Barclays is closing down a part of its controversial unit Structured Capital Markets (SCM), which was instrumental in tax avoidance of many companies, resulting in 2,000 job losses. The move marks the beginning of Barclays’ transformation process to revive its tarnished image, while trying to move away from the legacy left behind by ex-CEO Bob Diamond. The plan to axe the controversial unit will be disclosed along with its financial results to be announced on Tuesday.
The move comes amid fresh accusations that Barclays helped clients avoid tax on an ‘industrial’ scale. In a Panorama investigation which is to be aired on BBC One tonight, a former insider is believed to claim that the small team of 100 staff at the SCM would share huge rewards from the profits of tax avoidance deals.
In the strategic review chalked out by Bob Diamond’s replacement Antony Jenkins, 2,000 staff at its investment arm Barclays Capital, are likely to lose their jobs. The axed unit, SCM, was a secretive division which helped companies avoid tax through a network of offshore tax havens and was previously run by its highest-paid banker Roger Jenkins. Additionally, the notorious unit was used by Barclays itself to cut its own tax bill, which resulted in mounting pressure over ordinary households to bridge the £32 billion annual shortfall in HM Revenue & Customs’ coffers.
Since taking charge, Antony Jenkins has been seen placing more emphasis on the bank’s culture, while having issued a directive to Barclays’ staff following the disclosure of the destruction of an important report by a Wealth unit executive. The Barclays chief is likely to describe tomorrow, the activities of its tax-avoidance arm as ‘legal’ but ‘incompatible with our purpose’, pledging ‘a new approach for a new era of banking’.
Coming close to admitting the blunders, Antony Jenkins is expected to hint that in some cases the unit ‘relied on sophisticated and complex structures, where transactions were carried out with the primary objective of accessing the tax benefits’.
In his address on Tuesday, Barclays chief Antony Jenkins is expected to speak about the marked change that the bank promises in near future. “We get it. The old ways weren’t the right way to behave nor did they deliver the right results – for banks themselves or for wider society. ‘There must be a new approach for a new era of banking. Banks that fail to change will become failing banks. My message is Barclays is changing.”