Barclays ready to fend off radical proposals by activist investor
Sherborne became the fourth largest shareholder last month after taking a stake of 5.4%.
Barclays bosses are prepared to tell activist investor Ed Bramson that shareholders have no appetite for a major overhaul of the bank during a high-level meeting to be held this week.
Chief executive Jes Staley and finance director Tushar Morzaria are set to sit down with Mr Bramson, whose fund Sherborne became the fourth largest shareholder recently after taking a stake of around 5.4%.
He has now made a total investment of around £2 billion when accounting for additional derivatives holdings.
Mr Bramson has yet to put down any specific demands, though speculation is rife that he will push for an overhaul of the investment bank in order to deliver bigger returns for investors, with some even fearing that he will call for the unit to be sold off.
However, the bank’s leadership is confident that they have the backing of other shareholders to easily fend off any radical demands, given that the lender is now just emerging from a lengthy period of restructuring and starting to deliver returns.
“I think the current shareholder support for the current strategy is there,” one Barclays board member said.
However, he said the bank was remaining open to “sensible” proposals.
“People will always make radical suggestions from the outside, that’s how people in financial markets work.
“Generally as a board we’re focused on the three to five-year picture of where we can go, and frankly we’d all like to get there as fast as we could.
“If there are sensible things to do, then why not?”
But suspicions that Mr Bramson may also ask for a spot on the Barclays board have been batted away, given the backlash it might spark from regulators who would prefer stability – rather than a shake-up – at one of Britain’s biggest lenders.
Barclays board members held a meeting last week where the upcoming sit-down with Sherborne was discussed, and it is expected that a full leadership debrief will follow.
Mr Bramson, who has a track record of corporate activism, is understood to have also voted through all of the resolutions at last week’s AGM, though he did not attend.
At least one individual shareholder has warned the bank of cosying up to Sherborne.
“I urge this board, if you entertain him, please do so and listen to him carefully,” the shareholder said at the AGM last week.
“But be careful about inviting him into the house, because this is a fox that will raid our hen house … (it is) bad for shareholders, stakeholders and more importantly bad for our customers,” he added.
Chairman John McFarlane responded by saying that Mr Bramson has not made any proposals to the bank so far “but what we’ve done is arranged a meeting between him and the chief executive next week and we’ll take it from there”.
Executives have been driving home the bank’s progress, with Mr McFarlane having said last week that Barclays had “moved into a new phase, with the bulk of our legacy issues behind us and the business performing well”.
The bank reported a pre-tax loss of £236 million in the first quarter – compared with profits of £1.68 billion a year earlier – but that was primarily due to further payment protection insurance (PPI) charges and a £1.4 billion settlement with the US Department of Justice related to the sale of mortgage-backed securities in the lead-up to the financial crisis.
Stripped of litigation and conduct charges, pre-tax profits rose 1% to £1.7 billion.