Activist Bramson takes aim at Barclays ahead of annual meeting
The activist also took aim at Barclays management.
Barclays faces the prospect of having to raise fresh capital unless it scales back its investment banking operations, activist investor Edward Bramson has warned.
Mr Bramson, who holds a 5.5% stake in Barclays through his investment vehicle Sherborne, is calling for a board seat at the British lender, as well as petitioning the bank to shrink its corporate and investment banking arm.
In a letter to fellow investors ahead of the bank’s AGM next month, he said that if Barclays continues on its existing course, it would represent a “real threat that more new capital will need to be raised” to fund the under-fire division.
“We believe that any new capital invested in the corporate and investment bank is almost certain to cause an immediate destruction of shareholder value,” Mr Bramson wrote.
He compared Barclays to troubled German lender Deutsche Bank, arguing that they have “similar strategic weaknesses” and have pursued similar product and customer strategies, describing the lender’s woes as a “cautionary sign”.
Pointing to lacklustre shareholder returns, the activist also took aim at Barclays management, saying: “Uncontrollable factors, such as Brexit, do not account for Barclays’ underperformance.
“The cause is, we believe, the board’s prolonged pursuit of a strategy that is not grounded in the fundamental realities of the global corporate and investment bank marketplace.”
Mr Bramson is calling for a “judicious rebalancing of the corporate and investment bank strategy”, which would reduce the need for new external capital and result in a lower risk business.
His comments come just weeks after Barclays embarked on a radical executive and organisational shake-up, with Tim Throsby, the boss of investment banking, quitting the lender.
Mr Throsby was drafted in two years ago from JP Morgan, but an overhaul of the division will see the unit split into three – global banking, global markets and corporate banking – each with its own head reporting directly to chief executive Jes Staley.
Mr Staley has himself admitted that the corporate and investment bank is “not yet where we need it to be” and needs to show higher returns.
However, Mr Staley and outgoing chairman John McFarlane have rejected Mr Bramson’s vision, saying the activist’s interests are “not aligned” with those of the bank or of long-term shareholders.
In a strongly worded circular, they argued that Mr Bramson’s presence at the top table would “not be in the best interests of shareholders as a whole”, adding that his appointment would be “detrimental” and result in “significant disruption”.
The annual meeting will take place on May 2, when shareholders will vote on whether to appoint Mr Bramson to the board.