With heads beginning to roll in the Libor interest rate-fixing scandal, Barclays have now been caught telling regulators one thing and investors another — over commodities speculation which has left many of the world’s poorest people starving.
In a letter of 28 March to US financial regulators, Barclays global head of commodities talked down the impact of their activity on prices for food, metals and energy:
Although we understand that [the Commodities Futures Trading Commission] is under pressure to respond to the perception that “speculation” is responsible for rising commodity prices … We believe that the changes we and others have proposed will mitigate this risk.
So why have they been telling their clients that commodities securities and speculative index swaps have been a, erm, “big driver” of a rising prices? In a bid to encourage investors to pile into the commodities, Barclays were telling potential clients earlier this year:
“commodity investors have begun allocating to commodities again after beginning 2012 heavily underexposed to the sector”
Under pressure from poverty campaigners, Bob Diamond told the Barclays AGM that their traders were not involved in direct speculation. So why on earth are £2.5 billion pounds of commodities on his balance sheet?
Indeed, Barclays own research shows that external asset management is the most popular way to invest in commodities — which is precisely what they are doing on behalf of their clients, trousering a proportion of the profits along the way.
So perhaps Bob Diamond can explain who Barclays are misleading over commodities trading — investors or the regulators?