Profitable Barclays unit gets the chop

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

Antony Jenkins will say on Tuesday that the bank is closing its Structured Capital Markets business unit, the bank said. He has already indicated that it would go or be scaled back as he ends activities that could damage the bank's reputation.

"The old ways weren't the right way to behave, neither did they deliver the right results - for banks themselves or for wider society.

"Banks that fail to change will become failing banks," Jenkins states in the draft of a speech to be delivered tomorrow, laying out his strategy.

Extracts from the text were released by the bank yesterday.

Structured Capital Markets has long been controversial but has delivered hundreds of million of pounds in profits.

Nigel Lawson, the former Conservative finance minister, and a member of a parliamentary banking inquiry, said last week that MPs had been told privately that the unit made annual profits in the "high hundreds of millions" of pounds.

But Barclays chairman David Walker told him the scale of the business was "much smaller than suggested".

Jenkins is expected to maintain that many of the bank's tax services are not controversial and will continue.

"However, there are some areas that relied on sophisticated and complex structures, in which transactions were carried out with the primary objective of accessing the tax benefits," he is quoted as saying.

Though these transactions were legal they are incompatible with new tax principles which the bank will publish, he says.

Jenkins is also expected to unveil plans to increase profitability by cutting some operations and slashing costs, which could lead to 2000 investment-banking jobs being axed. Much of his speech is expected to be about improving standards after a series of scandals at the bank.