Barclays boss bids to clean up image

British bank Barclays is to close a profitable but controversial tax advisory business as part of an attempt by its new chief executive to clean up the bank’s image.

Antony Jenkins will announce tomorrow that the bank is closing the structured capital markets business unit. He had already indicated it would go or be scaled back as he ends activities that could cause reputational damage.

“The old ways weren’t the right way to behave nor did they deliver the right results — for banks themselves or for wider society ... banks that fail to change will become failing banks,” Mr Jenkins says in the draft of a speech which lays out his future strategy. Extracts of the text were provided by the bank yesterday.

Structured capital markets have long been controversial, but have also delivered hundreds of million of pounds in profits.

Nigel Lawson, the former Conservative finance minister and member of a current parliamentary banking inquiry, said last week lawmakers had been told privately that structured capital markets made annual profits in the “high hundreds of millions” of pounds and sometimes £1 billion. But Barclays chairman David Walker told him the scale of the business was “much smaller than suggested”.

Mr Jenkins is expected to say tomorrow that many of the bank’s tax services are not controversial and it will continue those.

However, in some areas “transactions were carried out with the primary objective of accessing the tax benefits”, he said.

He is also expected to unveil plans to boost profitability by slashing costs, which could see 2,000 investment bank jobs axed. A large part of his speech is due to be about improving standards after a series of scandals.