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Barclays to close 'tax avoidance' unit Barclays to close 'tax avoidance' unit
(about 17 hours later)
Barclays is to close down a part of its business which helped clients avoid tax, the BBC understands. Barclays is to close down a controversial part of its business which helps clients avoid tax, the BBC understands.
The bank will still help clients with their tax arrangements on transactions, but will not engage in activities where the main purpose is to avoid tax. The bank will announce that part of its Structured Capital Markets (SCM) business will be axed as part of a wide-ranging strategic review.
The move is part of a wide-ranging strategic review to be published on Tuesday. The announcement is expected alongside Barclays' full year results on Tuesday.
Full-year results - expected to be strong - will also be published that same day. The move comes as part of the bank's attempts to improve its image following a string of scandals.
'New era' Barclays was fined £290m ($450m) over the Libor-rigging scandal last year, and has set aside nearly £3.5bn to cover possible payouts related to the mis-selling of payment protection insurance (PPI) and interest rate investment products.
Barclay's Structured Capital Markets business was widely regarded as its tax avoidance unit. It is thought to have saved the bank and its clients billions of pounds over the years. 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 scandal in July.
But its closure, according to insiders, marks an important and significant break with the past, BBC industry correspondent John Moylan reports. Last week he told MPs he was "shredding" Mr Diamond's legacy at the bank.
He says the move is the first tangible outcome of a long-awaited strategic review, called Transform, which was launched in the wake of a series of scandals, including the fixing of Libor rates. Ethics focus
On Tuesday Barclay's chief executive Antony Jenkins is expected to say that the bank is changing, that the old ways were not the right way to behave, and he will call for a new approach for a new era of banking. Barclays is expect to continue helping clients with their tax arrangements, but will not engage in activities where the main purpose is to avoid tax.
Earlier this month Mr Jenkins waived his bonus for last year, saying it would be wrong for him to receive it, given what had been a "difficult" year for Barclays. "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 on Tuesday.
It is thought Mr Jenkins was in line to receive about £1m of a potential maximum entitlement of £2.75m. "Although this was legal, going forward such activity is incompatible with our purpose. We will not engage in it again."
Last summer Barclays was fined £290m ($450m) by the US and UK regulators for attempting to manipulate the inter-bank lending rate. According to insiders, the closure of the tax SCM unit marks an important and significant break with the past.
Former chancellor Lord Lawson, a member of the Parliamentary Banking Commission, last week accused Barclays of being involved in legal tax avoidance on an "industrial scale".
Barclays is also due to report the size of its bonus pool on Tuesday.
Earlier this month Mr Jenkins waived his bonus for last year, thought to be about £1m, following what he described as a "difficult" year for Barclays, and warned that others would also be cut.