(Bloomberg) -- Barclays Plc’s cull of traders includes several senior members of an equities business that profits by exploiting gaps in tax laws.
Sadat Mannan, head of the Delta-1 Strategic business in London, has left Barclays after about two decades along with Renaud Isman and Premkumar Vadiveloo, people familiar with the matter said. The unit arranges trades that profit by avoiding taxes on dividends and has generated about 10% of the bank’s equities revenue in the past, Bloomberg reported in May.
Chief Executive Officer Jes Staley is clamping down on costs as he seeks to achieve key profitability targets in 2020, a year that he has predicted will be “more challenging.” Trading desks that target dividend-tax laws, meanwhile, have also found it harder to turn a profit as governments close off the loopholes that enable them.
Ellie Austin, a spokeswoman for Barclays in London, declined to comment. The three traders either didn’t comment or didn’t immediately respond to requests for comment.
Mannan joined Barclays in 2001 and later became a key executive in the Structured Capital Markets division, which arranged complex tax-avoidance transactions. Isman joined the bank in 2003 and also worked at the SCM business while Vadiveloo joined around 2008, U.K. records show.
The SCM division later attracted much public criticism –- one U.K. lawmaker described its activities as “industrial-scale tax avoidance” –- and Staley’s predecessor Antony Jenkins shuttered it in 2013. Yet remnants of the SCM business endured at Delta-1 Strategic, making some executives uncomfortable, Bloomberg reported last year.
Delta-1 Strategic uses a practice known as dividend arbitrage, which targets anomalies in the withholding taxes on payments made to shareholders. While proponents of the trades say they’re a legal way for investors to boost returns, critics have questioned the industry’s costs to taxpayers.
Isman is based in Singapore while Vadiveloo trades from Tokyo, according to their LinkedIn profiles. Mannan is based in London.
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