Activist investor Edward Bramson is reportedly agitating for British bank Barclays PLC (LON:BARC) to jettison large chunks of its investment bank business.
According to the Reuters news agency, Bramson, who took a 5% stake in Barclays in February via his Sherborne Investors investment vehicle, has been pressing for Barclays’ management to slim down the investment banking arm to those parts that directly serve corporate clients.
READ: Activist investor Sherborne becomes fourth largest shareholder in Barclays
According to Reuters’ sources, that would mean the culling of the cash equities, currency and fixed income trading desks.
Barclays has struggled to rebuild its reputation since its most prominent scandal in 2012, when it paid a £290mln fine to the US and UK authorities for rigging Libor, which measures the rate at which banks can borrow from one another.
More recently, chief executive Jes Staley somehow managed to keep his job despite being fined £642,430 for trying to identify a whistle-blower at the bank.
READ: Barclays boss Jes Staley fined £642,430 for trying to unmask whistleblower
Staley joined Barclays from US hedge fund BlueMountain Capital Management, so he will be no stranger to the tactics of activist investors.
He replaced Antony Jenkins, a veteran of the retail banking arm of Barclays, who was appointed to clear up the reputational damage sustained during the wheeling & dealing tenure of his predecessor, Bob Diamond.
Here's the detail on activist investor Ed Bramson's plan to shake-up Barclays https://t.co/PmqIfJYERV
— Ben Martin (@Benjaminwmartin) May 17, 2018
Staley has generally shifted the emphasis back towards investment banking and it is thought that he would be resistant to Bramson’s proposals.
Some shareholders told Reuters they believed Bramson might be underestimating the challenge of stripping out the investment bank’s underperforming units without hurting stronger parts.
“I am pretty sure returns in Cash Equities are fairly rubbish but it’s very hard to do ECM (equity capital markets business) and some M&A activities without it,” one of Sherborne’s own major investors told the news agency.
“I think the Markets bit of Barclays CIB is more profitable than he thinks it is, if anything it is the Commercial Bank that is the laggard,” he added.
Shares in Barclays were down 0.3% at 208.4p in a flat market.