THE ORIGIN OF BARCLAYS BANK Barclays is a legendary word in the financial world in Europe and America.

Of late it is becoming a household name in the rest of the world especially Asia and Africa and Latin America. It is the 18th largest firm in the world as regards assets, financial service provider and ranks 15th in the banking industry calculating market capitalization. In UK it is the third largest bank. The headquarters of the bank are in London.

(Fig: Barclays headquarters in London) The Barclays story unfolded in the murky streets of 17th century London. In 1690 John Freame and Thomas Gould set up their business as goldsmith bankers in Lombard Street, London In 1736 James Barclay, the son-in-law of Freame became a partner. In 1864 a new building for the bank was built on Lombard Street. In 1896 a big stride was taken when Barclays teamed up with 19 different banking bodies to form a joint stock bank by the name of Barclay and Company Ltd. It branched off into 82 locations having a respectable deposit of 26 million pounds. The bank because of certain connections often came to be referred to as the Quaker Bank.

Meanwhile with each passing year more and more mergers took place. In 1925 Barclays Bank began international operations by merging with Colonial Bank, Anglo Egyptian Bank and National Bank of South Africa. In 1961 it opened its first computer branch on Drummond Street, London. The first credit card in UK was introduced by Barclays in 1966. In 1972 Barclays was the first bank to make use of television advertising. Today UK it has innumerable branches on high streets and of late it has teamed up with Post Office Ltd to expand personal banking services in the field of secured or unsecured loans. Most of the Barclay Bank branches have round the clock ATM services where cards from other banks can be used without paying extra charges. Barclay is a part of the Global ATM Alliance. From 2004 Barclays has been sponsoring the Premier League (football) as also the Churchill cup from 2006. From 1987 it has sponsored the Football League till 1993. International Expansion in the 1910s and 1920s After Barclays's expansionist phase ended, Goodenough(the secretary till 1917 and then the chairman until his death in 1934) turned his attention to international banking operations. Barclays's first international venture took place in 1914 when it established its French subsidiary, Cox & Company. Goodenough had a vision of a network of Barclays banks spanning the globe to the greater glory of the British Empire. As early as 1916, he started preparations for worldwide banking by acquiring the shares of the Colonial Bank, established in 1836 to provide banking services in the West Indies and British Guiana. The Colonial Bank's charter was extended by special legislation to British West Africa in 1916 and then worldwide in 1917. Immediately after World War I, Goodenough began negotiations with the National Bank of South Africa Ltd. and the Anglo-Egyptian D.C.O., operating in the Mediterranean. Despite the opposition from the Bank of England, which feared Barclays would become overextended, Goodenough engineered the 1925 merger of the two banks with the Colonial to form Barclays Bank (Dominion, Colonial & Overseas), later renamed Barclays Bank (D.C.O.). Although Goodenough never realized his dream of establishing banks throughout the British Empire, for decades Barclays was the only British bank to combine domestic business with a widely dispersed international branch network.

A contemporary of Goodenough's speculated that the chairman became interested in expanding Barclays's international operations because domestic growth was very limited. Despite this stagnation and later the Great Depression, Goodenough's plan did not result in a disastrous overextension of the bank's assets. Barclays survived the Great Depression relatively intact to take its place as a leading wartime financier. Goodenough died in 1934 and was replaced by William Favill Tuke, who was in turn replaced in 1936 by Edwin Fisher. Fisher saw Barclays through the boom years of World War II. When Fisher died in 1947, he was replaced by William Macnamara Goodenough. In 1951, Anthony William Tuke, the son of William Favill Tuke, became chairman following William Goodenough's retirement that year. A. W. Tuke was essentially conservative but encouraged innovations, even those he personally disliked, which were potentially beneficial to the bank. Under Tuke's leadership, Barclays became Britain's largest bank, surpassing the Midland Bank in the late 1950s. Barclays was also a leader in introducing new banking technology: Barclays was the first British bank to use a computer in its branch accounting, in 1959; introduced the world's first automatic cash-dispensing machine; and started a plastic revolution in Britain by introducing the Barclaycard in 1966. Entered U.S. Market in 1965 In the late 1960s and early 1970s, when most competitors were struggling to establish international operations, Barclays enjoyed an enormous head start, since its operations in former British colonies in Africa and the Caribbean were well-established. The economies of many of these countries, however, were precarious. To offset its high exposure in developing countries, Barclays decided to enter the U.S. market. It first established Barclays Bank of California in 1965, and then in 1971 formed Barclays Bank of New York. Together these two banks gave Barclays the unique advantage of having retail banking operations on both U.S. coasts. Another advantage Barclays enjoyed was an exemption from 1978 legislation barring foreign banks from operating branches in more than one state. In 1967 British banking authorities clarified their position on domestic mergers. The National Board for Prices and Incomes stated that mergers would be allowed to rationalize existing

networks and that further reduction in the number of independent banks would not be viewed as inherently anticompetitive. Barclays quickly took advantage of the change in policy by merging with the venerable Martins Bank, in November 1968. Martins Bank began as the Bank of Liverpool in 1831 and had merged with more than 30 smaller banks by the time it was acquired by Barclays. The most important of these mergers was with Martin's Bank of London, founded by Sir Thomas Gresham, chief financial adviser to Elizabeth I and founder of the Royal Exchange. The merger with Martins Bank, the sixth-largest in the country, brought Barclays more than 700 branches, mostly in northern England. In 1973 A. W. Tuke was succeeded as chairman by Anthony Favill Tuke, William F. Tuke's grandson. A. F. Tuke served until 1981, when he left Barclays to operate a British mining company. His tenure was most notable for Barclays's expansion in North America. In May 1974 Barclays Bank International acquired the First Westchester National Bank of New Rochelle, New York. In the late 1970s, Barclays opened a series of branches and agencies in major U.S. cities. By 1986 North American operations had extended to 37 states. In the early 1980s Barclays Bank International diversified into commercial credit, acquiring the American Credit Corporation, renamed Barclays American Corporation (BAC), in May 1980. Later that year BAC acquired 138 offices from subsidiaries of Beneficial Finance and the operations of Aetna Business Credit Inc. Restructuring in Early 1980s In June 1981 Timothy Bevan became chairman of Barclays and immediately, with the assistance of United Kingdom Chairman Deryk Weyer, set about restructuring domestic operations. The system of local control initiated by F. C. Goodenough had become outdated as the bank expanded and diversified. Senior managers' responsibilities were not clearly defined, and, although technically higher in authority than regional bank directors, in practice the senior managers were subject to the regional officials' control as board members. Moreover, the original structure of the company tended to produce dynasties. Weyer's strategy was to establish three basic divisions to represent Barclays's most important markets--the large corporate market, the middle market of small- to medium-sized businesses, and the traditional individual-customer and mass-consumer market. Bevan and Weyer moved cautiously, however, avoiding wholesale

reorganization of the company so that the relationships of local managers with large customers were not disrupted. Further changes in the structure of the company followed. Barclays had converted from a jointstock bank to a public limited company in 1981, and it assumed its present name in 1984. In 1985 Barclays became a holding company and all of its assets were transferred, in exchange for stock, to its operating subsidiary, Barclays Bank International Ltd., which was simultaneously converted to a public limited company and renamed Barclays Bank PLC. In 1986 Barclays acquired Visa's traveler's check operation, becoming the third-largest issuer in the world with 14 percent of the market. That same year, in preparation for the deregulation of the British securities market, Barclays Merchant Bank Ltd. de Zoete and Bevan and Wedd Durlacher Morduant & Company merged to form Barclays de Zoete Wedd (BZW), a new investment-banking enterprise. Faced Challenging Environment in Late 1980s Chairman John Quinton, appointed in May 1987, faced a number of challenges in the late 1980s. Domestic banking had always been Barclays's strength, but the bank faced increasing competition. National Westminster Bank edged out Barclays in assets. The building societies, by offering high interest on savings, threatened the bank's traditional deposit base. Finally, American and Japanese banks entered the commercial-lending market and began to pose a threat to British banks. Barclays fought back with two formidable money-generating enterprises, Mercantile Credit and the Barclaycard, which generated about 20 percent of Barclays's domestic profits. The bank also continued to rationalize its branches to better serve the three major banking-service markets. In addition, Barclays planned to spend more than 500 million on technological advances, including the introduction of the first electronic debit card in the United Kingdom. Barclays's future in international banking was less certain. It was dealt a number of setbacks in the late 1980s. In 1986 Barclays divested its 148-year-old, wholly owned South African subsidiary, Barclays National Bank (Barat), in response to a disastrous drop in the subsidiary's earnings from 1984 to 1986 and to losses in the lucrative student market in Britain as Barclays's

presence in South Africa became more unpopular at home. Also, the steady deterioration of African economies posed a hazard because the bank's African involvement was so heavy. Barclays decreased its African investments where possible, but had difficulties in removing profits and proceeds from Africa. In addition, Barclays's Hong Kong and Italian operations both suffered large losses in the 1980s, and the performance of Barclays's American operations was consistently disappointing. In the early 1980s, Barclays expanded very rapidly and tried to build earnings quickly through an aggressive lending policy. As a result, branches picked up a large volume of low-quality loans. Bad-debt ratios were very high, costs were difficult to control, and American operations only started to show a profit in the late 1980s (only 4 percent of Barclays's profits were from U.S. operations, while 15 percent of the bank's assets were invested there). As a result, Barclays began offering specialized services in the United States in an attempt to improve its position there. Nevertheless, after years of trying to make it profitable, Barclays sold its California banking subsidiary in 1988 to Wells Fargo. And the following year, Barclays sold its U.S. consumer finance unit to Primerica (later known as Travelers). On the positive side, Barclays's investment-banking operations showed promise. BZW expanded its operations by purchasing 50 percent of Mears and Phillips, an Australian brokerage firm. Barclays also formed a new bank in Geneva, Barclays Bank S.A., to develop capital markets with BZW.