Tuesday September 02, 2014




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BNP Paribas suspends ag fund after criticism

Barclays stops ag trading with hedge funds

BNP Paribas, France's No. 1 listed bank, has suspended a 160 million euro (US$214 million) agricultural commodities fund after international aid group Oxfam criticized French banks for speculating on food prices.

"We are suspending subscriptions," a spokeswoman for BNP said of its Parvest World Agriculture fund, explaining the move as part of the bank's policy on corporate and social responsibility.

The fund is the bank's most exposed to food commodities, she said.

Banks around the world have come under fire for speculating on grain and other agriculture products, which critics say has pushed up food prices and fueled unrest in some poor countries.

BNP also intends to close its Easy ETF Ultra light Energy fund, which had 43 million euros in assets by end-January, of which 37 per cent was linked to food commodities, the spokeswoman said.

Food commodities amounted to 411 million euros, or 0.08 per cent of the total in assets BNP Paribas manages, it said.

BNP said the move was taken after regular meetings with non-profit group Oxfam, which released a report on Tuesday blaming banks for "speculating on hunger."

Oxfam called for more banks to close food-related funds.

"Banks have a decisive role to play in the fight against food price volatility, which jeopardizes the right to food for hundreds of millions of people in the southern part of the world," Oxfam France said.

"Reputational reasons"

Barclays said Tuesday it was halting trading in agricultural markets with hedge funds, in a move to burnish its reputation amid a major overhaul.

Barclays CEO Antony Jenkins told a news conference the British bank was exiting speculative trading in softs and agriculture due to "reputational reasons," but was sticking with the overall commodities sector.

A source close to the situation later clarified that the bank was only stopping softs and agricultural trading with hedge funds.

"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," said the source, who declined to be identified.

Barclays has a strong business in derivatives linked to commodity indices, including subsectors ranging from metals to agriculture, and this business would continue, the source added.

Germany's Commerzbank has restricted investments in agricultural products, but other banks have been slower to curb activity despite lobbying by groups such as the World Development Movement.

Deutsche Bank last month reversed a moratorium on trading in agricultural derivatives, saying there was no evidence that such activity boosted food prices. -- Reuters


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