This is a promise much like the idea of the global financial institutions saying they were ending proprietary trading.
Yes, the tax unit will go away. However, that doesn't mean that the its human resources will not be allocated to other departments where they will continue to engage in similar activities.
Regular readers know that the large global financial institutions have literally thousands of subsidiaries which exist for the sole purpose of regulatory and tax arbitrage.
There is no reason to believe that Barclays has truly exited the tax deferral business until such time as it provides ultra transparency and discloses on an ongoing basis its current global asset, liability and off-balance sheet exposure details. This includes the details of each of these thousand of subsidiaries.
It is only with this information that market participants can confirm that Barclays has exited the tax deferral business.
In the absence of ultra transparency, Mr. Jenkins announcement is just rhetoric.
The new chief executive of Barclays is to close the bank's controversial tax avoidance unit in a bid to repair its battered reputation, although he still risks inflaming the row over City pay by paying out up to £2bn in bonuses.
Antony Jenkins ... will announce on Tuesday that the tax planning part of the structured capital markets (SCM) division – which has been accused of orchestrating tax avoidance on an "industrial scale" and has generated vast profits for the bank – is to be axed.
The tax planning operation is one of several areas that have put been under review by Jenkins to assess if the bank's businesses are ethical and not just profitable.
While Barclays will continue to offer straightforward tax planning to customers, it will pledge to no longer devise schemes purely intended for this purpose....Rhetoric.
The existence of SCM has long been controversial, including rumoured £40m pay deals for former bosses, and reports from insiders about tough management styles and odd rituals.
Lord Lawson, the former Tory chancellor, and Labour peer Lord McFall have repeatedly raised the existence of the division when Barclays witnesses have appeared before the Banking Standards Commission, set up after the Libor scandal in June.
McFall has cited reports from insiders – disputed by the bank – that the division had generated 110% of the bank's profits.
When Jenkins appeared before the commission last week, Lawson accused the bank of engaging in "industrial scale" tax avoidance that while legal was unethical....Which suggests that closing the tax unit is good PR.
Jenkins will admit that some parts of the business were engaging solely in devising tax schemes.
"There are some areas that relied on sophisticated and complex structures, where transactions were carried out with the primary objective of accessing the tax benefits," he will say.
"We will not engage in it again," he will say, because it is "incompatible" with a new commitment to pay tax.
But he will insist that some areas are "not controversial" because they delivered "value as part of real client transactions".The loophole through which Barclays gets to carry on as before and confirms that closing the tax unit is all about PR/rhetoric and has no real economic substance.