Full Year 2020 Barclays PLC Fixed Income Analysts and Investors Earnings Call
I will now hand, you over to to show Masora Group Finance director.
Good afternoon, everyone and welcome to the fixed income investor call for our full year 2020 results I'm joined today by Catherine Our group Treasurer and head of term funding, let me start with slide three and make a few brief comments before handing over to Katherine.
As I said this morning, our priority during the pandemic has been to support the economy, serving our customers and looking after the interests of colleagues and other stakeholders. It's been a very challenging year, but the pandemic has shown very clearly the benefits of our diversified business model.
The effects of the pandemic reported a statutory authority of three 2% or three 4% excluding litigation and conduct.
The impairment charge of $4 8 billion up almost 3 billion year on year reduced PBT from six two to $3 2 billion, excluding litigation and conduct with income up 1% overall, we delivered neutral jaws and a cost income ratio of 63% slightly in excess of the group's target of below 60% over time.
Our capital position is also strong with a CET one ratio strengthening further in Q4 to reach 15, 1% up 130 basis points over the year.
The temporary guardrails, which the regulator announced in December now statutory profitability allows us to distribute five tenths in aggregate by way of dividend and buyback.
Panther launch a share buyback of up to $700 million by the end of Q1, which is attractive for us from a financial point of view at current share prices and equivalent to <unk> per share.
In addition, we are paying a dividend of one pence and reaffirming our intention going forward to pay dividend supplemented as appropriate by share buybacks, we'll update the market further on distributions at the appropriate time.
Our balance sheet resilience and ability to remain profitable in every quarter of 2020 and maintain a strong position to continue capital distributions to shareholders absorb capital headwinds and operate in our target range of 13% to 14% more on capital from Katherine in a moment.
Before I hand over a few words on impairment on slide four.
You're already familiar with the significant increase of almost $3 billion and the impairment charge year on year.
This is being driven by deterioration in economic outlook as a result of the pandemic.
Led to significant increases in the charges in each business.
Wherever they spoke up in provisions in Q1, and Q2 has not being followed by material increases in default you can see much lower charges for Q3 and Q4 in the second chart is.
Starting to charge for each quarter split into stage, one plus two impairment, mostly related to balances, which arm posture and stage three impairments on loans in default because you can see most of the elevated impairment in Q1 and Q2 was from book ups, while most of the Q3 and Q4 charges once phase III balances on.
On the next slide we show the macroeconomic variables or Mips, we've used in the expected loss calculation.
You updated the mess slightly in Q4 as you can see on slide five however, I would emphasize that with the reduction in unsecured balances and given the ongoing level of government support the models on their own would have generated a significant provision write back in Q4.
Wherever there is significant uncertainty as to what the folks we will experience a support schemes around down through 2021, and we have therefore apply significant post model adjustments totaling $1 4 billion as you can see in the table.
Our reserve to $9 4 billion, which fully maintained or increased level of coverage.
Even our forecast for unemployment levels, we would anticipate an increased flow into delinquency as we go through 2021, but given our existing level of provisioning, we would expect a material lower charge for 2021.
And with that I'll hand over to Katherine.
Thank you Sean.
You can see on slide seven we finished last year.
With a robust balance sheet across all our metrics.
The tier one ratio was 15, 1%.
<unk> finished ahead of our end state requirements at 32, 7% or 8% on a leverage basis.
LCR stands at a very strong position of 162%.
I'll start with capital on slide eight.
Over the course of 2020, our CET one ratio increased by 130 basis points from 13 eight to 15, 1%.
You can see on this slide the largest driver for this was our ability to deliver profit every quarter in 2020, despite external stressed that we and the rest of the sector experienced.
Pre provision profit contributed to 203 basis points of capital accretion EMEA.
It was meaningful regulatory support in 2020, such as 100% related to stage, one and stage two impairment taken since the beginning of 2020.
And in Q4, we saw further out there from the risk weighting of software asset, but when do you expect that benefit to be reversed during the course of this year for U K banks.
So as you mentioned the resumption of capital distributions out yet while the dividend cancellation in 2020 and non accrual interest.
Three quarters of the year helped our capital position. The resumption of distribution is a key part of our capital plan, given our strong capital position and resilient.
Right.
Turning to slide nine you'll see that we've provided color on the various meeting costs as the next couple of years.
You will see in the chart, our Rebase CET, one position of 14, 7%.
Into account the share buyback and T regulatory items that impact our capital base in Q1 of this yet.
First is that the PVA relief, which the PRA granted for 2020.
Second is the August nine transition or are these data for impairments taken in 2018, and 2019, which reduces from 70% to 50% of it yet.
From here, our prudent capital planning takes into account the headwinds and tailwind we used to see in the coming is.
And of course these are reflected in the calibration of our CET, one target range of between 13, and 14%, which I'll explain in a moment.
As you heard me say, our resilient business models with a profit in each quarter of 2020, despite the very challenging year for the sector.
We're confident that our diversified business model and a sustained performance of our CIB in particular will allow us to continue to generate retained earnings and to help offset the headwinds ahead.
Given our strong excess capital position supported by our profitability. We expect to continue to return capital to shareholders, which reflects the soundness of our capital management and of course, if this decision taken hand in hand with our regulator.
As ever maintaining a strong CET one ratio at the key tenets of our capital management framework and our capital plans take into account anticipated headwinds, which you'll see on the slide.
Taking these in turn.
The first two on the list has been clients throughout the stress period last year with the potential for credit rating migration to drive a pro cyclical increase in <unk>.
And for impairment stage migration impacts the amount of office nine transition relief.
Next you haven't seen the PRA statements about that stance and the risk weighting a software asset and so that's benefits fear of us during the course of the year info. After a consultation that was launched this month.
On the previous page you would've seen the under the tiara software benefit contributed around 30 basis points.
Accretion and CET, one we saw in Q4.
And operating plan has seen fit to be with us in due course.
Next we're flagging that the August nine traditionally scatter will continue to amortize through to the end of 2024 and there is a slide in the appendix, which provides further detail on it.
On the 2022 regulatory items, which we've also flagged in the past the guidance remains of low single digit billion <unk> for each of the changes to mortgage risk weights and models and SA CCR.
And finally like our peers, we have a pension deficit reduction plan with a 700 million payments this year and $300 million next yet.
Taking all of the headwind and tailwind into accounts, we have today announced a target for our CET one ratio of between 13 and 14%.
Spend a moment on that on the next slide.
You will recall that throughout the stress period last year, we guided is maintaining its capital position with an appropriate headroom above the MDA hurdle driven by our strong capital accretion and the regulator, taking supportive actions, including taking the MDA hurdle down we ended the year with a record headroom about the MTA of just under 400 basis points.
Equivalent to 12 billion pounds.
Of course, holding an appropriate headroom to MDA continues to be part of our capital management framework and it's taken into account when we calibrate this target.
Going forward, we're aware that the MTA huddle could change due to the dynamic nature of the pillar two a calibration and a potential reintroduction of a UK counter cyclical buffer or <unk> in the medium term.
Our CET one ratio target will continue to be effects, but the target range also reflects the potential fluctuations in the MDA hurdle.
With the C. C Y B, we note that the regulator act decisively at the beginning of the pandemic to remove the requirement as they also did in 2016 following the outcome of the EU referendum.
It's clear that the C. P Y D is a macro stress buffer.
So we're pleased to operate with a record headroom to MDA hurdle during stress in 2020, and we continue to prudently plan maintain an appropriate headroom.
Turning now to leverage that.
These ratios at year end to five three and 5% on a spot and average basis, respectively reflect our continued sound leverage profiles.
You can see on the slide we operate well above minimum requirements and our leverage profile who's been running at a consistent level for the last four years.
We noted that the FTC is due to report back on its long awaited leveraged review this summer with the potential to move to a single leverage framework C U K banks.
As you know as a U K bank, we only have a leverage requirement under the U K basis.
Our obligation under the sea are all basis is currently only one of disclosure.
Whilst this euro basis doesn't have a cash exemption UK basis does the pra's decision in 2016.
Given his prior position it seems a reasonable assumption that the final state UK leverage rules would include a form of cashing pension nursing also that this is committed under Basel rules.
I mentioned this as it could be relevant to the bank of England's Enbrel reviews, which is also due to report that this year.
More on this on the next slide.
As you can see our prudent build of MLP eligible that over many years has meant that we are ahead of 2022 requirements on all bases.
Given this conservative position Emerald issuance plans for the year of around 8 billion pounds is consistent with recent years and when comparing like for like with Holdco and Opco maturities and calls we expect to be a negative issue for the year.
You may have seen that the bank of England published Emerald requirements for all U K banks in January which showed the tier I leverage basis is binding for us alongside a number of other banks.
It is possible that I am a requirement to an out of your basis, given the language reviews and flexibility of our cost of goods exemption to be retained in the final rule if I just mentioned.
It's also notable that the current balance sheet looks like a surge in cash balances across the banking system caused by central Bank's response to the pandemic, albeit we do acknowledge that this could persist into the medium term.
While we wait for the outcome of the language reviews will continue to prudently manage our emerald position and our intended issuance volume reflects it.
Turning to the next slide which illustrates the structure of our total capital position.
81, and <unk> capital are likely to once again form part of our 8 billion pound ml issuance plans for the year.
We continue to target a conservative 81 headroom, albeit this may temporarily be at an elevated level recognizing the 81 also supports leverage as we see attractive high return opportunities in our markets business, where at times and maturity in excess of the cost of 81.
On a long term basis, all principles that underpin our 81 target remains the same the hedges said to manage potential <unk> and ethics fluctuations and to manage through potential redemptions and any refinancing activity.
In the near to medium term this means managing through the <unk> headwinds I mentioned, a moment ago and planning for the call dates for outstanding 81 instruments in 2022 and 2023.
We also manage these risks in our tier two debt and thereby aimed to hold an amount in excess of the three 2% requirement.
With regards to legacy capital instruments, we have received the bank of England request with the remediation of the Prudential treatment of legacy instruments, along with the other U K banks and of course, we will respond to the bank of England before the 31st of March deadline.
As you will have heard from us on prior calls we have a very modest amount of Barclays Bank plc issues capital instruments of which we believe the majority should continue to count as capital. After the end of this year.
Turning now to liquidity, which you can see on slide 14.
The liquidity pool of 266 billion pounds, and our LCR ratio of 162% represented surplus above the 100% pillar one regulatory requirement of close to 100 billion pounds.
The December LCR position is stable year on year, following heightened intra year positions that reflected strong deposit growth and as temporary and prudent increase in cost effective short term funding, which has now unwound.
Meanwhile, we continue to deploy excess liquidity to our businesses, allowing them to capitalize on prevailing market opportunity.
Going forward, we intend to maintain a conservative liquidity position underpinned by a prudent funding profile given the persistent macro uncertainties as you can see on the next slide.
The significant reduction of the loan to deposit ratio since the end of 2019 was primarily driven by the unprecedented level of deposit growth observed across the market through the crisis.
This is a structural phenomenon driven by government and Central Bank policy, So starting money supply up 14% on a year on year basis, whilst credit was only up by 4%.
This money supply expansion contributed to an 11 point reduction in the loan to deposit ratios as our deposit base increased by 65 billion pounds or 16% driven predominantly by 43 billion.
23% growth across the CIB and business banking.
We've continued to apply very conservative planning assumptions on the evolution of the deposit book to ensure that we are well positioned amidst the ongoing uncertainty.
Turning now briefly to our main subsidiaries, which you can see on slide 16.
Barclays Bank plc, and Barclays Bank UK plc continue to run.
Regulatory metrics.
Barclays Bank Island plc, which sits beneath baby healthy with built in response to Brexit with a significant expansion in its capability.
So let me end of the transition period in December Barclays is positioned to continue providing services in the EU through our subsidiary.
It also means that we're not dependent on the EU and U K agreeing to financial services equivalents to continue to serve our clients and customers.
Turning now to our holding company and subsidiary credit ratings, which you can see on slide 17.
Maintaining strong credit ratings for all of our entities with each of the agencies continues to be a strategic priority for the group.
Due to the macroeconomic backdrop, a number of our entities have a negative outlook consistent with the rest of the sector. We were very pleased when fits removes the rating watch negative in the second half of last year.
We continue to highlight our credit strength to the rating agencies through our ongoing intensive engagement and in particular relative lighting levels versus peers.
I'd like to take a moment to talk about ESG, which you can see on slide 18.
As Jeff mentioned this morning last year, we made particular progress in our commitment towards climate change.
Is that an ambition to be net zero by 2050 and committed to align all of our financing to the goals of the Paris agreement.
I'm proud of the continuing efforts in this regard within treasury.
A green bond holding in our liquidity pool now stands at $3 1 billion pounds and increase from the prior year acquisition of $2 7 billion.
In November we issued our second Green Bond, which medicine first U K bank to issue a sudden denominated green bond the emeril eligible six nonqualified senior from our Holdco.
We will continue to seek opportunities to expand our green offerings to the market as we continue to deepen our dialogue with our investors on sustainability.
Before I finish let me make a few remarks on LIBOR for them given the impending deadlines set by the SBA. We entered this year for.
For the first time, we have a dedicated to our financial statements in our annual report on interest rate benchmark reform with exposure to the maturity profile to provide color on our progress.
We've been actively engaging with our customers and counterparties to transition all include appropriate pullback of provisions.
Is the LIBOR floor back protocols and use a fallback supplement which went live from the 22nd January a major step forward in the transition plan.
And importantly, we've delivered the vast majority of our Counterparties and customers non LIBOR reference products across news sports and derivatives.
In line with official working group expectations and milestones.
In terms of our own English law LIBOR indexed liabilities were the first U K bank to offer investors the opportunity to try to transition away from LIBOR across an extensive range of securities at the same time.
These included new and old style capital instruments, and we're pleased to have succeeded in amending the terms of five securities, including $3 81, and one senior <unk> Securities.
This was an important first step which demonstrated our desire to fulfill the originators objected to prepare for a post LIBOR world and to offer investors an opportunity to reduce their own LIBOR exposures.
So to conclude we finished an incredibly turbulent year with a strong balance sheet, a record CET, one ratio and robust liquidity metrics.
<unk> business model supported our ability to remain profitable in every quarter and as we look ahead to 2021, we are in a strong position to be able to support the economy, our customers and the cost to the interests of colleagues and other stakeholders and with that I'll hand back to <unk>.
Thank you Catherine we would now like to open up the call to questions and I Hope you found this call helpful. Operator. Please go ahead.
If you wish to ask a question. Please press star followed by one on your telephone keypad. If you change your mind unless you remove your question. Please press star followed by T y.
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To confirm that staff flip I wanted to ask a question.
The first question today comes from Lee Street Citigroup. Please go ahead Lee.
Hello, Good afternoon, all and thanks for taking my question Buckle, One group on a fruitful technical one shall we say.
Groupon Phase III loan classification, you seen coffee increased law Street specialty lines and that we still see that the economy on the side of.
My question is how are we supposed to interpret I used to loan classification.
I actually think it does really represent genuine increasing credit risk or was it really just.
Kind of a model.
You referred to just to take her off probably shouldn't be reading too much into the group of women.
Just a technical one.
The slides Barclays Bank, two to qualify or Microsoft office.
For 2022 do you think you've taken increases in your MRO requirements for Starbucks on your expectation.
Secondly on building towards Europe, three two central target tier two level.
Around two and a wholesome holdco.
A month ago.
Some talk about 2 billion pounds.
Q2 should see in 2022.
Finally, just you mentioned the lager exchange that reliable consent solicitation did as being an important first step.
There were a couple of securities.
And with the consent didn't pass.
Is there a second step for those who would like just referred to.
Contractual terms and conditions.
My questions. Thank you very much.
Thanks Lee.
Thanks for your question why don't I take the one on <unk>.
Staging in all countries.
The other more technical questions that you have.
Yes, thanks thinking with.
It is very much.
Driven by models, particularly on the consumer side.
Quite simply.
It's a meaningful change in the probability of default.
For any particular credit.
Ken.
Either way.
Thanks, Jamie Division originated something with it.
Meaningful.
It's more likely the case.
Thanks Bonnie.
The stage two.
Okay.
Quantitative output.
Did I cut it off.
Name by name looking for a judgment on that one.
The paper side totally.
Logical.
It was much more easily.
Okay.
You'll notice that the.
Having stage, two and having the balance sheet.
Is that mostly for overwhelming for them at all in past you, yes, so that when we get to the point where it.
Very much.
These credits have exhibited.
A more riskier protocols than they were previously.
Current accounting standards.
We take kind of unexpected.
Kevin This morning.
The model that people would expect.
Hey, Steve.
The risks.
Start to materialize, we're just not seeing that yet.
I'm not going to be benign, but it's on the consumer side.
And on the corporate side is very much a function I guess.
All right.
Schemes at the moment, which is being very helpful.
Okay could you a little bit more.
Thanks Catherine.
Yes, Thanks, Keisha, Firstly I think you had three equal technical additional questions in the past one was how.
How do we think about it.
The amortizing nature of the tier two and it's a protected.
While issuance plans and so on.
I think it is a modest amount that we would have that would be in that category and it would be reflected in terms of the 8 billion target, which is the only guidance we've given for this year.
We said that it is likely to encompass regular senior issuance.
<unk> and <unk> and as you rightly identified what we have said is that we intend to increase.
Level of tier twos.
That reflects upcoming calls that we may choose to exercise and redemptions from the Opco and the whole kind of the next few years, but I don't think we shouldn't be commenting on our particular quantity of tissue supply.
Or either this year or next year adjusted it won't be part of our right to be part of our <unk> issuance plans for the year and obviously, we'll be very thoughtful around accessing the market in terms of any potential.
<unk> refinancing activity that we may choose to do.
And I guess lastly in terms of the consent solicitation around 12.
Cherokee's referencing LIBOR that we launched in November of last year and concluded in December.
As you said we were successful in five.
Which means our seven left.
And we were pleased to have done this to have done quite a comprehensive.
Liability management exercise that spans starting in dollar securities and you would probably be challenging but wanted to give investors a chance to exit some of that a lot more exposure to that effect.
At this stage.
Guidance envisage doing anything else in relation to the securities and as we said, we obviously are following.
External market developments in this area and everything that the working groups are doing thing.
Our plans for us to follow up on what we concluded in December.
Alright. Thank you very much that's very clear thank you.
Next question please operator.
The next question comes from Robert Smalley of UBS. Please go ahead and drop that.
Alright, Thanks for taking my questions and thanks for doing the call in the New York accessible time as well greatly appreciate it.
The.
Disclosure enhanced disclosure that youre, giving them that capital.
Greatly appreciate it.
Two questions first on slide nine.
Where you've got the green box.
Capital generation.
Yeah.
In general what do you think that number should be what should the range be.
How much organic capital should Barclays fee generating on an annual basis I ask because it's a real indicator of your ability to earn your way out of.
Problems as they occur.
So if you could give us some detail around that.
That would be great. My second question similar type of question on the MDA headroom.
You referred to are appropriate headroom going forward, how do you determine what's appropriate.
Do you look at peers is there some other internally generated number.
And why I asked that is because that's often pointed to as investors as being thinner at Barclays and a lot of other peers.
Yes, thanks, Rob.
Thank you.
Catherine.
Question on MTA et cetera.
Organic capital generation.
Get up to full cost all sort of specific numbers suffice to say that.
We would expect to be very profitable.
We were profitable in every quarter actually in 2020 and guided to.
Meaningful improvement in profitability.
2021.
It.
You should take from that.
We expect to be in.
Thats probably would be profitable.
Throughout the year.
<unk> capital is well against that we've got it too.
If you like technical headwinds things that you can see in front of you.
Think even when you net all of that in as best as we can forecast.
Andover outcome growth for the balance sheet, which we take as a positive legal to originate.
New loans and grow our business although.
So much a function of.
A strong recovery as late in the year, even after all of that we would be expecting generate.
Reasonable amounts of excess capital that we would like to then think about the most appropriate way to distribute that back to RFP.
Our equity holders and so forth so.
Well if somebody doesn't answer your question with a precise number but suffice to say that.
At Barclays I feel very confident that we'll be generating after.
So everything in the round.
The key headwinds.
Think back into balance sheet growth.
Meaningful amounts of excess capital and that's.
It was to run on the bank side is what is the benefit of it.
Okay.
Equity holders.
Yeah. Thanks Keisha.
In relation to the MTA and how we think about.
What is an appropriate distance, we'd like to run the capital ratio MDA. Obviously today, we came out with a new capital target.
<unk> to 14%.
And clearly at the end of the year as you saw I think we had in excess of our MTA of around 12 billion pass the catheter hotel, it's about a 400 basis points tougher to MDA.
So the new targets that we've given out reflects a couple of things. Obviously April reflects the capital generative capacity the bankers too shortsighted, obviously demonstrated last year and I don't think the headwinds that we've communicated that you won't have highlighted that are coming.
And you know potential movements.
W as kind of a two way and potentially alter at some stage the reintroduction into you kind of the past six months.
It's very clearly a macro stress buffer as we've seen in 2016 at the beginning of this year too so that would be in a position where that to come in when the banquet also be generating strong profits.
Having followed the bank as of now you have for quite some time now to see where our targets have been historically.
Many years six years seven years in terms of how we do that targets MTA, a huge amount of thought and we have the second half.
And then kind of framework that we used to think about distance to MDA. It's incredibly important to us we do look at it quite obviously during the crisis of law channel to the distance to Mdas, we do can fit our peers as well in terms of why they all the 13th or 14th at that target stay does is very much in line with a lot of the peers that we have.
I would just give you I guess some guidance that we think that it does give you confidence of us remaining at a prudent buffer above MDA is when we think about the headwinds and a tailwind that we have and that is reflected within the 13% to 14% target that we've given today.
Thanks for the question Robert.
Could we have the next question please operator.
The next question comes from Daniel David of Autonomous Your line is now open.
Good afternoon, and thanks for taking my questions.
Just a couple of questions on the infection risk.
The March submission deadlines with PRA could you provide any guidance as the kind of regulatory Taiwan. After March and you've previously commented that we've commenced a restructuring suddenly if he wants to mitigate infection risks.
Just wondering if you have the approvals to restructured and tunnels and also if you were to restructure with this being publicly disclosed all you would we be aware of it.
Just stepping back and considering a more broadly the situation how do you weigh up the benefit of the positive market sentiment would be generated from the sale in may recall versus the capital benefit I'm, specifically thinking about some of the smaller securities.
And just finally just on label.
In your previous.
I'm just thinking about studying LIBOR on the SCA synthetic LIBOR approach is this something that you would consider using and also if you did it is that kind of a timeline with which you think that you'd be able to use synthetic like before a year. After the launch or is it indefinite. Thanks.
Yeah. Thanks, Thanks for your question.
That's what we have done.
Catherine.
Certainly so in terms of your first question around.
Section risk.
I think the story is very good and I'm afraid that's what you've heard from us before which is.
We have quite a modest amount of securities.
And that's more than they were before because of the seven and five and then we did in December or about $3 fit in at the end of this year, I mean, 91, and a half baked in at the end of 2022, and obviously that is really quite small when you consider the 100 billion of Enbrel outstanding. So I do think that we are in a well and are in a good position.
When you think about.
The ability to.
FX or the impediment to resolution as you know these legacy Securities just one element of the bank of England look back.
So I think our position is pretty good we got a lot of work across all of the resolve ability attachments with the bank of England looks at.
It's probably and we don't see clearly what the bank of England is also looking at in terms of that considerations around flexibility of payments the level of subordination provisions.
Or non U K law.
At this stage.
Obviously, you submitted a response to the March 31 deadline, and there's no real guidance from.
At the moment in terms of where things go.
In terms of getting feedback and clearly any decision that the bank of England may take them. So.
I guess, we obviously know the extent on a timeline that's been in place for many many years and we'll just wait for feedback from the bank of England on that.
So in terms of your.
Second question can you just repeat it again and then we'll get onto the synthetic starting LIBOR I just didn't quite catch your second question on.
Regulatory treatment I think it was.
Sorry, just on the internal 80 ones or on just the benefit of market for that.
So should that be any need to restructure or change the terms of in China Securities you would already potentially see them. If there are securities issued by in the writing company accounts.
So that would be.
It can be agony.
And then on Sterling synthetic viable it wasn't part of a consent solicitation in terms of its securities in December.
I don't know if you'll have shrunk on new ones.
But when you were out without your ankle Daniel it's something else.
So I guess, the what what was noted in the UK.
Hopeful approach from the FCA extending potentially the license LIBOR to avoid market disruption and I guess, what we're just kind of thinking through is if you flipped or you continue to use LIBOR and synthetic approach is there a deadline for the down the line.
Let's say the synthetic local needs to be switched off or is it is it the sterling LIBOR can continue in perpetuity given that there's a new approach I'm thinking.
Relations Europeans just kind of talk with the problem.
Yes.
Mike do you want to yeah, Doug Hi, Tom Good question actually.
We.
Sure.
<unk>.
The FCA comment on top of legacy <unk>.
It would have.
Excluding lapses speech in January refers to a consultation that will come up sometime in the spring around.
And we actually would expect to pursue their sports.
How long.
Synthetic LIBOR must be wrong, if I want to guess probably longer than one year.
First comes into perpetuity, but we'll have to see how that plays out.
Thank you.
And Dan I think I'll, probably just a question I know I didn't answer was just more a question around liability management in general on some of the <unk> Securities and I think again.
Constantly look at where there may be opportunities like we did in December with the tier two seven knowhow base okay.
But certainly nothing imminent, but it's something we're obviously always do look at.
Thanks, a lot I really appreciate it.
Thank you very much.
The next question please operator.
The next question comes from Neal Shah of credit Agricole. Please go ahead.
I've got two questions. So firstly, one philosophy towards reporting.
The fact that we got in the reference rate changes I think Patrick you mentioned that five of the 12 what changed.
What's their public announcement regarding vessel with a reason why there wasn't one and we're talking with the remaining seven securities.
Can you explain what the options are.
Available to yourselves going forward.
So you're having with the PRA that's question one.
Two resulting issuing a further two to you let.
You've guided to having.
Building and three 2% is there any.
Positive impact regarding back with the rating agencies in terms of the way. They look at your stock was signed into law securities could there be any changes there. Thanks.
Thanks Neil.
You cover the I'm sure. The first question on.
Thanks for that I mean, obviously the results of the <unk>.
Contractual station were announced.
Both around the once the capacity and the first meeting as well as the ones that cash in terms middle of January we have released.
Requisite rns was at the time, we can start to get come through.
Of course in terms of securities actually becoming.
Mid swap Sonya box, we need first starting LIBOR to be discontinued.
You're back to happen for it to become effective if you will.
So if that's what you're referring to that of course is still waiting for the FDA.
Non represented this or the cessation of announcements but.
Fact remains that investors.
To us making that change.
With regards to low sevens.
Yes.
I think it's important to underline that.
We feel very strongly about the nature of the exercise that we have proposed to investors it.
It was a fair and transparent restructured eggs.
Exercise.
With no value transfer from one side to the other.
Importantly, I think it follows in the Austrian regulatory guidelines.
Stage, we don't think so.
Or a requirement for trying this again or really changing anything around.
And then.
David asked earlier.
If anything as Sterling LIBOR linked I think we will have to look at whether.
It would count as.
Legacy is something is solid.
That is not under U S law.
U S.
Solution will not help us so we're going to have to see what happens in terms of synthetic dollar LIBOR.
Finally, I'll remind you that all of this I can just have some formal feedback.
Quick on older style, often resort to our the last six weeks or first fixing but there is something in there we're going to have to watch developments in terms of where that ends up.
And.
In terms of your question regarding any additional benefit that we might get in terms of.
Tier two issuance that we indicated.
It is in the call that in the Q&A with the rating agencies, obviously, we do for each of the agencies look at our key metrics LG Act.
T J D.
And so when we do have the all the discussions with the rating agencies clearly issuance plans do reflect where.
Where do we sit on each of these metrics and how we see them evolving.
I think they are reflected in the 8 billion number which as I said. It does include tier two but I don't think it's a material driver for us in terms of issuing.
Here too and obviously just in terms of ratings, we do spend a lot of time with the agencies.
As we said, we do feel that the racing for us on a good trajectory certainly on a relative basis, we feel very good and if you've had on the equity call. This fixed income pool, we do feel that we have demonstrated very good financial performance given the diversification of the group.
It does deliver several credit positives.
It's an area that we are certainly spending a lot of time in but.
In terms of tier two issuance that it's not really a racing driver behind it in any material side.
Thank you very much that's very helpful.
Thanks, very much Neil.
Our price because we have any further questions.
As a reminder, if you wish to ask a question. Please press star followed by one on your telephone keypad now.
We currently have no further questions, so I'll hand back to shop.
Well. Thank you very much everybody I hope you found this call helpful and I'm sure.
The team will get a chance to legacy <unk>.
Thank you again.
Yeah.
Ladies and gentlemen, this does conclude today's call. Thank you for joining you may now disconnect your lines.
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