The Co-operative Asset Management (TCAM), the £20bn (€24bn) UK funds house, has excluded banking titan Barclays from its investments over the Libor interest rate-rigging scandal and other issues such as mis-selling – and warned that other banks may also be dropped.
It follows a re-screening of the banking sector conducted by TCAM’s environmental, social and governance (ESG) team in the wake of the Libor scandal last year. The seven-point methodology has ‘net benefit’ to society as the highest weighting.
Other criteria are anti-consumer practices, best in class, asset & portfolio exposure, governance, direct operational impacts and remedial action.
“According to this approach, Barclays is now excluded with the agreement of the [external] Advisory Committee and other banks may follow if the evidence of wrong-doing is compelling and systemic,” TCAM says in a new report. The exclusion is from TCAM’s ‘Sustainable’ range of funds only.
The scandal, which led to the departure of then Barclays CEO Bob Diamond, erupted when the bank was fined £290m as the first bank to settle claims it tried to manipulate Libor and other rates.
Earlier screenings had led to Northern Rock, Bradford & Bingley, Alliance & Leicester, Royal Bank of Scotland and Lloyds being excluded “long before the financial crisis broke” TCAM says in its latest Responsible Investments Quarterly Review – although Standard Chartered andBarclays were ranked first and second place respectively in 2008.
It has also led to Bank of America, Citigroup, Goldman Sachs and J.P. Morgan being excluded in more recent screenings. No what are termed “socially useless” investment banks are currently held by the firm.
“Other banks may follow if the evidence of wrong-doing is compelling and systemic”
The Co-operative is wrestling with the notion that banks, while vital to modern society, played a key role in the “unravelling of the global economy” and it is discussed in full in the report.
The challenge as TCAM sees it is to find banks “not so tarnished that they negate their net benefit to a net deficit”.
There is a “now irresistible truth that the way in which banks, regulators and politicians behave, govern and are governed individually and as a triumvirate must change radically”.
The report also includes an obituary of Lord Alf Morris of Manchester, a former member of its external Advisory Committee on Responsible Investment, who died in August 2012 aged 84. Link