Barcap increases commodities appetite

Investment bank Barclays Capital has sharply increased its appetite for risk-taking in the first half of 2007, with all the new risk being taken in the commodities segment, according to Barcap reports.

Gross value-at-risk (VaR) increased from an average of £67.5 million per day in 2006 to an average of £74 million in H1 2007, a rise of 9.6%. Net VaR after diversification effects rose by around 6% from £37.1 million to £39.3 million.

“Increasing portfolio diversification has therefore been crucial to holding down the overall estimated VaR within the proprietary trading business,” says John Kemp, an economist with Sempra Commodities. “It helps explain Barclays Capital’s strong appetite for

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