Christopher Lucas - Chief Financial Officer, Group Finance Director, Executive Director, Chairman of Disclosure Committee, Member of Executive Committee and Group Finance Director of Barclays Bank PLC Robert Edward Diamond - Group Chief Executive Officer, President, Chief Executive Officer of Corporate, Investment Banking & Wealth Management, Executive Director, Member of Executive Committee and Executive Director of Barclays Bank PLC

Rahul Sinha Andrew Lim - Matrix John-Paul Crutchley - UBS Investment Bank, Research Division Andrew Coombs - Citigroup Inc, Research Division Peter Toeman - HSBC, Research Division Ian Gordon - Exane BNP Paribas, Research Division James Alexander - Jefferies Bruce Packard - Seymour Pierce Limited, Research Division Robert Law - Nomura Securities Co. Ltd., Research Division Christopher Wheeler - Mediobanca Securities, Research Division Ian Gordon - Evolution Securities Limited, Research Division Thomas Rayner - Exane BNP Paribas, Research Division Michael Trippitt - Oriel Securities Ltd., Research Division Manus Costello - Autonomous Research LLP Fiona Swaffield - RBC Capital Markets, LLC, Research Division Jon Kirk - Redburn Partners LLP, Research Division Chris Manners - Morgan Stanley, Research Division

Ladies and gentlemen, welcome to the Barclays quarter three interim management statement, analyst and investors conference call. I will now hand over to the speakers to begin today's presentation.

Good morning. Thanks for being with us. I'm here with Chris, and Chris is going to take you through the details in a moment. I would like to share a few headlines before he does that. I think of our performance in the first 9 months is reassuring. It has been a period of considerable challenge and uncertainty. I think all of you have been able to see that. We've delivered a solid financial performance despite significant economic and market pressures. Our adjusted profit before tax of GBP 5 billion is up 18% over the 9 months last year, that includes GBP 1.3 billion of adjusted profit in the third quarter. One of the things that really pleases me is that the profit delivery was very, very balanced. So if you look at RBB, the Retail and Business Bank, with wealth, that was about the same, 55th [ph] to roughly 1/2 the PBT, as it was in the Corporate and Investment Bank. And I think the power of the diversification truly comes through in the first 9 months of this year. Another thing that I really like is that all -- one of our businesses performed better in this quarter, the third quarter, than in the second quarter, and performed better in the third quarter this year than the third quarter last year. The exception, of course, was Barclays Capital. Its performance was impacted by the market environment as you would expect, but it does stand out on a relative basis. We've always said that our model will outperform in difficult markets. And I think the BarCap performance in this quarter again demonstrates that. Most importantly, we've continued to make progress against the 4 key execution priorities that I've shared with all of you in February. Capital, returns, income growth and citizenship. Let me just touch on each of those quickly, before Chris takes over. Our core Tier 1 equity ratio stands at 11%. We passed the EBA stress test, therefore, there is no need for additional equity. We reduced our exposure in the EU periphery to sovereigns about 31% to corporates by 7% during the third quarter. We increased our pool of liquid assets by GBP 21 billion since the half year, to GBP 166 billion. The majority of that pull, by the way, is FSA-eligible, and that covers all of our wholesale debt maturing within the next 12 months. And we raised over GBP 6 billion of term funding in the third quarter through various channels, all at pretty favorable rates. The second execution priority is returns. Our adjusted return on equity is 8.1%, up from where we ended 2010, our adjusted return on tangible equity is close to 10%. Another part of returns is managing expenses. And I'm pleased that excluding the PPI provision, operating expenses are flat, and impairment is down by over 1/3. And we continue to exit underperforming businesses, the list that included Barclays Financial Planning in Indonesia now includes Russia as well. The third execution priority is income growth. And I think this is a pleasant surprise, I think it should be looked at closely. We see clear positive momentum in wealth, in retail, in cards and in the corporate business. Our fourth execution priority is citizenship, and I think a key factor there is that we are ahead of our targets set in Merlin, with gross new lending of GBP 33 billion, GBP 11 billion of that to SMEs. All in all, as I've said, I think this performance is pleasing given the difficult market conditions. Looking ahead, you do not need me to tell you, but I will, market conditions remain difficult. Our focus is on execution, execution, execution. Let me hand over to Chris.

Good morning, and thanks, Bob. Adjusted profit before tax is up 18% to GBP 5 billion, with well-balanced contributions from across the business. Our capital funding and liquidity remained strong. Our Eurozone and credit market exposures have reduced, and continued to be well managed. Our return on equity is up year-over-year. We're making good progress with those businesses that have underperformed. And excluding PPI, we have held costs flat. This represents a reassuring performance in challenging market conditions. I'm going to use the adjusted numbers this morning, because it gives a better understanding of the operating trends. The adjusted numbers principally exclude a gain on own credit with GBP 3 billion, impairment on our state in BlackRock of GBP 1.8 billion, and the provision for Payment Protection Insurance of GBP 1 billion. We've also provided statutory numbers in the document. In general, my comments compared the first 9 months with the same period last year, and you'll see that there's additional disclosure on quarterly performance in today's statement. Turning to the headlines. Adjusted profit before tax for the 9 months grew 18%, to GBP 5 billion with the third quarter contributing GBP 1.3 billion. On an adjusted basis, total income was down 3% to GBP 22.2 billion, impairment charges improved 34% to GBP 2.9 billion and our annualized loan loss rate was reduced to 74 basis points, from 110 basis points last year. Net operating income was up 11% to GBP 20.6 billion, and costs were held flat at GBP 14.5 billion. Return on equity rose from 6.5% to 8.1%, return on tangible equity grew from 7.9% to 9.7%, and return on risk-weighted assets was 1.3%. Earnings per share were 9.7p, and we've announced a dividend of 1p for the quarter, bringing the total dividend for 9 months to 3p. We continue to give detailed disclosure on our assets in Greece, Ireland, Italy, Portugal, and Spain. And given market interest, I'd like to talk about these before taking you through the individual businesses. Our sovereign exposure at the end of September was 31% lower than the half year at GBP 8 billion, GBP 5.9 billion of these assets were held as available for sale, as the hedged interest rate rising [indiscernible] the hedge interest rate risk relating to our local businesses, mainly in Spain. The remainder are part of our market-making activities. Most of our retail assets relate to residential mortgages in Spain, Italy and Portugal. Our lending criteria are conservative, and the average loan to current market value in these markets remains just over 50%. The impairment charges in Europe Retail and Business Banking decreased to GBP 178 million in the first 9 months. The loan loss rate was down to 53 basis points, and credit risk loans were 41% covered. Our corporate assets decreased 7% from the first half to GBP 12.8 billion. We've taken substantial provisions already in this portfolio, especially in Spain. Finally, our financial institutions exposure, which reflects normal interbank activity reduced 3% to GBP 6.5 billion. The significant part of this relates to non-Irish banks, with administrative centers in Dublin but with little Irish exposure. Our exposure to Greece is minimal as you know. I'll turn now to the performance of the individual businesses. Adjusted profits in U.K. Retail and Business Banking grew 89% to GBP 1.2 billion, excluding the GBP 400 million PPI provision. There was strong income growth of 6% driven by mortgages and personal savings. Impairment improved 41%, and costs were down 5% leading to a return on equity of 17%. Europe RBB returned to profitability in the third quarter, reducing the loss for the 9 months to GBP 109 million. This included GBP 129 million of restructuring largely in Spain, but we've closed 20% of our branches, and we're reducing headcount by 16%. Impairment improved 21%, which reflects the speed with which we took action. Africa RBB profits increased 13% to GBP 622 million. Income grew by 5%, and impairment fell by 11%. This was partially offset by an increase in operating expenses in South Africa, resulting from a non-returning pension credit in 2010. At Barclaycard, adjusted profits grew 61% to GBP 902 million, excluding the GBP 600 million provision for PPI. Income rose 4%, while impairment declined 24%. 90-day delinquency rates continued to improve further during the third quarter. Return on equity rose to 17% from 11% last year. Barclays Capital reported a profit before tax of GBP 2.7 billion, excluding own credit. Income was down 12% to GBP 8.5 billion in difficult market conditions. This was partially offset by an improvement in impairment of GBP 300 million, and a 4% reduction in costs of GBP 260 million. The cost to net operating income ratio was 68%. We continue to target a ratio of 60% to 65% over time. Income in the third quarter, excluding own credit, was down 22% on the second quarter, which is a good performance compared to the industry. Most of the businesses performed well on a relative basis; fixed income, currency and commodities declined 16%, equities and prime services were down 40%, and Investment Banking decreased 25%. Despite difficult market conditions, Barclays Capital generated a 12% return on equity, consistent with last year's return. Barclays Corporate delivered a profit before tax of GBP 106 million, compared to a loss of GBP 414 million last year, as performance improved across all regions. Profits in the U.K. increased 5% to GBP 592 million. In Europe, losses reduced 38% to GBP 434 million, driven by improved impairment in Spain, which was 45% lower at just over GBP 400 million. Losses in other corporate markets more than halved to just over GBP 100 million. At Barclays Wealth, there was strong income growth of 13%, and profits increased 25% to GBP 153 million, despite continued investment in the Gamma program. Before I wrap up, I'd like to talk briefly about costs and capital. We held costs flat at GBP 14.5 billion, excluding PPI. This is despite continued investment in growth areas, as well as restructuring charges of GBP 265 million, up from GBP 111 million for the same period last year. The restructuring will, of course, deliver future cost improvements. Our cost to net operating income ratio improved from 78% to 74%. Excluding the U.K. bank levy and PPI provision, we're on track to keep 2011 nonperformance costs in line with last year, and we're confident we can exceed our GBP 1 billion cost reduction target for 2013. We'll be able to tell you more about this in February. Moving on to capital and liquidity. We continued to create capital through profit generation in the third quarter, and our core Tier 1 ratio remained strong at 11% after adjusting for BlackRock. Adjusted gross leverage was broadly stable at 21x, and risk-weighted assets was slightly lower at GBP 390 billion. The new regulatory requirements for market risk in CRD 3 will come in at the end of the year. We estimate that our core Tier 1 ratio would have been about 10.2%, had this been in force at the 30th of September. This reflects additional market risk RWAs in the region of GBP 30 billion, GBP 10 billion lower than our earlier estimates. As Bob told you, our liquidity and funding positions remain a key strength. We have seen this very clearly in the third quarter, with the unsecured term funding market largely closed, and with concerns about the level of term liquidity. Our liquidity pool increased to GBP 166 billion, up from GBP 145 billion at the half year, and we've attracted significant amounts of wholesale deposits during the third quarter. We've raised over GBP 24 billion of wholesale debt across a variety of products and geographies, including GBP 6 billion of term funding in the third quarter. We've already refinanced that 2011 term maturities and have started to pre-finance some of those maturing in 2012. We have significant funding flexibility going forward; we retain access to unsecured funding markets, and have a high caution of unencumbered assets, that could be used to access secured funding markets on competitive terms. Our liquidity pool represents more than 12 months of wholesale maturities. Moving on to current trading. Capital markets remained difficult in October, but have shown some improvement since the announcement by Eurozone leaders last week. Our Retail, Corporate and Wealth businesses performed broadly in line with the underlying run rate for the first 9 months of the year. It's also worth noting that the year-to-date numbers do not include an accrual for the U.K. bank levy, which we now expect to be in the range of GBP 330 million to GBP 380 million for the full year. So in conclusion, adjusted profit before tax was up 18% to GBP 5 billion, with well-balanced contributions from across the business. Our capital, funding and liquidity remains strong. Our Eurozone and credit market exposures have reduced and continue to be well managed. Our return on equity is up year-on-year, and we're making good progress in those businesses that have underperformed and, excluding PPI, we have held costs flat. This represents a reassuring performance in a challenging market conditions. Thank you very much indeed. We're happy to take your questions.

[Operator Instructions] Our first question today comes through from the line of Chris Manners from Morgan Stanley. Chris Manners - Morgan Stanley, Research Division: I just have 2 questions for you, really. First one was on the hedging gains that you've made in the quarter, the GBP 559 million. Just for working out the sustainability of that hedge, how much we should expect that to contribute in the future quarters, and to sort of broad split between the divisions of that hedge? And the second one was just on the cost on the income ratio of Barclays Capital. Obviously, you're targeting of 60% to 65% that came in quite a long way higher than that in the quarter. How are you sort of thinking about the cost base and the shape of that for the rest of the year?

Let me take the cost income first and then ask Chris to talk about hedging. I think that was just a really tough quarter in terms of market conditions, and while we can't be immune, and are never immuned, to the overall conditions in the market, I thought we outperformed. We are not changing the targets that we want for BarCap of 60% to 65%, but I think what you see year-to-date, reflects a pretty tough quarter in the third quarter. Chris, on...

Yes, Chris, in terms of the hedging gain, it's normal business activity. You'll see that there was a comparative of GBP 665 million in last year. So really, it's more to do with timing, as to when the opportunities present themselves, some of the hedges are able to deliver but get also gains. I think the fact that we've been able to do this now for 2 years, suggests to me that the opportunities exist, as it is the timing that's difficult to tell. In terms of how you allocate it, the best thing I can do is say, "Allocate it by reference through economic capital." That is always the way we've allocate it, and you get this up in the right sort of ballpark. Chris Manners - Morgan Stanley, Research Division: Okay, perfect. So the GBP 559 million, we should probably not expect that just to come every single quarter? We should take that out of the revenue line to strong workout for a sustainable run rate?

I think that every single quarter would be optimistic, but I would expect to achieve something each year.

Our next question comes through from the line of John-Paul Crutchley from UBS. John-Paul Crutchley - UBS Investment Bank, Research Division: I've got 3 short questions. Do you want them one at a time, or shall I give you the entire 3 upfront?

Shoot. John-Paul Crutchley - UBS Investment Bank, Research Division: The first question. I guess going back on the BarCap costs, I appreciate it, but the cost in my opinion of the best banks is quite challenging for the moment, because at any one here, you're not just managing which of these costs, but obviously, a part will fail for it coming through. So I just wondered if you can maybe just share a bit about what the underlying dynamic in that cost number in terms of -- I mean, even if you would turn off an entire comp cycle this year, which I know you're not going to do, because you want to keep the business running. But to what degree we just got headwinds from the previous years to fill for the -- the costs you said you'll do anything about, and how do you think about that over the next couple of years in terms of what plays out into '12 and '13...

Is that the first... John-Paul Crutchley - UBS Investment Bank, Research Division: That's the first, yes.

You did say, 3 short questions. John-Paul Crutchley - UBS Investment Bank, Research Division: The question is shortly answered [indiscernible]. The second question was just on the risk asset dynamic. I've seen it's gone down a bit in the quarter, I'm just wondered if you could just sort of flesh out a bit, what's happened divisionally, what's driven that? Is it model shift, is it actual declines in the balance sheet? And the final question is a short -- well, I hope for a short answer, the head office costs, or the PBT loss in the head office has gone up quarter-by-quarter, I'm just wondering if you could just share some a bit of a dynamic behind that as well, please?

Okay. If you let me try and take the first, and then I'll ask Chris to take the second 2. And if I'm not answering the question, pushback. But I think what you're saying is, are we changing our view of cost income ratio on BarCap, and I think the answer to that is, no. 60% to 65% should be what you expect. There was a pretty, I think, a not-normal quarter in the third quarter that strung us off during that quarter, and now year-to-date. But you shouldn't, by any means, be changing your planning that BarCap will operate in the top tier of investment banks and cost income ratio, which we see is 60% to 65%. John-Paul Crutchley - UBS Investment Bank, Research Division: Probably, I guess the question is [indiscernible] you're trying to execute the top tier, but I guess my question is more broadly, I mean, it's an industry problem. Is it hard for the industry to achieve what it wants to in terms of costs in a more difficult revenue environment, given the structure of the way that the -- or the accountants make you recognize costs now?

So mostly, in terms of comp costs? John-Paul Crutchley - UBS Investment Bank, Research Division: It terms of the federals coming through which...

Well, by and large, JP, this will never be exact, but by and large, in '12 and '13, you're about in an equal position of accruals that go forward and accruals that come in from the past. And that's what we've said a couple of years ago. We'll be around '12 and '13. Would we prefer to have a different accounting system? Yes, we would. But we have to live with this, and it shouldn't make a huge difference in '12, '13, or going forward, it should be fairly balanced. What happened is, depending on the quality of the year, it will be off a little bit here, a little bit there, but it's broadly flat. And then I would say that for industry, not just for Barclays.

JP, the answer to your second question in risk-weighted assets, it almost entirely came out of Barclays Capital, and it's due to a number of things, say, a change in mix in business as we sell off high capital-intensive credit market exposures, and some work done in terms of how do we optimize the risk-weighted assets that we have available and are able to use. So it's -- I would describe it as business as usual, it's prudent management of risk-weighted assets, because it's prudent management of capital. And there's nothing really to report on it. It is just, as I said, business as usual. In terms of head office cost, this is one for the accountants. There are 2 things going through. There is what's called a currency translation adjustment, whereby you take, when you repatriate capital, you take the gains or losses comes through the currency translation reserve, back up through the profit and loss accounts. And if you look at 2010, we had a gain of GBP 870 million that flowed through the profit and loss account, there was 0 in for 2011. The second piece is there was a quite a significant cost in relation to the compliance with U.S. economic sanctions, and that hasn't recurred into 2011. So if you net those 2 off, you'll pretty much get the full level of increase from GBP 522 million to GBP 635 million.

Our next question today comes through from the line of Manus Costello from Autonomous. Manus Costello - Autonomous Research LLP: I have a couple of questions, please.

Manus, we can barely hear you. Manus Costello - Autonomous Research LLP: I just have a couple of questions, please. First, I just want to come back on Chris' question regarding the hedging activities. I wondered if you could just explain a bit more how much of that GBP 559 million, actually came in Q3 as opposed to the 9-month period, and whether it was -- how much of it was ongoing structural hedge and how much of it was gilt sales and capital gains-related activity, and the way that you were voted I think in Q4 last year. And my second question was around your sovereign exposures. I wondered in the reduction of exposures that you've talked about, how much of that was due to outright sales of government bond positions, and how much was hedging? Because it looks like the Spanish position was a sale. I'm just wondering if the Italian reduction was a sale, or if you entered into a CDS contract over that?

In terms of your first question, the GBP 559 million, pretty much all we raised in the third quarter, rather than the third, 9 months. And it was a mixture of exchanging the duration of the hedges, and that caused some thousands in purchases. It was predominantly, against the sterling book, but you should regard that as predominantly, rather than entirely. And then I regard it as normal management talk of the hedges, and very much tied into the expectations of duration that we want to carry with it. Manus Costello - Autonomous Research LLP: But to be clear, if you didn't make any changes going into Q4, that number would be 0? It was just due to a reshuffling of the portfolio, is that correct?

It was due to the change in maturity of the portfolio, that led us to do some transactions. If we were to look at opportunities in the fourth quarter, you would have a number in there, it will depend very much on the shape of the yield curve that presents itself at the time. Manus Costello - Autonomous Research LLP: I just into the -- because you talked in your sovereign exposures about using CDS, and I wondered if your reduction was costs sale, or derivative-related this quarter?

It was sales and maturing, are replaced by swaps, but not with CDS. Manus Costello - Autonomous Research LLP: So none of the Italian reduction was due to purchase a CDS, it was all genuine maturing of sale?

It was mostly maturing. There may have been some bits in there, but it was very small. You should regard this as outright sales, or maturing, rather than replacement with CDS.

The next question comes through from the line of Tom Rayner from Exane BNP Paribas. Thomas Rayner - Exane BNP Paribas, Research Division: Sorry to keep coming back to questions that have been asked, but just on the BarCap cost ratio target, 60% to 65%, to me, for the full year 2011, would imply a cost reduction in the division of maybe 30% Q-on-Q, which seems unlikely, or not even possible to achieve. So am I right in concluding that the 60%, 65% remains a medium-term target rather than a target for every single year?

I think it's both, Tom. We're going to stick to our guns here. 60% to 65% is our target. We clearly can do it in an environment like it was in the third quarter and that from time to time we miss it. Hopefully, from time to time, we'll miss it on the high-side, and from time to time on the low side, depending on conditions. But we're not backing up one or the other, from a normalized operating environment, 60% to 65% is our target, it's what we managed to, and it's tough quartile in the industry. Thomas Rayner - Exane BNP Paribas, Research Division: But it's a quarter by quarter target, you can't basically get back to the missing Q3 and Q4, that's I guess, the point?

I think that it's still going to be our goal, but it's possible we miss it, given the quality of the environment, or the lack of quality in the environment in the third quarter, and depending on the fourth quarter, to tell you [ph]. But it wouldn't change how we operate the business, and what our expectations would be going forward. Thomas Rayner - Exane BNP Paribas, Research Division: Sure. And can I just have a second question, again, it's sort of following up on the questions on hedging, and how it's been allocated. Because I guess, what people are trying to get at, is how sustainable is some of the improving revenue trends in the retail bank and in part [indiscernible] for instance. So I think Q3 revenues in those 2 divisions combined, was up about 50% annualized in Q3 on Q2, which, given the environment in the U.K. seems a pretty impressive performance. So I just wondered if you could comment on how much of that reflects price increases to customers, which maybe now starting to stick? And how much possibly are the things, such as hedging, being allocated across the division?

Tom, I think that the best way of getting there is what we said on Page 3, which is, if you look at the net interest margin, which is up 9 basis points, it's to, broadly speaking, equally to hedging and the underlying margin. And I think that's the best indicator we can give. Thomas Rayner - Exane BNP Paribas, Research Division: And that margin comment, that is just for those divisions you mentioned, the RBB, BarCap -- it's corporate and wealth?

Yes. Thomas Rayner - Exane BNP Paribas, Research Division: Okay. And that's 9 in the quarter of 9 months?

Nine in the 9 months. We're facing difficult economic conditions and probably, some downward pressure on the margins. But what we've set out here, give you the best view of the numbers that we have. Thomas Rayner - Exane BNP Paribas, Research Division: Okay. And just finally, so I just thought over the flat RWAs in the quarter. I saw a currency impact here, obviously, really reflecting...

The minimal currency impact is reflecting just the day-to-day management of RWAs.

Our next question today comes through from the line of Ian Gordon from Evolution. Ian Gordon - Evolution Securities Limited, Research Division: It's just yet another follow up on BarCap costs. Before you've taken, and I note that you have significantly outperformed many of your peers on the cost income metric, even in this quarter. But just looking out 1 of 2 years, can you give us any feel for what you intend to do with headcount in BarCap to adjust for, if you like, the new revenue environment?

Well, I don't think there was any big announcement here, I think we continue to manage. If we expected the third quarter this year to be the market environment for the next 4 or 5 years then you would be addressing it differently, but we don't. We do expect the balance of '11 and '12 to continue to be tough. I wouldn't expect as tough as the third quarter, but probably similar to the first half. And if there are any big announcements on existing businesses, you would have seen them, but there will be a constant management of the business, so no big announcements. Ian Gordon - Exane BNP Paribas, Research Division: Okay. And then just one other follow up. Just on RWAs, and obviously, the OpEx guidance, you gave us around BAU about 2.5% is helpful. Is there any additional commentary to make on general RWA managements, across the group, beyond what you've already said?

I think it's very much as we've said, there is day-to-day management target, there's day-to-day focus. And therefore, I would expect to see some continued improvement, given your view of BAU 2.5%, is we think is appropriate given how quickly it is before it, it becomes the requirement. We're working hard on BAU 3, then we'll update you as of when it's appropriate but there's nothing really to say beyond what I've said today.

Ian, this may be too general, but it's on that point. The recent promotion and appointment of Benoît de Vitry in the Group Treasury, there's a function of how much we think of funding, liquidity, RWA management, all these things, is much more of a core part of the day-to-day business, and something that we manage across all the businesses, because of the new environment we're in. So you should expect to see very, very fine-tune management of all the variables around that.

The next question comes through from the line of Robert Law from Nomura. Robert Law - Nomura Securities Co. Ltd., Research Division: Can I explore to 2 areas, please. Firstly, the margin issues that's been talked about. Within the Retail Banking, Wealth and Corporate banking area, could you say what the sustainable margin was in the third quarter? I mean, looking at the numbers, I think comparing in the first half, it was about 2.4%, up from 2%. But obviously, there seem to be these gains in there, so how do we think about rather than -- what you think the right margin was? And related to that, was part of the gain allocated to BarCap, because it has been allocated on the basis of risk assets. It looks like it might have been about GBP 250 million in the quarter, is that right?

If you start with the margin, there is broadly, I think, a flat underlying margin, and that's where I would be pointing you to in terms of going beyond guidance we've previously given, so I think sort of flat levels. And there is some allocation to BarCap, but that's entirely consistent with what we've done in prior years. Robert Law - Nomura Securities Co. Ltd., Research Division: Yes. So when you're saying flat, Chris, can I just check, you're talking about flat compared with the roughly 2% reported in the first half?

A little bit more. I think here, flat in relation to last year's full year margin, which is a bit above 2%. Robert Law - Nomura Securities Co. Ltd., Research Division: Okay. And the second unrelated area was, could you comment on the movements in the tangible book value? You said it looked better than I had. Obviously, part of that to do with the own debt and presumably the impairment on BlackRock reverse is out in reserves, but were there any other movements in reserves during the quarter?

I think there was a currency translation -- in cash side, not translation, there's a cash flow hedging credit that goes through, which is, again, one way we have a portfolio which we take the cash flows through the cash flow hedging account, then reverse through P&L. So this is a gain in the cash flow hedging account. Robert Law - Nomura Securities Co. Ltd., Research Division: And roughly, how much was that?

About GBP 1 billion. Robert Law - Nomura Securities Co. Ltd., Research Division: Great. Can I just clarify, say, for the year as a whole, taking account of the gains booked in the third quarter, we're looking at a broadly flat margin for the traditional banking businesses for the whole of 2011 compared with 2010?

Yes.

The next question comes through from the line of Jon Kirk from Redburn. Jon Kirk - Redburn Partners LLP, Research Division: Just a couple of questions. Firstly, back on margins, I'm thinking more about the outlook. You did mention that you broadly flatten in this period versus last year, but actually you're expecting some downward pressure going forward. Can you just sort right the dynamic of that, because we think you see things like deposit pricing getting higher, cost of funding cost going up with -- can you just talk about cost of the pricing and what you're doing to try to counter those pressures? And then secondly, just on asset quality, I'm particularly interested on your view of the retail and commercial banking businesses, is there anything that you're seeing now in terms of forward-looking indicators on credit quality that we should know about?

Yes. You've picked up the pressures on the asset -- the pressures on the margin, very clearly. What we're doing now is working pretty hard on the asset margin, and where we can looking to reprice up. And clearly that has a period of time before it impacts, because you've got a relatively slow flow, relative to the back book. But there is quite bit of work going on in relation to repricing of the asset book. In terms of impairments and asset quality, we're seeing what I think we predicted, which is a slowdown in the speed of improvement of impairments. So we've seen a very positive trend now over 18 months. That trend of improvement is slowing down, but it's not reversing yet. If we look at the early stage indicators to 30 days and the 90 days overdue, we're seeing a little bit of buildup, but it's still early days to be able to determine quite, what that means in terms of impairment going forward. You'll notice that our impairment numbers loan loss rate was 74 basis points for the 9 months. It was also 74 basis points for the 6 months, so there's, I think, the first signs of that slowdown in improvement. And we'll have to see how it plays out, but I think our overall position is that the quality of our asset book has been extremely strong. It's something that we're very pleased with. Jon Kirk - Redburn Partners LLP, Research Division: Okay. Just on the back of the margin again, I mean, should we -- to be blunt about it, should we be expecting margins to contract a little bit, excluding hedging gains more heavy, but underlying picture, should we be expecting a contraction in margins for 2012?

I think some contraction, but small.

Our next question comes through from the line of Peter Toeman from HSBC. Peter Toeman - HSBC, Research Division: I was just trying to see if you could give us more color on this GBP 559 million of hedging activities that particular gain, and whether that there's any relationship to the gains on the product structural hedges of GBP 711 million that you recorded in the first half of the year. I mean, if I don't want from the other, will I come up with a -- from the meaningful number?

No, I don't think so. The GBP 559 million is the overall net hedging benefit. The GBP 711 million, I think, related to just the changes on the hedges of the product hedges last year. Peter Toeman - HSBC, Research Division: And most of that GBP 559 million came from the third quarter?

Yes.

The next question today comes through from the line of Andrew Coombs from Citigroup. Andrew Coombs - Citigroup Inc, Research Division: If I could just please ask one question on the capital, and then one on the BarCap equities results. And on the capital, just wanted to clarify that you've seen a 5% Q-on-Q growth in the tangible book value, RWAs down 1%, the capital's flat, and I'm assuming that's just because the fair value and debt gain is stripped out for the capital calculation? On BarCap, you gave some color around the strong equities result in the hedging activities, but I'm just interested to know why equities is down 40% Q-on-Q, so what's the key driver there, is that the derivative business, the cash business, and is it just weaker volumes, or other inventory losses in there as well?

Let me take that one first, and then hand over to Chris, Andrew. It was a tough quarter for volumes in equities in the third quarter. I think the prospective I have, given that this is a business that we're investing in Europe and in Asia, and a business that has been performing really well in the U.S. since the Lehman acquisition, is that the business on a year-to-date basis is up 2% over last year, that's the key. I think the second thing I'd say is this year, we're #2 in U.S. IPOs, our market share is just under 12%. We topped the U.K. capital markets league tables with the market share of 11%. We hit our target in Europe, which is to have 500 companies on our research covers. So we are really pleased with this. It was a tough quarter. The pipeline remains good. We are delighted, given all the things that have happened around the capital charges and Basel III and everything else, that we have this business as a part of Barclays Capital now. And frankly, it's going well. But I will tell you that was a pretty brutal quarter for execution of business.

In terms of your second question, it was, indeed, the reversal of own credit for capital purposes.

The next question comes through from the line of Fiona Swaffield from RBC. Fiona Swaffield - RBC Capital Markets, LLC, Research Division: Just a couple of things. I know we've talked about this a lot, but the delta in the head office, Q3 versus Q2, I'm trying to tie that in with the hedge, or with I think you mentioned from cash flow hedges positive. I'm just trying to understand whether we should be using minus 400 as a base, because it seems such a significantly negative figure. And then the secondary was risk-weighted assets, you mentioned GBP 10 billion better-than-expected. So does that mean the mitigation stays the same, the GBP 97 billion Basel III stays the same, so we're GBP 10 billion better than we were, originally?

In light to your second question, first, we are GBP 10 billion better than we expected. There's still a lot more work to do to complete it, but I think it was a big enough change, and it warranted highlighting to you. In relation to the head office costs, the major deltas are the legal and regulatory costs that we incurred and also, this currency translation adjustment. It has nothing to do with the hedge.

The next question comes through from the line of Chris Wheeler from Mediobanca Securities. Christopher Wheeler - Mediobanca Securities, Research Division: Can I just ask a question on the fixed-income revenues? It appears to me that you've outperformed your competitors across the board there. Although obviously, we have the hedging gain. Could you perhaps comment on how you think you achieved that?

I guess we're going to sound boring, but both Jerry and Rich have talked about this in the past. We have a top-tier of FICC franchise. We have been a flow monster, or focused on client business for well over a decade. And all of a sudden, some of the second-tier are talking about being flow monsters, so driving customer depth and breadth. Our FICC franchise is clearly at the very top tier in terms of client flows, and I think that's why we continue to outperform in a tough market. I think you can also see us potentially underperform in up markets, because we don't take as much proprietary risks. But we're very pleased with it. But I hate to say it this way, it's going to sound a bit boring, but we were not surprised. Christopher Wheeler - Mediobanca Securities, Research Division: But I'm guessing here you did take some market share, are you pretty confident about that?

Absolutely.

The next question comes through from the line of James Alexander by M&G. . James Alexander - Jefferies: James Alexander from M&G. Chris, just a question on the hedge gains, you said that it's maybe regarded as a normal thing to do to alter the hedges, and not really a one-off gain. But surely, if you're altering them that often, that you are generating gains and losses on a fairly regular basis, doesn't that mean the more trading than hedging, and I'm just wondering what your auditors might say about that?

It is done on an irregular basis, when you see some impact between the rates and the maturity of the hedges. As you would expect, cover this as all other issues with our auditors, and they are happy with it. James Alexander - Jefferies: Just the regularity, that which they might come through? That sounds strange.

It has come through price in 2 years, for the last 2 years, but it may be more frequent or less frequent, depending on what happens to the interest rates.

The next question comes through from the line of Rahul Sinha from JPMorgan.

First off, if I could just follow up on James' questioning before, how much of the gains were related to the fact that yield goes -- fell significantly in the quarter, obviously, following on from the Korea announcement by the bank agreement.

There will be a portion of that in the -- it's quite hard to allocate to specific events, but probably some within there.

Okay. Liquidity pool is up over GBP 20 billion in the quarter, could we talk about what impact it has had on the costs to fold in there?

Yes. But you'll notice it has come down against, or it came down at the half year relative to previous periods. So there is some reduction in costs, but there's also been quite a bit of work to look at the instruments within the pool, and there is some downward reductions, some downward level of costs, but it's not really mattered at this stage.

Okay. Should we expect the liquidity pool to fall, if, let's say, terms on the unsecured funding markets remain frozen into next year?

You may expect it to move around, that's why we have it. But I think it's in the sort of range that we feel comfortable with.

Well, one thing I would say to that is if you'd ask that question at the half, that if it was a tough funding environment would it fall, it was a very tough funding environment. But during times of stress, we see more deposits come to us. And we have an opportunity in a very difficult market environment with a lot of uncertainty around Europe, to build our liquidity pool, which we felt is the right thing to do to be rock-solid on liquidity and funding in environments like this. But you shouldn't see it as a static number, you should see it as something that we manage.

Sure. Bob, if I can ride you to comment on the ICB and any updated thoughts there, what gives you the confidence around managing to your ROE target? Is that basically an assumption that the ICB recommendations are so far out, that they don't really impact your medium-term ROE target?

I guess it's a little different than that. I think the Independent Commission on Banking recommendations were clear, that they wanted to see London as a premier financial center. They were clear that they wanted London to be home to large, successful international banks. They were clear that we had flexibility, and they quoted a lot of the things that we had talked with them about how to implement the ring fence. Much of the costs of funding are in the market already today because of the dislocations. I think having the glide path through 2019, certainly helps with the execution implementation as well, but there are a lot of positive things in the report in terms of our ability to keep our commitment to 2013.

The next question comes through from the line of Andrew Lim from Espírito Santo. Andrew Lim - Matrix: Just quite a few questions, please. Firstly, on your liquidity portfolio, that part which is government bonds, GBP 53 billion. How much of that is AAA, please? And can you confirm that the total GBP 166 billion is unencumbered, i.e. there's no part which has already been heard of governance. And then secondly, I noticed in the third quarter, that you're RBB had a quite a 21% increase in revenues versus the second quarter. Could you give more granularity on why that is, and whether that represents a step change going forward, or more -- or if that's more one-off in nature? And then thirdly, I'm just trying to figure out the impact of the impairment of the BlackRock stake on your core Tier 1 ratio. Could you stress out in a bit of terms what the incremental impact of that impairment has been, i.e. not that part, which has reversed out of the AFS reserves, and then taken down as impairment bond? What's coming commensally from what was part from the end of the second quarter stage?

The BlackRock stake has an impact on capital of about GBP 1.3 billion in relation to the revaluation fees down, and that's the result of the stock price leaving from $192 to $148. But you will have seen, as with it's balanced quite significantly, subsequent to the end of the quarter. In terms of the liquidity pool, I think substantially, all the government bonds that are eligible for central bank court purposes and that's for equivalent to the FSA definition of working on the ring fence, are AAA. So the vast majority of them are treasuries, for the dollars, gilts, or sterling and euros from AAA-rated issuers for the euro business. And I didn't get the second part of the...

Encumbered.

Encumbered. I think the encumbered amount across the whole portfolio is about GBP 7 billion, and I think none of this is within this. In terms of Spanish income, I think there is an element of challenging trading, but flat income with some upward trend, so I don't think it sets yet a new baseline, but we're working extremely hard to make it do so.

The next question comes through from the line of Bruce Packard from Seymour Pierce. Bruce Packard - Seymour Pierce Limited, Research Division: I just want to ask about the GBP 146 billion of wholesale debt that needs refinancing in the next year, and you sound quite confident about that, making statements about funding at attractive rates. But at the same time, there's the GBP 2.9 billion of your own credit gain, and that sort of seem to just contradict that statement. So I was just wondering if you could talk about how confident you feel on that, and maybe to the margin pressure going forward as well in terms of the funding costs.

I think the things that make me feel comfortable is the performance in the third quarter, which you must recognize, I think, we all recognize as extremely challenging. And within that, we are able to raise GBP 6 billion of capital, GBP 3 billion was through covered bonds and asset-backs and credit cards. And as I've said, we have a very small amount to our balance sheet that is encumbered about GBP 7 billion, so there's quite significant amount of supply and demand there. I think the other part that makes me feel comfortable is the size and quality of the structured notes program, which has been a source of funding ever since 2008, and has been remarkably constant in terms of demand and opportunity to fund through it. And I think the combination of those 2 are the basis of my comfort and confidence. Bruce Packard - Seymour Pierce Limited, Research Division: Okay. And maybe just one quick last one, which is a broader question in terms of the ICB and the business model. And I think historically, corporate lending plans on bond underwriting wasn't particularly profitable. It was just all the cross-selling of the derivatives that was -- is driving profitability, and I wondered whether the ICB changed that business model?

I don't think the ICB has had any impact on that at all. But certainly, I think we're looking for, over time, a real opportunity in Europe as more corporate and financial institutions will be going to the capital markets and away from bank funding. So I think there's a lot of positives in terms of the need for a more liquid capital market and more access from the capital markets because of higher capital levels on banks, and therefore, higher cost of credit, but the ICB will not impact it.

Our final question today, gentlemen, is from the line of Mike Trippitt from Oriel Securities. Michael Trippitt - Oriel Securities Ltd., Research Division: I have 2 questions. One, which I think has been covered by Bruce's question. So a very quick question on costs. Could you just reiterate what the restructuring charge will be this year or at least what the restructuring charges will be to get to your GBP 1 billion of cost saves, and how much restructuring was in Q3?

Total year-to-date, restructuring is about GBP 260 million. We're looking at the -- comes through that for the end of the year, relative to the progress we're making in the third quarter cost program. I think we've already said to you that we expect the GBP 1 billion target to be higher. And therefore, I'd expect that to be somewhat put pressure on restructuring. It will only be taken to the expenses economically, give us a better answer to the cost saving that we are looking for. So some potential upward movement but only if the cost program delivers more.

And Mike, keep in mind that what we have said is, we take GBP 1 million out of the cost base by 2013. But that for this year, we get a GBP 0.5 billion out, GBP 250 million net. So that kind of implies we're looking at around GBP 250 million. It's where we'd be likely in terms of restructuring. It will be somewhat higher than that but the GBP 250 million net, in terms of cost, out of the business this year which we commit to. It's done. Thank you, everyone. Appreciate the time.