Barclays is to announce on Tuesday that it is pulling out of commodities trading as its boss Antony Jenkins attempts to focus the investment banking arm on its most profitable and least controversial areas.
Just days before Jenkins faces a storm of protests about bonuses at the bank’s annual general meeting, Barclays will tell staff in its commodities arm that large parts of the operation are to be shut down or sold off.
The future of the commodities business – one of the world’s biggest – is likely to figure in questions at Thursday’s AGM where much focus is expected to be on a decision to increase bonuses by 32% after a year when profits fell 10% and shareholders were asked to back a £5.8bn cash call.
Jenkins pledged to halt any business that could be construed as involving speculation on food after he took the helm of the bank in 2012 when Bob Diamond quit following the Libor rigging scandal.
At last year’s AGM, Jenkins had insisted that Barclays only supported clients involved in food production rather than helping big investors take bets on prices.
The decision to exit other areas of commodities trading such as metals, agricultural and energy products is to be announced to staff before the AGM and a set-piece strategy update on 8 May when investors will be seeking information about how Jenkins intends to bolster dividends paid to them.
Barclays declined to comment but the expected move follows decisions by rivals, such as JP Morgan, to also pull back from an area where regulations are becoming tighter and profits falling sharply.
Barclays’ commodities operations reportedly employ 160 although it is not immediately clear how many of them be affected by the new plans.
At next month’s strategy day, Jenkins is expected to reveal whether he is further cutting back the investment bank which was built up by Diamond and his colleagues Jerry del Missier and Rich Ricci who have both left since.
Jenkins has already incurred criticism after saying he needed to increase bonuses for 2013 to avoid a “death spiral” of investment bankers quitting to take up higher paid jobs at rivals.
At the AGM, the bank could face a rebellion from as many as 40% of shareholders about its remuneration report, one of three votes on pay to be tabled at the meeting.
Another will be on the pay policy of the bank – a new resolution ordered by business secretary Vince Cable from all major companies which allows investors to vote down bonus schemes for the coming three years. Another will be on the plan to allow Barclays to pay bonuses of two times salaries, a limit imposed by the European Union’s new bonus rules.