Barclays to shrink tax advisory unit in reputational clean up

Barclays is to shrink its tax structuring unit as new chief executive Anthony Jenkins pledges to clean up the bank’s image.

The business, which is known as the structured capital markets unit, made up to three-quarters of profits at Barclays’ investment banking operation at its peak, according to reports.

In a call with investors yesterday, Barclays investment banking chief Rich Ricci said the bank would review what products and services it no longer deemed “appropriate to do business” in.

The Financial Times reports Ricci as saying: “We have to take a fresh look to see if there are products and services in which … we no longer deem it appropriate to do business, regardless of financial return.

“For example, elements of our tax advisory business have generated negative media and political attention.”

Ricci also said the bank was likely to withdraw from selling derivatives to consumers and small businesses, following an industry-wide scandal over the misselling of interest rate swaps to SMEs.

The FT reports on the same call to investors, Jenkins reaffirmed its commitment to investment banking but said ethical behaviour would be the priority in the future.

He said: “Our ability to build a franchise over time depends on our reputation.”

In July, chief executive Bob Diamond and chairman Marcus Agius resigned over the Libor-rigging scandal which saw the bank fined £290m by the FSA and US authorities after it admitted that derivative traders manipulated Libor. Anthony Jenkins, head of the bank’s retail and business banking operations, replaced Diamond as chief executive at the end of last month.