LONDON Nov 28 Barclays is considering
quitting trading of agricultural commodities due to the
reputational risk the activity can pose, its head of investment
banking said on Wednesday.
Barclays is reviewing all parts of its investment banking
and other operations and has said it will quit areas that could
harm its reputation.
It is among several banks to come under fire for allegedly
speculating on food prices, which critics say has pushed up food
prices and fuelled unrest in some poor countries.
Barclays is on high alert for any reputational risk after
being fined in June for rigging Libor interest rates, which
sparked fierce criticism of its culture and prompted its
chairman and chief executive to quit.
Rich Ricci, head of corporate and investment banking, has
previously said the bank could halt its tax advisory business
due to potential reputational damage, and said soft commodities
trading could be cut too.
"Another good business for us is agricultural commodities
trading. Are there elements of that business from a reputational
risk perspective that we simply want to consider and think about
whether we want to pursue them or not?" Ricci told a panel of UK
lawmakers as part of an inquiry into banking standards.
"Are there things that historically may have been at the
aggressive end or aren't fit for purpose any more simply for
reputational risk... things that we just don't want to do any
more because we've seen the damage that reputational risk has?"
The bank declined further comment on what activities could
Several German banks, including Commerzbank, have
this year restricted their investments in agricultural products,
but banks elsewhere have been slower to curb activity despite
heavy lobbying by groups such as World Development Movement
(WDM), which has been critical of Barclays.
Barclays is assessing all parts of its investment bank as
part of a review by new Chief Executive Antony Jenkins, and last
week quit open outcry metals trading in London.
Barclays, Deutsche Bank and J.P. Morgan
have all built up strongly in commodities in the past decade to
challenge established veterans Goldman Sachs and Morgan
Stanley. Those five banks control about 70 percent of the
commodities trading pot.
But commodities trading turnover for the 10 biggest
investment banks has tumbled 20 percent in the first nine months
of this year, and the profitability of operations could be
squeezed further by tougher regulations.