(Bloomberg) -- Barclays Plc escalated its opposition to radical changes sought by activist shareholder Edward Bramson, saying his plans to cut back the investment bank are unclear and flawed.
The British bank strongly opposes Bramson's appointment to its board, according to a statement on Thursday. The activist's vehicle Sherborne Investors, which set out its proposals on Monday, has been “selective and misleading” in describing the investment bank's strategy, the lender said.
Bramson, who has an investment of about 5.5 percent in Barclays, has said it could be forced to raise capital, sell lucrative businesses or cut dividends if it persists in prioritizing its investment bank. He asked the bank's investors to back his request for a seat on the board at the annual general meeting next month.
Barclays said such an appointment would be detrimental for other shareholders as Bramson's strategy is skewed to short-term benefits, as demonstrated by the way his holding is structured.
“Sherborne's complex investment structure is leveraged and hedged, in large measure, by time-limited derivatives which contain its exposure to falls in our share price an narrow its investment horizon to a more near-term bias,” the bank said.
Bramson is keen to see cuts at the corporate and investment bank, which has reported lower return on equity than other units, while Chief Executive Officer Jes Staley has bet his reputation on boosting returns and overhauling that division. The American CEO has recently reshaped key parts of its investment bank, taking direct control of the securities unit after the abrupt departure of its top executive, Tim Throsby.
“The board recognizes that Barclays does not yet perform at the level at which it should. We are highly focused on business execution to deliver returns above our cost of equity,” it added in the statement.
Barclays claimed that Bramson's analysis contains errors such as the amount of capital the bank planned to devote to the investment bank. “We have not added significant financial resources to the CIB, nor do we intend to do so," the bank said.
Barclays's Main Points:
- Board's recruitment priorities are focused on particular areas of expertise, including consumer banking and payments, which Bramson's appointment wouldn't address
- Selecting Bramson as a director would be disruptive and distract from the focus on execution
- Sherborne's interests are not aligned with the wider shareholder base
To contact the reporter on this story: Stefania Spezzati in London at sspezzati@bloomberg.net
To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Marion Dakers, Keith Campbell
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