Barclays Activist Raises Stake, Pressure on Trading Rejig

Written by
Stefania Spezzati
Written by

Stefania Spezzati

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(Bloomberg) -- A strong first half of the year for Barclays Plc traders hasn't stopped the bank's top shareholder from renewing calls to shrink its investment bank.

Edward Bramson's Sherborne Investors Management LP, which recently boosted its stake to 5.9%, said Barclays should mimic cutbacks at Deutsche Bank AG to improve profitability, according to a letter sent to investors this week and seen by Bloomberg News.

“Trading firms should optimize the capital allocated to their corporate and investment banks rather than pursue unrealistic ambitions,” Bramson wrote in the letter.

A fierce critic of Chief Executive Officer Jes Staley's strategy to boost the securities unit, Bramson bought a 5.2% stake in Barclays in March 2018 and has been slowly increasing it since. The renewed pressure from the activist comes after the corporate and investment bank reported a 60% gain in foreign-exchange, rates and credit income, cushioning a difficult set of second-quarter results.

Read the full letter here

Spokesmen for Bramson and Barclays declined to comment.

German Turnaround

Deutsche Bank has embarked on a major restructuring over the past year, closing down trading desks and firing thousands of staff. Its shares are up 14% in the year to date, compared to an approximate 41% decline for Barclays.

The British bank should consider a 24% reduction of its CIB assets, Bramson's letter says. The magnitude of the proposed reduction hasn't been previously reported.

Chairman Nigel Higgins acknowledged last year that Barclays had a “serious shareholder value problem,” Bramson added. He said a plan similar to the one implemented by Deutsche Bank, whose experience is applicable to Barclays, could be “an expedient roadmap” for Higgins.

The chairman has publicly endorsed Staley's strategy, saying that the group has transformed itself considerably over the last few years. Shareholders almost unanimously voted for Staley's reappointment at the bank's annual meeting in May.

Bramson has previously asked investors in his fund to pressure the bank to step up succession planning for the CEO. While there is no formal search currently under way, the bank has informally reached out to potential candidates in recent months to gauge their interest in the top job, Bloomberg News has reported.