Barclays on Tuesday confirmed previously published reports that it plans to exit the majority of its global commodities business; however, it will continue to trade precious metals and derivatives tied to the price of oil and gas. It said the "refocused business will provide a simplified financial flow platform for clients, with an emphasis on efficient electronic execution."
The UK banking giant said it "will continue its commitment to precious metals, financial oil, US financial gas, and index products" as part of its client offerings.
"We will continue to actively manage our existing books to minimise any impact on our clients' business," Barclays said. The decision is not expected to have a material impact on the bank's financial results.
The announcement ended days of speculation following published reports that Barclays was planning to withdraw from parts of the energy, metals and agricultural commodities markets due to slumping revenues and increased regulatory scrutiny (see Daily GPI, April 21). Barclays is calling an end to its trading in crude oil, oil-indexed natural gas and other energy products, as well as some metals and agricultural commodities.
The news follows JPMorgan Chase & Co.'s announcement that it will sell its physical commodities business to Mercuria Energy Group Ltd. in a $3.5 billion all-cash transaction (see Daily GPI, March 19). Morgan Stanley has also scaled back its commodities business, and Deutsche Bank recently eliminated dedicated trading desks for energy, agriculture, base metals and dry bulk (seeDaily GPI, Dec. 5, 2013).
Barclays was No. 51 in combined natural gas purchase and sales volumes in 2012, down from No. 43 in 2011, according to an analysis by Natural Gas Intelligence (NGI) of Form 552 buyer and seller filings with the Federal Energy Regulatory Commission (see Daily GPI, June 4, 2013).
Last month, Barclays ended trading in electricity markets. That announcement came less than a year after FERC ordered Barclays and four of its traders to pay $453 million in civil penalties and disgorge $34.9 million, plus interest, in unjust profits for manipulating electric power prices in California and other western markets between November 2006 and December 2008 (see Daily GPI, July 17).