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Germany's second largest bank stops speculating on basic food prices

Lobby group Foodwatch cites moral reasons for bank's divestment.

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People walk past a branch of Commerzbank on Sept. 2, 2008 in Berlin, Germany. (Sean Gallup/Getty Images)

Commerzbank announced on Thursday that it would abstain from food price speculation.

After studies correlated speculation with artificially increased food prices that adversely affected the world's poorest and hungriest nations, the bank withdrew agricultural products from its commodity index fund, Deutsche Welle reported

Commerzbank did not say why they stopped investing in food, but Foodwatch said:

"Commerzbank is reacting to the debate about a series of studies which show that investment in this type of commodity fund pushes food prices upwards and so contributes to the hunger crisis in many parts of the world."

"If a bank can't be sure which damage such speculation may cause, it should not offer such funds to be on the safe side," Thilo Bode, Germany's Foodwatch managing director said.

According to the Globe and Mail, Commerzbank is not the first German bank to leave the agriculture business, though the majority of bankers find no fault with investing in food commodities. 

David Bicchetti, economics affairs officer at the United Nations Conference on Trade and Development (UNCTAD), told Reuters, "I think that more and more investors are sensitive to banks' exposure to agriculture. In the last 12 months, there's been lots of discussion about ethical investment."

The announcement comes as Commerzbank said its profits are likely to decrease in the second half of the year. As the Wall Street Journal said, their net profit is expected to be "smaller than it was in the first six months."

According to Reuters, Commerzbank took the $145.1million and reinvested it in metals and energy. 

http://www.globalpost.com/dispatch/news/regions/europe/germany/120810/germanys-second-largest-bank-stop-speculating-basic-food