LONDON (Reuters) - Barclays will close the energy business within its 'Macro' trading division, the bank said in an internal memo on Thursday obtained by Reuters, in a move that will affect dozens of jobs at the British lender.
The bank said it would have required "significant incremental investment" to maintain and grow the business, and that the resources would be better deployed growing other trading businesses.
The energy business is responsible for the sale and trading of energy-related products, largely derivatives such as oil futures contracts, and sits within the 'Macro' division that also trades foreign exchange and interest rate products.
"This is the right decision for Macro and the broader firm as we invest for the long term to best serve our clients," Joe Corcoran, head of markets at Barclays, said in the memo.
Macro's energy business accounted for less than 2 percent of overall revenue for the markets business at Barclays, the memo said.
"Barclays has made the decision to wind-down its Energy business within Macro which will create the additional capacity to invest in and accelerate the growth of our Rates and FX businesses," a Barclays spokesman told Reuters by email. "We have made the decision to redeploy capital, technology resources and people into our core areas of strength so that we can best serve the needs of our global Markets and Banking clients and earn an attractive return for our shareholders."
Investment banks have increasingly struggled to make money from commodities such as oil in recent years amid weak prices and muted investor appetite for trading related products.
Commodities-related revenue at the 12 biggest investment banks fell 22 percent in the first nine months of this year due to weak industrial metals trading and lacklustre investor interest, a report by financial industry analytics firm Coalition said on Nov. 16.
Barclays has been scaling back its commodities exposure this year, announcing in January it would exit the precious metals business and in May that it would sell its gold vault, one of the largest in Europe, to ICBC Standard Bank.
(Reporting By Lawrence White; Editing by Susan Fenton)
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