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View the article online at http://citywire.co.uk/wealth-manager/article/a657932

Barclays to shut controversial tax arm & axe 2,000 ‘casino’ bank jobs

by Dylan Lobo on Feb 11, 2013 at 07:36

Barclays to shut controversial tax arm & axe 2,000 ‘casino’ bank jobs

Barclays is expected to axe 2,000 jobs from its 'casino' investment banking arm and shut a controversial tax unit as part of its ‘Transform’ programme.

According to the Sunday Times, new boss Antony Jenkins the bank will unveil the plans on Tuesday as he delivers his first set of annual results as chief executive of the bank.   

The cuts will see 10% of its investment banking staff force go.

At the same time Jenkins is expected to sanction the closure of its Structured Capital Markets division, which was subject of public anger after it emerged it was saving multinationals millions in tax bills.

The division was once one of the most profitable for Barclays earning £1 billion a year with it architect Roger Jenkins on a £40 million pay packet.

Jenkins left the bank in 2009. At the start of 2011 former Barclays chief Bob Diamond was grilled by the Treasury Select Committee in which he admitted SCM controlled around 300 subsidiaries which operated nearly 300 subsidiaries in tax havens.

The backlash intensified when he revealed the unit had only paid £133 million in corporation tax in a year in which it paid out £3.4 billion in bonuses.

Barclays has been on a crusade to revive its reputation since it was hit with a massive £290 million fine last summer for manipulating Libor.

Its reputation took a fresh hit earlier this month when it said it had set aside another £600 million to cover the mis-selling of payment protection insurance and a further £400 million to cover interest rate hedged products, increasing the provision to cover the scandals to £2.6 billion and £850 million respectively.

To make matters worse an investigation by Panorama, scheduled to be aired tonight, is expected to reveal the bank tricked investors into believing a £3 billion investment in 2008 came from Manchester City owner Sheikh Mansour.

The BBC programme will claim the money, which helped Barclays avoid a taxpayer bailout, actually came from the Abu Dhabi government. If proved true, this would mean the bank has broken anti-corruption laws.  

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