Notes to the accounts

For the year ended 31st December 2007


19 Current and deferred tax

The components of taxes are as follows:

Excel File Download table as excel file
2007 2006
Assets  Liabilities  Assets  Liabilities 
£m  £m  £m  £m 
Current tax  518  1,311  557  1,020 
Deferred tax  2,334  1,726  2,005  1,523 

Deferred taxes are calculated on all temporary differences under the liability method. The movement on the deferred tax account is as follows:

Excel File Download table as excel file
2007  2006 
£m  £m 
At beginning of year  482  (14)
Income statement credit/(charge) 393  (4)
Equity 
Available for sale investments  13  4 
Cash flow hedges  (132) 128 
Share-based payments  (63) 24 
Other equity movements  (125) 48 
Acquisitions and disposals  33  264 
Exchange and other adjustments  7  32 
At end of year  608  482 

Deferred tax assets and liabilities are attributable to the following items:

Excel File Download table as excel file
2007  2006 
£m  £m 
Deferred tax liabilities 
Accelerated tax depreciation  803  705 
Available for sale investments  101  116 
Cash flow hedges  51  – 
Other  771  702 
Deferred tax liabilities  1,726  1,523 
Deferred tax assets 
Pensions and other retirement benefits  491  622 
Allowance for impairment on loans  108  69 
Other provisions  377  436 
Cash flow hedges  44  91 
Tax losses carried forward  215  1 
Share-based payments  428  380 
Other  671  406 
Deferred tax assets  2,334  2,005 
Net deferred tax asset  608  482 
Disclosed as deferred tax liabilities  855  282 
Disclosed as deferred tax assets  1,463  764 
Net deferred tax asset  608  482 

19 Current and deferred tax (continued)

Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to set off and the balances relate to income tax payable to the same taxation authority on either the same taxable entity or different taxable entities within the same tax group where there is the intention and ability to settle on a net basis or realise the assets and liabilities simultaneously.

The amount of deferred tax liability expected to be settled after more than 12 months is £1,468m (2006: £1,046m).

The amount of deferred tax asset expected to be recovered after more than 12 months is £1,950m (2006: £1,582m).

The deferred tax assets balance includes £450m (2006: £106m) which is the excess deferred tax assets over deferred tax liabilities in entities which have suffered a loss in either the current or prior year. This is based on management assessment that it is probable that the relevant entities will have taxable profits against which the temporary differences can be utilised.

The deferred tax (credit)/charge in the income statement comprises the following temporary differences:

Excel File Download table as excel file
2007  2006 
£m  £m 
Accelerated tax depreciation  118  120 
Pensions and other retirement benefits  96  (24)
Allowance for impairment on loans  (28) (30)
Other provisions  (165) (105)
Tax losses carry forward  (214) 25 
Available for sale investments  (1) 8 
Cash flow hedges  –  (14)
Share-based payments  (100) (77)
Other  (99) 101 
Total  (393) 4 

Deferred tax assets have not been recognised in respect of the following items:

Excel File Download table as excel file
2007  2006 
£m  £m 
Deductible temporary differences (gross) 247  395 
Unused tax losses (gross) 1,683  190 
Unused tax credits  126  98 

The following tax losses expire: £9m in 2008 to 2011, £9m in 2011, £9m in 2012 and £1,201m in 2027. The other tax losses, tax credits and temporary differences do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilise the benefits. The unused tax losses include amounts relating to non-UK branches of Barclays Bank PLC where the future tax benefit might be restricted to the amount in excess of the UK rate.

The amount of temporary differences associated with investments in subsidiaries, branches, associates and joint ventures for which deferred tax liabilities have not been recognised is £5,722m (2006: £3,387m).

The tax charge for the period was based on a UK corporation tax rate of 30% (2006: 30%). The effective rate of tax for 2007, based on profit before tax, was 28% (2006: 27.2%). The effective tax rate differed from 30% as it took account of the different tax rate applied to profits earned outside the UK, non-taxable gains and income and adjustments to prior year tax provisions. The forthcoming change in the UK rate of corporation tax from 30% to 28% on 1st April 2008 led to an additional tax charge in 2007 as a result of its effect on the Group’s net deferred tax asset.

Notes to the accounts

For the year ended 31st December 2007


20 Investment in associates and joint ventures

Excel File Download table as excel file
Share of net assets 
Associates Joint ventures Total
2007  2006  2007  2006  2007  2006 
£m  £m  £m  £m  £m  £m 
At beginning of year  74  427  154  119  228  546 
Share of results before tax  35  63  10  (6) 45  57 
Share of tax  (2) (10) (1) (1) (3) (11)
Share of post-tax results  33  53  9  (7) 42  46 
Dividends paid  –  (17) –  –  –  (17)
New investments  7  2  8  7  15  9 
Acquisitions  56  51  150  102  206  153 
Disposals  (47) (404) (72) (72) (119) (476)
Exchange and other adjustments  (33) (38) 38  5  5  (33)
At end of year  90  74  287  154  377  228 

Excel File Download table as excel file
Share of net assets 
Associates Joint ventures Total
2007  2006  2007  2006  2007  2006 
£m  £m  £m  £m  £m  £m 
Cost 
At beginning of year  1  122  40  83  41  205 
Acquisitions  –  –  –  –  –  – 
Disposals  (1) (121) (16) –  (17) (121)
Transfer  –  –  3  (43) 3  (43)
At end of year  –  1  27  40  27  41 

The fair value of the Group’s investment in Ambit Properties Limited, an associate listed on the Johannesburg Stock Exchange, is £42m.

Disposal of associates and joint ventures

On 29th June 2007 and 2nd July 2007, the Group disposed of its investment in Gabetti Property Solutions for cash consideration, net of transaction costs of £13m, which after deducting the Group’s share of its net assets on the dates of disposal, resulted in a profit of £8m.

On 24th September 2007, the Group disposed of its investment in Intelenet Global Services for a cash consideration, net of transaction costs of £22m, which, after deducting the Group’s share of its net assets on the date of disposal, resulted in a profit of £13m.

Summarised financial information for the Group’s associates and joint ventures is set out below:

Excel File Download table as excel file
2007 2006
Joint  Joint 
Associates  ventures  Associates  ventures 
£m  £m  £m  £m 
Property, plant and equipment  588  632  599  142 
Financial investments  239  8  4  2 
Trading portfolio assets  –  –  1  – 
Loans to banks and customers  516  2,372  1,378  797 
Other assets  1,387  314  541  199 
Total assets  2,730  3,326  2,523  1,140 
Deposits from banks and customers  1,515  2,189  1,421  769 
Trading portfolio liabilities  –  –  1  – 
Other liabilities  902  458  887  187 
Shareholders’ equity  313  679  214  184 
Total liabilities  2,730  3,326  2,523  1,140 
Net income  528  340  538  178 
Operating expenses  (404) (292) (334) (178)
Profit before tax  124  48  204  – 
Profit after tax  104  40  186  (2)

The amounts included above, which include the entire assets, liabilities and net income of the investees, not just the Group’s share, are based on accounts made up to 31st December 2007 with the exception of certain undertakings for which the amounts are based on accounts made up to dates not earlier than three months before the balance sheet date.

Associates and joint ventures in 2007 includes £1,728m (2006: £1,525m) of assets, £1,537m (2006: £1,380m) of liabilities and £18m (2006: £25m) of profit after tax in associates and joint ventures within the Absa Group.

The Group’s share of commitments and contingencies of its associates and joint ventures is £6m (2006: £nil).

21 Goodwill

Excel File Download table as excel file
2007  2006 
£m  £m 
Net book value 
At beginning of year  6,092  6,022 
Acquisitions  879  390 
Disposals  (17) (14)
Exchange and other adjustments  60  (306)
At end of year  7,014  6,092 

Goodwill is allocated to business operations according to business segments identified by the Group under IAS 14, as follows:

Excel File Download table as excel file
2007  2006 
£m  £m 
UK Banking  3,131  3,132 
Barclaycard  400  403 
International Retail and Commercial Banking  1,682  1,481 
Barclays Capital  147  86 
Barclays Global Investors  1,261  673 
Barclays Wealth  393  317 
Goodwill  7,014  6,092 

The Barclays Financial Planning business previously managed and reported within Barclays Wealth, is now managed and reported within UK Banking. Goodwill of £312m relating to this business has been transferred to UK Banking and the comparative figures restated.

Goodwill is reviewed annually for impairment, or more frequently when there are indications that impairment may have occurred by comparing the carrying value to its recoverable amount.

Impairment testing of goodwill

The recoverable amount of each operation’s goodwill is based on value-in-use calculations. The calculation is based upon discounting expected pre-tax cash flows at a risk adjusted interest rate appropriate to the cash generating unit, the determination of both of which requires the exercise of judgement. The estimation of pre-tax cash flows is sensitive to the periods for which forecasts are available and to assumptions regarding the long-term sustainable cash flows. While forecasts are compared with actual performance and external economic data, expected cash flows naturally reflect management’s view of future performance.

At 31st December 2007, the goodwill allocated to UK Banking of £3,131m (2006: £3,132m) included £3,130m (2006: £3,130m) relating to Woolwich, and the amount allocated to International Retail and Commercial Banking of £1,682m (2006: £1,481m) included £1,054m (2006: £953m) relating to Absa.

The remaining aggregate goodwill of £2,830m (2006: £2,009m) comprised of balances not considered individually significant.

Key assumptions used in value in use calculations for significant goodwill

The values assigned to key assumptions reflect past experience and management judgement. The recoverable amount calculations performed for the significant amounts of goodwill are sensitive to changes in the following key assumptions:

Term of cash flow forecasts and growth ratesCash flows are based on internal management information for a period of up to three years, after which a growth factor suitable for the business is applied. Growth rates are based on the projected local inflation rates over the term of estimated cash flows.

The business operation containing Woolwich has applied a growth factor of 2% (proxy for inflation) to cash flows for the period 2011 to 2016. Absa has applied a growth rate of 8% to cash flows for the three years 2011 to 2013, and a rate of 4% for the years 2014 to 2021. The use of longer cash flow projections is justified by the long-term nature of these businesses within the Barclays Group.

Discount rates

The business operation containing Woolwich has applied a discount factor of 15%, and Absa has applied 13.62% to forecast cash flows used in the impairment testing.

Management believes that reasonable changes in key assumptions used to determine the recoverable amounts of Absa and Woolwich goodwill will not result in impairment.

No impairment was identified in 2007 or 2006.

Notes to the accounts

For the year ended 31st December 2007


22 Intangible assets

Excel File Download table as excel file
2007 
Internally  Core  Mortgage 
generated  Other  deposit  Customer  servicing  Licences 
software  software  intangibles  Brands  lists  rights  and other  Total 
£m  £m  £m  £m  £m  £m  £m  £m 
Cost 
At 1st January 2007  267  123  242  145  467  122  140  1,506 
Acquisitions  –  –  –  –  54  –  23  77 
Additions  118  56  –  3  –  4  –  181 
Exchange and other adjustments  3  9  2  1  3  –  (2) 16 
At 31st December 2007  388  188  244  149  524  126  161  1,780 
Accumulated amortisation and impairment 
At 1st January 2007  (116) (29) (24) (22) (64) (10) (26) (291)
Amortisation charge  (45) (13) (11) (15) (36) (54) (12) (186)
Impairment charge  –  (14) –  –  –  –  –  (14)
Exchange and other adjustments  (2) (1) (2) (1) (1) –  –  (7)
At 31st December 2007  (163) (57) (37) (38) (101) (64) (38) (498)
Net book value  225  131  207  111  423  62  123  1,282 

Excel File Download table as excel file
2006 
Internally  Core  Mortgage 
generated  Other  deposit  Customer  servicing  Licences 
software  software  intangibles  Brands  lists  rights  and other  Total 
£m  £m  £m  £m  £m  £m  £m  £m 
Cost 
At 1st January 2006  188  43  306  183  582  –  139  1,441 
Acquisitions  –  –  –  –  –  114  2  116 
Additions  95  86  –  –  –  16  13  210 
Exchange and other adjustments  (16) (6) (64) (38) (115) (8) (14) (261)
At 31st December 2006  267  123  242  145  467  122  140  1,506 
Accumulated amortisation and impairment 
At 1st January 2006  (90) (18) (7) (9) (29) –  (19) (172)
Amortisation charge  (29) (7) (20) (16) (44) (11) (9) (136)
Impairment charge  (2) (5) –  –  –  –  –  (7)
Exchange and other adjustments  5  1  3  3  9  1  2  24 
At 31st December 2006  (116) (29) (24) (22) (64) (10) (26) (291)
Net book value  151  94  218  123  403  112  114  1,215 

Impairment charges reflect the impairment of certain IT assets where the future economic benefit did not exceed the carrying value.

Impairment charges detailed above have been included within other operating expenses.

23 Property, plant and equipment

Excel File Download table as excel file
2007  2006 
Operating  Operating 
leased  leased 
Property  Equipment  assets  Total  Property  Equipment  assets  Total 
£m  £m  £m  £m  £m  £m  £m  £m 
Cost 
At 1st January  2,154  2,429  365  4,948  2,450  2,541  365  5,356 
Acquisitions and disposals  5  13  –  18  –  –  –  – 
Additions  506  638  105  1,249  180  475  –  655 
Disposals  (241) (112) (57) (410) (422) (382) –  (804)
Fully depreciated assets written off  (1) (8) –  (9) (1) (89) –  (90)
Exchange and other adjustments  28  35  –  63  (53) (116) –  (169)
At 31st December  2,451  2,995  413  5,859  2,154  2,429  365  4,948 
Accumulated depreciation and impairment 
At 1st January  (993) (1,454) (9) (2,456) (1,022) (1,575) (5) (2,602)
Acquisitions and disposals  (1) (7) –  (8) –  –  –  – 
Depreciation charge  (91) (370) (6) (467) (118) (335) (2) (455)
Impairment charge  (2) –  –  (2) (14) –  –  (14)
Disposals  58  37  –  95  148  341  –  489 
Fully depreciated assets written off  1  8  –  9  1  89  –  90 
Exchange and other adjustments  (16) (18) –  (34) 12  26  (2) 36 
At 31st December  (1,044) (1,804) (15) (2,863) (993) (1,454) (9) (2,456)
Net book value  1,407  1,191  398  2,996  1,161  975  356  2,492 

Operating leased assets represent assets such as plant and equipment leased to customers under operating leases.

Certain of the Group’s equipment is held on finance leases. See Note .

In 2007 the value of an existing office building in the UK property portfolio was impaired by £2m reflecting local market conditions that had prevented its disposal in the year. In 2008 the freehold of the building will be disposed of by a short- or long-term leaseback. Consequently the value has been written down to fair value, less cost of sale.

24 Financial liabilities designated at fair value

Excel File Download table as excel file
2007 2006
Contractual  Contractual 
amount  amount 
due on  Fair  due on 
Fair value  maturity  value  maturity 
£m  £m  £m  £m 
Debt securities  52,320  62,167  32,261  37,393 
Deposits  17,319  18,140  19,990  20,465 
Other  4,850  6,239  1,736  2,913 
Financial liabilities designated at fair value  74,489  86,546  53,987  60,771 

The amount of change in the fair value of financial liabilities attributable to changes in own credit risk of these liabilities in 2007 is £658m. There were no significant gains or losses attributable to changes in own credit risk for financial liabilities in 2006.

25 Other liabilities

Excel File Download table as excel file
2007  2006 
£m  £m 
Accruals and deferred income  6,075  6,127 
Sundry creditors  4,341  4,118 
Obligations under finance leases (Note ) 83  92 
Other liabilities  10,499  10,337 

Included in the above are balances of £9,043m (2006: £9,265m) expected to be settled within no more than 12 months after the balance sheet date; and balances of £1,456m (2006: £1,072m) expected to be settled more than 12 months after the balance sheet date.

Accruals and deferred income included £102m (2006: £107m) in relation to deferred income from investment contracts and £677m (2006: £822m) in relation to deferred income from insurance contracts.

Notes to the accounts

For the year ended 31st December 2007


26 Insurance assets and liabilities

Insurance assets

Reinsurance assets are £157m (2006: £172m) and relate principally to the Group’s long-term business. Reinsurers’ share of provisions relating to the Group’s short-term business are £94m (2006: £82m). The reinsurance assets expected to be recovered after more than one year are £63m (2006: £92m).

Insurance contract liabilities including unit-linked liabilities

Insurance liabilities comprise the following:

Excel File Download table as excel file
2007  2006 
£m  £m 
Insurance contract liabilities: 
– linked liabilities  1,398  1,591 
– non-linked liabilities  2,347  2,121 
Provision for claims  158  166 
Insurance contract liabilities including unit-linked liabilities  3,903  3,878 

Insurance contract liabilities relate principally to the Group’s long-term business. Insurance contract liabilities associated with the Group’s short-term non-life business are £174m (2006: £198m).

Movements in insurance liabilities and reinsurance assets

Movements in insurance assets and insurance contract liabilities were as follows:

Excel File Download table as excel file
2007  2006 
Gross  Reinsurance  Net  Gross  Reinsurance  Net 
£m  £m  £m  £m  £m  £m 
At beginning of year  3,878  (172) 3,706  3,767  (114) 3,653 
Change in year  25  15  40  111  (58) 53 
At end of year  3,903  (157) 3,746  3,878  (172) 3,706 

Assumptions used to measure insurance liabilities

The assumptions that have the greatest effect on the measurement of the amounts recognised above, and the processes used to determine them were as follows:

Long-term business – linked and non-linked

Mortality – mortality estimates are based on standard industry and national mortality tables, adjusted where appropriate to reflect the Group’s own experience. A margin is added to ensure prudence – for example, future mortality improvements for annuity business.

Renewal expenses level and inflation – expense reserves are a small part of overall insurance liabilities, however, increases in expenses caused by unanticipated inflation or other unforeseen factors could lead to expense reserve increases. Expenses are therefore set using prudent assumptions. Initial renewal expense levels are set by considering expense forecasts for the business and, where appropriate, building in a margin to allow for the increasing burden of fixed costs on the UK closed life book of business. The inflation assumption is set by adding a margin to the market rate of inflation implied by index-linked gilt yields.

Short-term business

Short-term business – for single premium policies the proportion of unearned premiums is calculated based on estimates of the frequency and severity of incidents.

Changes in assumptions

There have been no changes in assumptions in 2007 that have had a material effect on the financial statements.

Uncertainties associated with cash flows related to insurance contracts and risk management activities

Long-term insurance contracts (linked and non-linked)

For long-term insurance contracts where death is the insured risk, the most significant factors that could detrimentally affect the frequency and severity of claims are the incidence of disease, such as AIDS, or general changes in lifestyle, such as in eating, exercise and smoking. Where survival is the insured risk, advances in medical care and social conditions are the key factors that increase longevity.

The Group manages its exposure to risk by operating in part as a unit-linked business, prudent product design, applying strict underwriting criteria, transferring risk to reinsurers, managing claims and establishing prudent reserves.

Short-term insurance contracts

For payment protection contracts where inability to make payments under a loan contract is the insured risk, the most significant factors are the health of the policyholder and the possibility of unemployment which depends upon, among other things, long-term and short-term economic factors. The Group manages its exposure to such risks through prudent product design, efficient claims management, prudent reserving methodologies and bases, regular product, economic and market reviews and regular adequacy tests on the size of the reserves.

Absa insures property and motor vehicles, for which the most significant factors that could effect the frequency and severity of claims are climatic change and crime. Absa manages its exposure to risk by diversifying insurance risks accepted and transferring risk to reinsurers.

26 Insurance assets and liabilities (continued)

Sensitivity analysis

The following table presents the sensitivity of the level of insurance contract liabilities disclosed in this note to movements in the actuarial assumptions used to calculate them. The percentage change in variable is applied to a range of existing actuarial modelling assumptions to derive the possible impact on net profit after tax. The disclosure is not intended to explain the impact of a percentage change in the insurance assets and liabilities disclosed above.

Excel File Download table as excel file
2007 2006
Net profit  Net profit 
Change in  after tax  Change in  after tax 
variable  impact  variable  impact 
%  £m  %  £m 
Long-term insurance contracts: 
Improving mortality (annuitants only) 10  21  10  23 
Worsening of mortality (assured lives only) 10  29  10  25 
Worsening of base renewal expense level  20  43  20  23 
Worsening of expense inflation rate  10  10  10  9 
Short-term insurance contracts: 
Worsening of claim expense assumptions  10  3  10  9 

Any change in net profit after tax would result in a corresponding increase or decrease in shareholders’ equity.

The above analyses are based on a change in a single assumption while holding all other assumptions constant. In practice this is unlikely to occur.

Options and guarantees

The Group’s contracts do not contain options or guarantees that could confer material risk.

Concentration of insurance risk

The Group considers that the concentration of insurance risk that is most relevant to the Group financial statements is according to the type of cover offered and the location of insured risk. The following table shows the maximum amounts payable under all of the Group’s insurance products. It ignores the probability of insured events occurring and the contribution from investments backing the insurance policies. The table shows the broad product types and the location of the insured risk, before and after the impact of reinsurance that represents the risk that is passed to other insurers.

Excel File Download table as excel file
2007  2006 
Before  After  Before  After 
Reinsurance  Reinsurance  Reinsurance  Reinsurance  Reinsurance  Reinsurance 
£m  £m  £m  £m  £m  £m 
Total benefits insured by product type 
Long term insurance contracts  31,205  (10,497) 20,708  24,934  (9,445) 15,489 
Short term insurance contracts  31,464  (1,139) 30,325  39,870  (901) 38,969 
Total benefits insured  62,669  (11,636) 51,033  64,804  (10,346) 54,458 

Excel File Download table as excel file
2007  2006 
Before  After  Before  After 
Reinsurance  Reinsurance  Reinsurance  Reinsurance  Reinsurance  Reinsurance 
£m  £m  £m  £m  £m  £m 
Total benefits insured by geographic location 
United Kingdom  22,538  (7,473) 15,065  25,403  (8,010) 17,393 
Other European Union  4,304  (2,479) 1,825  3,317  (1,802) 1,515 
Africa  35,827  (1,684) 34,143  36,084  (534) 35,550 
Total benefits insured  62,669  (11,636) 51,033  64,804  (10,346) 54,458 

Reinsurer credit risk

For the long-term business, reinsurance programmes are in place to restrict the amount of cover to any single life. The reinsurance cover is spread across highly rated companies to diversify the risk of reinsurer solvency. Net insurance reserves include a margin to reflect reinsurer credit risk.

Notes to the accounts

For the year ended 31st December 2007


27 Subordinated liabilities

Subordinated liabilities comprise dated and undated loan capital as follows:

Excel File Download table as excel file
2007  2006 
£m  £m 
Undated loan capital  (a)   6,631  5,422 
Dated loan capital  (b)   11,519  8,364 
18,150  13,786 

(a) Undated loan capital

Excel File Download table as excel file
2007  2006 
Notes  £m  £m 
Non-convertible 
The Bank 
6% Callable Perpetual Core Tier One Notes  a , p   392  404 
6.86% Callable Perpetual Core Tier One Notes (US$1,000m) a , p   624  571 
5.3304% Step-up Callable Perpetual Reserve Capital Instruments  b , q   520  501 
5.926% Step-up Callable Perpetual Reserve Capital Instruments (US$1,350m) c , r   708  690 
6.3688% Step-up Callable Perpetual Reserve Capital Instruments  n , ad   526  – 
7.434% Step-up Callable Perpetual Reserve Capital Instruments (US$1,250m) o , ae   660  – 
Junior Undated Floating Rate Notes (US$121m) d , s   61  62 
Undated Floating Rate Primary Capital Notes Series 3  d , t   147  146 
9.875% Undated Subordinated Notes  e , u   319  319 
9.25% Perpetual Subordinated Bonds (ex-Woolwich plc) f , v   171  178 
9% Permanent Interest Bearing Capital Bonds  g , w   102  102 
7.125% Undated Subordinated Notes  h , x   535  550 
6.875% Undated Subordinated Notes  i , y   657  656 
6.375% Undated Subordinated Notes  j , z   482  481 
6.125% Undated Subordinated Notes  k , aa   560  571 
6.5% Undated Subordinated Notes (FFr 1,000m) l , ab   115  105 
5.03% Reverse Dual Currency Undated Subordinated Loan (Yen 8,000m) m , ac   21  34 
5% Reverse Dual Currency Undated Subordinated Loan (Yen 12,000m) m , ac   31  52 
Undated loan capital – non-convertible  6,631  5,422 

Security and subordination

None of the undated loan capital of the Bank is secured.

The Junior Undated Floating Rate Notes (the ‘Junior Notes’) rank behind the claims against the Bank of depositors and other unsecured unsubordinated creditors and holders of dated loan capital.

All other issues of the Bank’s undated loan capital rank pari passu with each other and behind the claims of the holders of the Junior Notes, except for the 6% and 6.86% Callable Perpetual Core Tier One Notes (the ‘TONs’) and the 5.3304%, 5.926%, 6.3688% and 7.434% Step-up Callable Perpetual Reserve Capital Instruments (the ‘RCIs’) (such issues, excluding the TONs and the RCIs, being the ‘Undated Notes and Loans’).

The TONs and the RCIs rank pari passu with each other and behind the claims of the holders of the Undated Notes and Loans.

Interest
Notes
a
These TONs bear a fixed rate of interest until 2032. After that date, in the event that the TONs are not redeemed, the TONs will bear interest at rates fixed periodically in advance, based on London interbank rates.
b
These RCIs bear a fixed rate of interest until 2036. After that date, in the event that the RCIs are not redeemed, the RCIs will bear interest at rates fixed periodically in advance, based on London interbank rates.
c
These RCIs bear a fixed rate of interest until 2016. After that date, in the event that the RCIs are not redeemed, the RCIs will bear interest at rates fixed periodically in advance, based on London interbank rates.
d
These Notes bear interest at rates fixed periodically in advance, based on London interbank rates.
e
These Notes bear a fixed rate of interest until 2008. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of five years.
f
These Bonds bear a fixed rate of interest until 2021. After that date, in the event that the Bonds are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of five years.
g
The interest rate on these Bonds is fixed for the life of this issue.
h
These Notes bear a fixed rate of interest until 2020. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of five years.
i
These Notes bear a fixed rate of interest until 2015. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of five years.

27 Subordinated liabilities (continued)

j
These Notes bear a fixed rate of interest until 2017. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of five years.
k
These Notes bear a fixed rate of interest until 2027. After that date, in the event that the Notes are not redeemed, the coupon will be reset to a fixed margin over a reference gilt rate for a further period of five years.
l
These Notes bear a fixed rate of interest until 2009. After that date, in the event that the Notes are not redeemed, the Notes will bear interest at rates fixed periodically in advance based on European interbank rates.
m
These Loans bear a fixed rate of interest until 2028 based on a US Dollar principal amount, but the interest payments have been swapped, resulting in a Yen interest rate payable, which is fixed periodically in advance based on London interbank rates. After that date, in the event that the Loans are not redeemed, the Loans will bear Yen interest rates fixed periodically in advance, based on London interbank rates.
n
These RCIs bear a fixed rate of interest until 2019. After that date, in the event that the RCIs are not redeemed, the RCIs will bear interest at rates fixed periodically in advance, based on London interbank rates.
o
These RCIs bear a fixed rate of interest until 2017. After that date, in the event that the RCIs are not redeemed, the RCIs will bear interest at rates fixed periodically in advance, based on London interbank rates.

The Bank is not obliged to make a payment of interest on its Undated Notes and Loans excluding the 9.25% Perpetual Subordinated Bonds if, in the preceding six months, a dividend has not been declared or paid on any class of shares of Barclays PLC or, in certain cases, any class of preference shares of the Bank. The Bank is not obliged to make a payment of interest on its 9.25% Perpetual Subordinated Bonds if, in the immediately preceding 12 months interest period, a dividend has not been paid on any class of its share capital. Interest not so paid becomes payable in each case if such a dividend is subsequently paid or in certain other circumstances. During the year, the Bank declared and paid dividends on its ordinary shares and on all classes of preference shares.

No payment of principal or any interest may be made unless the Bank satisfies a specified solvency test.

The Bank may elect to defer any payment of interest on the RCIs (b, c, n and o above). Any such deferred payment of interest must be paid on the earlier of (i) the date of redemption of the RCIs, and (ii) the coupon payment date falling on or nearest to the tenth anniversary of the date of deferral of such payment. Whilst such deferral is continuing, neither the Bank nor Barclays PLC may declare or pay a dividend, subject to certain exceptions, on any of its ordinary shares or Preference Shares.

The Bank may elect to defer any payment of interest on the TONs if it determines that it is, or such payment would result in it being, in non-compliance with capital adequacy requirements and policies of the FSA. Any such deferred payment of interest will only be payable on a redemption of the TONs. Until such time as the Bank next makes a payment of interest on the TONs, neither the Bank nor Barclays PLC may (i) declare or pay a dividend, subject to certain exceptions, on any of their respective ordinary shares or Preference Shares, or make payments of interest in respect of the Bank’s Reserve Capital Instruments and (ii) certain restrictions on the redemption, purchase or reduction of their respective share capital and certain other securities also apply.

Repayment
Notes
p
These TONs are repayable, at the option of the Bank, in whole on any coupon payment date falling in or after June 2032.
q
These RCIs are repayable, at the option of the Bank, in whole on any coupon payment date falling in or after December 2036.
r
These RCIs are repayable, at the option of the Bank, in whole on any coupon payment date falling in or after December 2016.
s
These Notes are repayable, at the option of the Bank, in whole or in part on any interest payment date.
t
These Notes are repayable, at the option of the Bank, in whole on any interest payment date.
u
These Notes are repayable, at the option of the Bank, in whole in 2008, or on any fifth anniversary thereafter.
v
These Bonds are repayable, at the option of the Bank, in whole in 2021, or on any fifth anniversary thereafter.
w
These Bonds are repayable, at the option of the Bank, in whole at any time.
x
These Notes are repayable, at the option of the Bank, in whole in 2020, or on any fifth anniversary thereafter.
y
These Notes are repayable, at the option of the Bank, in whole in 2015, or on any fifth anniversary thereafter.
z
These Notes are repayable, at the option of the Bank, in whole in 2017, or on any fifth anniversary thereafter.
aa
These Notes are repayable at the option of the Bank, in whole in 2027, or on any fifth anniversary thereafter.
ab
These Notes are repayable, at the option of the Bank, in whole in 2009, or on any fifth anniversary thereafter.
ac
These Loans are repayable, at the option of the Bank, in whole in 2028, or on any fifth anniversary thereafter.
ad
These RCIs are repayable at the option of the Bank, in whole on any coupon payment date falling in or after December 2019.
ae
These RCIs are repayable at the option of the Bank, in whole on any coupon payment date falling in or after December 2017.

In addition, each issue of undated loan capital is repayable, at the option of the Bank, in whole for certain tax reasons, either at any time, or on an interest payment date. There are no events of default except non-payment of principal or mandatory interest.

Any repayments require the prior notification to the FSA.

All issues of undated loan capital have been made in the eurocurrency market and/or under Rule 144A, and no issues have been registered under the US Securities Act of 1933.

Notes to the accounts

For the year ended 31st December 2007


27 Subordinated liabilities (continued)

(b) Dated loan capital

Dated loan capital, issued by the Bank for the development and expansion of the Group’s business and to strengthen its capital base, by Barclays Bank Spain SA (Barclays Spain), Barclays Bank of Botswana Ltd (BBB), Barclays Bank Zambia PLC (Barclays Zambia) and Barclays Bank of Kenya (Barclays Kenya) to enhance their respective capital bases and by Absa and Barclays Bank of Ghana Ltd (BBG) for general corporate purposes, comprise:

2007  2006 
Notes  £m  £m 
Non-convertible 
The Bank 
7.4% Subordinated Notes 2009 (US$400m) a   200  204 
Subordinated Fixed to CMS-Linked Notes 2009 (€31m) b   23  21 
12% Unsecured Capital Loan Stock 2010  a   27  27 
5.75% Subordinated Notes 2011 (€1,000m) a   724  676 
5.25% Subordinated Notes 2011 (€250m) (ex-Woolwich plc) a   200  186 
Floating Rate Subordinated Notes 2012  –  301 
Callable Subordinated Floating Rate Notes 2012  –  44 
Step-up Callable Floating Rate Subordinated Bonds 2012 (ex-Woolwich plc) –  151 
Callable Subordinated Floating Rate Notes 2012 (US$150m) –  77 
Floating Rate Subordinated Notes 2012 (US$100m) –  51 
Capped Floating Rate Subordinated Notes 2012 (US$100m) –  51 
Floating Rate Subordinated Notes 2013 (US$1,000m) b , n   501  513 
5.015% Subordinated Notes 2013 (US$150m) a   77  77 
4.875% Subordinated Notes 2013 (€750m) a   583  540 
5.5% Subordinated Notes 2013 (DM 500m) d , n   196  179 
Floating Rate Subordinated Step-up Callable Notes 2013 (Yen 5,500m) b , n   25  24 
Floating Rate Subordinated Notes 2013 (AU$150m) c , n   67  61 
5.93% Subordinated Notes 2013 (AU$100m) e , n   44  41 
Callable Floating Rate Subordinated Notes 2015 (US$1,500m) b , n   753  767 
4.38% Fixed Rate Subordinated Notes 2015 (US$75m) a   30  37 
4.75% Fixed Rate Subordinated Notes 2015 (US$150m) a   85  76 
Floating Rate Subordinated Step-up Callable Notes 2016 (US$750m) b , n   375  382 
Callable Floating Rate Subordinated Notes 2016 (€1,250m) b , n   927  844 
Callable Floating Rate Subordinated Notes 2017 (US$500m) b , n   250  255 
10.125% Subordinated Notes 2017 (ex-Woolwich plc) k , n   111  113 
Floating Rate Subordinated Step-up Callable Notes 2017 (US$1,500m) b , n   749  – 
Floating Rate Subordinated Step-up Callable Notes 2017 (€1,500m) b , n   1,106  – 
6.05% Fixed Rate Subordinated Notes 2017 (US$2,250m) a   1,125  – 
Floating Rate Subordinated Notes 2018 (€40m) b   29  27 
Floating Rate Subordinated Notes 2019 (€50m) b   36  32 
Callable Fixed/Floating Rate Subordinated Notes 2019 (€1,000m) l   761  696 
9.5% Subordinated Bonds 2021 (ex-Woolwich plc) a   282  290 
Subordinated Floating Rate Notes 2021 (€100m) b   72  66 
Subordinated Floating Rate Notes 2022 (€50m) b   37  34