Barclays tax advice unit to close
Market watch top headlines
LONDON, Feb 10 PA
February 11 2013, 03:53AM
Barclays boss Antony Jenkins will attempt to break from the bank's scandal-hit past this week by announcing the closure of its tax avoidance unit and the cull of about 2000 investment banking jobs, it has been reported.
The moves - due to be unveiled alongside the bank's annual results on Tuesday - are part of Jenkins' drive to "shred" the legacy left by former boss Bob Diamond, who quit after the bank's STG290 million ($A446 million) Libor rigging settlement last year.
According to the Sunday Times, about 10 per cent of the investment banking division's 23,000 staff will be shown the door, while Jenkins will close the Structured Capital Markets division, which gained notoriety for its advice to multinational companies on reducing their tax bills.
The review has broken the bank down into 75 business units and examined both their potential to generate sustainable profit and their ability to inflict reputational damage.
Writing in the Sunday Telegraph, Jenkins said: "Tuesday is an important day in the 320-year history of Barclays. Combined with announcements on purpose and values, our strategy review will set out a fundamentally new approach for a new era.
"It will provide a road map for long-term success and I am confident that, given time, it will show that the understandable scepticism about our commitment to real change was misplaced."
He wants the business to combine its "excellent" retail banking operations with a "high-quality" investment bank, including a strong international presence in growing markets.
However, he is expected to say on Tuesday: "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.
"Although this was legal, going forward such activity is incompatible with our purpose. We will not engage in it again."
The Libor-rigging scandal and provisions to cover mis-selling claims for payment protection insurance and interest rate swap products mean bottom-line pre-tax profits are expected to slump from 5.9 billion in 2011 to below 1 billion.
Stripping out one-off factors, analysts expect profits of STG7.18 billion for 2012, up 28 per cent on the STG5.59 billion reported in 2011, with more than half of this expected to come from its investment banking division.
Jenkins has already waived his bonus for 2012, saying it was "only right that I bear an appropriate degree of accountability" after a "very difficult" year for the group.
But Barclays is set to reveal how much its wider bonus pool is for 2012 and what it will pay staff in its investment banking arm, about 9000 of whom are based in London.
By Graeme Evans and Holly Williams