Barclays to axe 2,000 jobs and shut tax unit

Jenkins will set out 'fundamentally new approach for a new era'. Picture: Reuters
Jenkins will set out 'fundamentally new approach for a new era'. Picture: Reuters
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ANTONY Jenkins will attempt to break from Barclays’ scandal-hit past tomorrow by announcing the closure of its tax avoidance unit and the cull of around 2,000 investment banking jobs.

The moves – due to be unveiled alongside the bank’s full-year results – are part of a drive by the group’s new chief executive to “shred” the legacy left by former boss Bob Diamond, who quit after the bank’s £290 million Libor-rigging settlement last year.

It is understood about 10 per cent of the 23,000 staff at Barclays’ investment banking division will be axed, while Jenkins will also close the group’s structured capital markets division, which gained notoriety for its advice to larger companies on reducing their tax bills.

Multinationals including Amazon and Starbucks have been criticised over their tax affairs in recent months, and yesterday Associated British Foods (ABF), owner of Twinings tea and discount clothing chain Primark, was accused of depriving one of the world’s poorest countries of millions of pounds in tax revenues.

ActionAid said ABF had paid “virtually no corporate tax” in Zambia, where about 60 per cent of the population lives in poverty. ABF rejected the claim, accusing the charity of publishing a “highly inflammatory” account of its tax position that is “incomplete at best and factually wrong in places”.

Barclays’ 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”.

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 said he wanted the business to combine its “excellent” retail banking operations with a “high-quality” investment bank, including a strong international presence in growing markets.

The Libor-rigging scandal and provisions to cover mis-selling claims for payment protection insurance and interest rate swap products mean bottom-line profits are expected to slump from £5.9 billion in 2011 to below £1bn.

Stripping out one-off factors, analysts at Shore Capital expect profits of £7.2bn, up from £5.6bn a year ago, with more than half of this expected to come from its investment banking division.