Barclays takes axe to capital markets arm in clean sweep
Barclays is to close down a controversial part of its business which helps clients avoid tax, the BBC reported yesterday.
The bank is expected today to announce part of its structured capital markets business will be axed as part of a wide-ranging strategic review.
The announcement is expected alongside Barclays' full year results due today.
Barclays chief executive Antony Jenkins has tried to place more emphasis on the ethics of the bank's practices since taking over from his predecessor Bob Diamond, who resigned in the wake of the Libor rate-rigging scandal in July.
Barclays is preparing to cut at least £2 billion (Dh11.6bn) from its annual cost base of £20bn as part of a strategic overhaul to be presented by the bank today, bank insiders and analysts told the Financial Times yesterday.
The cuts are to focus on a retrenchment from some of Barclays' investment banking operations in Asia, particularly its equities franchise, as well as a partial wind-down of retail and commercial banking in parts of Europe, such as Italy, bankers said.
Mr Jenkins' strategic review of the bank, dubbed the Transform programme, is also expected to involve 2,000 job losses in the investment banking business, the BBC said.
Barclays is expected to continue helping clients with their tax arrangements, but will not engage in activities where the main purpose is to avoid tax.
"There are some areas that relied on sophisticated and complex structures, where transactions were carried out with the primary objective of accessing the tax benefits," Mr Jenkins is expected to say today.
"Although this was legal, going forward such activity is incompatible with our purpose. We will not engage in it again." At its peak, Barclays' controversial tax structuring unit, led until 2009 by Roger Jenkins, contributed the bulk of the group's investment banking revenue.
However, the business, which specialised in often aggressive tax avoidance for clients and the bank itself, is now considered one of the main reasons for the damage done to Barclays' reputation, the FT said.
"It's not before time that it has been closed down," said Vince Cable, the UK business secretary.
"It was completely unacceptable behaviour - it should not have happened."
* with agencies
Published: February 11, 2013 04:00 AM