Barclays Bank has hinted it is considering pulling out of food speculation due to ‘reputational risk’.
Financial speculation in commodity markets fuels dramatic spikes in food
prices, pushing basic food stuffs beyond the reach of the world’s poorest people.
Rich Ricci, chief executive of Barclays’ corporate and investment arm, told the UK’s Parliamentary Commission on Banking Standards on Wednesday: ‘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,’ according to The Financial Times newspaper.
Barclays is the biggest UK player in food commodity markets, making up to an estimated £500 million from speculating on food prices in 2010 and 2011.
Deutsche Bank and Commerzbank have already said they will stop trading in investment products linked to the prices of food
commodities, such as maize and soya.
The World Development Movement’s director Deborah Doane said on Thursday: ‘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.
‘This is precisely why we need strong regulation. Food speculation has devastating consequences, and George Osborne and fellow European finance ministers must take the lead in curbing it. Otherwise, as soon as the media spotlight shifts, Barclays will be able to quietly forget its fine words and resume business as usual.’
Legislation to limit speculation is on the table at the European Union, and finance ministers including George Osborne are due to vote on the proposals early in 2013.
Campaign group World Development Movement is calling for strict rules to prevent speculation driving up food and other commodity prices. This month the anti-poverty group released a spoof film on Barclays’ involvement in food speculation.
Read more about this issue in the ‘Banking on hunger’ issue of New Internationalist.