Amundi and BNP Paribas shutter food commodities-linked funds but hit back at Oxfam campaign

NGO says banks are responding to its hunger campaign.

Oxfam France is claiming scalps in a campaign targeting French and international banks and asset managers over commodities trading and alleged links to food scarcity, after two said they would shutter funds. However, the banks accuse the NGO of over-dramatising its claims and have contested some of the numbers touted. BNP Paribas, the Paris-based bank is suspending investment into two funds with exposure to agricultural commodities. Crédit Agricole, the French bank, which historically has financed the agricultural sector, will close three commodities index funds between March 1 and mid-April this year. Amundi, the fund manager of Crédit Agricole, said the decision to close three exchange traded funds worth €33m was taken during the Autumn of 2012 and is not a result of the Oxfam campaign. The funds are currently being liquidated.
In a statement, Amundi accused Oxfam France of “jumping on a bandwagon for issues that have already been resolved”. The French manager said: “The decision to close these funds was taken last Autumn and is linked to the wish of the Crédit Agricole group to concentrate on investments in the agriculture sector according to a long-term approach.” Oxfam said that AXA, the French insurer, had also been in contact with it to discuss the issue following the publication of its campaign report. The giant insurer is known to be discussing the issue internally. Agricultural commodities have been firmly on banks’ risk agendas recently. Barclays, the UK banking group, announced last week that it was stopping commodities and agricultural trading with hedge funds for reputational reasons, although it said it would continue its own commodities investing.
The Oxfam France campaign, titled “Banques: la faim leur profite bien”, “Banks: hunger is good for profit” calls on its supporters to write to bank CEOs asking them to halt commodities derivatives trading, stop lending to companies producing biofuels or accused of land-grabs, and withdraw SRI funds that finance biofuels or are linked to land-grabs/food stockpiling.The campaign follows the Oxfam France report (in French only) released on February 12: Link to report It accuses banks and their investment subsidiaries of threatening global food security and availability because of their agricultural commodities investment activities. Jean-Laurent Bonnafé, Group Chief Executive Officer of BNP Paribas, wrote to Luc Lamprière, Executive director of Oxfam France and a former financial journalist, to tell him the bank had suspended new money being taken into its €159m Parvest World Agriculture funds and its €43m exchange traded fund (ETF), the EasyETF Ultra Light Energy fund. He said this was “out of precaution” and because of its ethical financial policy. BNP Paribas closed three other ETFs exposed to commodities in July 2011, at which time it put together a group policy on commodities, which Bonnafé said was the only one of its kind at the time. The Parvest World Agriculture funds consist of a euro denominated sub-fund of €106.2m and a $67.27m US dollar denominated sub-fund. They are managed by BNP Paribas Investment Partners Luxembourg. The sub funds were created in 2008 and invest in commodities indices including the S&P GSCI Agriculture and Livestock and the Dow Jones-UBS Agriculture Sub Index. The EasyETF Ultra Light Energy fund is run by Paris-based BNP Paribas Asset Management and invests in commodity index related derivative instruments relating to the S&P GSCITM Ultra-Light Energy Index. However, in his letter to Oxfam, Bonnafé said the bank was “surprised” that Oxfam had cited it as a major actor in commodities and given a figure of €1.4bn in related assets in its report. This he said represented the total of its diversified funds with small agricultural commodity exposures. He said that the total amount invested by the bank in agricultural commodities was €411m, or 0.08% of its assets. He said BNP Paribas did not “speculate” on agricultural commodities but that the money was run on behalf of its clients for diversification and inflation protection.