2.4

3.1

4.3

Stage 3 Model Exposure (£m)

Home loans

1,670

Credit cards, unsecured

loans and other retail lending

3,008

Wholesale loans

1,489

Stage 3 Model ECL (£m)

Home loans

268

262

264

266

272

316

Credit cards, unsecured

loans and other retail lending

2,198

2,154

2,174

2,195

2,235

2,292

Wholesale loans

118

111

114

117

127

128

Stage 3 Coverage (%)

Home loans

16.0

15.7

15.8

15.9

16.3

18.9

Credit cards, unsecured

loans and other retail lending

73.1

71.6

72.3

73.0

74.3

76.2

Wholesale loans

7.9

7.4

7.6

7.9

8.5

8.6

Total Model ECL (£m)

Home loans

315

299

303

307

326

505

Credit cards, unsecured

loans and other retail lending

4,547

4,056

4,231

4,461

5,130

7,105

Wholesale loans

741

558

611

679

977

1,852

Note

Material wholesale loan

defaults

are individually

assessed across different

recovery strategies.

As a result, ECL of £419m is

reported

as non-modelled in

the table below.

Reconciliation to total ECL

£m

Total model

ECL

5,603

ECL from non

-modelled, individually assessed,

and other

adjustments

687

ECL from management adjustments

340

Total ECL

6,630

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The total weighted ECL represents a 3% uplift from the Baseline ECL, largely driven

by credit card losses which have

more linear loss profiles than

UK home loans and wholesale loan positions.

Home loans:

Total weighted

ECL of £315m

represents a 2% increase over the Baseline ECL (£307m),

and coverage ratios remain steady across the

Upside scenarios, Baseline and Downside

1 scenario. However,

total ECL increases in the Downside 2 scenario to £506m, driven

by a significant fall

in UK HPI (32.4%)

reflecting the non-linearity of the UK portfolio.

Credit cards, unsecured loans

and other retail lending:

Total weighted ECL of £4,547m

represents a 2% increase over the Baseline ECL (£4,461m)

reflecting the range

of economic scenarios used, mainly impacted by Unemployment.

Total ECL increases to £7,105m

under the Downside 2

scenario, mainly driven

by Stage 2, where coverage

rates increase to 21.8% from a weighted scenario approach

of 13.8

and circa £6bn increase

in model exposure that meets the Significant Increase

in Credit Risk criteria and transitions from Stage 1 to Stage 2.

Wholesale loans:

Total weighted ECL of £741m

represents a 9% increase over the Baseline ECL (£679m)

reflecting the range of economic

scenarios used, with exposures in the Investment Bank particularly

sensitive to the Downside 2 scenario.

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Scenarios

As at 31 December 2018

Weighted

Upside

Baseline

Downside

Stage 1 Gross Exposure (£m)

Home loans

115,573

116,814

116,402

115,924

114,858

109,305

Credit cards, unsecured

loans and other retail lending

30,494

32,104

31,082

30,536

29,846

24,884

Wholesale loans

80,835

81,346

81,180

80,941

80,517

73,715

Stage 1 ECL (£m)

Home loans

Credit cards, unsecured

loans and other retail lending

355

304

343

351

365

388

Wholesale loans

175

161

163

162

203

242

Stage 1 Coverage (%)

Home loans

Credit cards, unsecured

loans and other retail lending

1.2

0.9

1.1

1.2

1.6

Wholesale loans

0.2

0.3

Stage 2 Gross Exposure (£m)

Home loans

17,455

16,214

16,627

17,105

18,170

23,724

Credit cards, unsecured

loans and other retail lending

10,943

9,334

10,355

10,902

11,591

16,553

Wholesale loans

11,377

10,866

11,031

11,271

11,694

18,496

Stage 2 ECL (£m)

Home loans

172

Credit cards, unsecured

loans and other retail lending

2,013

1,569

1,779

1,969

2,331

4,366

Wholesale loans

323

277

290

302

397

813

Stage 2 Coverage (%)

Home loans

0.7

Credit cards, unsecured

loans and other retail lending

18.4

16.8

17.2

18.1

20.1

26.4

Wholesale loans

2.8

2.5

2.6

2.7

3.4

4.4

Stage 3 Gross Exposure (£m)

Home loans

1,104

Credit cards, unsecured

loans and other retail lending

2,999

Wholesale loans

1,165

n/a

1,165

n/a

Stage 3 ECL (£m)

Home loans

Credit cards, unsecured

loans and other retail lending

2,200

2,154

2,174

2,199

2,234

2,297

Wholesale loans

333

n/a

323

n/a

Stage 3 Coverage (%)

Home loans

0.5

0.3

0.4

0.5

0.7

2.4

Credit cards, unsecured

loans and other retail lending

73.4

71.8

72.5

73.3

74.5

76.6

Wholesale loans

28.6

n/a

27.7

n/a

Total ECL (£m)

Home loans

208

Credit cards, unsecured

loans and other retail lending

4,568

4,027

4,296

4,519

4,930

7,051

Wholesale loans

831

n/a

787

n/a

Note

Material corporate loan

defaults

are individually

assessed across different

recovery strategies

which are

impacted by the macroeconomic variables. As

a result,

only the Baseline

scenario is

shown together

with the

weighted estimate

which reflects alternative

recovery paths.

Staging sensitivity

(audited)

An increase of 1% (£3,454m)

of total

gross exposure

into Stage 2 (from Stage 1), would result in an increase in ECL impairment allowance of

£207m

based on applying the difference

in Stage 2 and Stage

1 average impairment

coverage

ratios to the

movement in gross exposure

(refer to

Loans and advances at amortised cost by product

on page 114).

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Analysis of

the concentration

of credit

risk

A concentration of credit risk exists when a number

of counterparties are located in a common geographical

region or are engaged in similar

activities and have similar economic

characteristics that would cause their ability to meet contractual obligations to be similarly affected by

changes in economic or

other conditions. The Group

implements limits

on concentrations in order

to mitigate

the risk. The analyses of credit risk

concentrations presented

below are based on the location of the counterparty

or customer or

the industry in which they are engaged. Further detail

on the Group

policies with

regard

to managing concentration

risk is

presented on page

159

of Barclays PLC Pillar 3 Report 2019

(unaudited).

Geographic concentrations

As at 31 December

2019

the geographic concentration of the Group’s

assets

remained broadly

consistent with

2018

Exposure is concentrated in

the UK 40% (2018:

%), in the

Americas 34% (2018:

34%) and Europe 20% (2018

21%).

Credit risk concentrations by geography (audited)

United

Kingdom

Americas

Europe

Asia

Africa and

Middle East

Total

£m

As at 31 December 2019

On-balance sheet:

Cash and balances at central banks

51,477

28,273

54,632

15,130

746

150,258

Cash collateral and settlement balances

27,431

23,595

26,008

5,385

837

83,256

Loans and advances at amortised cost

257,459

46,569

25,599

6,275

3,213

339,115

Reverse repurchase

agreements and other similar secured lending

1,005

1,056

470

833

3,379

Trading

portfolio assets

11,550

27,621

13,397

4,786

763

58,117

Financial assets at fair value through

the income statement

29,001

70,849

11,286

12,534

1,921

125,591

Derivative financial instruments

69,844

63,344

83,165

11,189

1,694

229,236

Financial assets at fair value through

other comprehensive income

9,444

23,052

24,443

7,665

123

64,727

Other assets

1,170

126

1,375

Total on-balance sheet

458,595

283,267

239,628

63,434

10,130

1,055,054

Off-balance sheet:

Contingent liabilities

7,539

10,839

3,862

1,562

726

24,528

Loan commitments

105,350

188,108

36,033

3,166

1,797

334,454

Total off-balance sheet

112,889

198,947

39,895

4,728

2,523

358,982

Total

571,484

482,214

279,523

68,162

12,653

1,414,036

As at 31 December 2018

On-balance sheet:

Cash and balances at central banks

64,343

36,045

66,887

9,076

718

177,069

Cash collateral and settlement balances

27,418

22,184

22,316

4,928

376

77,222

Loans and advances at amortised cost

240,116

49,592

27,913

5,371

3,414

326,406

Reverse repurchase

agreements and other similar secured lending

724

113

1,320

2,308

Trading

portfolio assets

12,444

34,369

13,375

3,616

713

64,517

Financial assets at fair value through

the income statement

33,842

73,489

20,984

13,556

1,758

143,629

Derivative financial instruments

69,798

58,699

80,003

12,172

1,866

222,538

Financial investments - debt securities

11,494

13,953

23,298

2,786

163

51,694

Other assets

780

100

125

1,006

Total on-balance sheet

460,959

288,499

255,014

51,588

10,329

1,066,389

Off-balance sheet:

Contingent liabilities

5,910

8,996

3,572

1,289

536

20,303

Loan commitments

108,506

175,995

34,524

3,346

1,852

324,223

Total off-balance sheet

114,416

184,991

38,096

4,635

2,388

344,526

Total

575,375

473,490

293,110

56,223

12,717

1,410,915

Industry concentrations

The concentration

of the Group’s assets by industry remained broadly

consistent year on year. As at 31 December

2019

total assets

concentrated

in banks and other financial institutions was 36%

(2018

36%), predominantly within derivative financial

instruments. The proportion

of the overall

balance concentrated

in governments and

central banks was 19% (2018

20%), cards, unsecured loans and other

personal lending was 13%

(2018

13%) and

in home loans remained stable at

(2018

11%).

Risk review

Risk performance

Credit risk

128

Barclays PLC

2019 Annual Report on Form

20-F

Credit risk concentrations by industry (audited)

Banks

Other

financial

insti-

tutions

Manu-

facturing

Const

ruction

and

property

Govern-

ment and

central

bank

Energy

and

water

Whole-

sale

and retail

distri-

bution

and

leisure

Business

and other

services

Home

loans

Cards,

unsecured

loans and

other

personal

lending

Other

Total

£m

As at 31 December 2019

On-balance sheet:

Cash and balances at

central banks

150,178

150,258

Cash collateral and

settlement balances

16,599

55,262

516

9,251

536

642

335

83,256

Loans and advances at

amortised cost

8,788

20,473

8,323

24,403

23,847

5,346

10,031

17,125

154,479

55,232

11,068

339,115

Reverse repurchase

agreements and other

similar secured lending

1,172

2,134

3,379

Trading

portfolio assets

2,872

9,049

2,787

1,053

33,092

2,996

842

3,158

2,268

58,117

Financial assets at fair

value through

the income

statement

10,747

97,849

634

6,909

5,353

3,569

358

127

125,591

Derivative financial

instruments

125,323

83,285

2,049

2,273

7,811

3,077

562

1,520

3,334

229,236

Financial assets at fair

value through

other

comprehensive

income

18,596

4,370

286

40,763

430

282

64,727

Other assets

897

322

109

1,375

Total on-balance sheet

185,001

272,817

14,310

34,993

270,370

12,007

11,488

26,553

154,837

55,252

17,426

1,055,054

Off-balance sheet:

Contingent liabilities

1,250

8,043

3,549

703

1,981

3,318

1,072

2,831

109

1,671

24,527

Loan commitments

1,909

47,815

42,148

14,358

1,704

29,877

14,711

22,932

10,060

124,841

24,100

334,455

Total off-balance sheet

3,159

55,858

45,697

15,061

3,685

33,195

15,783

25,763

10,060

124,950

25,771

358,982

Total

188,160

328,675

60,007

50,054

274,055

45,202

27,271

52,316

164,897

180,202

43,197

1,414,036

As at 31 December 2018

On-balance sheet:

Cash and balances at

central banks

177,069

Cash collateral and

settlement balances

17,341

48,398

498

9,235

386

223

717

349

77,222

Loans and advances at

amortised cost

9,478

18,653

8,775

23,565

12,764

5,515

11,609

19,716

150,284

55,298

10,749

326,406

Reverse repurchase

agreements and other

similar secured lending

1,368

865

2,308

Trading

portfolio assets

3,500

9,550

3,825

897

34,968

4,202

1,202

3,481

2,892

64,517

Financial assets at fair

value through

the income

statement

30,374

96,378

8,914

5,331

2,178

405

143,629

Derivative financial

instruments

123,769

80,376

2,390

1,993

5,987

2,791

486

2,004

2,742

222,538

Financial investments -

debt securities

12,135

2,250

200

36,973

136

51,694

Other assets

580

426

1,006

Total on-balance sheet

198,545

256,896

15,488

35,681

282,365

12,926

13,533

28,232

150,689

55,298

16,736

1,066,389

Off-balance sheet:

Contingent liabilities

939

3,840

3,470

626

1,890

3,491

952

3,455

116

1,524

20,303

Loan commitments

1,267

42,890

39,978

14,362

1,629

26,519

14,566

22,142

8,900

126,640

25,330

324,223

Total off-balance sheet

2,206

46,730

43,448

14,988

3,519

30,010

15,518

25,597

8,900

126,756

26,854

344,526

Total

200,751

303,626

58,936

50,669

285,884

42,936

29,051

53,829

159,589

182,054

43,590

1,410,915

Risk review

Risk performance

Credit risk

129

Barclays PLC

2019 Annual Report on Form

20-F

The approach

management and

representation

of credit

quality

Asset credit quality

The credit quality distribution is based on the IFRS 9 12

-month probability of default (PD) at the reporting date to ensure comparability with other

ECL disclosures on pages 112

to 119.

The following internal measures are used

to determine credit quality for loans:

Default Grade

Retail and Wholesale

lending

Probability

of default

Credit Quality Description

1-3

0.0 to <0.05%

Strong

4-5

0.05 to <0.15%

6-8

0.15

to <0.30%

9-11

0.30 to <0.60%

-14

0.60 to <2.15%

Satisfactory

-19

2.15

to <10%

10 to <11.35%

20-

11.35

to <100

Higher Risk

100%

Credit Impaired

For retail clients, a range

of analytical tools is used to derive the probability of default of clients at inception and on an ongoing

basis.

For loans that are not past due, these descriptions can be summarised as follows:

Strong:

there is a very high

likelihood of the asset being recovered

in full.

Satisfactory:

while there is a high likelihood that the asset will be recovered

and therefore,

of no cause for concern to the Group, the asset may not

be collateralised, or may

relate to unsecured retail facilities. At the lower end

of this grade there are customers that are being more

carefully

monitored, for

example, corporate

customers which are indicating some evidence of deterioration, mortgages with a high loan to value, and

unsecured

retail loans operating outside normal product

guidelines.

Higher risk:

there is concern

over the obligor’s ability to make payments when due. However,

these have not yet converted

to actual delinquency.

There may also be doubts

over the value of collateral or security provided. However,

the borrower

or counterparty is continuing to make payments

when due and is expected to settle all outstanding amounts of principal and interest.

Loans that are past due are monitore

closely, with impairment allowances raised as appropriate

and in line with the Group’s impairment policies.

Debt securities

For assets held at fair value, the carrying

value on the balance sheet will include, among other things, the credit risk of the issuer.

Most listed and

some unlisted securities are rated by external

rating agencies. The Group mainly uses external credit ratings provided

by Standard & Poor’s,

Fitch or

Moody’s.

Where such ratings are not available

or are not current,

the Group will use its own internal ratings for the securities.

Balance sheet credit quality

The following tables present the credit quality of the

Group

’s assets

exposed to credit risk.

Overview

As at 31 December

2019,

the ratio of the Group’s on-balance

sheet assets

classified as strong (0.0 to <0.60%)

remained stable at 86%

(2018:

86%)

of total assets exposed to credit risk.

Further analysis of debt securities by issuer and issuer type and netting and collateral

arrangements on

derivative financial instruments is presented

on pages 138

and 139

respectively.

Risk review

Risk performance

Credit risk

130

Barclays PLC

2019 Annual Report on Form

20-F

Balance sheet credit quality (audited)

PD range

Total

PD range

Total

0.0 to

<0.60%

0.60 to

<11.35%

11.35

100%

0.0 to

<0.60%

0.60 to

<11.35%

11.35

100%

£m

As at 31 December 2019

Cash and balances at central banks

150,258

100

Cash collateral and settlement balances

73,122

10,134

83,256

100

Loans and advances at amortised cost:

Home loans

146,269

5,775

2,435

154,479

100

Credit cards, unsecured

and other retail

lending

20,750

31,425

3,121

55,296

100

Wholesale loans

97,854

28,150

3,336

129,340

100

Total loans and advances at amortised cost

264,873

65,350

8,892

339,115

100

Reverse repurchase agreements and other

similar

secured lending

3,290

3,379

100

Trading portfolio

assets:

Debt securities

49,117

3,479

143

52,739

100

Traded

loans

864

3,219

1,295

5,378

100

Total trading portfolio assets

49,981

6,698

1,438

58,117

100

Financial assets at fair value through the

income statement:

Loans and advances

14,467

7,993

232

22,692

100

Debt securities

4,806

413

5,249

100

Reverse repurchase

agreements

62,475

34,232

180

96,887

100

Other financial assets

757

763

100

Total financial assets at fair value through the

income statement

82,505

42,644

442

125,591

100

Derivative financial instruments

216,103

13,012

121

229,236

100

Financial assets at fair value through other

comprehensive income

64,727

100

Other assets

1,242

133

1,375

100

Total on-balance sheet

906,101

138,060

10,893

1,055,054

100

As at 31 December 2018

Cash and balances at central banks

177,069

100

Cash collateral and settlement balances

70,455

6,763

77,222

100

Loans and advances at amortised cost:

Home loans

137,449

9,701

3,134

150,284

100

Credit cards, unsecured

and other retail

lending

21,786

31,664

2,981

56,431

100

Wholesale loans

86,271

30,108

3,312

119,691

100

Total loans and advances at amortised cost

245,506

71,473

9,427

326,406

100

Reverse repurchase agreements and other

similar

secured lending

1,820

444

2,308

100

Trading portfolio

assets:

Debt securities

51,896

4,998

389

57,283

100

Traded

loans

1,903

4,368

963

7,234

100

Total trading portfolio assets

53,799

9,366

1,352

64,517

100

Financial assets at fair value through the

income statement:

Loans and advances

13,177

6,295

19,524

100

Debt securities

4,380

4,522

100

Reverse repurchase

agreements

85,887

31,813

1,341

119,041

100

Other financial assets

524

542

100

Total financial assets at fair value through the

income statement

103,968

38,207

1,454

143,629

100

Derivative financial instruments

211,695

10,791

222,538

100

Financial assets at fair value through other

comprehensive income

51,546

148

51,694

100

Other assets

723

283

1,006

100

Total on-balance sheet

916,581

137,475

12,333

1,066,389

100

Risk review

Risk performance

Credit risk

131

Barclays PLC

2019 Annual Report on Form

20-F

Credit exposures by internal PD grade

The below tables represents credit risk

profile by PD grade

for loans and advances at amortised cost, contingent liabilities and loan commitments.

Stage 1 higher risk assets, presented gross of associated collateral held,

are of weaker credit quality but have not significantly deteriorated

since

origination. Examples would include leveraged

corporate

loans or non-

prime credit

cards.

IFRS 9 Stage 1 and Stage 2 classification is not dependent solely on the absolute probability

of default but on elements that determine a Significant

Increase in Credit Risk (see Note 7 on page 225

), including relative movement in probability

of default since

initial recognition.

There is therefore no

direct relationship between credit quality and

IFRS 9 stage classification.

Credit risk profile by internal PD grade for loans and advances at amortised cost (audited)

Gross carrying amount

Allowance for ECL

Net

exposure

Coverage

ratio

Grading

PD range

Credit quality

description

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

£m

As at 31 December 2019

1-3

0.0 to <0.05%

Strong

91,993

1,615

93,608

93,582

4-5

0.05 to <0.15%

Strong

92,668

7,704

100,372

100,348

6-8

0.15

to <0.30%

Strong

29,187

4,444

33,631

33,603

0.1

9-11

0.30 to <0.60%

Strong

34,515

2,932

37,447

107

37,340

0.3

-14

0.60 to <2.15%

Satisfactory

35,690

4,341

40,031

210

187

397

39,634

1.0

-19

2.15

to <10%

Satisfactory

9,041

9,190

18,231

232

981

1,213

17,018

6.7

10 to <11.35%

Satisfactory

5,235

3,629

8,864

104

166

8,698

1.9

20-

11.35

to <100%

Higher Risk

937

4,379

5,316

1,055

1,119

4,197

21.0

100%

Credit Impaired

7,923

3,228

4,695

40.7

Total

299,266

38,234

7,923

345,423

707

2,373

3,228

6,308

339,115

1.8

As at 31 December 2018

1-3

0.0 to <0.05%

Strong

69,216

1,413

70,629

70,582

0.1

4-5

0.05 to <0.15%

Strong

72,460

3,142

75,602

75,583

6-8

0.15

to <0.30%

Strong

47,172

4,728

51,900

51,850

0.1

9-11

0.30 to <0.60%

Strong

43,315

4,273

47,588

47,491

0.2

-14

0.60 to <2.15%

Satisfactory

38,831

9,561

48,392

255

339

594

47,798

1.2

-19

2.15

to <10%

Satisfactory

6,920

8,806

15,726

202

992

1,194

14,532

7.6

10 to <11.35%

Satisfactory

2,979

6,401

9,380

186

237

9,143

2.5

20-

11.35

to <100%

Higher Risk

333

5,123

5,456

1,131

1,165

4,291

21.4

100%

Credit Impaired

8,503

3,367

5,136

39.6

Total

281,226

43,447

8,503

333,176

688

2,715

3,367

6,770

326,406

2.0

Risk review

Risk performance

Credit risk

132

Barclays PLC

2019 Annual Report on Form

20-F

Credit risk profile by internal PD grade for contingent liabilities

(audited)

Gross carrying amount

Allowance for ECL

Net

exposure

Coverage

ratio

Grading

PD range

Credit quality

description

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

£m

As at 31 December 2019

1-3

0.0 to <0.05%

Strong

6,947

118

7,065

7,062

4-5

0.05 to <0.15%

Strong

4,199

4,239

4,238

6-8

0.15

to <0.30%

Strong

2,953

103

3,056

3,055

9-11

0.30 to <0.60%

Strong

4,551

136

4,687

4,683

0.1

-14

0.60 to <2.15%

Satisfactory

2,529

654

3,183

3,168

0.5

-19

2.15

to <10%

Satisfactory

663

244

907

895

1.3

10 to <11.35%

Satisfactory

421

172

593

575

3.0

20-

11.35

to <100%

Higher Risk

117

282

399

369

7.5

100%

Credit Impaired

355

350

1.4

Total

22,380

1,749

355

24,484

24,395

0.4

As at 31 December 2018

1-3

0.0 to <0.05%

Strong

6,674

6,711

6,708

4-5

0.05 to <0.15%

Strong

3,687

129

3,816

3,815

6-8

0.15

to <0.30%

Strong

1,433

1,488

1,487

0.1

9-11

0.30 to <0.60%

Strong

3,206

222

3,428

3,424

0.1

-14

0.60 to <2.15%

Satisfactory

2,543

509

3,052

3,043

0.3

-19

2.15

to <10%

Satisfactory

464

252

716

712

0.6

10 to <11.35%

Satisfactory

534

203

737

726

1.5

20-

11.35

to <100%

Higher Risk

228

277

267

3.6

100%

Credit Impaired

2.7

Total

18,590

1,635

20,299

20,254

0.2

Credit risk profile by internal PD grade for loan commitments (audited)

Gross carrying amount

Allowance for ECL

Net

exposure

Coverage

ratio

Grading

PD range

Credit quality

description

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

£m

As at 31 December 2019

1-3

0.0 to <0.05%

Strong

85,908

1,025

86,933

86,930

4-5

0.05 to <0.15%

Strong

70,112

1,889

72,001

71,995

6-8

0.15

to <0.30%

Strong

53,340

1,019

54,359

54,350

9-11

0.30 to <0.60%

Strong

44,097

1,592

45,689

45,675

-14

0.60 to <2.15%

Satisfactory

36,112

3,955

40,067

40,011

0.1

-19

2.15

to <10%

Satisfactory

4,913

3,857

8,770

8,707

0.7

10 to <11.35%

Satisfactory

3,662

2,106

5,768

5,757

0.2

20-

11.35

to <100%

Higher Risk

616

1,993

2,609

2,588

0.8

100%

Credit Impaired

580

530

8.6

Total

298,760

17,436

580

316,776

113

233

316,543

0.1

As at 31 December 2018

1-3

0.0 to <0.05%

Strong

80,971

1,636

82,607

82,602

4-5

0.05 to <0.15%

Strong

54,239

1,498

55,737

55,733

6-8

0.15

to <0.30%

Strong

36,714

823

37,537

37,532

9-11

0.30 to <0.60%

Strong

34,587

1,483

36,070

36,058

-14

0.60 to <2.15%

Satisfactory

62,217

4,142

66,359

66,315

0.1

-19

2.15

to <10%

Satisfactory

20,824

6,645

27,469

27,399

0.3

10 to <11.35%

Satisfactory

1,100

1,019

2,119

2,094

1.2

20-

11.35

to <100%

Higher Risk

747

3,245

3,992

3,951

1.0

100%

Credit Impaired

610

590

3.3

Total

291,399

20,491

610

312,500

123

226

312,274

0.1

Note

Excludes

loan commitments

and financial

guarantees

of £17.7bn (2018: £11.7bn)

carried at

fair value

Risk review

Risk performance

Credit risk

133

Barclays PLC

2019 Annual Report on Form

20-F

Analysis of

specific portfolios

and asset

types

This section provides an analysis of principal

portfolios and businesses, in particular,

home loans, credit cards, unsecured

loans and other retail

lending.

Secured home loans

The UK home loans portfolio

comprises first lien

home loans and accounts for 92

(2018:

%) of the Group’s total

home loan balances.

Home loans principal

portfolios

Barclays UK

As at 31 December

2019

2018

Gross loans and advances (£m)

143,259

136,517

90 day arrears

rate, excluding recovery

book (%)

0.2

Annualised gross charge

-off rates - 180 days past due (%)

0.6

0.7

Recovery

book proportion

of outstanding balances (%)

0.5

0.6

Recovery

book impairment coverage

ratio (%)

5.3

2.9

Note

2018

metrics

have been restated

to align with the

current methodology for the classification

of delinquent balances

and the inclusion of past maturity

balances.

Within the UK home loans portfolio:

◾

Gross loans and advances increased

by £6.7bn

(4.9%) following

increases across both Residential

(3.0%) and Buy

to Let (BTL)

(17.6%).

◾

Owner-occupied

interest-only home loans comprised 23.4%

(2018: 26.3%)

of total

balances.

◾

The average balance

weighted LTV

on owner

occupied loans increased to 50.2% (2018:

47.9%)

with average completion LTVs remaining

higher

than for the existing portfolio.

◾

BTL home loans comprised

13.6% (2018:

12.1%) of total balances. The average balance weighted LTV

increased to 56.5% (2018:

55.4%) driven

by average

completion LTVs

remaining higher

than for the existing book.

Home loans principal

portfolios

- distribution of

balances by LTV

Distribution

of balances

Distribution

of impairment allowance

Coverage ratio

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Barclays UK

As at 31 December 2019

<=75%

76.0

10.7

0.7

87.4

4.2

15.4

28.5

48.1

0.1

2.2

>75% and <=90%

10.4

0.7

11.1

2.7

11.5

12.6

26.8

0.9

19.7

0.1

>90% and <=100%

1.3

0.1

1.4

0.8

2.5

4.9

8.2

1.8

54.4

0.3

>100%

0.1

0.2

4.1

12.6

16.9

0.2

8.7

107.4

9.0

As at 31 December 2018

<=75%

77.9

11.9

0.8

90.6

3.3

26.7

20.9

50.9

0.1

1.3

>75% and <=90%

8.0

0.6

8.6

1.6

11.8

8.7

22.1

1.0

12.7

0.1

>90% and <=100%

0.6

0.1

0.7

0.3

3.0

4.4

7.7

1.7

44.5

0.5

>100%

0.1

10.0

9.3

19.3

5.9

88.5

10.8

Note

Portfolio marked to market

based on the

most updated

valuation including recovery book balances. Updated

valuations reflect the application of the

latest HPI available as at 31

December 2019.

Home loans principal

portfolios

- average

LTV

Barclays UK

As at 31 December

2019

2018

Overall portfolio LTV(%):

Balance weighted

51.1

48.8

Valuation weighted

37.3

35.8

For >100% LTVs:

Balances (£m)

160

150

Marked to market collateral (£m)

140

132

Average

LTV: balance weighted (%)

133.5

136.3

Average

LTV: valuation weighted (%)

119.7

119.5

Balances in recovery

book (%)

10.0

7.7

Note

2018

metrics

have been restated

to align with the

current methodology for the classification

of delinquent balances

and the inclusion of past maturity

balances.

Risk review

Risk performance

Credit risk

134

Barclays PLC

2019 Annual Report on Form

20-F

Home loans principal

portfolios

- new lending

Barclays UK

As at 31 December

2019

2018

New bookings (£m)

25,530

23,473

New home loan proportion

above >90% LTV

(%)

4.2

1.8

Average

LTV on new

home loans: balance weighted (%)

67.9

65.4

Average

LTV on new

home loans: valuation weighted (%)

60.0

57.4

The value of new bookings

increased across both the owner

-occupied and BTL portfolios, 9.2% and 6.5% respectively. High LTV

lending booked

2019

increased driven by

market conditions.

Head Office:

Italian home loans and advances at amortised cost reduced

to £6.0bn (2018:

£7.9bn)

and continue to run-off since new bookings

ceased in 2016.

The portfolio is secured on residential property

with an average balance weighted mark

to market LTV of 64.4%

(2018:

61.8%).

90-

day arrears increased

to 1.8% (2018:

1.4%), a function of the balance reduction

associated with

the sale of £787

assets in Q3 2019, gross

charge

-off rates remained stable at 0.8% (2018:

0.8%).

Credit cards, unsecured loans

and other retail lending

The principal portfolios listed below accounted

for 87

(2018:

87%) of the Group’s total credit cards, unsecured loans and other

retail lending.

Credit cards, unsecured loans and other retail lending

principal

portfolios

Gross loans

and

advances

30 day arrears,

excluding

recovery book

90 day arrears,

excluding

recovery book

Annualised gross

write-off rate

Annualised net

write-off rate

£m

As at 31 December 2019

Barclays UK

UK cards

16,457

1.7

0.8

1.6

UK personal loans

6,139

2.1

1.0

3.2

2.9

Barclays International

US cards

22,041

2.7

1.4

4.5

4.4

Barclays partner finance

4,134

0.9

0.3

1.7

Germany consumer

lending

3,558

1.7

0.7

2.1

1.3

As at 31 December 2018

Barclays UK

UK cards

17,285

1.8

0.9

1.9

1.5

UK personal loans

6,335

2.3

1.1

1.9

1.5

Barclays International

US cards

22,178

2.7

1.4

3.6

3.4

Barclays partner finance

4,216

1.1

0.4

1.7

Germany consumer

lending

3,400

1.9

0.8

2.7

2.0

UK cards:

Following the

introduction

of payment reminders

both 30 and 90 day arrears rates reduced

by 0.1%. The annualised gross write-off rate

reduced

to 1.6% (2018:

1.9%), reflecting lower levels of delinquency and contractual

charge-offs through 2019,

albeit with

increased debt sales

from the recovery

book.

UK personal loans:

30 and 90 day

arrears rates reduced

by 0.2% and 0.1%

respectively reflecting a

continued improvement

in lending quality over

the past 2 years, coupled

with improvements in collections effectiveness. Write-off

rates increased significantly reflecting higher

charge

-offs in

2018.

US cards:

30 and 90

-day arrears rates remained

stable.

The annualised gross and net write-off rates increased to 4.5%

(2018:

3.6%) and 4.4%

(2018:

3.4%) respectively primarily

driven by

an increase in charge-offs in 2018.

The percentage of write-offs to charge-offs has been stable year

year.

Barclays partner finance:

Improvement

in 30 and 90 days arrears was driven by better

arrears management

and improved customer selection.

Annualised write-off rates remained

flat.

Germany consumer lending:

Improvement

in 30 and 90 days arrears

was driven by better collections performance

across all

products. The

annualised gross write-off rate has shown slight improvement

and is in

line with the expectations.

Risk review

Risk performance

Credit risk

135

Barclays PLC

2019 Annual Report on Form

20-F

Exposure to UK commercial

real estate

(CRE)

The UK CRE portfolio includes property

investment, development, trading and house

builders but excludes social housing and contractors.

UK CRE summary

2019

2018

As at 31 December

UK CRE loans and advances (£m)

9,051

8,576

Stage 3 balances (£m)

254

267

Stage 3 balances as % of UK CRE balances (%)

2.8

3.1

Impairment allowances (£m)

Stage 3 coverage

ratio (%)

7.5

8.8

Total collateral

(£m)

26,876

26,508

Twelve months ended 31 December

Impairment charge

(£m)

(15)

Note

Based

on the most recent

valuation

assessment.

Maturity analysis of exposure to UK CRE

Contractual maturity

of UK CRE loans and

advances at amortised

cost

Stage 3

balances

Not more than

six months

Over six

months

but not

more than one

year

Over one year

but not

than two

years

Over two years

but not

than five years

Over five years

but not

than ten years

Over ten years

Total loans

and

advances

As at 31 December

£m

2019

254

146

111

377

3,088

3,687

1,388

9,051

2018

267

100

134

492

3,569

2,778

1,236

8,576

Risk review

Risk performance

Credit risk

136

Barclays PLC

2019 Annual Report on Form

20-F

Forbearance

measures consist of

concessions towards a debtor

that is experiencing or about to experience

difficulties

in meeting their financial

commitments (‘financial difficulties’).

Analysis of forbearance programmes

Gross balances

Impairment allowances

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

£m

As at 31 December 2019

Barclays UK

147

298

445

127

Barclays International

225

227

158

159

Head Office

130

Total retail

149

653

802

258

294

Barclays UK

449

496

Barclays International

918

1,016

1,934

226

263

Head Office

Total wholesale

965

1,465

2,430

257

298

Group total

1,114

2,118

3,232

515

592

As at 31 December 2018

Barclays UK

173

349

522

139

172

Barclays International

231

233

165

166

Head Office

165

Total retail

175

745

920

314

348

Barclays UK

615

671

Barclays International

1,088

1,196

2,284

201

241

Head Office

Total wholesale

1,144

1,811

2,955

237

286

Group total

1,319

2,556

3,875

551

634

Note

2018

metrics

have been restated

to exclude

up to date, paying customers

classified as Stage 1.

Balances on fo

rbearance

programmes decreased 17

driven by better portfolio

performance.

Retail balances on forbearance

reduced 13%

to £0.8bn, reflecting a decrease in Barclays UK and Head Office.

Wholesale balances on forbearance

fell to

£2.4bn

(2018:

£3.0bn) with lower exposure

in Corporate Bank and SME

of £211m

and £171m

respectively.

Impairment allowances rose to £298m

(2018:

£286m) following a small

number

of material single

name charges in the year.

Barclays

International accounted

for 80% of wholesale forbearance

with corporate cases representing 72% of all forborne

balances.

Risk review

Risk performance

Credit risk

137

Barclays PLC

2019 Annual Report on Form

20-F

Retail forbearance programmes

Forbearance

on the Group’s principal

retail portfolios is

presented below.

The principal portfolios account

for 100

(201

100%) of total retail

forbearance

balances.

Analysis of key portfolios

in forbearance programmes

Gross balances on

forbearance

programmes

Marked to

market LTV of

forbearance

balances:

balance

weighted

Marked to

market LTV of

forbearance

balances:

valuation

weighted

Impairment

allowances

marked against

balances on

forbearance

programmes

Total balances

on forbearance

programmes

coverage ratio

Total

% of gross

retail loans

and

advances

£m

As at 31 December 2019

Barclays UK

UK home loans

137

0.1

42.7

31.0

UK cards

254

1.5

n/a

38.2

UK personal loans

0.9

n/a

55.3

Barclays International

US cards

183

0.8

n/a

131

71.6

Barclays partner

finance

0.1

n/a

66.7

Germany consumer

lending

1.0

n/a

60.9

Head Office

Italian home loans

130

2.2

60.6

44.9

5.9

As at 31 December 2018

Barclays UK

UK home loans

182

0.1

41.3

29.9

UK cards

279

1.6

n/a

121

43.4

UK personal loans

1.0

n/a

82.3

Barclays International

US cards

177

0.8

n/a

131

74.0

Barclays partner finance

0.1

n/a

66.7

Germany consumer

lending

1.3

n/a

60.9

Head Office

Italian home loans

165

2.1

59.5

46.6

6.1

Note

2018

metrics

have been restated

to exclude

up to date, paying customers

classified as Stage 1.

UK home loans:

Forbearance

balances reduced to £137

(2018:

£182

m) due to a

reduction in volumes of entries into collections and new

forbearance

plans.

UK cards:

Forbearance

balances decreased in line with the reduction in delinquent balances.

UK personal loans:

Forbearance

balances decreased in line with the

reduction in delinquent

balances.

US cards:

Forbearance

balances increased to £183m

(2018:

£177m)

in line with

book size but as

a percentage

of total

balance remained low

(<1%). Lower

coverage

was driven by favourable

macroeconomic conditions.

Barclays partner finance:

The reduction

in forbearance

balances was mainly driven by the rundown of the motor business over the course

of 2019.

Germany consumer lending:

Improved

performance and higher quality bookings led to fewer accounts moving

into forbearance.

Italian home loans:

Forbearance

balances reduced

to £130m (2018:

£165m), due to an asset

sale in Q3 2019.

Risk review

Risk performance

Credit risk

138

Barclays PLC

2019 Annual Report on Form

20-F

Wholesale forbearance programmes

The tables below detail balance information

for wholesale forbearance

cases.

Analysis of wholesale

balances in forbearance programmes

Gross balances on

forbearance

programmes

Impairment

allowances

marked against

balances on

forbearance

programmes

Total balances on

forbearance

programmes

coverage ratio

Total balances

% of gross

wholesale loans

and

advances

£m

As at 31 December 2019

Barclays UK

496

1.6

7.1

Barclays International

1,934

1.9

263

13.6

Total

2,430

1.8

298

12.3

As at 31 December 2018

Barclays UK

671

2.4

6.7

Barclays International

2,284

2.3

241

10.6

Total

2,955

2.3

286

9.7

Analysis

of debt securities

Debt securities include government

securities

held as part of the Group

’s treasury management portfolio for liquidity and regulatory

purposes,

and

are for use on a continuing

basis in

the activities of the Group

The following tables provide

an analysis of debt securities held by the Group

for trading and

investment purposes by issuer type,

and where the

Group

held government securities exceeding 10%

of shareholders’ equity.

Further information

on the credit quality of debt securities is presented on pages 129 to 130

Debt securities

2019

2018

As at 31 December

£m

Of which issued by:

Governments

and other public bodies

91,058

65.1

76,646

64.6

Corporate

and other issuers

39,231

28.1

30,767

26.0

US agency

4,480

3.2

7,014

5.9

Mortgage and asset backed securities

5,084

3.6

4,143

3.5

Total

139,853

100.0

118,570

100.0

Government securities

2019

2018

Fair value

As at 31 December

£m

United States

32,145

31,199

United Kingdom

28,010

19,555

Japan

6,679

1,249

Risk review

Risk performance

Credit risk

139

Barclays PLC

2019 Annual Report on Form

20-F

Analysis

of derivatives

The tables below set out the fair values of the derivative

assets together with the value of those assets subject to enforceable

counterparty

netting

arrangements for

which the Group

holds offsetting liabilities and eligible

collateral.

Derivative assets (audited)

2019

2018

Balance sheet

assets

Counterparty

netting

Net

exposure

Balance sheet

assets

Counterparty

netting

Net

exposure

As at 31 December

£m

Foreign

exchange

56,606

44,284

12,322

64,188

50,189

13,999

Interest rate

142,468

106,589

35,879

125,272

95,572

29,700

Credit derivatives

8,215

6,589

1,626

10,755

8,450

2,305

Equity and stock index

20,806

17,517

3,289

20,882

16,653

4,229

Commodity derivatives

1,141

1,019

122

1,441

1,137

304

Total derivative assets

229,236

175,998

53,238

222,538

172,001

50,537

Cash collateral held

33,411

31,402

Net exposure less collateral

19,827

19,135

Derivative asset exposures would

be £209

bn (2018:

£203bn) lower than reported under IFRS if netting were permitted for

assets and liabilities

with

the same counterparty

or for which the Group

holds cash collateral.

Similarly, derivative liabilities would

be £212bn

(2018:

£202bn) lower

reflecting

counterparty

netting and collateral placed. In addition, non-cash collateral of £6bn (2018:

£6bn) was held in respect of derivative assets. The Group

received collateral from clients in support

of over the counter

derivative transactions. These transactions are generally undertaken under

International Swaps and Derivative Association

(ISDA) agreements

governed

by either UK or New York law.

The table below sets out the fair value and notional amounts of OTC

derivative instruments by type of

collateral arrangement.

Derivatives by collateral arrangement

2019

2018

Notional contract

amount

Fair value

Notional contract

amount

Fair value

Assets

Liabilities

Assets

Liabilities

£m

Unilateral in favour of Barclays

Foreign

exchange

32,441

398

(422)

22,639

473

(369)

Interest rate

5,202

859

(13)

4,762

769

(25)

Credit derivatives

338

(1)

Equity and stock index

158

(27)

107

Total unilateral in favour of Barclays

38,139

1,265

(463)

27,562

1,260

(394)

Unilateral in favour of counterparty

Foreign

exchange

11,230

424

(1,206)

14,221

530

(1,641)

Interest rate

44,360

3,094

(4,210)

64,504

2,925

(4,090)

Credit derivatives

116

(1)

(3)

Equity and stock index

494

298

(40)

714

242

(31)

Total unilateral in favour of counterparty

56,200

3,816

(5,457)

79,517

3,698

(5,765)

Bilateral arrangement

Foreign

exchange

4,484,380

51,571

(51,001)

4,788,711

58,772

(56,392)

Interest rate

12,303,652

131,700

(128,096)

9,699,149

116,712

(114,091)

Credit derivatives

390,790

5,034

(4,923)

380,546

6,339

(5,002)

Equity and stock index

210,267

8,925

(11,178)

177,496

7,984

(8,494)

Commodity derivatives

7,269

294

(210)

9,635

492

(330)

Total bilateral arrangement

17,396,358

197,524

(195,408)

15,055,537

190,299

(184,309)

Uncollateralised

derivatives

Foreign

exchange

379,741

4,117

(4,216)

371,158

4,243

(5,495)

Interest rate

284,168

4,697

(1,668)

205,050

3,454

(1,138)

Credit derivatives

8,142

216

(474)

5,830

234

(234)

Equity and stock index

21,131

1,400

(4,540)

12,179

1,468

(3,305)

Commodity derivatives

(46)

121

(78)

Total uncollateralised derivatives

693,240

10,439

(10,944)

594,338

9,428

(10,250)

Total OTC derivative assets/(liabilities)

18,183,937

213,044

(212,272)

15,756,954

204,685

(200,718)

Risk review

Risk performance

Market risk

140

Barclays PLC

2019 Annual Report on Form

20-F

Summary of

contents

Page

Outlines key measures used to summarise the market

risk profile of the bank such as value at risk (VaR).

◾

Market risk overview

and summary of performance

141

The Group

discloses

details on management

measures

of market risk. Total management

VaR includes all

trading positions and is presented on a diversified basis

by risk factor.

This section also outlines the macroeconomic

conditions modelled as part of the Group’s

risk

management framework.

◾

Traded

market risk

◾

Review of management

measures

-

The daily average, maximum

and minimum values of management VaR

-

Business scenario stresses

141

142

Risk review

Risk performance

Market risk

141

Barclays PLC

2019 Annual Report on Form

20-F

All disclosures in

this section

(pages 141 to 142) are

unaudited

unless

otherwise stated.

Overview

This section contains key statistics describing

the market risk profile of the Group. The market r

isk management section on page 104 provides

description of management VaR

Measures of

market

risk

in the

Group and accounting

measures

Traded

market risk measures such as VaR and

balance sheet exposure measures have fundamental differences:

◾

balance sheet measures show accruals-based balances

or marked

to market values as at the reporting date;

◾

VaR measures also take

account of current

marked to market values, but in addition hedging effects between positions are considered;

◾

market risk measures are expressed in

terms of changes in value or volatilities as opposed

to static values.

For these reasons, it is not possible to present direct

reconciliations of traded market

risk and accounting

measures.

Summary of

performance

in the

period

Overall, the Group

has maintained a

steady market risk profile. Average

management VaR

increased by 10%

to £23m in 2019

(2018: £21m) and

remained relatively stable during

the period. The increase in average management

VaR in 2019

was driven by a small increase

in equity risk and

credit risk, partially offset by a

slight decrease in interest rate risk compared

to 2018.

Traded market

risk

review

Review of management measures

The following disclosures provide

details on management measures of market risk. Refer to the market risk

management section on pages 179

186

of the Barclays PLC Pillar 3 Report 2019

(unaudited)

for more detail on management measures and the differences when compared

regulatory

measures.

The table below shows the total management VaR

on a diversified basis by risk factor.

tal management VaR includes all trading positions in CIB

and Treasury

and it is calculated with a one-day holding

period.

Limits are applied against each risk factor VaR

as well as total management VaR, which are then cascaded further

by risk managers to each

business.

The daily average, maximum and minimum

values of management VaR

Management VaR (95%, one day) (audited)

2019

2018

Average

High

Low

Average

High

Low

For the year ended 31 December

£m

Credit risk

Interest rate risk

Equity risk

Basis risk

Spread risk

Foreign

exchange risk

Commodity risk

Inflation risk

Diversification effect

(23)

n/a

(24)

n/a

Total management VaR

Notes

Excludes

BAGL from 23 July 2018.

Diversification

effects

recognise that forecast losses

from different

assets or businesses are unlikely

to occur concurrently,

hence the expected

aggregate loss is lower than

the

sum of the

expected

losses from each area.

Historical

correlations between

losses are taken

into account in making these

assessments. The high and

low VaR figures

reported for

each category did

not necessarily

occur on the same

day as the high and

low VaR reported

as a whole. Consequently,

a diversification effect

balance for the

high and low VaR

figures

would not be meaningful

and is

therefore omitted

from the above table.

Risk review

Risk performance

Market risk

Jan 2018

Jan 2019

Dec 2019

142

Barclays PLC

2019 Annual Report on Form

20-F

Group Management VaR

(£m)

Note

Excludes

BAGL from 23 July 2018.

Business

scenario stresses

As part of the Group’s

risk management framework, on

a regular basis the performance of the trading business in hypothetical scenarios

characterised by severe macroeconomic

conditions is modelled. Up to seven global scenarios are modelled on a regular basis, for example,

sharp deterioration in liquidity,

a slowdown in the global economy,

global recession, and a sharp increase in economic

growth.

In 2019,

the scenario analyses

showed that the largest market risk

related impacts would be due

to a severe deterioration in financial liquidity and a

global recession.

Risk review

Risk performance

Treasury and

Capital risk

143

Barclays PLC

2019 Annual Report on Form

20-F

Summary of

contents

Page

Liquidity

risk

performance

The risk that the firm is unable to meet its contractual or

contingent obligations or that it does not have the

appropriate

amount, tenor and composition of funding

and liquidity to support its assets.

This section provides an overview

of the Group’s

liquidity risk.

◾

Liquidity overview

and summary of performance

◾

Liquidity risk stress testing

-

Liquidity risk appetite

-

Liquidity regulation

-

Liquidity coverage

ratio

145

146

The liquidity pool is held unencumbered

and is intended

to offset stress outflows.

◾

Liquidity pool

-

Composition of the liquidity pool

-

Liquidity pool by

currency

-

Management of the liquidity pool

-

Contingent liquidity

147

The basis for sound liquidity risk management

is a

funding structure

that reduces the probability of a

liquidity stress leading to an inability to meet funding

obligations as they fall due.

◾

Funding structure

and funding relationships

-

Deposit funding

-

Wholesale funding

148

Provides details on the contractual maturity of all

financial instruments and other assets and liabilities.

◾

Contractual maturity of financial assets and liabilities

151

Capital

risk

performance

Capital risk is the risk that the firm has an insufficient

level or composition

of capital to support its

normal

business activities and to meet its regulatory

capital

requirements under

normal operating environments or

stressed conditions (both actual and as defined for

internal planning or regulatory

testing purposes). This

also includes the risk from the firm’s pension plans.

This section details the Group’s capital position

providing

information on both

capital resources and

capital requirements. It also provides

details of the

leverage ratios and exposures.

◾

Capital risk overview and summary

of performance

◾

Regulatory minimum

capital and leverage requ

irements

-

Capital

-

Leverage

155

156

This section outlines the Group’s

capital ratios, capital

composition, and provides

information on significant

movements in CET1 capital during

the year.

◾

Analysis of capital resources

-

Capital ratios

-

Capital resources

-

Movement in CET1 capital

157

165

This section outlines risk weighted assets by risk type,

business and macro drivers.

◾

Analysis of risk weighted assets

-

Risk weighted assets by risk type and business

-

Movement analysis of risk weighted assets

166

This section outlines the Group’s

leverage ratios,

leverage exposure

composition, and provides

information on significant movements in the IFRS and

leverage balance sheet.

◾

Analysis of leverage ratios and exposures

-

Leverage ratios and exposures

167

This section outlines the Group’s

Minimum requirement

for own funds and

Eligible Liabilities

(MREL) position

and ratios.

◾

Minimum Requirement

for own funds and

Eligible Liabilities

168

The Group

discloses

the two sources of foreign

exchange risk that it is exposed to.

◾

Foreign

exchange risk

-

Transactional foreign

currency

exposure

-

Translational foreign

exchange exposure

-

Functional currency

of operations

169

A review focusing on the UK retirement

fund, which

represents the majority of the Group’s

total retirement

benefit obligation.

◾

Pension risk review

-

Assets and liabilities

-

IAS 19 position

-

Risk measurement

170

171

Interest rate

risk

in the

banking book

performance

Risk review

Risk performance

Treasury and

Capital risk

144

Barclays PLC

2019 Annual Report on Form

20-F

A description of the non

-traded market risk framework

is provided.

The Group

discloses

a sensitivity analysis on pre

-tax net

interest income for non

-trading financial assets and

liabilities. The analysis is carried out by

business unit

and currency.

The Group

measures some non-traded

market risks,

particular prepayment,

recruitment, and residual risk

using an economic capital methodology.

The Group

discloses

the overall impact of a parallel

shift

in interest rates on other comprehensive

income and

cash flow hedges.

The Group

measures the volatility of the value of the

FVOCI instruments in the liquidity pool through

non-

traded market risk VaR.

◾

Interest rate risk in the banking book

overview and

summary of

performance

◾

Net interest income sensitivity

-

by business unit

-

by currency

◾

Analysis of equity sensitivity

◾

Volatility of the FVOCI portfolio

in the liquidity pool

172

173

Risk review

Risk performance

Treasury and

Capital risk

145

Barclays PLC

2019 Annual Report on Form

20-F

Liquidity

risk

All disclosures in this section (pages 152

to 161

)

are unaudited unless otherwise stated.

Overview

The Group

has a comprehensive key risk control framework

for managing the Group’s liquidity risk.

The Liquidity Framework

meets the

PRA’s

standards and is designed to maintain liquidity resources

that are sufficient in amount and quality, and a funding

profile that is appropriate to meet

the liquidity risk appetite. The Liquidity Framework

is delivered via a

combination of policy formation, review

and governance,

analysis,

stress

testing, limit setting and monitoring.

This section provides an analysis of the Group

’s:

(i) summary of performance,

(ii) liquidity risk

stress testing, iii) liquidity pool, (iv) funding

structure

and funding relationships, (v) credit ratings, and (vi) contractual maturity of

financial assets and liabilities.

For further

detail on liquidity

risk governance

and framework

refer to page 192

to 194 of the Barclays PLC Pillar 3 Report 2019

(unaudited).

Summary of

performance

The liquidity pool at £211

bn (December

2018:

£227

bn) reflects the

Group’s

prudent approach to liquidity management. The Liquidity Coverage

Ratio (LCR) remained well above

the 100% regulatory

requirement at 160

(December 2018

169

%),

equivalent to a surplus of £78bn (December

2018

£90bn)

The liquidity pool, LCR and surplus have been managed down through

the course of the year, supporting

increased business

funding

requirements while maintaining a prudent

liquidity position.

During the year,

the Group issued £8.6bn

of minimum requirement

for own funds and eligible liabilities

(MREL) instruments in a range of tenors

and currencies.

Barclays Bank PLC

continued to issue in the shorter-term markets and Barclays Bank UK PLC issued in the

shorter-term and

secured markets,

helping to maintain their stable and diversified funding bases.

The Group

has continued to reduce its reliance on short-term wholesale funding, where

the proportion maturin

in less

than 1 year fell to 28%

(December

2018:

30%)

Key metrics

Liquidity Coverage Ratio

160% (2018:

169%)

Liquidity

risk

stress testing

Under the Liquidity Framework,

the Group has established a liquidity risk appetite (LRA) together with the appropriate

limits

for the management

the liquidity risk. This is the level of liquidity risk the Group

chooses to take in

pursuit of its business objectives and in meeting its regulatory

obligations. The Group

sets

its internal liquidity risk appetite (LRA) based on internal liquidity risk assessments and

external regulatory

requirements namely the CRR (as amended by

CRR II) Liquidity Coverage Ratio (LCR).

Liquidity risk appetite

The liquidity risk assessment measures the potential contractual and contingent

stress outflows under a range of stress scenarios, which are then

used to determine the size of the liquidity pool that is immediately available to meet

anticipated outflows should a stress occur.

As part of the LRA,

the Group runs

three short-term liquidity stress

scenarios, aligned to the PRA’s

prescribed

stresses:

◾

90 day market

-wide stress event

◾

30 day Barclays

-specific stress event

◾

combined 30

day market-wide and Barclays

-specific stress

event

Risk review

Risk performance

Treasury and

Capital risk

146

Barclays PLC

2019 Annual Report on Form

20-F

Key LRA assumptions

For the year ended 31 December 2019

Drivers of Liquidity

Risk

LRA Combined

stress – key assumptions

Wholesale Secured and Unsecured

Funding Risk

- Zero rollover

of maturing wholesale unsecured funding

- Loss of repo

capacity on non-

extremely liquid repos at contractual maturity date

- Roll of repo for

extremely liquid repo at wider haircut at contractual maturity date

- Withdrawal of contractual buyback

obligations, excess client

futures margin,

Prime Brokerage

(PB)

client cash and overlifts

- Haircuts applied to the market value of marketable assets held in the liquidity

buffer

Retail and Corporate Funding Risk

- Retail and Corporate

deposit outflows as

counterparties seek to diversify their

deposit balances

Intraday Liquidity Risk

- Liquidity held to meet increased intraday liquidity usage due

to payment and receipts volatility, loss

of unsecured credit lines and haircuts applied to collateral values

used to back secured creditlines, in

a stress

Intra-Group Liquidity Risk

- Liquidity support for

material subsidiaries. Surplus liquidity held within

certain subsidiaries is not

taken as a benefit to the wider Group

Cross-Currency Liquidity

Risk

- Deterioration in FX market capacity that may result

in restriction in net currency

positions

Off-Balance Sheet Liquidity Risk

- Drawdown

on committed facilities based on facility and counterparty

type

- Collateral outflows due to a two-notch credit rating

downgrade

- Increase in the Group's

initial margin requirement

across all

major exchanges

- Variation margin

outflows from collateralised risk positions

- Outflow of collateral owing but not called

- Loss of internal sources of funding within the PB synthetics business

Franchise-Viability

Risk

- Liquidity held to enable the firm to meet select non-contractual

obligations to ensure market

confidence in the firm is maintained, including debt buy

-backs, swap tear-ups and incresed prime

brokerage

margin debits

Funding Concentration Risk

- Liquidity held against largest wholesale funding counterparty

refusing to roll

As at 31 December

2019

the Group held eligible liquid assets well

in excess of 100%

of net stress outflows of the 30 day combined

scenario, which

has the highest net outflows of the three short-

term liquidity stress scenarios.

The Group

also runs a long term liquidity

stress test, which measures the anticipated outflows over

a 12-month

market-wide scenario. As at 31

December 2019,

the Group remained compliant with this internal metric.

Liquidity regulation

The Group

monitors its position

against the CRR (as amended by

CRR II) Liquidity Coverage Ratio and the Net Stable Funding Ratio (NSFR).

The LCR is designed to promote

short-term resilience of a bank’s liquidity risk profile by holding sufficient High Quality Liquid Assets to survive an

acute stress scenario lasting for 30

days. The NSFR has been developed

to promote a sustainable maturity structure of assets and liabilities.

In June 2019,

the EBA published CRR II which defined the final rules

and minimum requirements

for the NSFR.

Barclays expects to be compliant

with these requirement

when they become effective in June 2021.

Liquidity coverage ratio

The external LCR requirement

is prescribed by the regulator

taking into account the relative stability of

different sources of

funding and potential

incremental funding requirements

in a stress.

2019

2018

As at 31 December

£bn

Eligible liquidity buffer

206

219

Net stress outflows

(128)

(129)

Surplus

Liquidity coverage

ratio

160%

169%

As part of the LRA, Barclays also establishes the minimum LCR

limit. The Group

plans to maintain

its surplus to the internal and regulatory

stress

requirements at an efficient

level, while continuously assessing risks to market funding conditions and

its liquidity position and taking actions to

manage the size of the liquidity pool as appropriate.

Risk review

Risk performance

Treasury and

Capital risk

147

Barclays PLC

2019 Annual Report on Form

20-F

Liquidity

pool

The Group

liquidity pool as at 31 December 2019

was £211bn

(2018: £227

bn). During 2019,

the month-end liquidity pool ranged from £211

bn to

£256bn

(2018:

£207bn

to £243bn), and the month-end average balance was £235

bn (2018: £2

25bn). The liquidity

pool is held unencumbered and

is intended

to offset stress outflows. It comprises the following cash

and unencumbered

assets.

Composition

of the

Group liquidity pool

as at

31 December 2019

Liquidity pool

of which CRR LCR eligible

2018

Cash

Level 1

Level 2A

Liquidity

pool

£bn

Cash and deposits with central banks

153

150

181

Government bonds

AAA to AA-

BBB+ to BBB

Other LCR Ineligible Government

bonds

Total government bonds

Other

Goverment

Guaranteed Issuers, PSEs and GSEs

International Organisations and MDBs

Covered

bonds

Other

Total other

Total as at 31 December 2019

211

150

227

Total as at

31 December

2018

227

176

Notes

Includes

cash held

at central banks and surplus

cash at central banks related

to payment

schemes. Of which over 98%

(2018: over

99%) was placed

with the

Bank of England,

Federal

Reserve,

European Central

Bank, Bank of Japan

and Swiss National Bank.

Of which

over 67%

(2018:

over 71%) comprised

UK, US, French,

German, Swiss and

Dutch

securities.

The LCR eligible liquidity

pool is adjusted

for trapped liquidity and

other regulatory deductions. It also incorporates

other CRR (as amended by CRR II) qualif

ying assets that are

not

eligible under

Barclays’

internal risk appetite.

The Group

liquidity pool is

well diversified by major currency

and the Group

monitors LRA stress

scenarios for major currencies.

Liquidity pool

by currency

USD

EUR

GBP

Other

Total

£bn

Liquidity pool

as at

31 December 2019

211

Liquidity pool as at 31 December

2018

227

Management of the liquidity

pool

The composition of the liquidity pool is subject to limits set by the Board

and the independent liquidity risk, credit risk and market risk functions. In

addition, the investment of the liquidity pool is monitored

for concentration

risk by issuer, currency

and asset

type. Given the returns generated by

these highly liquid assets, the risk and reward

profile is continuously managed.

As at 31 December

2019,

67%

(2018:

70%) of the liquidity

pool was located in Barclays Bank PLC, 20

(2018:

20%) in Barclays Bank UK

PLC and

(2018:

2%) in Barclays Bank Ireland

PLC. The residual portion of the liquidity pool is held outside of these entities, predominantly in the US

subsidiaries, to meet entity-specific stress outflows and local regu

latory requirements. To

the extent the

use of this portion of the liquidity pool

restricted due to local regulatory

requirements, it is assumed to be unavailable to the rest of the Group

in calculating the

LCR.

Contingent liquidity

In addition to the Group

liquidity pool, the Group has access to

other unencumbered

assets

which provide

a source of contingent liquidity.

While these are not relied on in the Group’s

LRA, a portion of these assets may be monetised in a stress to generate liquidity through

their use as

collateral for secured

funding or

through outright sale.

In a Barclays-specific, market-wide or

combined liquidity stress, liquidity available via market sources

could be severely disrupted. In circumstances

where market liquidity is unavailable or

available only at significantly elevated prices, the Group

could generate liquidity via central bank facilities.

The Group

maintains a

significant amount

of collateral positioned at central banks.

For more

detail on the Group’s other unencu

mbered assets,

see pages 221

to 222 of the Barclays PLC Pillar 3 Report

2019

(unaudited).

Risk review

Risk performance

Treasury and

Capital risk

148

Barclays PLC

2019 Annual Report on Form

20-F

Funding structure

and funding

relationships

The basis for sound liquidity risk management

is a funding structure that reduces the probability of a liquidity stress leading to an inability to meet

funding obligations as they fall due. The Group’s

overall funding

strategy is

to develop

a diversified funding base (geographically,

by type and by

counterparty)

and maintain access

to a variety of alternative funding source

s, to

provide

protection against unexpected fluctuations, while

minimising the cost of funding.

Within this, the Group

aims to

align the sources and uses of funding. As such, retail and corporate

loans and advances are largely funded by

deposits in the relevant entities,

with the surplus primarily funding

the liquidity pool. The majority of

reverse repurchase

agreements are matched

by repurchase

agreements. Derivative liabilities and assets are largely matched. A substantial proportion

of balance sheet derivative positions

qualify for counterparty

netting and the remaining portions

are largely offset when netted against cash collateral received and paid. Wholesale debt

and equity is used to fund residual assets.

These funding relationships are summarised below:

2019

2018

2019

2018

Assets

£bn

Liabilities

£bn

Loans and advances at amortised cost

339

327

Deposits at amortised cost

416

395

Group

liquidity pool

211

227

<1 Year

wholesale funding

>1 Year

wholesale funding

106

107

Reverse repurchase

agreements, trading portfolio

assets, cash collateral and settlement balances

298

303

Repurchase agreements, trading

portfolio liabilities,

cash collateral and settlement balances

247

262

Derivative financial instruments

229

223

Derivative financial instruments

229

220

Other assets

Other liabilities

Equity

Total assets

1,140

1,133

Total liabilities

1,140

1,133

Note

Other assets

include fair

value assets that are not part

of reverse

repurchase agreements

or trading portfolio assets,

and other asset

categories.

Deposit funding (audited)

2019

2018

Funding of loans and advances

Loans and

advances at

amortised cost

Deposits

amortised cost

Loan: deposit

ratio

Loan: deposit

ratio

As at 31 December 2019

£bn

Barclays UK

198

206

96%

Barclays International

133

210

63%

65%

Head Office

Barclays Group

339

416

82%

83%

Note

The loan: deposit

ratio is calculated

as loans and advances

at amortised cost divided by deposits

at amortised cost.

As at 31 December

2019,

£181

bn (2018: £172

bn) of total

customer deposits were insured through

the UK Financial Services

Compensation

Scheme (FSCS) and other similar schemes. In addition to these customer deposits £4bn

(2018:

£5bn) of other liabilities

are insured by other

governments.

Contractually current accounts are

repayable

on demand and

savings accounts at

short notice. In practice, their observed maturity is typically

longer than their contractual maturity. Similarly,

repayment

profiles of certain types of assets e.g. mortgages, overdrafts

and credit card lending,

differ from their contractual

profiles. The Group therefore

assesses

the behavioural

maturity of both customer assets and liabilities

to identify

structural balance sheet funding

gaps. In doing so, it applies quantitative modelling and qualitative assessments which take into account

historical

experience, current

customer composition, and macroeconomic projections.

The Group’s

broad

base of customers, numerically and by

depositor type, helps protect against unexpected fluctuations in balances and hence

provide

a stable funding base for the Group’s

operations and liquidity needs.

Wholesale funding

Barclays Bank Gro

up and Barclays Bank UK Group

maintain access

to a variety of sources of wholesale funds in major currencies, including

those

available from term investors across

a variety of distribution channels and geographies,

short-term funding

markets and repo markets.

Barclays Bank Group

has direct access to US, European and Asian capital markets through

its

global investment banking operations

and to long-

term investors through

its

clients worldwide. Key sources

of wholesale funding include money markets, certificates of deposit, commercial paper,

medium term issuances (including structured

notes) and securitisations.

Risk review

Risk performance

Treasury and

Capital risk

149

Barclays PLC

2019 Annual Report on Form

20-F

Key sources of wholesale funding

for Barclays Bank UK Group

include money markets, certificates

of deposit, commercial pa

per,

covered

bonds and

other securitisations.

The Group

expects to continue issuing

public wholesale debt from Barclays PLC

(the Parent company),

in order to maintain compliance with

indicative MREL requirements and

maintain a stable and diverse funding base by type, currency

and market.

As at 31 December

2019

the Group’s total wholesale funding outstanding (excluding

repurchase agreements) was £147.1bn

(2018:

£154.0

bn), of

which £19.6

bn (2018

£22.5bn) was secured funding and £127.5

bn (2018:

£131.5bn)

unsecured funding. Unsecured funding includes £51.1bn

(2018

£47.3

bn) of privately placed senior unsecured notes issued through

a variety of distribution channels including intermediaries and private

banks.

During the year,

the Group issued £8.6bn

of minimum requirement

for own funds and eligible liabilities

(MREL) instruments from Barclays PLC

(the

Parent company)

in a range of different currencies

and tenors.

Barclays Bank PLC continued

to issue

in the shorter-

term markets and Barclays Bank

UK PLC issued in the shorter

-term and secured markets, helping to maintain their stable and diversified funding

bases.

As at 31 December

2019

wholesale funding of £40.6

bn (2018

£46.7bn)

matures in less

than one year, of which £16.3

(2018

£19.1

bn) relates

to term funding. Although

not a requirement, the liquidity pool exceeded the wholesale funding matur

ing in less

than one year by £170

bn (2018

£180

bn).

Barclays Bank Group

and Barclays Bank UK Group

also support various central bank monetary initiatives

including participation in the Bank of

England’s Term Funding

Scheme. These are reported under

‘repurchase agreements and other similar secured borrowing’ on the balance sheet.

Maturity profile of wholesale funding

a,b

month

1-3

months

3-6

months

6-12

months

year

1-2

years

2-3

years

3-4

years

4-5

years

>5 years

Total

£bn

Barclays PLC (the Parent company)

Senior unsecured

(Public benchmark)

0.8

0.3

1.1

4.2

0.9

8.2

4.5

14.2

33.1

Senior unsecured

(Privately placed)

0.2

0.1

0.5

0.9

Subordinated

liabilities

1.0

6.7

7.7

Barclays Bank PLC (including

subsidiaries)

Certificates of deposit and commercial

paper

1.1

4.2

3.6

7.3

16.2

0.9

0.5

0.1

17.7

Asset backed commercial paper

1.6

4.9

0.7

7.2

Senior unsecured

(Public benchmark)

0.6

2.9

0.1

1.1

0.3

5.0

Senior unsecured

(Privately placed)

1.1

1.5

2.4

5.9

10.9

5.7

4.8

3.9

4.0

20.9

50.2

Asset backed securities

0.4

0.6

1.0

0.2

0.6

0.9

2.1

4.8

Subordinated

liabilities

0.2

0.1

0.9

1.2

5.0

3.3

0.1

0.9

10.5

Other

0.1

0.3

1.2

1.6

Barclays Bank UK PLC (including

subsidiaries)

Certificates of deposit and commercial

paper

0.4

0.2

0.8

Covered

bonds

1.0

0.9

2.3

1.8

1.1

7.1

Asset backed securities

0.5

Total as at 31 December 2019

4.5

11.6

9.4

15.1

40.6

19.8

12.1

15.1

11.6

47.9

147.1

Of which secured

1.6

5.3

2.3

0.5

9.7

0.9

2.5

2.4

0.9

3.2

19.6

Of which unsecured

2.9

6.3

7.1

14.6

30.9

18.9

9.6

12.7

10.7

44.7

127.5

Total as at

31 December

2018

2.5

15.9

8.2

20.1

46.7

16.7

16.8

10.4

13.2

50.2

154.0

Of which secured

2.0

3.7

1.1

3.6

10.4

2.7

1.2

2.6

1.9

3.7

22.5

Of which unsecured

0.5

12.2

7.1

16.5

36.3

14.0

15.6

7.8

11.3

46.5

131.5

Notes

The composition

of wholesale funds

comprises

the balance sheet reported

financial liabilities at fair

value, debt securities in

issue and subordinated liabilities. It

does not include

participation

in the

central bank facilities

reported

within repurchase agreements

and other similar secured

borrowing.

Term funding

comprises

public benchmark and privately

placed senior unsecured

notes, covered bonds,

asset-backed securities

and subordinated debt where

the original maturity

of the instrument

was more than

one year.

Includes

structured

notes of £42.9bn, of which £8.3bn matures

within

one year.

Risk review

Risk performance

Treasury and

Capital risk

150

Barclays PLC

2019 Annual Report on Form

20-F

Currency composition

of wholesale debt

As at 31 December

2019

the proportion of wholesale funding by

major currencies was

as follows:

Currency composition

of wholesale funding

USD

EUR

GBP

Other

Certificates of deposit and commercial

paper

Asset backed commercial paper

Senior unsecured

(Public benchmark)

Senior unsecured

(Privately placed)

Covered

bonds / Asset backed securities

Subordinated

liabilities

Total as at 31 December 2019

Total as at

31 December

2018

To manage

cross currency

refinancing risk,

the Group manages to foreign

exchange cash flow limits,

which limit risk at specific maturities.

Risk review

Risk performance

Treasury and

Capital risk

151

Barclays PLC

2019 Annual Report on Form

20-F

Contractual maturity

of financial

assets

and liabilities

The table below provides

detail on the contractual maturity of

all financial instruments and other assets and liabilities. Derivatives

(other than those

designated in a hedging

relationship) and trading portfolio

assets

and liabilities are included in the ‘on

demand’ column

at their fair

value. Liquidity

risk on these items is not managed on

the basis of contractual maturity since they are not held for settlement according

to such maturity and will

frequently be settled before

contractual maturity at fair value. Derivatives designated in a hedging

relationship are included according

to their

contractual maturity.

Contractual maturity of financial assets and liabilities

(audited)

As at

31 December 2019

demand

Not more

than three

months

Over three

months

but

not more

than six

months

Over six

months

but

not more

than nine

months

Over nine

months

but

not more

than one

year

Over one

year

but not

more than

two years

Over two

years but

not more

than three

years

Over three

years but

not more

than five

years

Over five

years but

not more

than ten

years

Over ten

years

Total

£m

Assets

Cash and

balances

central banks

149,383

766

109

150,258

Cash collateral

and

settlement

balances

2,022

81,231

83,256

Loans

and advances

amortised

cost

14,824

10,944

13,108

7,738

7,031

21,771

22,478

37,408

40,702

163,111

339,115

Reverse

repurchase

agreements

and other

similar secured

lending

3,097

190

3,379

Trading

portfolio

assets

114,195

Financial

assets

at fair

value

through

the

income statement

14,279

89,355

13,979

3,443

1,317

1,664

512

953

2,302

5,282

133,086

Derivative

financial

instruments

229,063

229,236

Financial

assets

at fair

value

through

other

comprehensive

income

6,694

3,241

1,164

1,159

7,711

6,521

11,896

21,195

6,169

65,750

Other

financial assets

895

441

1,375

Total financial

assets

524,674

192,558

30,465

12,345

9,521

31,230

29,725

50,266

64,278

174,588

1,119,650

Other assets

20,579

Total

assets

1,140,229

Liabilities

Deposits

at amortised

cost

348,337

42,357

10,671

3,861

4,067

3,935

930

530

545

554

415,787

Cash collateral

and

settlement

balances

3,053

64,275

67,341

Repurchase

agreements

and other

similar

secured

borrowing

2,755

10,007

1,201

470

14,517

Debt securities

in issue

12,795

6,560

4,147

3,123

8,387

3,325

18,189

14,342

5,501

76,369

Subordinated

liabilities

207

832

4,979

3,266

1,075

5,979

1,665

18,156

Trading

portfolio

liabilities

36,916

Financial

liabilities

designated

at fair

value

13,952

127,939

10,890

6,519

3,798

6,981

6,235

7,706

7,127

13,179

204,326

Derivative

financial

instruments

228,617

370

229,204

Other

financial liabilities

251

2,361

1,110

138

242

351

409

5,019

Total financial

liabilities

631,133

252,690

28,277

14,662

11,870

35,435

15,137

28,254

28,432

21,745

1,067,635

Other liabilities

6,934

Total liabilities

1,074,569

Cumulative

liquidity

gap

(106,459)

(166,591)

(164,403)

(166,720)

(169,069)

(173,274)

(158,686)

(136,674)

(100,828)

52,015

65,660

Risk review

Risk performance

Treasury and

Capital risk

152

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2019 Annual Report on Form

20-F

Contractual maturity of financial assets and liabilities

(audited)

As at

31 December 2018

demand

Not more

than three

months

Over three

months but

not more

than six

months

Over six

months but

not more

than nine

months

Over nine

months but

not more

than one

year

Over one

year

but not

more than

two years

Over two

years but

not more

than three

years

Over three

years but

not more

than five

years

Over five

years but

not more

than ten

years

Over ten

years

Total

£m

Assets

Cash and

balances

central banks

175,534

1,353

118

177,069

Cash collateral

and

settlement

balances

2,389

74,786

77,222

Loans

and advances

amortised

cost

12,506

11,171

7,938

5,416

7,072

26,336

25,559

39,604

48,606

142,198

326,406

Reverse

repurchase

agreements

and other

similar secured

lending

1,245

586

446

2,308

Trading

portfolio

assets

104,187

Financial

assets

at fair

value

through

the

income statement

13,606

112,297

7,174

3,124

2,312

4,677

165

311

829

5,153

149,648

Derivative

financial

instruments

222,384

222,538

Financial

assets

at fair

value

through

other

comprehensive

income

3,120

2,784

1,696

2,719

6,080

2,765

7,818

18,659

7,164

52,816

Other

financial assets

761

182

1,006

Total financial

assets

531,409

204,154

18,095

10,237

12,200

37,695

28,946

47,748

68,180

154,536

1,113,200

Other assets

20,083

Total assets

1,133,283

Liabilities

Deposits

at amortised

cost

342,967

30,029

7,282

3,672

3,237

3,983

2,053

520

349

746

394,838

Cash collateral

and

settlement

balances

3,542

63,973

67,522

Repurchase

agreements

and other

similar secured

borrowing

1,331

5,542

10,017

1,201

484

18,578

Debt securities

in issue

14,779

5,937

5,159

7,686

6,984

6,248

12,988

15,812

6,667

82,286

Subordinated

liabilities

306

860

5,156

3,387

6,968

3,759

20,559

Trading

portfolio

liabilities

37,882

Financial

liabilities

designated

at fair

value

14,280

143,635

6,809

9,051

3,577

10,383

5,689

7,116

4,415

11,879

216,834

Derivative

financial

instruments

219,578

219,643

Other

financial liabilities

277

2,984

554

3,815

Total financial

liabilities

619,883

261,257

20,033

17,962

14,545

22,770

29,166

25,215

28,031

23,095

1,061,957

Other liabilities

7,547

Total liabilities

1,069,504

Cumulative

liquidity

gap

(88,474)

(145,577)

(147,515)

(155,240)

(157,585)

(142,660)

(142,880)

(120,347)

(80,198)

51,243

63,779

Expected maturity date may differ from

the contractual dates, to account for:

◾

trading portfolio

assets and liabilities and derivative financial instruments, which may not be held to maturity as part of the Group’s

trading

strategies

◾

corporate

and retail deposits, reported under

deposits

at amortised cost, are repayable on demand

or at short notice on a contractual basis. In

practice, their behavioural

maturity is

typically longer than their contractual maturity, and

therefore

these deposits provide stable funding for the

Group’s

operations and liquidity needs because of the broad

base of customers, both numerically and by depositor type

◾

loans to corporate

and retail customers, which are included within loans and advances at amortised cost and financial assets at fair value, may be

repaid earlier in line with terms and conditions of the contract

◾

debt securities in issue, subordinated liabilities, and financial liabilities designated at fair value, may

include early redemption

features.

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Capital risk

153

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2019 Annual Report on Form

20-F

Contractual maturity of financial liabilities

on an undiscounted basis

The table below presents the cash flows payable

by the Group

under financial liabilities

by remaining

contractual maturities at the balance sheet

date. The amounts disclosed in the table are the contractual

undiscounted cash flows of all financial liabilities (i.e. nominal values).

The balances in the below table do not agree

directly to the balances in the consolidated balance sheet as the table incorporates

all cash

flows, on

an undiscounted basis, related to both principal as well

as those associated with all future coupon

payments.

Derivative financial instruments held for trading

and trading portfolio

liabilities

are included in the on demand column

at their fair

value.

Contractual maturity of financial liabilities

- undiscounted (audited)

demand

Not more

than three

months

Over three

months

but

not more

than six

months

Over six

months

but

not more

than one

year

Over one

year

but not

more than

three years

Over three

years but

not more

than five

years

Over five

years but

not more

than ten

years

Over ten

years

Total

£m

As at 31 December 2019

Deposits at amortised cost

348,337

42,369

10,682

7,946

4,869

532

554

595

415,884

Cash collateral and settlement

balances

3,053

64,297

67,363

Repurchase agreements

and

other similar secured borrowing

2,758

11,300

485

149

14,709

Debt securities in issue

12,850

6,589

7,305

12,330

19,132

16,657

9,398

84,261

Subordinated

liabilities

207

950

9,822

1,286

7,192

3,025

22,560

Trading

portfolio liabilities

36,916

Financial liabilities designated at

fair value

13,952

128,064

11,020

10,609

13,507

8,054

7,519

19,392

212,117

Derivative financial instruments

228,617

378

229,229

Other financial liabilities

251

2,372

126

1,337

351

565

448

5,515

Total financial liabilities

631,133

252,919

28,457

26,944

53,245

29,885

32,586

33,385

1,088,554

As at 31 December 2018

Deposits at amortised cost

342,967

30,047

7,295

6,924

6,069

546

412

816

395,076

Cash collateral and settlement

balances

3,542

63,985

67,534

Repurchase agreements

and

other similar secured borrowing

1,331

5,542

10,238

1,243

486

18,840

Debt securities in issue

14,810

5,976

12,914

13,849

13,351

17,639

10,254

88,819

Subordinated

liabilities

306

123

6,147

3,568

7,917

4,413

22,474

Trading

portfolio liabilities

37,882

Financial liabilities designated at

fair value

14,280

143,766

6,948

12,732

16,546

7,679

5,008

17,621

224,580

Derivative financial instruments

219,578

219,662

Other financial liabilities

277

2,984

554

3,815

Total financial liabilities

619,883

261,452

20,224

32,695

53,409

26,390

31,466

33,163

1,078,682

Risk review

Risk performance

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Capital risk

154

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2019 Annual Report on Form

20-F

Maturity of off-balance sheet commitments received and given

The table below presents the maturity split of the Group’s

off-balance sheet commitments received and given at the balance sheet date.

The

amounts disclosed in the table are the undiscounted

cash flows (i.e. nominal values) on the basis of earliest opportunity at which they are available.

Maturity analysis of off-balance sheet commitments received (audited)

demand

Not more

than three

months

Over three

months

but

not more

than six

months

Over six

months

but

not more

than nine

months

Over nine

months

but

not more

than one

year

Over one

year but

not more

than two

years

Over two

years but

not more

than three

years

Over three

years but

not more

than five

years

Over five

years but

not more

than ten

years

Over ten

years

Total

£m

As at 31 December 2019

Guarantees, letters of

credit and credit

insurance

13,091

106

13,390

Other commitments

received

Total off-balance sheet

commitments received

13,182

106

13,481

As at 31 December 2018

Guarantees, letters of

credit and credit

insurance

6,288

110

6,570

Other commitments

received

135

Total off-balance sheet

commitments received

6,381

152

6,705

Maturity analysis of off-balance sheet commitments given (audited)

demand

Not more

than three

months

Over three

months

but

not more

than six

months

Over six

months

but

not more

than nine

months

Over nine

months

but

not more

than one

year

Over one

year but

not more

than two

years

Over two

years but

not more

than three

years

Over three

years but

not more

than five

years

Over five

years but

not more

than ten

years

Over ten

years

Total

£m

As at 31 December

2019

Contingent liabilities

23,586

366

125

140

143

24,527

Documentary credits and

other short-term trade

related transactions

1,287

1,291

Standby facilities, credit

lines and other

commitments

328,623

1,133

792

973

639

269

273

139

225

333,164

Total off-balance sheet

commitments given

353,496

1,502

879

1,098

779

412

140

301

142

233

358,982

As at 31 December

2018

Contingent liabilities

16,344

1,102

553

145

170

415

435

641

319

179

20,303

Documentary credits and

other short-term trade

related transactions

1,263

325

1,741

Standby facilities, credit

lines and other

commitments

317,257

1,734

1,311

397

667

311

257

424

105

322,482

Total off-balance sheet

commitments given

333,671

4,099

2,189

597

851

737

695

1,065

338

284

344,526

Risk review

Risk performance

Treasury and

Capital risk

155

Barclays PLC

2019 Annual Report on Form

20-F

Capital

risk

All disclosures in this section (pages 162

to 171

)

are unaudited unless otherwise stated.

Overvie

The CET1 ratio, among

other metrics, is a measure of the capital strength and resilience of Barclays. Maintenance of our

capital resources is vital in

order

to meet the

overall capital requirement,

and to cover the Group’s

current and

forecast business needs,

and associated risks in order to provide

a viable and sustainable business offering.

This section provides an overview

of the Group’s: (i) CET1 capital,

leverage and own

funds and eligible liabilities requirements; (ii) capital resources;

(iii) risk weighted assets (RWAs);

(iv) leverage ratios and exposures; and (v) own

funds and eligible liabilities.

More details on monitoring

and managing capital risk may be found in the risk management sections on pages 194

to 196 of the Barclays PLC Pillar

3 Report 201

(unaudited)

Summary of

performance

in the

period

The Group

continues to be in excess of overall capital requirements, minimum leverage

requirements and

minimum requirements for own funds

and eligible liabilities (MREL).

The CET1 ratio ended

the year at 13.8%

(December

201

13.2

%).

CET1 capital decreased by £0.3bn

to £40.8bn. This was driven by underlying

profit generation of £5.0bn offset by dividends paid and foreseen

£2.4bn,

the additional provision for PPI

of £1.4bn,

pension deficit reduction contribution payments of £0.5bn, a decrease in the currency

translation

reserve of £0.5bn

mainly driven by the depreciation

of period end USD against GBP and a loss on the

redemption

of Additional Tier 1 (AT1)

securities of £0.4bn

RWAs

decreased by £16.8bn

to £295.1bn

primarily driven by the reduction in the Group’s operational

risk RWAs as well as the depreciation of

period end USD against GBP.

The average UK

leverage ratio remained

stable at 4.5% (December 2018:

4.5%) primarily driven by a net increase in AT1 capital, offset by a modest

increase in leverage exposure

to £1,143bn

(December 2018: £1,110bn).

The UK leverage rat

io remained stable at

5.1% (December

2018: 5.1%)

Key metrics

Common Equity Tier 1 ratio

13.8%

Average UK leverage ratio

4.5%

UK leverage ratio

5.1%

Own funds and eligible

liabilities ratio

32.8%

Overall capital

requirements

The Group’s

Overall Capital Requirement

for CET1 is 12.1% comprising

a 4.5% Pillar 1 minimum, a

2.5% Capital Conservation

Buffer (CCB), a 1.5%

Global Systemically Important

Institution (G-SII) buffer,

a 3.0% Pillar 2A requirement and

a 0.6% Countercyclical Capital

Buffer (CCyB).

The Group’s

CCyB

is based on the buffer rate applicable for each jurisdiction

in which the Group has exposures. On 28 November

2018, the

Financial Policy Committee

(FPC) set the CCyB rate for UK exposures

at 1%. The buffer rates set by other national authorities for non

-UK exposures

are not currently material. Overall,

this results in a 0.6% CCyB for the Group for

Q419.

On 16 December

2019, the FPC announced its intention to

increase the CCyB rate for

UK exposures from

1% to 2%. This

will take effect from

December 2020

and

based on current UK exposures, is expected

to increase the Group’s

CCyB to approximately 1.1%.

The Group

’s

Pillar 2A requirement

as per the PRA’s Individual Capital Requirement

is 5.4%

of which at least 56.25%

needs to be met with

CET1

capital,

equating to approximately 3

.0%

of RWAs. Certain

elements of the Pillar 2A requirement

are a fixed quantum whilst others are a

proportion

of RWAs,

based on a point in time assessment. The Pillar 2A requirement

is subject

to at least annual review.

On 27 June 2019,

CRR II came into force amending CRR. As an amending regulation, the existing provisions of CRR

apply unless they are amended

by CRR II.

Certain provisions took immediate effect and

these primarily relate to MREL. Amendments within the capital risk section include changes to

qualifying criteria for CET1, AT1

and Tier 2 instruments, the inclusion of additional holdings eligible for deduction, an amendment

to the treatment

Risk review

Risk performance

Treasury and

Capital risk

156

Barclays PLC

2019 Annual Report on Form

20-F

of deferred

tax assets and the introduction of requirements for

MREL. Grandfathering and

transitional provisions relating to MREL have also been

introduced.

Other CRR II amendments are expected to take effect from 28 June

2021.

Certain aspects of CRR II are dependent

on final technical standards to

be issued by the European

Banking Authority (EBA) and adopted by

the

European

Commission as

well as UK implementation of the rules. The disclosures in the following

section reflect Barclays’ interpretation of the

current rules and guidance.

Minimum leverage

ratio

requirements

The Group

is subject to a

leverage ratio requirement

of 4.0% as at 31 December 2019.

This comprises the 3.25% minimum requirement, a G-SII

additional leverage ratio buffer

(G-SII ALRB) of 0.53%

and a countercyclical leverage ratio buffer

(CCLB) of 0.2%. Although the leverage ratio is

expressed in terms of Tier 1 (T1)

capital, 75% of the minimum requirement,

equating to 2.4375%,

needs to be met with

CET1 capital. In addition,

the G-SII ALRB and CCLB must be covered

solely with

CET1 capital.

The CET1 capital held against the 0.53%

G-SII ALRB was £6.0bn

and against

the 0.2% CCLB was £2.3bn.

MREL

The Group

is required to meet the higher of: (i) the MREL set by the Bank of England; and (ii) the requirements in CRR II, both of which have RWA

and leverage based requirements.

MREL is subject to phased implementation and will be fully implemented by 1 January

2022,

at which time

the

Group’s

indicative MREL is expected to be two times the sum of its Pillar 1 and Pillar 2A requirements,

as set by the Bank of England. In addition,

CET1 capital cannot be counted towards

both MREL and the capital buffers, meaning that the buffers will effectively be applied

above both

the

Pillar 1 and Pillar 2A requirements

relating to own funds and eligible liabilities. The Bank of England will review the MREL calibration by the end of

2020,

including assessing the proposal for Pillar 2A recapitalisation, which may drive

a different 1 January 2022

MREL than currently proposed.

Risk review

Risk performance

Treasury and

Capital risk

157

Barclays PLC

2019 Annual Report on Form

20-F

Capital

resources

Capital ratios

a,b,c

As at 31 December

2019

2018

CET1

13.8%

13.2%

Tier 1 (T1)

17.7%

17.0%

Total regulatory

capital

21.6%

20.7%

Capital resources (audited)

2019

2018

As at 31 December

£bn

Total equity excluding

non-controlling

interests per the balance

sheet

64.4

62.6

Less: other equity instruments (recognised

as AT1 capital)

(10.9)

(9.6)

Adjustment to retained earnings for

foreseeable dividends

(1.1)

(0.7)

Other regulatory adjustments and deductions

Additional value adjustments (PVA)

(1.7)

Goodwill and intangible assets

(8.1)

(8.0)

Deferred tax assets that rely on future profitability

excluding temporary

differences

(0.5)

Fair value reserves related to

gains or losses on cash flow hedges

(1.0)

(0.7)

Gains or losses on liabilities at fair value resulting from own

credit

0.3

(0.1)

Defined benefit pension fund assets

(1.6)

(1.3)

Direct and indirect holdings by an institution of own

CET1 instruments

(0.1)

Adjustment under IFRS 9 transitional arrangements

1.1

1.3

Other regulatory adjustments

(0.1)

CET1 capital

40.8

41.1

AT1 capital

Capital instruments and related share premium accounts

10.9

9.6

Qualifying AT1

capital (including minority interests) issued by subsidiaries

0.7

2.4

Other regulatory adjustments and deductions

(0.1)

AT1 capital

11.4

11.9

T1 capital

52.2

53.0

T2 capital

Capital instruments and related share premium

accounts

7.7

6.6

Qualifying T2 capital (including minority

interests) issued by subsidiaries

4.0

5.3

Other regulatory adjustments and deductions

(0.3)

Total regulatory capital

63.6

64.6

Notes

CET1, T1 and

T2 capital, and

RWAs are

calculated

applying the transitional

arrangements of the

CRR as amended by CRR II applicable as

at the reporting date. This

includes IFRS 9

transitional

arrangements

and the grandfathering

of CRR and CRR II non-compliant capital

instruments.

The fully

loaded CET1 ratio,

as is relevant

for assessing against the

conversion trigger in Barclays

PLC AT1 securities, was

13.5%, with £39.7bn of CET1 capital and £

295.0bn

of RWAs calculated

without applying

the transitional

arrangements of the CRR as amended

by CRR II applicable as at the

reporting date.

The Group’

CET1 ratio, as is

relevant

for assessing

against the conversion

trigger in Barclays

Bank PLC T2 Contingent Capital

Notes, was 13.8%. For this calculation

CET1 capital

and RWAs

are calculated

applying

the transitional arrangements

under the CRR, including the IFRS 9 transitional

arrangements. The benefit

of the Financial Services Authority

(FSA) October 2012

interpretation

of the transitional

provisions, relating to the

implementation of CRD IV, expired

in December 2017.

Risk review

Risk performance

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Capital risk

158

Barclays PLC

2019 Annual Report on Form

20-F

Movement in CET1 capital

2019

£bn

Opening balance as at 1 January

41.1

Profit for the period attributable to equity holders

3.3

Own credit relating to derivative liabilities

0.1

Dividends paid and foreseen

(2.4)

Increase in retained regulatory capital generated from earnings

1.0

Net impact of share schemes

0.3

Fair value through

other comprehensive income reserve

0.1

Currency

translation reserve

(0.5)

Other reserves

(0.4)

Decrease in other qualifying reserves

(0.5)

Pension remeasurements

within reserves

(0.2)

Defined benefit pension fund asset deduction

(0.3)

Net impact of pensions

(0.5)

Goodwill and intangible assets

(0.1)

Adjustment under IFRS 9 transitional arrangements

(0.2)

Decrease in regulatory capital due to adjustments and deductions

(0.3)

Closing

balance as at

31 December

40.8

CET1 capital decreased £0.3bn

to £40.8bn

(December 2018:

£41.1bn).

£3.3bn

of capital generated

from profits was partially offset

by £2.4bn

of regulatory dividends

paid and foreseen including

£0.8bn of AT1

coupons

paid. Other movements in the period

were:

◾

A £0.5bn decrease

in the currency translation reserve mainly driven

by the depreciation of period

end USD against GBP

◾

A £0.5bn decrease

as a result of movements relating to pensions, largely due to deficit contribution

payments of £0.25bn

in April 2019 and

September 2019

◾

A £0.4bn

loss on the

redemption

of AT1 securities

◾

A £0.2bn decrease

in the IFRS

9 transitional add back primarily due to the

change in the phasing of transitional relief from

95% in 2018

to 85% in

2019

Risk review

Risk performance

Treasury and

Capital risk

159

Barclays PLC

2019 Annual Report on Form

20-F

Risk

weighted assets

Risk weighted assets (RWAs) by risk type and business

Credit risk

Counterparty

credit risk

Market risk

Operational

risk

Total RWAs

Std

IRB

Std

IRB

Settlement Risk

CVA

Std

IMA

As at 31 December 2019

£bn

Barclays UK

5.2

57.5

0.2

11.8

74.9

Corporate

and Investment Bank

25.7

62.1

12.1

16.9

0.3

2.5

12.8

17.6

21.5

171.5

Consumer, Cards and

Payments

27.2

2.7

0.1

7.6

37.7

Barclays International

52.9

64.8

12.2

16.9

0.3

2.5

12.8

17.7

29.1

209.2

Head Office

5.1

5.8

0.1

11.0

Barclays Group

63.2

128.1

12.4

16.9

0.3

2.5

13.0

17.7

41.0

295.1

As at 31 December 2018

Barclays UK

3.3

59.7

0.2

0.1

11.8

75.2

Corporate

and Investment Bank

26.1

64.8

9.8

14.9

0.2

3.3

13.9

16.2

21.7

170.9

Consumer, Cards and

Payments

29.5

2.2

0.1

0.6

7.3

39.8

Barclays International

55.6

67.0

9.9

15.0

0.2

3.3

13.9

16.8

29.0

210.7

Head Office

4.3

5.8

15.9

26.0

Barclays Group

63.2

132.5

10.1

15.0

0.2

3.4

14.0

16.8

56.7

311.9

Movement analysis of risk weighted assets

Credit risk

Counterparty

credit risk

Market risk

Operational risk

Total RWAs

Risk weighted assets

£bn

As at 31 December 2018

195.6

28.8

30.8

56.7

311.9

Book size

3.9

(1.0)

(1.5)

1.4

Acquisitions and disposals

(0.8)

Book quality

(2.9)

0.3

(2.6)

Model updates

1.5

0.5

2.0

Methodology

and policy

0.8

(1.4)

0.9

(14.2)

(13.9)

Foreign

exchange movement

(2.9)

As at 31 December 2019

191.3

32.1

30.7

41.0

295.1

Note

Foreign

exchange movement

does not include

foreign exchange

for counterparty

credit risk or market

risk.

RWAs

decreased £16.8bn

to £295.1

bn:

◾

‘Book size’ increased RWAs

£1.4

bn primarily due to an increase in trading activity, offset by

a decrease in operational risk as per the standardised

approach

◾

‘Book quality’ decreased RWAs

£2.6bn primarily

due to changes in risk profile

◾

‘Model updates’ increased RWAs

£2.0bn primarily

due to the recalibration of modelled wholesale RWAs

◾

‘Methodology

and Policy’ decreased RWAs

£13.9

bn primarily due to removal of the operational risk floor

◾

‘Foreign exchange

movements’ decreased RWAs

by £2.9bn

primarily due to the depreciation of period

end USD against

GBP

Risk review

Risk performance

Treasury and

Capital risk

160

Barclays PLC

2019 Annual Report on Form

20-F

Leverage ratios

and exposures

The Group

is required to disclose an average UK leverage ratio which

is based on capital on the last day of each month in the quarter and

exposure measure

for each day in the quarter.

The Group

is also

required

to disclose

a UK leverage

ratio based on capital and

exposure on

the last

day of the quarter.

Both approaches

exclude qualifying claims on central banks from the leverage exposures.

Leverage ratios

a,b

2019

2018

As at 31 December

£bn

Average UK leverage ratio

4.5%

Average

T1 capital

51.8

50.5

Average

UK leverage exposure

1,143

1,110

UK leverage ratio

5.1%

CET1 capital

40.8

41.1

AT1 capital

10.7

9.5

T1 capital

51.6

50.6

UK leverage exposure

1,008

999

UK leverage exposure

2019

2018

As at 31 December

£bn

Accounting assets

Derivative financial instruments

229

223

Derivative cash collateral

Securities financing transactions (SFTs)

111

130

Loans and advances and other assets

743

732

Total IFRS assets

1,140

1,133

Regulatory consolidation

adjustments

(1)

(2)

Derivatives adjustments

Derivatives netting

(207)

(202)

Adjustments to cash collateral

(48)

(42)

Net written credit protection

Potential future exposure

(PFE) on derivatives

119

123

Total derivatives adjustments

(122)

(102)

SFTs adjustments

Regulatory deductions and other adjustments

(12)

(11)

Weighted off-balance sheet commitments

105

108

Qualifying central bank claims

(120)

(144)

UK leverage exposure

1,008

999

Notes

Fully loaded

average UK leverage ratio was

4.4%,

with £50.7bn of T1 capital

and £1,142

bn of leverage

exposure.

Fully loaded

UK leverage ratio was 5.0%, with

£50.4bn of T1

capital and

£1,007bn of leverage exposure.

Fully loaded

UK leverage ratios

are calculated

without applying the

transitional arrangements

of the CRR as amended by CRR II

applicable as

at the reporting

date.

Capital and

leverage measures

are calculated

applying the transitional

arrangements of the

CRR as amended by CRR II applicable

as at the reporting date

The T1 capital

is calculated

in line with the PRA Handbook.

Comparative numbers

have been revised

to reflect

the allocation of margin

lending from Loans and

advances and other assets

to SFTs.

Risk review

Risk performance

Treasury and

Capital risk

161

Barclays PLC

2019 Annual Report on Form

20-F

The averag

UK leverage ratio remained

stable at 4.5%

(December

2018:

4.5%). T1 capital increased £1.4bn

to £51.8b

n, which included a net

increase in AT1

capital, partially offset by

a modest increase in exposure of £33bn

to £1,143

bn primarily

driven by

SFTs and Weighted off-balance

sheet commitments.

The UK leverage ratio also remained

stable at 5.1%

(December

2018:

5.1%). T1 capital increased £1.0bn

to £51.6

bn, which included a net increase

in AT1 capital. The UK leverage

exposure increased

£9bn to £1,008

bn primarily

driven by

Loans and advances and other assets.

The difference between

the average UK leverage

ratio and the UK leverage ratio was primarily driven by

lower trading

portfolio assets,

settlement

exposures and SFT exposures at quarter

end.

The Group

also discloses a CRR

leverage ratio

within its additional regulatory

disclosures prepared

in accordance with EBA guidelines on disclosure

under Part

Eight of the CRR (see

Barclays

PLC Pillar 3 Report 2019

(unaudited)

due to be published on 13 February 2020

and which will be

available at home.barclays/annualreport).

Note

CRR leverage ratio as amended

by CRR II applicable as

at the reporting

date.

Minimum requirement

for own

funds and

eligible

liabilities

CRR

requirements

relating

own

funds

and

eligible

liabilities came into

effect

from

June

2019.

Eligible liabilities have

been

calculated

reflecting the

Group’s

interpretation

of the

current

rules and

guidance.

Certain aspects of CRR II

are dependen

on final technical standards to

issued by the EBA and adopted by

the European Commission as well as UK implementation of the rules.

Own funds and eligible

liabilities ratios

As at 31 December

2019

2018

CET1 capital

13.8%

13.2%

AT1 capital instruments and related share

premium accounts

3.6%

3.1%

T2 capital instruments and related share premium

accounts

2.5%

2.1%

Eligible liabilities

11.2%

9.7%

Total Barclays PLC (the Parent company) own funds and eligible

liabilities

31.2%

28.1%

Qualifying AT1

capital (including minority interests) issued by subsidiaries

0.2%

0.7%

Qualifying T2 capital (including minority

interests) issued by subsidiaries

1.3%

1.6%

Total own funds and eligible liabilities,

including eligible Barclays Bank PLC instruments

32.8%

30.5%

Own funds and eligible

liabilities

£bn

CET1 capital

40.8

41.1

AT1 capital instruments and related share

premium accounts

10.7

9.6

T2 capital instruments and related share premium

accounts

7.4

6.6

Eligible liabilities

33.0

30.4

Total Barclays PLC (the Parent company) own funds and eligible

liabilities

92.0

87.7

Qualifying AT1

capital (including minority interests) issued by subsidiaries

0.7

2.3

Qualifying T2 capital (including minority

interests) issued by subsidiaries

4.0

5.1

Total own funds and eligible liabilities,

including eligible Barclays Bank PLC instruments

96.7

95.1

Total RWAs

295.1

311.9

Notes

CET1, T1 and

T2 capital, and

RWAs are

calculated

applying the transitional

arrangements of the

CRR as amended by CRR II applicable as

at the reporting date. This

includes IFRS 9

transitional

arrangements

and the grandfathering

of CRR and CRR II non-compliant capital

instruments.

Includes

other AT1 capital

regulatory adjustments

and deductions of £0.1bn (included

in AT1 issued

by subsidiaries in December 2018: £0.1bn), and

other T2 credit

risk

adjustments

and deductions

of £0.2bn (included in T2 issued

by subsidiaries

in December 2018: £0.3bn).

The comparatives

are based on the

Bank of Englan

d's statement

of policy on MREL.

Risk review

Risk performance

Treasury and

Capital risk

162

Barclays PLC

2019 Annual Report on Form

20-F

Foreign exchange risk

(audited)

The Group

is exposed to two sources of foreign exchange risk.

a) Transactional foreign

currency exposure

Transactional foreign

currency

exposures represent exposure

on banking assets

and liabilities, denominated in currencies other than the functional

currency

of the transacting entity.

The Group’s

risk management policies are designed to prevent

the holding of significant open positions in foreign currencies outside the trading

portfolio managed

by Barclays International

which is monitored through

VaR.

Banking book

transactional foreign exchange

risk outside of

Barclays International is monitored on

a daily basis by the market risk function and

minimised by the businesses.

b) Translational foreign

exchange exposure

The Group’s

investments in overseas subsidiaries and branches

create capital resources denominated in foreign

currencies, principally USD and

EUR. Changes in the GBP value of the net investments

due to foreign currency

movements are captured in the currency translation reserve,

resulting in a movement in CET1 capital.

The Group’s

strategy is to minimise the volatility of the capital ratios caused by foreign

exchange movements,

by matching the CET1 capital

movements to the reva

luation of the Group’s foreign

currency

RWA exposures.

Functional currency of operations (audited)

Foreign

currency

net investments

Borrowings

which hedge the

net investments

Derivatives

which hedge the

net investments

Structural

currency

exposures pre-

economic

hedges

Economic

hedges

Remaining

structural

currency

exposures

£m

As at 31 December 2019

USD

25,607

(10,048)

(1,111)

14,448

(5,339)

9,109

EUR

3,068

(3)

3,065

(1,122)

1,943

JPY

533

Other currencies

2,001

(34)

1,967

Total

31,209

(10,051)

(1,145)

20,013

(6,461)

13,552

As at 31 December 2018

USD

28,857

(12,322)

(2,931)

13,604

(4,827)

8,777

EUR

2,672

(3)

2,669

(2,146)

523

JPY

489

Other currencies

2,026

(37)

1,989

Total

34,044

(12,325)

(2,968)

18,751

(6,973)

11,778

Economic hedges

relate to exposures arising on foreign currency

denominated preference share and AT1 instruments. These are accounted for

historical cost under

IFRS and do not qualify as hedges for accounting purposes. The gain or loss arising from changes in the GBP value of these

instruments is recognised

on redemption

in retained earnings.

During 2019,

total structural currency exposure

net of hedging instruments increased by £1.8bn

to £13.6bn (2018:

£11.8bn). Foreign

currency

net investments decreased

by £2.8bn

to £31.2bn

(2018: £34.0bn) driven

predominantly by a £3.2bn decrease in USD offset

by a £0.

4bn increase in

EUR. The hedges associated with these investments decreased

by £4.1

bn to £11.2

bn (2018: £15.3bn).

Risk review

Risk performance

Treasury and

Capital risk

1.1%

5.8%

13.6%

24.7%

29.9%

24.9%

0-10 Years

11-20

Years

21-30

Years

31-40

Years

41-50

Years

51 Years +

163

Barclays PLC

2019 Annual Report on Form

20-F

Pension risk

review

The UK Retirement Fund (UKRF)

represents approximately

97% (2018:

97%) of the Group’s total retirement benefit obligations globally. As such

this risk review section focuses exclusively on

the UKRF. The UKRF is closed to new entrants and there is no

new final salary benefit being accrued.

Existing active members accrue

a combination

of a cash balance benefit

and a defined contribution

element. Pension risk arises as the

market value

of the pension fund assets may decline, investment

returns may reduce

or the estimated

value of the pension liabilities may increase.

Refer to page 196

of the Barclays PLC Pillar 3 Report 2019

(unaudited)

for more information on how

pension risk

is managed.

Assets

The Trustee Board

of the UKRF defines its overall long-term investment strategy with investments across a

broad

range of asset classes.

This

results in an appropriate

mix of return seeking assets as well as liability matching assets to better match future pension obligations. The two largest

market risks within the asset portfolio are interest

rates and equities. The split of scheme assets is shown within Note

33.

The fair value of the UKRF

assets was £31.4bn

as at

31 December

2019

(2018:

£29.0bn).

Liabilities

The UKRF retirement benefit obligations are a series of future cash

flows with relatively long duration.

On an IAS 19 basis these cash flows are

sensitive to changes in the expected long

-term price inflation rate (RPI) and the discount rate (GBP AA corporate

bond yield):

◾

An increase in long

-term expected inflation corresponds

to an increase in liabilities;

◾

A decrease in the discount rate corresponds

to an increase in liabilities.

Pension risk is generated

through

the Group’s defined benefit schemes and this

risk is set to reduce

over time as the main defined benefit scheme is

closed to new entrants. The chart below outlines the shape of the UKRF’s liability cash flow profile as at 31

December 2019

that takes

account of

the future inflation indexing of payments to beneficiaries. The majority

of the cash flows (approximately

93%) fall between 0 and 40 years

peaking

between 11

and 20 years and reducing

thereafter. The shape may vary depending

on changes to inflation

and longevity expectations and any

members who elect to transfer out. Transfers

out will bring forward

the liability

cash flows.

For more

detail on the UKRF’s financial and demographic

assumptions see

Note 33

to the financial statements.

Proportion

of liability cash flows

Risk review

Risk performance

Treasury and

Capital risk

164

Barclays PLC

2019 Annual Report on Form

20-F

The graph

above shows the evolution of the UKRF’s net IAS 19 position over

the last two years. During 2019

the net improvement in the IAS 19

position was largely driven by

bank contributions. Credit spreads tightening during

the year had a negative impact which was broadly offset by

changes in other market levels, in particular equity prices and interest rates, and

updates to demographic

assumptions.

Refer to Note 33

for the sensitivity of the UKRF to changes in key assumptions.

Risk measurement

In line with Barclays’ risk management framework

the assets

and liabilities of the UKRF are modelled within a VaR

framework

to show the volatility

of the pension position at a total portfolio level. This enables the risks, diversification and

liability matching characteristics of the UKRF obligations

and investments to be adequately captured. VaR

is measured and monitored

on a monthly basis. Risks

are reviewed and

reported

regularly at

forums including

the Board Risk Committee, the Group

Risk Committee, the Pensions Management Group

and the Pension Executive Board.

The

VaR model takes into account

the valuation of the liabilities on an IAS 19 basis (see Note

33). The Trustee receives quarterly

VaR measures on a

funding basis.

The pension liability is also sensitive to post-retirement

mortality assumptions which are reviewed regularly.

See Note 33 for more details.

In addition, the impact of pension risk to the Group

is taken into account as part of the stress testing process. Stress testing is performed

internally

on at least an annual basis. The UKRF exposure

is also included

as part of regulatory

stress

tests.

Barclays defined benefit pension

schemes affects capital in two ways:

◾

An IAS 19 deficit is treated as a liability on the

Group’s

balance sheet. Movement in a deficit due to remeasurements, including actuarial losses,

are recognised

immediately through Other Comprehensive

Income and as such reduces shareholders’ equity and CET1 capital.

An IAS 19 surplus

is treated as an asset on the balance sheet and increases shareholders’

equity; however,

it is deducted for the purposes

of determining CET1

capital.

◾

In the Group’s statutory balance sheet an IAS

19 surplus or

deficit is partially offset by a deferred tax liability or asset respectively.

These may or

may not be recognised

for calculating CET1 capital depending

on the overall deferred

tax position of the

Group

at the

particular time.

Pension risk is taken into

account in the Pillar 2A capital assessment undertaken by the PRA at least annually. The Pillar

2A requirement

forms part

of the Group’s

Overall Capital Requirement for CET1 capital, Tier 1 capital and total capital. More detail on minimum

regulatory

requirements can

be found on

page 168

Risk review

Risk performance

Treasury and

Capital risk

165

Barclays PLC

2019 Annual Report on Form

20-F

Interest rate

risk

in the

banking book

All disclosures in this section (pages 165

to 166

)

are unaudited unless otherwise stated.

Overview

The treasury and capital risk framework covers interest rate sensitive

exposures held in the banking book, mostly relating to accrual accounted and

FVOCI instruments. The potential

volatility of net interest

income is measured by an Annual Earnings at Risk (AEaR) metric which is

monitored

regularly and reported

to senior management

and the Barclays PLC Board Risk

Committee as part of the

limit monitoring framework.

For further

detail on the interest rate risk in the banking book governance

and framework refer to pages 196

to 197 of the Barclays PLC Pillar 3

Report 2019

(unaudited).

Summary of

performance

in the

period

Annual Earnings at Risk

(AEaR), is a key measure of interest

rate risk in the banking book (IRRBB).

Key metrics

AEaR

+£45m

AEaR across the Group

from a positive 25bps shock to forward

interest rate curves.

Net interest

income sensitivity

The table below shows a sensitivity

analysis on pre-tax net interest income for non-traded financial assets

and liabilities,

including the effect of any

hedging. NII

sensitivity

uses the

Annual Earnings at Risk

(AEaR) metric as described on page 196 of the Barclays PLC Pillar 3 Report 2019

(unaudited).

Note that this metric

assumes an instantaneous parallel

change to forward

interest rate curves.

The model does not apply floors

to shocked market

rates, but does recognize

contractual product specific

interest rate floors where relevant. The main model assumptions

are: (i) one-year ahead time

horizon; (ii) balance sheet is

held constant; (iii)

balances are adjusted for assumed behavioural profiles (i.e. considers that

customers may prepay

the

mortgage

before the contractual maturity); and (iv) behavioural

assumptions are kept unchanged in

all rate

scenarios.

Net interest income sensitivity (AEaR) by business

unit

a,b,c,d

(audited)

Barclays UK

Barclays

International

Head Office

Total

£m

As at 31 December 2019

+25bps

-25bps

(57)

(74)

(4)

(135)

As at 31 December 2018

+25bps

-25bps

(71)

(73)

(5)

(149)

Notes

Excludes

minor investment

banking business.

Expected

fixed

rate mortgage pipeline

completions

in Barclays

UK assumed to be consistent

with level and timing of pipeline hedging.

The Group’s

customer banking

book hedging activity

is risk

reducing from an

NII sensitivity

perspective. The hedges in place

remove interest

rate risk and smooth income over the

medium term.

The NII sensitivity

for the Group at 31 December 2019 without

hedging in

place for +/-25bp rate

shocks would

be £140m/£(229)m respectively.

NII sensitivity

for December 2018 restated

due to increased

portfolio coverage, primarily the

inclusion of the Treasury

portfolio.

NII asymmetry arises due to the current low

interest rate levels as some customer products

have embedded

floors.

NII sensitivity

to a +25bp

shock

to rates has decreased year

on year as a result of actions taken to reduce the exposure

to falling interest rates and increased bond holding

outright

in the liquidity pool.

Risk review

Risk performance

Treasury and

Capital risk

166

Barclays PLC

2019 Annual Report on Form

20-F

Net interest income sensitivity (AEaR) by currency

a,b

(audited)

2019

2018

+25 basis

points

-25 basis

points

+25 basis points

-25 basis points

As at 31 December

£m

GBP

(93)

(112)

USD

(32)

(37)

EUR

(10)

(20)

(5)

Other currencies

(12)

(3)

Total

(135)

(149)

Notes

Excludes

minor investment

bank businesses.

NII sensitivity

for December 2018 restated

due to increased

portfolio coverage,

primarily

the inclusion

of the Treasury portfolio.

Analysis of

equity

sensitivity

Equity sensitivity measures the overall impact

of a +/-

25bps movement

in interest rates on retained earnings, fair value through other

comprehensive

income (FVOCI), cash flow hedge reserves

and pensions. For non

-NII items

a DV01

metric is

used, which is an indicator of the shift

in value for a 1 basis point movement

in the yield curve.

Analysis of equity sensitivity

(audited)

2019

2018

+25 basis

points

-25 basis

points

+25 basis

points

-25 basis

points

As at 31 December

£m

Net interest income

(135)

(149)

Taxation effects

on the above

(11)

(22)

Effect on profit for the year

(101)

(112)

As percentage of net profit after tax

1.0%

(3.0%)

2.6%

(4.4%)

Effect on profit for

the year (per above)

(101)

(112)

Fair value through

other comprehensive income reserve

(321)

329

(253)

260

Cash flow hedge reserve

(534)

534

(574)

574

Taxation effects

on the above

214

(216)

207

(209)

Effect on equity

(607)

546

(554)

513

As percentage of equity

(0.9%)

0.8%

(0.9%)

0.8%

Note

December 2018

sensitivities

restated due

to increased portfolio coverage, primarily

the inclusion of the

Treasury

portfolio.

Movements in the FVOCI reserve

impact CET1 capital. However,

movements in the cash flow hedge reserve and pensions remeasurement

reserve

recognised in FVOCI do

not affect CET1 capital.

Volatility

of the

FVOCI portfolio

in the

liquidity

pool

Changes in value of FVOCI exposures flow directly through capital

via the FVOCI reserve. The volatility

of the value of the

FVOCI investments in the

liquidity pool is

captured and

managed through a value measure rather than an earning

measure, i.e.

non-traded market risk VaR.

Although the underlying methodology to calculate the non-traded VaR is

identical to

the one used in traded management VaR,

the two measures

are

not directly comparable. The non-

traded VaR represents the

volatility

to capital

driven by

the FVOCI exposures. These exposures are in the

banking

book and do

not meet the criteria

for trading book treatment.

Analysis of volatility of the FVOCI portfolio in the liquidity

pool

2019

2018

Average

High

Low

Average

High

Low

For the year ended 31 December

£m

Non-traded

market value at risk (daily, 95%)

DVaR trended

upwards

for the first three quarters of 2019

as outright duration and asset swap spread risk

increased. The liquidity pool de-

risked

substantially in early Q4, causing an associated reduction

in DVaR.

Risk review

Risk performance

Operational risk

167

Barclays PLC

2019 Annual Report on Form

20-F

All disclosures in this section are unaudited

unless otherwise stated.

Overview

Operational risks are inherent in the Group’s

business activities and it is not cost effective or possible to attempt to

eliminate all operational risks.

The Operational Risk Framework

is therefore focused on identifying operational

risks,

assessing them and

managing them within the Group’s

approved

risk appetite.

The Operational Risk principal risk comprises the following risks:

Data Management & Information

Risk;

Financial Reporting Risk; Fraud Risk;

Payments Process Risk;

People Risk; Premises Risk; Physical Security Risk; Supplier Risk;

Tax Risk; Technology

Risk;

Transaction Operations

Risk and

Execution Risk. The operational risk profile is also informed

by a number

of risk themes:

Cyber, Data, and Resilience. These

represent threats to the

Group

that extend across multiple risk

types, and therefore

require

an integrated risk management approach.

For definitions of these risks refer

to pages 199 to 200

of the Barclays PLC Pillar 3 Report 2019.

In order to provide complete coverage

of the

potential adverse impacts on

the Group arising from

operational risk, the operational risk taxonomy extends beyo

nd the risks

listed above to cover

operational risks associated with other

principal risks too.

This section provides an analysis of the Group’s

operational risk profile, including events above the Group’s

reportable

threshold, which have had

financial impact in 2019.

The Group’s

operational risk profile is informed by bottom

-up risk assessments

undertaken by

each business unit

and top-

down qualitative review by the

Operational Risk specialists for each risk type. Fraud, Transaction

Operations and Technol

ogy continue to be

highlighted as key operational

risk exposures.

For information

on conduct

risk events see

page 170

Summary of

performance

in the

period

During 2019,

total operational risk losses

decreased to £169m

(2018:

£230m) and the number of recorded events for 2019

(2,098) was at the

same level as 2018

(2,068). The total operational risk losses

for the year were mainly driven

by events falling within the Execution, Delivery

and

Process Management and External Fraud

categories, which tend to be high volume but low impact events.

Key metrics

84%

of the Group’s

net reportable operational

risk events had a

loss value of £50,000

or less

67%

of events by number

are due to external fraud

60%

of losses are from ev

ents aligned to Execution, Delivery and Process Management

Operational risk

profile

Within operational risk, there are a large number

of small

risk events.

In 2019,

84% (2018:

84%) of the Group’s reportable operational

risk events

by volume had

a value of less than £50,000 each.

Cumulatively, events under

this £50,000 threshold accounted

for only 19% (2018:

14%) of the

Group’s

total net operational risk losses.

A small proportion

of operational risk events have a material impact on the financial results of the Group.

The analysis below presents the Group’s

operational risk events by Basel event category:

Risk review

Risk performance

Operational risk

168

Barclays PLC

2019 Annual Report on Form

20-F

Note

The data

disclosed

includes

operational risk losses for reportable

events having

impact of > £10,000 and excludes

events

that are conduct or legal risk,

aggregate and boundary

events.

A boundary event

is an operational

risk event that results

in a credit risk impact. Due to the

nature of risk events that

keep evolving, prior year losse

have been updated.

◾

Execution, Delivery and Process Management impacts

decreased to £101m

(2018:

£130m)

and accounted for 60% (2018:

57%) of total

operational risk losses. The events in this category

are typical of the

banking industry as a whole where

high volumes of transactions are

processed on a daily basis, mapping

mainly to Barclays Transaction Operations risk type. The overall

frequency

of events in this