The UK bank recognised a net attributable loss of £600m as the impact of over-issuance of structured notes and ETNs was felt in the US market.

Barclays has reported group income of £5.8 billion (US$7 billion) in the fourth quarter of 2022 – an increase of 12% year-on-year (YoY).

Group operating expenses, at £4 billion, were up six percent from the prior year quarter, reflecting the impact of FX, inflation, and investment in the business.

For full year 2022, group income stood at £25 billion – up 14% YoY, with momentum across all operating divisions and the benefit from FX. Income for the corporate and investment bank (CIB) increased by eight percent; the best full year for both global markets and fixed income, currencies and commodities (FICC).

While our performance in 2022 was very gratifying overall, it was marred by the over-issuance of securities in the US - C.S. Venkatakrishnan, CEO

Group operating expenses were £16.7 billion, reflecting £1.6 billion of litigation and conduct charges, primarily driven by the over-issuance of securities. In March 2022, Barclays suspended the sale of structured notes and exchange-traded notes (ETNs) after it became aware that it had issued securities in excess of the amount registered under its shelf registration statement filed with the US Securities and Exchange Commission (SEC) in 2018 and 2019.

As a result, Barclays recognised a net attributable loss of £600m in 2022 which included a SEC monetary penalty of £165m.

The bank conducted a rescission offer to certain purchasers of affected securities, which completed in September 2022.

‘While our performance in 2022 was very gratifying overall, it was marred by the over-issuance of securities in the US,’ stated C.S. Venkatakrishnan (pictured), Barclays group chief executive, speaking during the results conference call and webcast on 15 February.

‘I am determined that an incident like this should not happen again […] we are committed in Barclays to operating at a very high level, reliably and consistently, day in and day out,’ he said.

The impact of the over-issuance was especially felt in the US market, where volumes dropped to US$137m in the second quarter and despite the bank resuming sales of structured notes in August, they never fully recovered, according to SRP data.

In Q4 2022, Barclays accumulated sales of US$975m from 369 issued products – a 64% decrease from the equivalent quarter in 2021 (Q4 2021: US$2.7 billion from 568 products). Sales for FY2022 were also down 64% YoY, with US$4.6 billion collected from 1,257 products compared to US$12.9 billion (from 2,553 products) the previous year.

Outside the US, the bank issued 145 public offers worth an estimated $500m across 10 different jurisdictions in Q4. Issuance was significantly down from Q4 2021 when it was the manufacturer behind 1,568 products (also across 10 jurisdictions). The drop in issuance was mainly seen in Switzerland where just 48 products were launched during the quarter compared to almost 1,500 in Q4 2021. Other markets where the bank was active included the UK (US$100m from 40 products), France (US$105m from 23 products) and Japan (US$200m from 12 products).

In FY2022, Barclays collected an estimated US$8.6 billion from more than 11,000 products, which included US$5.1 billion that was gathered from 3,197 private placements (2021: US$3.5 billion from 2,750 products, including US$1.3 billion from 1,084 private placements).

The bank’s best-selling product of the year was 固定利付コーラブル債/Callable Interest Rate linked Bond M20270928, which was distributed by Chugin Securities in Japan and collected $86m during its subscription period.

Wholesale funding

As of 31 December 2022, wholesale funding outstanding (excluding repurchase agreements) was £184 billion (Dec 2021: £167.5 billion) which includes £48.4 billion worth of structured notes issuance, of which £9.4 billion matures within one year.

In 2022, the group issued £15.3 billion of MREL (minimum requirement for own funds and eligible liabilities) eligible instruments from Barclays PLC (the parent company) in a range of tenors and currencies.

Barclays Bank PLC continued to issue in the shorter-term and medium-term notes markets. In addition, Barclays Bank UK PLC continued to issue in the shorter-term markets and maintains active secured funding programmes. Wholesale funding of £72.5 billion (Dec 2021: £66.7 billion) matures in less than one year, representing 39% of total wholesale funding outstanding (Dec 2021: 40%).

Click the link to read the Barclays Q4  and FY2022 results and presentation.