Barclays CEO, Antony Jenkins, announced that the bank is stopping its agricultural trading with hedge funds as part of a major overhaul strategy.
Antony Jenkins, the chief executive officer of Barclays PLC (LON:BARC) (NYSE:BCS) announced the bank’s decision to stop its agricultural trading as the company implements a major overhaul to improve its reputation.
According to Jenkins, Barclays will keep its trading in the overall commodities sector. He did not provide further details regarding any changes in the bank’s commodity business.
Barclays PLC (LON:BARC) (NYSE:BCS) is one of several financial institutions that has been strongly criticized for its speculative trading on agricultural products such as grains. Critics argued that trading speculations drove the prices to go up, which caused unrest in some of poor countries around the world.
According to the report from Reuters, an unidentified source familiar with Barclay’s move clarified that the bank will only stop its agricultural and softs trading with hedge funds.
The source said, “We are not stopping trading in agriculture commodities or softs. We’re going to continue to provide a service to our corporate… clients, what we’re doing is we’re stopping trading with hedge funds.”
In addition, the source explained that Barclays PLC (LON:BARC) (NYSE:BCS) has a strong business in derivatives from agriculture to metals, which are associated with the commodity indices. According to him, the bank’s business in the sector will continue. The bank is one the five largest banks who control 70 percent of commodities trading.
In November last year, Rich Ricci, chief executive of the corporate and investment bank unit of Barclays stated at the Parliamentary Commission on Banking Standards that he was evaluating the operations of the investment bank through the primary lens of a reputational risk. Back then, Ricci said, “If I decided to stop trading soft agricultural products, it is not driven by regulation. It is because it doesn’t sit socially well with the large constituent of our customers.”
Ricci explained Barclay’s agricultural trading and tax advisory units have too many reputational risks, but were good businesses from a pure revenue perspective.
Jenkins initiated the evaluation of the reputational impact of every business unit of Barclays PLC (LON:BARC) (NYSE:BCS) as part the bank’s major strategic overhaul. The bank aims to polish its reputation after a series of scandals.
Barclays PLC (LON:BARC) (NYSE:BCS) previously announced its plan to reduce its workforce in order to cut its annual costs by $2.7 billion (1.7 billion pounds).