LONDON (AlertNet) – Campaigners on Thursday welcomed news that Barclays is considering pulling out of trading agricultural commodities but said regulation is needed to stop food price speculation.
The Financial Times website reported that the British bank is looking into withdrawing from agricultural commodities trading as part of its drive to rebuild its reputation after a series of scandals.
The FT said such a possible retreat was part of a strategic overhaul by the bank’s new chief executive, Antony Jenkins, who is screening the reputational impact of every business line Barclays operates in.
“If I decided to stop trading soft agricultural products it is not driven by regulation,” the FT quoted Rich Ricci, chief executive of corporate and investment banking, as saying.
“It is because it doesn’t sit socially well with the large constituent of our customers,” Ricci said at the Parliamentary Commission on Banking Standards on Wednesday.
Financial speculation in staple foods, such as wheat, maize and corn, fuels dramatic spikes in food prices, pushing food beyond the reach of the world’s poorest people, campaigners say.
“Barclays appears to be relying on the police force of public opinion to tell it that speculating on food prices is wrong, rather than acknowledging its own moral responsibility,” said Deborah Doane, chief executive of the World Development Movement.
“This is precisely why it is essential that strong regulation is introduced. Food speculation has devastating consequences, and (UK Finance Minister) George Osborne and fellow European finance ministers must take the lead in curbing it,” Doane added.
Barclays is the biggest UK player in the food commodity markets. Campaigners estimate that it made an estimated £500 million pounds ($802 million) from speculating on food prices in 2010 and 2011.
Several European banks have announced in the past few months that they are withdrawing vehicles that allow investors to speculate on food prices due to reputational concerns amid pressure from campaigners and politicians.
Austria’s Volksbanken in August announced that it was either discontinuing investment funds linked to food commodities or ceasing to issue new ones. Germany’s Deutsche Bank, Commerzbank, DekaBank and Landesbank Baden-Wuerttemberg have announced similar moves.
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