Supporting individuals and small businesses

Helping homeowners

In the UK, our mortgage portfolio has grown from £69.9bn in 2007 to £107.7bn in 2011, a rise of 54%. At year end, we supported almost one million homeowners, including over 10,000 first-time buyers. Our range of re-mortgage products, Great Escape, won the Moneyfacts Innovation in Personal Financial Services Award, and is on track to help customers save up to £40m on their mortgage payments over the next two years.

We provide additional support to first-time buyers, but in a responsible manner – for example, we launched an open market 90% Loan To Value mortgage in October 2011. We are also taking part in the Newbuy Guarantee Scheme, launched by the UK Government, which aims to provide mortgages to first-time buyers of a new-build home. The scheme provides a guarantee for up to 100,000 new mortgages for new properties, and is based on Barclays ‘Perfect 10’ initiative with Bovis Homes.

While some of our mortgage customers experience difficulties with their payments from time to time, repossession is always our last resort. This approach is in line with the UK Government's Pre-Action Protocol, and our policy overall accords with the key principles of the Government’s Homeowner Mortgage Support Scheme. We also participate in other UK Government initiatives, such as the Mortgage Rescue Scheme, which brings together local authorities, lender and debt advice agencies, as well as housing associations, to help vulnerable customers stay in their homes. Our own policies allow for:

• Switching from capital and interest loans to interest only
• Short-term reductions in repayment amounts
• The longer-term restructuring of mortgage loans, either by extending the term or reducing the interest rates.

See Absa’s 2011 Integrated Annual Report for more details on our support for individuals in South Africa.

Supporting individuals in financial difficulty

We have dedicated teams trained to recognise the warning signs indicating that people may be facing financial difficulty. This enables us to intervene at an early stage, and offer our customers proactive advice on the best way to get them out of debt and back on track.

In the UK, we can help customers do this in a variety of ways, including:

• Reductions to minimum payment requirements for credit cards
• Short-term reductions in loan repayment amounts
• The short-term suspension or reduction of interest and charges on loans
• Formal repayment plans that combine lower repayments with reduced interest rates.

We recognise that customers sometimes need independent debt advice. Where appropriate, we refer such cases to organisations that provide specialised assistance. This might include free debt advice and counselling services, or the alternative sources of credit which organisations such as credit unions and community development finance institutions can provide. In 2011, our ‘Reach Out’ campaign supported colleagues in our UK branch network to connect with their local Citizens Advice Bureau and credit unions, and to look for ways to work together to assist customers.

We commissioned independent research on financial difficulty from the University of Bristol and the Money Advice Trust. Their report found that consumers facing financial difficulty benefited significantly from intervention by their lender at an early stage, not only through significant reductions in repayments and fees, but because this led to far lower levels of stress and anxiety. Most customers interviewed were able to resolve their financial issues by being given early support.

In 2011, we issued over five million new credit payment cards¹. We also provide services that support customers in managing their debt. In the US, Barclaycard launched a website that allows customers to check their level of debt, make payments online and request assistance if they are in difficulty. The site can offer reductions in customers’ interest rates and payment amounts, or help them avoid fees for late payments.

In 2012, Barclaycard US plans to roll out an online video, which customers can use to gain a better understanding of their financial position. We will also carry out online customer surveys to enable us to better help customers falling behind on payments due. If successful, it will be rolled out in other countries, including the UK.

Providing finance for small businesses

In 2011, we exceeded our commitments under the UK Government’s Project Merlin scheme by 13%, providing £14.7bn to SMEs. We completed a wide range of initiatives to support small businesses across the world, some of which will be replicated in 2012.

Performance highlights in 2011

• Delivered £45.0bn gross new lending to UK businesses and households
• Increased net lending to private non-financial companies in the UK by over 3%, compared to an industry-wide reduction in net lending of 5%
• Supported the formation of 108,000 new businesses, and the return to health of 1,900 existing businesses
• Provided business advice and support to more than 14,000 entrepreneurs through over 800 seminars in UK communities
• Responded expeditiously to the riots in UK local communities, helping businesses assess the cash-flow impact and offering temporary overdrafts

In the current economic climate the key issue for businesses, and especially SMEs, is confidence. We are working on a range of initiatives for 2012 that will help stimulate demand, and demonstrate that we are most definitely open for business. This will include advice, training, seminars and support services.

Watch a short film about businesses we’ve supported

Working with industry and government

We take part in a number of government and industry lending schemes designed to support businesses. We support small enterprises as part of the UK Business Finance Taskforce, managed by the British Bankers Association (BBA), which includes a commitment to invest up to £550m to establish a £2.5bn Business Growth Fund in collaboration with other major UK banks, as well as the establishment of a more transparent appeals process for borrowers, and clear lending principles.

The Business Finance Taskforce has also set up a network of business mentors for small businesses across the UK, supported by the Small Firms Enterprise Development Initiative. Mentors have been recruited from current and former bank employees, to give free advice and support to both start-up and existing small businesses. By the end of 2011, Barclays had recruited and trained 94 mentors, and we plan to provide a total of 200 trained mentors by July 2012.

Barclays was the first bank to launch its cash back scheme at the same time as the launch of the National Loan Guarantee Scheme (NLGS) in March 2012. Under Barclays unique scheme, SMEs who take out a loan will receive the full benefit of the NLGS discount immediately, in the form of upfront cash back. Looking ahead, we hope our product will help boost confidence and encourage more SMEs to invest in and grow their businesses. And in offering cash back, it will allow businesses to put the money to use immediately.

Supporting entrepreneurship in Africa

In Africa, Absa has established Small Business Enterprise Development Centres that provide support to start-ups and SMEs. In particular these centres:

• Help entrepreneurs develop their skills
• Facilitate access to financial products and services
• Develop sustainable and competitive SMEs through training, workshops and business information.

Absa currently has 12 Enterprise Development Centres throughout South Africa. These centres offer access to training, workshops and financial services to support start-ups and SMEs that are expanding. Our enterprise development score from the South African Department of Trade and Industry remained the same this year at a maximum of 15 points. Absa spent in excess of R900m on enterprise development, more than three times the government target of 3% of net profit after tax. We also support micro-entrepreneurs through loans and services tailored to their needs. See Absa’s 2011 Integrated Annual Report for more details.