Roger Jenkins, formerly of Barclays, is very rich. Not only was Jenkins allocated a £25m ($31m) bonus for his part in arranging the controversial Qatari financing for Barclays after the financial crisis, but he reportedly made up to £40m a year during his long tenure as head of Barclays' equally controversial and extremely profitable structured capital markets (tax structuring) group. Structured capital markets was closed in 2013 after public disapproval of its activities, but Bloomberg today claims that it lives on in a slightly different guise, and suggests that people working in the area are still paid very well indeed.
Bloomberg claims that vestiges of the old structured capital markets business are now to be found in a Barclays business known as Delta-1 Strategic, run by Sadat Mannan, a structured capital markets veteran. Delta-1 Strategic may be generating up to 10% of Barclays' stock trading revenues and could have made up to $252m in Europe in 2018, says Bloomberg.
Barclays isn't commenting on the claims, but insiders tell us it's not just Delta-1 strategic that has taken over some of the business of Barclays' structured capital markets business, but the broader 'Equity Solutions Group.' This is said to be run by the likes of Manann, plus financing specialist David Lohius, leverage solutions and Delta One managing director Florian Huber, and head of the European equity finance business Mark Newton.
If the equity solutions group is indeed as profitable as the structured capital markets group then Newton, Huber, Lohius and Manann are likely to be among the 16 people at Barclays who were paid in excess of £5m in last year's bonus round.
"A lot of the staff from the structured capital markets business retained their jobs and moved into the equity solutions group," claims one Barclays insider.
Manann has worked for Barclays since 2001 after graduating from the London School of Economics. Lohius joined from Lehman Brothers in 2008. Newton came from Citi in 2009. And Huber joined from Lehman in 2008.
The structured capital markets business was widely disparaged for its entirely legal practice of structuring complex cross-border deals to generate tax credits and use loopholes in international tax law. In 2013, the Guardian said the unit was known for its wild parties and claimed that a secretary was fired for, 'booking an executive a taxi that was a Volvo rather than an S class Mercedes.'
While there's no suggestion that these practices are back, Bloomberg says the Delta 1 desk is using dividend arbitrage to arrange deals that generate profit by lowering taxes on dividends. Traders are reportedly based in London, Luxembourg and Tokyo and the success of the unit is mooted as one reason why Barclays' tiny Luxembourg business made a profit of £291m in 2017.
Barclays' insiders suggest the endurance of the structured tax business is being exaggerated. "We closed SCM in 2013 and the rest of the business was dispersed across our markets business," says one. "We have an equities finance business and it needs to hold inventory. We hold it year round including across divi date. So there will be complex jurisdictional challenges to managing that inventory including how we lend it." He adds that this is all done in compliance with Barclays' very clear tax principles.
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