Barclays is being threatened with a boardroom shake-up after an activist investor announced plans for a shareholder vote on the bank’s leadership.
Edward Bramson, who has spent about £900m building a 5.5% stake in Barclays through his investment vehicle Sherborne Investors, told his own shareholders that a vote was necessary, given that “consistent engagement” with Barclays had failed to yield results.
He is pushing Barclays to scale back its investment banking business, which he says has “strategic weaknesses”. Bramson believes more resources should instead be funnelled towards the bank’s “attractive” consumer operations.
“It seems increasingly likely that, for any progress to be made on our concerns, we will be required to seek a shareholder vote to make changes in the composition of the board,” Bramson said in the letter, seen by the Guardian.
That vote could be held as soon as 2 May, when Barclays plans to hold its next annual general meeting. However, Bramson said he could call a separate meeting “if circumstances were to change”.
Barclays shares have tumbled by about 33% since 1 December 2015, when the American Jes Staley took the helm as chief executive. The former JP Morgan banker helped roll out a strategy that involved selling off non-core operations and reining in portions of the investment bank but the board is unlikely to shrink it further under current plans.
The bank’s performance is not out of line with its peers – Lloyds and RBS have each fallen just shy of 30% over the same period.
Bramson has been jostling for a position on the Barclays board, having made a written proposal in September offering to become a non-executive director.
However, the bank’s directors told Bramson that while they looked forward to continued engagement, his board representation would not be needed, according to Sherborne’s shareholder letter, which was first reported by Bloomberg.
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The move is to be expected, with Sherborne’s website clearly outlining that board membership is a key part of its investment strategy. “We seek to enhance value in our portfolio companies by offering our participation on the board, rather than through majority ownership and control of the company,” the website says.
However, the prospect of an activist investor on the board of a systemically important UK bank would likely face hurdles from regulators that may have questions over potential risks to financial stability.
Bramson last met Barclays executives, including Staley, the finance director Tushar Morzaria and the outgoing chair John McFarlane in New York in mid-November. He is next set for a sit-down with Barclays bosses at Sherborne’s offices on 12 March after the release of its annual results.
Barclays declined to comment.
Source: The Guardian