SEC Comment Letter for BARCLAYS (BCS) — Feb 10, 2011
BARCLAYS PLC
Date: Feb. 10, 2011 · CIK: 0000312069 · Accession: 0000000000-11-009001
AI Filing Summary & Sentiment
File numbers found in text: 001-09246
Referenced dates: December 22, 2010, September 8, 2010
Letter
February 10, 2011
Chris Lucas Group Finance Director Barclays PLC 1 Churchill Place London E14 5HP, England Re: Barclays PLC Form 20-F Filed March 19, 2010 File No. 001-09246 Dear Mr. Lucas: We have reviewed your filing and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to this letter within ten business days by amending your filing, by providing the requested information, including a draft of your proposed disclosures to be made in future filings or by advising us when you will prov ide the requested response, as is appropriate for each comment listed below. If you do not be lieve our comments apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response.
After reviewing any amendment to your filing and the information you provide in response to these comments, we ma y have additional comments.
Form 20-F for the fiscal year ended December 31, 2009
General 1. We note your response to prior comment 1 in our letter dated December 22, 2010. We do not agree with your conclusion that the opinions filed as Exhibits 5.1 and 5.2 to your shelf registration statement satisfy the exhibit requi rement applicable to a shelf registration statement on Form F-3 in the context of a medium-term note program. Accordingly, please file clean legal opinions in connection with any takedowns from your shelf registration statement. Alternatively, you may amend your registration statement to file clean legal opinions that cover future takedowns. See S ecurities Act Rules Compliance and Disclosure Interpretation 212.05 and Securities Act Forms Compliance and Disclosure Interpretation 118.02.
Chris Lucas Barclays PLC February 10, 2011 Page 2
Section 1. Business Review
Risk Management Credit Risk Management Barclays Capital Credit Market Exposures D. Protium, page 90 2. We note your responses to prior comment 3 to our letter dated December 22, 2010 and prior comment 7 to our letter dated September 8, 2010 regarding the Protium transaction. Please respond to the following additional comments: a. Your response indicates that the expected future cash flows significantly exceeds the asset fair values as the asset fair values were significantly impacted by non-cash flow factors, such as market liquidity. Tell us w ho would absorb the major ity of the variability in cash flows if the cash flows were act ually less than the asset fair values.
b. Your response indicates that 83% of the estimated variability resided with the third party investors and fund management team, with 17% impacting on Barclays. However, the transfer of risks and rewards under IAS 39 is evaluated by comparing an entity’s exposure both before and afte r the transfer. Thus, please provide your analysis that compares your variability in the cash flows bot h before and after the transfer pursuant to the guidance in par. 21 of IAS 39.
c. Your response indicates that after the transfer, Barclays maintains 17% of the estimated variability of the cash flows. We note that par. 21 of IAS 39 indicates that an entity has transferred substantially all th e risks and rewards of ownershi p of a financial asset if its exposure to such variability is no longer signif icant in relation to th e total variability in the present value of the future net cash flows a ssociated with the financial asset. Please provide your analysis supporting your conclusion that 17% of the estimated variability is not significant. d. Tell us whether you believe a transferor that retains all of the risks of a transferred financial asset, but not all of the rewards, has retained subs tantially all of the risks and rewards of ownership of a financial asset.
e. Tell us whether you believe you have retained su bstantially all of the risks of the assets transferred to Protium. Please ensure your response addresses th e fact that only $520,000 of Notes issued by Protium rank junior to the Barclays loan.
f. Tell us why the interest rate on the Class A notes, which rank se nior to the Barclays loan, is 27% per annum for the first five year s and 7% thereafter, and only LIBOR + 2.75 (approximately 4%) for the Barclays loan. g. Tell us the nature of the creditor rights he ld by Barclays over activities that Protium may take with respect to the assets held. For ex ample, tell us whether there are limits on the
Chris Lucas Barclays PLC February 10, 2011 Page 3
amount of loss that Protium can recognize on disposal of the asse t (versus holding the asset) as well as any other creditor rights that exist. h. Your response indicates that limitations on the activities of Protium, for example size and concentration limits on the Actively Manage d Account (AMA), are not significant. Please provide further information regarding you r conclusion that the limitations are not significant. As part of your response, please tell us the cu rrent balance of the AMA and tell us whether Protium has raised any th ird party financing to further increase its activities. i. Please clarify whether the assets held in the AMA also serve as collateral for the Barclays loan. j. Please provide additional background regardi ng your discussions with the FSA and the fact that the loan would be subject to fixed risk weights, as opposed to the underlying assets of Protium. Section 3. Financial Statements
Consolidated Income Statement, page 178
3. We note your response to prior comment 4 to our letter dated December 22, 2010 regarding the title “net income” on the income statemen t. The staff does not disagree with your conclusion that “profit before tax” is the prim ary measure of profit or loss and one that is well understood. However, the staff continues to be lieve that the title “net income,” which is shown prior to the inclusion of most operating expenses, may be confusing to some readers, and the practice does not appear to be widespr ead in the industry. T hus, please consider re- naming the title of this line item to be more descriptive of the measure that reflects income prior to most operating expenses.
You may contact David Irving at (202) 551-3321 or Sharon Blume at (202) 551-3474 if you have questions regarding comments on the fina ncial statements and related matters. Please contact Eric Envall at (202) 551-3234 or me at (202) 551-3366 with any other questions.
Sincerely,
Michael Seaman Special Counsel
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February 10, 2011 Chris Lucas Group Finance Director Barclays PLC 1 Churchill Place London E14 5HP, England Re: Barclays PLC Form 20-F Filed March 19, 2010 File No. 001-09246 Dear Mr. Lucas: We have reviewed your filing and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to this letter within ten business days by amending your filing, by providing the requested information, including a draft of your proposed disclosures to be made in future filings or by advising us when you will prov ide the requested response, as is appropriate for each comment listed below. If you do not be lieve our comments apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response. After reviewing any amendment to your filing and the information you provide in response to these comments, we ma y have additional comments. Form 20-F for the fiscal year ended December 31, 2009 General 1. We note your response to prior comment 1 in our letter dated December 22, 2010. We do not agree with your conclusion that the opinions filed as Exhibits 5.1 and 5.2 to your shelf registration statement satisfy the exhibit requi rement applicable to a shelf registration statement on Form F-3 in the context of a medium-term note program. Accordingly, please file clean legal opinions in connection with any takedowns from your shelf registration statement. Alternatively, you may amend your registration statement to file clean legal opinions that cover future takedowns. See S ecurities Act Rules Compliance and Disclosure Interpretation 212.05 and Securities Act Forms Compliance and Disclosure Interpretation 118.02. Chris Lucas Barclays PLC February 10, 2011 Page 2 Section 1. Business Review Risk Management Credit Risk Management Barclays Capital Credit Market Exposures D. Protium, page 90 2. We note your responses to prior comment 3 to our letter dated December 22, 2010 and prior comment 7 to our letter dated September 8, 2010 regarding the Protium transaction. Please respond to the following additional comments: a. Your response indicates that the expected future cash flows significantly exceeds the asset fair values as the asset fair values were significantly impacted by non-cash flow factors, such as market liquidity. Tell us w ho would absorb the major ity of the variability in cash flows if the cash flows were act ually less than the asset fair values. b. Your response indicates that 83% of the estimated variability resided with the third party investors and fund management team, with 17% impacting on Barclays. However, the transfer of risks and rewards under IAS 39 is evaluated by comparing an entity’s exposure both before and afte r the transfer. Thus, please provide your analysis that compares your variability in the cash flows bot h before and after the transfer pursuant to the guidance in par. 21 of IAS 39. c. Your response indicates that after the transfer, Barclays maintains 17% of the estimated variability of the cash flows. We note that par. 21 of IAS 39 indicates that an entity has transferred substantially all th e risks and rewards of ownershi p of a financial asset if its exposure to such variability is no longer signif icant in relation to th e total variability in the present value of the future net cash flows a ssociated with the financial asset. Please provide your analysis supporting your conclusion that 17% of the estimated variability is not significant. d. Tell us whether you believe a transferor that retains all of the risks of a transferred financial asset, but not all of the rewards, has retained subs tantially all of the risks and rewards of ownership of a financial asset. e. Tell us whether you believe you have retained su bstantially all of the risks of the assets transferred to Protium. Please ensure your response addresses th e fact that only $520,000 of Notes issued by Protium rank junior to the Barclays loan. f. Tell us why the interest rate on the Class A notes, which rank se nior to the Barclays loan, is 27% per annum for the first five year s and 7% thereafter, and only LIBOR + 2.75 (approximately 4%) for the Barclays loan. g. Tell us the nature of the creditor rights he ld by Barclays over activities that Protium may take with respect to the assets held. For ex ample, tell us whether there are limits on the Chris Lucas Barclays PLC February 10, 2011 Page 3 amount of loss that Protium can recognize on disposal of the asse t (versus holding the asset) as well as any other creditor rights that exist. h. Your response indicates that limitations on the activities of Protium, for example size and concentration limits on the Actively Manage d Account (AMA), are not significant. Please provide further information regarding you r conclusion that the limitations are not significant. As part of your response, please tell us the cu rrent balance of the AMA and tell us whether Protium has raised any th ird party financing to further increase its activities. i. Please clarify whether the assets held in the AMA also serve as collateral for the Barclays loan. j. Please provide additional background regardi ng your discussions with the FSA and the fact that the loan would be subject to fixed risk weights, as opposed to the underlying assets of Protium. Section 3. Financial Statements Consolidated Income Statement, page 178 3. We note your response to prior comment 4 to our letter dated December 22, 2010 regarding the title “net income” on the income statemen t. The staff does not disagree with your conclusion that “profit before tax” is the prim ary measure of profit or loss and one that is well understood. However, the staff continues to be lieve that the title “net income,” which is shown prior to the inclusion of most operating expenses, may be confusing to some readers, and the practice does not appear to be widespr ead in the industry. T hus, please consider re- naming the title of this line item to be more descriptive of the measure that reflects income prior to most operating expenses. You may contact David Irving at (202) 551-3321 or Sharon Blume at (202) 551-3474 if you have questions regarding comments on the fina ncial statements and related matters. Please contact Eric Envall at (202) 551-3234 or me at (202) 551-3366 with any other questions. Sincerely, Michael Seaman Special Counsel