Barclays to exit parts of commodities business

by World Grain Staff
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LONDON, ENGLAND — Barclays, one of the world’s biggest commodities traders, is reportedly planning to exit large parts of its agricultural trading business, The Financial Times newspaper reported on April 21. 

Chief executive Antony Jenkins is preparing a strategic update for investors on May 8 and is expected to slash several thousand jobs by cutting Barclays’ exposure to areas that do not generate returns above their cost of capital. 

The newspaper said the retreat from parts of its commodities business is due to be announced on April 22. 

Barclays is one of the top five banks in commodities — which together controlled about 70% of the commodities trading pot last year, The Financial Times said. But several are shrinking or disposing of these businesses, including Morgan Stanley, Deutsche Bank, UBS and Royal Bank of Scotland.

The retreat is being driven by tighter regulation, fresh capital constraints and lower profitability due to stable prices for oil and other commodities. 

Barclays closed its U.S. and European power trading operations in February after it was fined a record $470 million for allegedly manipulating power prices by the US Federal Energy Regulatory Commission. Barclays has refused to pay the fine, shifting the dispute to a federal court.

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