Christopher Lucas - Chief Financial Officer, Group Finance Director, Group Finance Director - Barclays Bank Plc, Executive Director and Chairman of Disclosure Committee Robert Le Blanc - Chief Risk Officer and Member of Disclosure Committee Rich Ricci - Co-Chief Executive and Chief Operating Officer of Investment Banking & Investment Management

Chris Manners - Morgan Stanley, Research Division John-Paul Crutchley - UBS Investment Bank, Research Division Michael Helsby - BofA Merrill Lynch, Research Division Andrew P. Coombs - Citigroup Inc, Research Division Raul Sinha - JP Morgan Chase & Co, Research Division Manus Costello - Autonomous Research LLP Ian Gordon - Investec Securities (UK), Research Division Andrew Lim - Espirito Santo Investment Bank, Research Division Fiona Swaffield - RBC Capital Markets, LLC, Research Division Chintan Joshi - Nomura Securities Co. Ltd., Research Division Gary Greenwood - Shore Capital Group Ltd., Research Division Christopher Wheeler - Mediobanca Securities, Research Division Michael Trippitt - Numis Securities Ltd., Research Division Jason Napier - Deutsche Bank AG, Research Division

Ladies and gentlemen, welcome to the Barclays 2012 Full Year Results Analyst and Investor Conference Call. I would now hand you over to Chris Lucas, Group Finance Director.

Good morning, and thank you for joining us. As you know, this is an important day for Barclays. We announced the key conclusions from our strategic review this morning, and Antony will give a presentation on them this afternoon. The Executive Committee will be there to answer questions, and the event will be webcast. The purpose of this call is to focus purely on the results for 2012. As usual, we're using adjusted numbers to give a better understanding of our underlying performance. Turning now to the headlines. We've made good progress across most of our businesses during the year. Adjusted profits increased 26% to GBP 7 billion. Total income was up 2% at GBP 29 billion despite gilt gains of GBP 1.1 billion from the sale of hedging instruments in 2011. Impairment improved 5% to GBP 3.6 billion mainly as a result of favorable trends in our U.K. businesses. This resulted in net income growth of 3% to GBP 25.4 billion. We've continued to reduce costs, which decreased 3% to GBP 18.5 billion, and our capital liquidity and funding remained strong. Our Core Tier 1 ratio was 10.9%, and our total capital ratio was 17.1%. Adjustment to the statutory numbers include a GBP 4.6 billion charge on own credit, a provision for PPI of GBP 1.6 billion, an GBP 850 million charge for redress on interest rate hedges, and the gain on BlackRock. As a result, statutory profits were GBP 246 million. The provisions, which include additional charges taken in the fourth quarter which we announced last week, GBP 400 million, was provided for redress on interest rate hedges. This is based on the FSA's report after a pilot exercise conducted in the fourth quarter. A charge of GBP 600 million was made for PPI. This is largely the result of higher than expected response rates from proactively contacting customers ourselves. The PPI balance sheet provision at the end of the year was GBP 990 million. Return on equity increased from 6.6% to 7.8%. We'll talk more about our plans to improve this later today. Our 4 largest businesses all increased returns. There were strong performances from U.K. RBB and Barclaycard, which reported returns of 16% and 22.1%, respectively. The Investment Bank delivered returns of 13.7% and Corporate Banking continued its turnaround. Returns there were 5.5%, up from 1.7% in 2011. Returns by businesses are shown in an appendix in the slide pack. I've told you we'll be allocating more head office results to the businesses going forward. We'll issue details of this before our first quarter. The business returns we're reporting this morning exclude this allocation. So head office is reflected in our group returns. The group's cost-income ratio improved from 67% to 64%. Adjusted earnings per share increased to 34.5p, and we've announced a cash dividend for the fourth quarter of 3.5p, bringing the total to 6.5p for the full year. This is up from 6p in 2011. We understand the importance of dividends and aim to pursue a progressive policy, which Antony will talk about later. The decrease in net tangible asset value per share mainly reflects the own credit charge, provisions for PPI and interest rate hedges and other adverse reserve movement. Turning now to the individual businesses. In the U.K. RBB, profits were up 4% to GBP 1.5 billion. Total income was down 5% to GBP 4.4 billion, reflecting the non-recurrence of gilt gains and a decline in the underlying contribution from structural hedges. Excluding these impacts, income was stable as growth from higher volumes in customer assets and deposits was offset by increased funding cost. Impairment charges halved GBP 269 million. This reflects improvements across all portfolios, especially in personal unsecured lending. The loan loss rate also halved 21 basis points. 90-day arrears on unsecured personal loans improved by 33 basis points to 1.34%. Excluding PPI, costs reduced 1% to GBP 2.7 billion. At Barclaycard, profits were up 25% to GBP 1.5 billion. Income grew 2% to GBP 4.2 billion. Impairments improved 22%, and the loan loss rate was 282 basis points compared to 391 in 2011. 30-day arrear rates improved in both the U.S. and the U.K.. Excluding PPI and goodwill impairments in 2011, costs grew 3%. In Africa Retail and Business Banking, income decreased 12% to GBP 3.2 billion. This was the result of adverse exchange rates and nonrecurring gilt gains. Impairment grew 39% as a result of provisions taken in the second and third quarter on mortgages in the Absa recovery book. We believe impairment in this book has now stabilized, and early arrears are improving across almost all portfolios, including mortgages. Cost decreased 10%, reflecting currency movements. Profits were down 44% to GBP 468 million. During the fourth quarter, we announced plans to combine the majority of our Barclays African operations with Absa. The terms of the transaction are supported by an independent fairness opinion to be voted by on Absa shareholders later this month. Europe Retail and Business Banking made a loss of GBP 239 million. Income fell 25%, reflecting the economic environment. Impairment increased 26% or GBP 67 million mainly as a result of deterioration in mortgages. We reduced cost by 31%. The savings played through for the restructuring in 2011. We also reduced the local funding gap in Europe. Customer assets reduced slightly in euros, while deposits increased notably in Spain. Turning now to the Investment Bank. Profits grew 37% to GBP 4.1 billion. Total income grew 13% to GBP 11.7 billion. Within this, Fixed Income, Currencies and Commodities increased 17% to GBP 7.4 billion. Equities and Prime Services grew 14% to GBP 2 billion, and Investment Banking is up 5% at GBP 2.1 billion. This income growth reflects share gains in many product areas. It was achieved despite a 5% reduction in RWAs to GBP 178 billion and a 33% reduction in daily value at risk to GBP 38 million. Impairment increased from GBP 93 million to GBP 460 million. This increase includes a charge relating to legacy CDO assets. There was also a one-off release of GBP 223 million in 2011. We reduced the bonus pool and other incentive awards granted in 2012 by 20%, while income grew 13% and profits were up 37%. The full impact of this reduction will feed into results in future years due to the IFRS treatment of deferred bonuses. Our reported cost in 2012 fell 1% to GBP 7.2 billion. Performance costs were down 3% to GBP 1.7 billion despite an increase of GBP 210 million in charges relating to deferrals from prior years. Nonperformance costs were brought in line with 2011 after absorbing GBP 193 million of the LIBOR settlement. Excluding LIBOR, nonperformance costs fell 4%. The cost in net operating income ratio improved from 71% to 64%, and the compensation to income ratio reduced from 47% to 39%. We continue to reduce our legacy assets. Credit market exposures decreased by almost GBP 6 billion to GBP 9.3 billion, and we exited these positions at or above our mark. We believe that annual trends give a better understanding of performance, but we also report quarterly numbers as we know you'll be interested in them. You can see the quarterly income progression in 2012 has a similar shape to 2011 but at a higher level. Comparing to the fourth quarter last year with the third quarter, total income was down only 2% at GBP 2.6 billion despite tougher market conditions. As we said before, our flow business model is designed to protect us from downside market risk. As a result, we may outperform in weak markets and underperform in strong markets. We see the fourth quarter is further evidence of this. Turning now to look at the current quarterly progression by business line. Fixed Income, Currencies and Commodities were down just 80% in the fourth quarter. Equities and Prime Services were down 9%, as we grew share despite low market volumes. Investment Banking was up 29%. In Corporate Banking, profits more than doubled to GBP 551 million. Within this, U.K. was up 22% to GBP 910 million. Losses in Europe reduced to GBP 381 million, and other regions reported a small profit compared to a small loss in 2011. Income was down 6% to GBP 2.9 billion. Impairment improved 24% to GBP 872 million. There was a 30% reduction in Spain to GBP 337 million, resulting from lower exposure to the property and construction sector. We reduced cost, 14%, to GBP 1.5 billion. In Wealth and Investment Management, profits grew 52% to GBP 315 million as our investment in the business gained traction. Income grew 4% to GBP 1.8 billion, driven by High Net Worth business and related increases in both customer loans and deposits. Costs were down 2% despite continued investment. Client assets under management increased 13% to GBP 186 billion mainly as a result of net new assets in the High Net Worth business. Losses in head office were GBP 1.1 billion, compared to GBP 1 billion in 2011. There was an improvement in the income line of GBP 148 million. This was mainly due to a one-off gain on hedges relating to employee share awards, which we closed out in the first quarter. This was more than offset by an increase in the bank levy and other operating expenses amounting to GBP 243 million. Operating expenses include GBP 97 million on the LIBOR settlement and financial service compensation scheme charges, which increased by GBP 90 million. Moving on now to capital, liquidity and funding. Our Core Tier 1 ratio at the end of 2012 was 10.9% on a Basel 2.5 basis. Our total capital ratio was 17.1%, and RWAs were slightly down at GBP 387 billion. Our liquidity position remains strong with a pool of GBP 150 billion. This compares with wholesale funding maturing this year of GBP 101 billion. At the end of December, we had liquidity coverage ratio of 126% based on the latest Basel plans. We are already compliant with net stable funding ratio proposals. We had GBP 27 billion of term debt maturing in 2012. We issued GBP 28 billion in term funding, which enabled significant prefunding of our term maturities this year, which are GBP 18 billion. The issuance of $23 billion of Tier 2 contingent capital notes, which are fully allowable as primary loss-absorbing capacity. We also raised GBP 6 billion through the Bank of England's Lending -- sorry, Funding for Lending Scheme. Our Retail Banking, Corporate Banking and Wealth businesses are largely funded by customer deposits. The loan-to-deposit ratio for these businesses improved from 111% to 102%. We've told you more about the impact of Basel III based on implementation in January. As you know, the implementation didn't take place to allow comparison with our previous disclosure in showing a ratio reported at the year end alongside pro forma ratios as if we had applied Basel III. We've also included the impact of IFRS changes that applied from January. Our latest Basel III estimates show a pro forma transition on common equity Tier 1 ratio of 10.6% as at January 1. We also showed the fully loaded ratio, which is 8.2%, a slight increase on the position disclosed at the end of September. Detailed calculations are in the appendix of our slide pack. We continue to believe it is well capitalized, and we'll discuss our capital structure and targets this afternoon. Turning now to margins. As I've mentioned before, we look at margins in 2 parts: customer margins, which drive the vast majority of our net interest income; and then the secondary margin derived from structural hedges. I'll start by talking about hedging. Across the group as a whole, the total contribution from structural hedges fell from GBP 3.3 billion to GBP 1.7 billion as expected, which was mainly due to the 2011 gilt gain, which we realized as we shortened the duration of hedges. The reduction in underlying contribution from these hedges is expected to be less pronounced this year. The businesses which contribute to our net interest margin analysis are Retail and Business Banking, Corporate Banking and Wealth. Overall, margins from these businesses fell 18 basis points to 1.85%. 14 basis points of this decline, or GBP 800 million, was from the reduced hedge contribution. This shows the relative stability of our customer margins. Increased volumes, mainly on the liability side, broadly offset slight customer margin contraction. So the net interest income generated from customers was stable at GBP 9.8 billion. Overall, net interest income from these businesses decreased 7% to GBP 11.2 billion. Turning now to costs. We reduced overall cost by 3% to GBP 18.5 billion. Performance costs for the group were down 4% to GBP 2.4 billion, while income grew 2% and profits were up 26%. We reduced nonperformance costs for the group by 3% to GBP 16.1 billion. This includes the LIBOR settlement of GBP 290 million and bank levy of GBP 345 million. Without these items, the level of nonperformance costs would have been GBP 15.5 billion, which is in line with our cost savings target. Bonuses and incentive awards granted in 2012 across the group were reduced by 16%. This reflects action taken to reposition our compensation in the marketplace and various conduct issues. That's all I have to say on the 2012 results. Looking at current trading, there's been a good start to the year across the group in January. So in summary, we're reporting good results for 2012. Adjusted profit grew 26% to GBP 7 billion. Income was up 2% despite gilt gains of GBP 1.1 billion in 2011. Impairment improved 5%, and we reduced cost by 3%. Our capital, liquidity and funding remained strong, with a Core Tier 1 ratio of 10.9%. Thanks very much. We look forward to speaking to you again later today, and I'm happy to take questions on the results now. Thank you.

[Operator Instructions] Today's first question comes from the line of Chris Manners from Morgan Stanley. Chris Manners - Morgan Stanley, Research Division: Yes, I was just -- I had a question, which was on your Barclaycard impairment charges. I could see the -- it's actually in rising for a couple of quarters and maybe you might be able to just give us an update on what you think the trajectory there and whether that's something that we should be concerned about.

Let me ask Robert Le Blanc who is with me to add to color. But my overall view is the performance of Barclaycard in the credit area has been extremely strong, and there's nothing that I see that makes me worry about it as we look forward.

I think that's right. Chris, we've seen improvements in card impairment over the last couple of years principally in our U.S. and U.K. portfolios as the economies have improved as well. And the card portfolios, of course, are all over the world, including Europe and South Africa. So there is -- although they do move around, the trend has been positive and I'd say we expect it to remain fairly steady from this point. So no, nothing there particularly concerning. Chris Manners - Morgan Stanley, Research Division: Okay. Robert, would it be possible maybe to just ask you to expand on how you see the credit outlook across the group in that case?

We certainly can.

Yes, certainly. I'll make just a brief comment on that, if I may. I mean, you recognize that we've seen a very significant reduction in impairment over the last 3 years, but if you look closely, the general trends in the second half of 2012 were broadly steady compared to the first half. And so the strength of the improvement we've seen has started to steady out, I think, as we had expected and guided you on. I think the trend this year will be steady across most portfolios in wholesale and retail. There is some room for a little bit further improvement, but my outlook for this year is a broadly steady one with potentially some slight improvement. And we think that will come through in the impairment numbers for this year.

And today's next question comes from the line of JP Crutchley from UBS. John-Paul Crutchley - UBS Investment Bank, Research Division: It's a broader question, I guess, in terms of context for numbers. The last financial policy committee -- clearly, the FSA was sent away to have discussions with the banks on the 3 broad topics: Forbearance, making sure legacy costs have been properly put into numbers and risk weighting. Clearly, you've taken charges on legacy items, and that's fully apparent. You've talked about -- in the U.K. retail results, about risk assets going up because of a more comprehensive approach to forbearance. I wonder if you can discuss around that. And on the third point, on risk weighting, I wonder if you could just maybe elucidate how that discussion has progressed. And can we conclude from this -- and given that in a strategic statement you're talking about increasing dividend policy? But as far as you are concerned, those debates with the FSA on capital and the like are closed and therefore, the debate around Barclays in particular is likely to be a subject to need more capital with this debate that's going on between the FSA and FPC as done and dusted.

Let me start and I'll ask Robert to touch on forbearance, and then we'll pick up RWAs. I think, JP, in general terms, we share, as you can imagine, pretty much everything with the FSA on an ongoing basis. So they have been with us and briefed on the strategic review that we're talking about later on today, and also those areas of forbearance, RWAs, CVAs and impairment on certain areas. And whilst I don't think we'd every say that they have to make our decisions for us, that's very much our job. We have a constructive dialogue with them and over time, understand their position. They understand our position. And you can be assured that we briefed them as to these results. We briefed of them as to the forward-looking views that we'll be talking about later on. And I think it's a very constructive dialogue. How that plays out as we go into the future, only time will tell. But I'm very pleased with where we are at the moment. Robert?

Thanks. I would only add that when we look at forbearance from a capital point of view, firstly, we have been carefully measuring and monitoring the levels of forbearance themselves just disclosed in the results this year. And really, what's changed from an RWA point of view is simply the recognition of forbearance as an impairment event or as a default. And that's been changing and being adjusted through our RWA models. So it had an effect during the year.

If I want more clarity on RWAs, probably the best place to be is on Slide 33, which shows the bridge from GBP 391 billion RWAs at the end of December 2011 and GBP 387 million at December '12. And you can see in there, there are some quite sizable individual items of methodology change of GBP 20 billion, operational risk uplift of GBP 18 billion offset predominantly by business reductions, which are real business reductions, including legacy assets of about GBP 28 billion. So there are some big moving parts, but it shows that most of these things -- lots of big moving parts sort of net down to almost no significant change year-on-year. John-Paul Crutchley - UBS Investment Bank, Research Division: And on risk weights, is that what happened in methodology changes? Or is that something which hasn't changed materially?

It's a mix here of methodology changes. It's a mixture of business reduction, where the returns are insufficient. And to give you a flavor, if you look at methodology changes in the GBP 20 billion on Slide 33, it's made up of an increased market risk charge, changes to sovereign loss in default and slotting of mortgages.

And today's next question comes from the line of Michael Helsby from Bank of America Merrill Lynch. Michael Helsby - BofA Merrill Lynch, Research Division: I just got a question on the Investment Bank's costs. Comp ratio is 39%, and your bonus pool was down 15%. I think one of the ways I look at it is to look at the bonus as a percentage in net revenue, and that was 11.5% versus 15.7% last year, and your deferral rates changed slightly. I was wondering if you could give us a little bit more color around how you see both the deferral rate evolving in the next couple of years and the likes of your plan? And also, whether an 11.5% sort of bonus as a percent in net revenue, if that's now consistent with the sort of the mid-35 comp ratio that you'll be looking for, i.e. can we take 2012 as a reasonable base forward because it makes quite a difference?

Let me ask Rich to start, and then I'll make a few comments.

Michael, I guess there's a couple of elements to your question. First, I've been on record several times just talking about our comp income ratio, I see, normalizing in the mid-30s over time. And you have to recall, as I know you know, that what you're looking at is the actual in-year charge that gets hung up with the actual bonus pool in the year. But over time, I would expect those things to kind of come into line with each other. Now that would mean that I would also see the deferral rate decreasing over time. We've had some extraordinary circumstances and for very good reasons had higher than, I would say, or normal deferrals in the last couple of years. But I would see those decreasing in time. They decreased this year actually. And as I say, I think over time, best-in-class investment banks and banks for that matter will have comp income ratios in the mid-30s, and we're on the journey to get there.

I think when we look at all the different measures of comp to income, yours, Michael, is the new one that we haven't used before. We'll certainly talk that out. And if there's anything that we want to add to what we said, we'll do so.

Your next question today comes from the line of Andrew Coombs from Citigroup. Andrew P. Coombs - Citigroup Inc, Research Division: I have a question on Slide 35, please, on the pro forma CRD IV capital and RWAs. Two questions related to that, I guess, if I split it out. First, on the numerator, if I look at your tangible book value per share, you just reported 373p. But adjusting for IAS 19, the 2.5 billion shareholders equity hit, and IFRS 10, the 0.5 billion shareholders equity hit, I guess that's pro forma 350p. But I just wanted to check that both of those aspects are already captured in your fully loaded Core Tier 1 guidance on Slide 35. And then the second half of the question, on the RWA number, back at the 9-month '12 stage, you were guiding to GBP 485 billion of Basel III RWAs by the year end. You're now guiding to GBP 468 billion. And the 2 big moving parts in that look to be the CVA, which has dropped from GBP 46 million to GBP 29 million, and securitization, which has dropped from 39 to 25. I'm just intrigued what the big driver of those 2 changes has been.

I think the answer to your first question about whether accounting changes have been included, the answer is yes. They have. In terms of RWAs and -- I think if I heard you right you're talking about the GBP 468 billion. So there's a number of things in there. There is securitizations which is where the impact of IFRS 10 goes, and the net capital change flows through there as well. The other area of reduction is CVA. And I think one of the things that's becoming clear to us is the volatility of the CVA number arising from changes in spreads. So you are very correct in what you are asking, and I think the GBP 268 billion is a more accurate current view of where the numbers are going to turn out.

And the next question today comes from Raul Sinha of JPMorgan. Raul Sinha - JP Morgan Chase & Co, Research Division: Chris, can I just have one question on U.K. retail's performance? It seems to be quite good loan growth pickup there in the second half of the year. And looking at the Bank of England data, Barclays seems to be outperforming the other banks in terms of the FLS loans extended. Can you comment on how the performance was in Q4 on both absolute balances and margins and how you expect that to trend forward?

You're absolutely right that we think we're taking market share at the FLS. In terms of trends, we've seen an upward trend and it's particularly mixed with an upward increase in deposits. And I think there is not much more to say. We've got a good performance. There's couple of individual items within there that have a little bit of impact on the fourth quarter but overall, good volume growth, continued gains and asset growth. So I don't know whether that fully answers your question, but we're pleased with the performance. Raul Sinha - JP Morgan Chase & Co, Research Division: Sure. Chris, I guess my question was more towards the underlying pace or momentum within the business heading into next year and especially as deposit costs have come down and you're seeing a pick-up in margins. Or perhaps, I can follow up later in the day.

Yes. I think we can cover that in more detail later today, but I would say the underlying performance is good. We think there is growth there. We see particular area for growth in volumes of customer deposits, which will offset as sort of flat margin that we expect to see; so net-net, flat margin, increased volumes, improved net interest income and good performance overall.

And your next question today comes from the line of Manus Costello from Autonomous. Manus Costello - Autonomous Research LLP: My one question, I'll get back to Slide 35, please, the pro forma impact. I noticed that you've shifted the PPA adjustment out of the transitional into the fully phased numbers as of Day 1. I wonder what's driven that, what -- and it obviously doesn't impact us on a fully phased basis. But do you think it will impact your ability to issue further contingent notes, which tend to be based on transitional measures and is -- obviously is quite a negative for that?

I think it is. This is one of the outcomes of the dialogue we would have had with the FSA, where it was thought to make more sense and simply more prudent to put this in the fully loaded rather than transitional over a period of time. Though you can debate the matter either way, but we think doing what we've done sets out the ratio at the most prudent basis of calculation rather than anything else. Manus Costello - Autonomous Research LLP: And there's nothing else within the transitional provisions which could come back up into the pre-transitionals?

No, not that we're aware of.

The next question today comes from the line of Ian Gordon from Investec. Ian Gordon - Investec Securities (UK), Research Division: It's just coming back to the U.K. retail performance and, in particular, mortgages. As we heard in the previous question, your balance sheet growth has been strong. I think your mortgage growth across the full year was about GBP 7 billion, H2 weighted. In terms of your current pricing, clearly, you're being more aggressive than some of your peers. In 2012, arguably, you had it easy, while Lloyds and Santander U.K. were giving away shares as fast as they could. Is it your intention going forward to maintain your more aggressive pricing to broadly sustain the pace of balance sheet growth even in a slightly more competitive market?

I think we'd have to look at that on a case-by-case basis. The important thing, from my perspective, is that we look at the return we make on the products and we look at the return on equity that we make in the business. And then a decision we make would make about -- be aggressive or not aggressive in terms of pricing would be very dependent upon being able to pass and exceed the return on equity target that we've set for the business. And you'll hear more about this afternoon.

And the next question today comes from Andrew Lim of Espirito Santo. Andrew Lim - Espirito Santo Investment Bank, Research Division: I just got a few questions, please. Your liquidity coverage ratios, you published 126%. Presumably, that's on the new Basel III basis. I was wondering if you could give some indication on how you'd like to run that. Would that be closer towards the 100% and therefore, you'd be able to reduce your liquidity pool there? Secondly, on...

Andrew, rather than queue them up, let's try to answer them one by one. The answer to that is, it is based on the latest view of the LCR rules, and we would expect that 126% to come down. Whether it gets down as low as 100%, I don't know. We would have to look at that over time, but it would certainly trend it down. So that, of course, would have the benefit of reducing the cost of the liquidity pool, which is the important thing that we've been aiming to do. So I hope that answers your first question. Andrew Lim - Espirito Santo Investment Bank, Research Division: Okay. That's fine. On Page 35, referring back to the couple of disclosure, you're the only U.K. bank to have this PPA adjustment, GBP 1.2 billion for yourself. I'm just wondering with what kind of certainty can you say that that's actually applicable going forward. So I mean, how much can we take that as a concrete adjustment you made there?

It feels pretty concrete to me. Andrew Lim - Espirito Santo Investment Bank, Research Division: Okay. And then thirdly, could you clarify what your outstanding existing Tier 1 and Tier 2 hybrids are, how much of these are?

Bear with us. Can we look at that answer and we'll come back to you with a response? This is regarded as about GBP 9 billion. Andrew Lim - Espirito Santo Investment Bank, Research Division: In aggregate for Tier 1 and Tier 2, okay?

Yes. Andrew Lim - Espirito Santo Investment Bank, Research Division: Okay. And then just finally, very straightforward, I hope, could give a bit more color on the mix of revenues in the head office?

There's a range of things in there. I think the best thing to do is to wait until we've restated with the allocation of head office expenses and income and look at it on a go-forward basis. What I would say is that if you look at the overall head office number, it's been creeping up. But when you look at it year-on-year, it has relatively small impact on the overall group with the exception of the group return on equity. And of course, our objective will be to allocate that out more fully. And I think that will be a good time to catch up on the individual component parts of it.

And the next question today comes from the line of Fiona Swaffield from RBC. Fiona Swaffield - RBC Capital Markets, LLC, Research Division: Just a question on the Basel III leverage ratio. So I think you are saying within 33x compared to the GBP 49.5 billion. So you're talking of a balance sheet of GBP 1.6 trillion or below. Is that the right way? And could you just take us through what the adjustments are on the Basel III relative to your just under GBP 1 trillion U.S. GAAP?

I think the answer is yes. How you described it is right. But I think -- what I'd suggest we do is take that offline and get one of our guys to go through it with you because it's an art rather than science.

And the next question this morning comes from the line of Chintan Joshi from Nomura. Chintan Joshi - Nomura Securities Co. Ltd., Research Division: Apologies, I had technical issues. I might have missed some comments. My first question is just what do you see as a picture in mortgages in the U.K.? If I look at LCRs of bank, they are not 4%. Rather, if you look at -- to your mortgages, you can get them now at 3.1%. So are you seeing switching behavior from your customers move from LCR to new low-price fixed deals? And how do you think about headwinds from this repricing?

Sorry. Headwinds from... Chintan Joshi - Nomura Securities Co. Ltd., Research Division: From this repricing of moving from 4%-plus LCR to 3% new fixed rate deal.

Yes. I think maybe you missed the comment, but our view on mortgage pricing is that we will be competitive. And in particular, we want to look at returns that we make on a product-by-product basis and look at whether it meets our return on equity requirements. The duration of travel that we're seeing is very low LCR volumes, mostly fixed and tracker, and increased numbers of buy-to-lets, increased volumes, so really across-the-board increase in volumes and good performance as a result of it. Chintan Joshi - Nomura Securities Co. Ltd., Research Division: Okay. The second question was on some of the targets that you've given. If I think about the GBP 16.8 billion cost target, add to that the GBP 700 million restructuring, with a mid-50s of cost-income ratio, that seems to imply a 10% revenue growth for a 9% cost reduction. I'm just trying to tie the 2 together. What you're saying here is you'll grow revenues and yet cut cost by about 10% each.

Can I just suggest we get ready to answer that question after the strategy session we're doing this morning and afternoon because one of the things we tackle is exactly how you get that cost performance line as you've been trying to derive. So it would be easier done once we've released the slide packs and information later on today. Chintan Joshi - Nomura Securities Co. Ltd., Research Division: Fair enough. Just one final detailed question, what was the driver of the quarter-on-quarter move in risk-weighted assets?

For the -- particularly, the quarter-on-quarter operating risk eventually gave rise to an increase in RWAs.

And your next question today is from Gary Greenwood of Shore Capital. Gary Greenwood - Shore Capital Group Ltd., Research Division: It's Gary at Shore Capital. I just wanted to come back to the issue of bonuses because I didn't quite understand given the sort of current hype around bonuses and banks' attitude towards bonuses. Why you've increased the current year cash bonus? And again, why you're talking about reducing the amount of deferral? I'm a bit surprised. I would have thought the route to be going down would be the opposite to that.

Gary, it's Rich. It's good question. I think that what I'm referring to is we've had extraordinary events. We clearly have a conservative deferral profile. But because of some of the events we've had, we've increased deferrals. What we want to do is try to get the balance right between making sure the interests are in line but you're not overloading your deferral rate in any one year that's irrational for the shareholder because you want to make sure because you have the constant roll-in of deferral. So that rates too high in any one year if you're working to a cost to income -- comp to income ratio. It could really limit your flexibly one way or the other. So it's about getting the balance right. And I think we just had a couple of extraordinary years where we've been particularly conservative in our deferral rate, which might not be in the interest long term to shareholder in terms of what we can pay to franchise versus pay them. Gary Greenwood - Shore Capital Group Ltd., Research Division: Surely, it's the cash rather than the P&L that matters there, P&L?

Yes, of course.

It's both.

It's both. But the cash payments -- we're not talking about a significant increase. The way we skewed our deferral this year, it's mostly towards the top of the house. So we're trying to get the cash that is released into the hands of the more junior people in the organization.

And the next question today comes from the line of Christopher Wheeler from Mediobanca. Christopher Wheeler - Mediobanca Securities, Research Division: A question really I suspect for Rich, I think. And it's really looking at the fixed income trading numbers. I mean, if I look at the big banks who have reported to date, we see, quarter-on-quarter, the average decline has been 24%. You managed just 8%. And also, I think for the first time in a long time, you actually earned more than Deutsche Bank in fixed income trading. That's quite a remarkable performance. Could you perhaps comment a little bit on the skew of that? How much perhaps was due to the U.S. business and your strength there? And how much perhaps just to your taking market share and where you took that?

Sure. We like your comparisons, Chris, so I'll let Rich to...

Chris, can we talk about first what we did gain. We certainly saw a market share gain in credit and rate. We saw some reduction in securitized products. There was a reduction on FX. Certainly, the U.S. was strong. Lower market volatility more broadly reduced the quarter. But we've said previously that we've been very consistent in our income. We're not running a lot of inventory. We have been taking market share. You've seen some players drop out of the space. But certainly, in the quarter-to-quarter comparison, it was really down to improve performance in credit rate, mainly driven by the U.S.

And the next question today comes from the line of Mike Trippitt from Numis. Michael Trippitt - Numis Securities Ltd., Research Division: Chris, just a quick question on the provisions that you've now taken on PPI and interest rate hedging redress. I just wonder if you could give a bit more on interest rate hedging as to what sort of share that would represent. And what I'm really looking forward is sort of degree of comfort now around the level of those 2 sets of provisions.

Yes, it's difficult because they are moving targets, but we take them individually. The -- that's on Page 91 of our results announcement. But if I look at the interest rate hedging redress, you know that we've had the guidance from the FSA. So we've got a pretty clear route map as to what we need to do in terms of the number of customers we deem not to have complied with relevant regulatory requirements, the nature of redress offered and the look at the reasonably foreseeable consequential loss. So all of those are estimates we had to make to include in the provision that we've made. It's our best view, and I should say that out of the GBP 850 million we've spent, something like GBP 36 million -- so it's a very big provision against a very small cash payment at the moment. And we think now based on the best available information that the GBP 850 million is a good number. If I look at PPI, it's a different product range. It's much greater number of individual claims. And therefore, it's a more volatile set of statistics if we look at trends of claims that are coming in. So I feel pretty comfortable about the interest rate hedging. It's less easy to be comfortable on the PPI. But in both instances, we've taken out best view of the situation that prevails and provided accordingly.

We have a follow-up question coming through from Chris Manners of Morgan Stanley. Chris Manners - Morgan Stanley, Research Division: So I just have one more question. I was wondering how do you think about the 2 related proposals from the Fed about the subsidization of the U.S. operations into an intermediate holding company. And have you sort of thought about how much capital and liquidity could be trapped there, what the potential costs could be and what the impacts of the business would be if you try to mitigate that?

We're working on it, Chris. As you know, the requirements are still being completely developed, and Antony will talk more about it this afternoon. But we're looking at different options in intermediate holding companies, what the funding cost will be and what we need to do to be able to comply with it. Let us get through this afternoon and then we'll come have a conversation with you, but a lot of work has been done in the area.

And we have a follow-up question coming from the line of Michael Helsby of Bank of America Merrill Lynch. Michael Helsby - BofA Merrill Lynch, Research Division: Yes. Just -- I was wondering if you could give us a little bit more color on your comments on January. It feels like fixed income, equities and primary are all off to quite a very good start certainly relative to January of last year. So I was wondering if you could just give us a little bit more color to be helpful.

We'll certainly be helpful. I think -- as I said, it's been a good month, but 1 month is a relatively short time frame to compare it over the whole year. But across the board, different products have been doing well. Different businesses have been doing well. So I think it's a good base to go into the rest of the year and the strategic review. Michael Helsby - BofA Merrill Lynch, Research Division: Okay. And just on bad debt, I think you mentioned you had this sort of bottoming out process. But I think clearly, Africa, you mentioned, still inflated; Spain, Western Europe still inflated. Could you just sort of drill down into those 2 areas and maybe talk a little bit about the outlook, please?

Let me ask Robert to do that.

I think those are areas where there is still -- particularly in Western Europe, still risks driven by the economies there and we've seen increasing rates of impairment. Remember, our businesses in Western Europe -- our largest books are on the mortgage side. So that went up last year, potentially could go up higher this year. So the rate is higher although the absolute numbers are relatively small for the overall impairment performance. Africa had some impairment in mortgages in South Africa last year, which was an LGD or a legal recovery increase, and we don't think that continues this year. But I think the Western Europe portfolios will remain under pressure.

And the last question we have time for today comes from the line of Jason Napier from Deutsche Bank. Jason Napier - Deutsche Bank AG, Research Division: I had 2, if I could be cheeky, please. The first for Robert, I think. Thank you for the new disclosures on forbearance on the wholesale side. I just wondered, could you confirm that there isn't really much contention around the definition of forbearance considering this is one of the things the FPC wants the FSA to look at. The numbers don't look particularly large, and the provision coverage looks pretty high. So I just wondered, is there an issue around definition of forbearance? That's the first question, please.

I think there is always a question of -- there has always been a question of interpretation of forbearance on the wholesale side. I wouldn't -- you may not be choosing your words too carefully, but call it -- I wouldn't call it an issue. But I think there are interpretations and refinements we've made. We've done them also, together with the regulator, in terms of what we think the RWA effects will be. But we think it's a fairly wholesome picture, and we'll continue to update on that as we release these on the regular basis. So there are interpretations you have to make on the wholesale side. I wouldn't call them issues so much as interpretation. Jason Napier - Deutsche Bank AG, Research Division: Okay. So your broad definitions are in line with the way the regulator looks at these sorts of things?

We believe so. Jason Napier - Deutsche Bank AG, Research Division: Great. And then a question for Rich, please. The gain in market share of Barclays in the IB is obvious. So I just wondered to what extent you look at the loss of traction at the likes of CS and UBS and other banks that have perhaps been at cost-cutting for longer. And I wonder whether the sort of targets that have been set for the overall group, how much of that is sort of already done? Or how much do you feel some retrenchment to the gains that you've made as you embark on this? I mean, how far along the road, I guess I'm asking, are you at this stage?

Well, I think, Jason, what I would answer to that is that over the last few years, we haven't been standing still and we really started reductions enforced across the business as far back as 2009. So I think ours has been more of a steady focus on costs. I think that the cost reductions that we are at a point now are certainly more targeted and I think towards areas where we need to rightsize for opportunity. You're right about some of our competitors exiting in a larger way. I think for the scale players, which is 4 or 5 of us, will continue to pick up passive market share and it's good news. I think there is more to come as others continue to retrench, but I think as far as we're concerned, I don't see any retrace-ment, if that's your question of our gains. Jason Napier - Deutsche Bank AG, Research Division: So as to the savings, do they relate to areas that you like to deemphasize rather than just reducing -- sort of resourcing across the board?

No, I wouldn't say deemphasize. Certainly, I think that when we built out our equities and Investment Banking businesses around the world put the estimates for what fee pools might be were quite large at the time. I think as those fee pools estimates have reduced, we reduced our size and scope. That doesn't mean we're going to be global or disinterested in the business. But certainly, I think we want to rightsize for the size of the opportunity. So that's where the cuts have been made. You'll hear more about that this afternoon.

I think that's all we have time for. I know we'll be seeing many of you later on today. So thank you for joining us, and we look forward to continuing the conversation over the rest of the day. Many thanks.