Barclays has been removed from the list of companies in which the ethical funds run by Co-operative Asset Management can invest because of concerns about the way the bank has been hit by the Libor scandal and its reliance on investment banking.
Other banks could also be excluded from the list used by the Co-op's £750m range of sustainable funds, which are more selective about the type of stocks in which they invest than conventional funds.
The appointment of new chief executive at Barclays, Antony Jenkins, who is due to present his strategy update on 12 February, has not been enough to persuade Co-op to keep the bank within the investment remit of its sustainable funds, which sold 2m Barclays shares in September.
The Co-op's advisory panel had considered whether to withdraw from any investment in Barclays in the immediate aftermath of the £290m Libor fine in June but concluded that the shares still met the criteria on the grounds that "the nuts and bolts and banking, or to be more precise the retail banking, still meet the positive criterion of providing a net benefit".
But a subsequent review has led to Barclays being removed from the approved list of investments, which before the financial crisis excluded Northern Rock, Bradford & Bingley, Alliance & Leicester, Lloyds and Royal Bank of Scotland.
Banks that are predominantly investment banks – Barclays makes the majority of its profits from investment banking – are not approved for investment. "Apart from struggling to convincingly pass the net benefit test, it is universally acknowledged that the most egregious risk taking, socially useless financial engineering and excess remuneration of the kind that threatened systemic failure took place at investment banks," the Co-op said.
Barclays is not excluded from the majority of funds run by the Co-op, which in total has £20bn under management.
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