BARCLAYS will tomorrow announce it is shutting down its controversial tax avoidance units as part of a major drive to clean up its operations and its image after a series of scandals.
Antony Jenkins became chief executive after Bob Diamond stood down in the wake of the Libor scandal, and tomorrow unveils his plans to reform the bank. A key part of his “transform” programme is to close down the Structured Capital Markets (SCM) business, despite its profitability – illustrating how serious the bank is about changing the way it operates.
“There are different components to the tax services that we have provided clients historically. Many of those are not controversial – delivering value as part of real client transactions – and we will continue to provide such services,” Jenkins will say tomorrow. “However, 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, and incompatible with the new tax principles which we are publishing today. We will not engage in it again.”
Jenkins wants bonuses and promotions to depend much more on good behaviour than they did in the past. And senior staff will have to wait longer for their bonuses, giving incentives to behave well and to work for the good of the bank as a whole.