Barclays urged to cut offshore subsidiaries

18 January 2011

A British MP has called on banking giant Barclays to reduce the number of foreign subsidiaries it holds and accused the company of committing "tax avoidance on a grand scale".

Questioning chief executive Bob Diamond as part of the Treasury Select Committee, Labour MP for Streatham Chuka Umunna implied that Barclays makes use of offshore divisions to dodge certain British levies.

"That [structured capital markets] division runs tax arbitrage for your bank, for high net worth individuals for companies, which enables you to all avoid the payment of UK tax," he told the American banker.

Mr Diamond replied that Barclays had an obligation to its clients to arrange its affairs "in the most tax-efficient way", but Mr Umunna observed that the bank's definition of "efficiency" may equate to the Treasury's definition of "avoidance".

During an appearance before the panel last week, the former Barclays Capital boss said that the time for "remorse and apology" among financial sector figures should be brought to an end.

By Asim Shah

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