Barclays announced Tuesday that they would be exiting from the commodities trade. Following in the footsteps of other major banks, like JPMorgan Chase and Deutsche Bank, Barclays is now leaving the commodities business. Many speculate that these big banks are leaving due to increasing regulatory scrutiny and falling profits. However, although the banks may be leaving because of regulatory burdens, that doesn’t mean that others are leaving. This new opening creates a lot of opportunities for other businesses that don’t have regulatory constraints.
Barclays, considered one of the top five banks that control much of the global market in the commodities business, will be eliminating some jobs in the process. According to Antony Jenkins, Barclays’ chief executive, “Barclays will get out of businesses that do not generate returns greater than the bank’s cost of funding. The investment bank, which includes the commodity business, fell short of that goal last year…” As a result, the bank will be shutting down or selling a lot of its metals, energy, and agricultural commodities businesses.
Although Barclays is shutting down this part of their business for now, some speculate that the bank may reopen it later when it becomes more profitable for them.
Source: New York Times
