LONDON (Reuters) – Activist investor Edward Bramson’s bid to join the Barclays board is destined to fail, shareholders told Reuters, though he has sharpened scrutiny of its investment banking strategy that Bramson argues has depressed profitability.
When Barclays reports its 2018 results on Thursday, investors will examine whether the trading and advisory business that Bramson believes should be shrunk has improved its performance, and whether those gains are sustainable.
Onus - Barclays - Management - Team - Market
“The onus is now on the Barclays management team to convince the market that their plan is the best way forward,” one investor said. “This probably requires more disclosure on the varying returns within the corporate and investment bank.”
The high-profile dispute between Bramson and Barclays CEO Jes Staley over strategy has helped spark wider debate about the viability of European investment banks, which have in recent years increasingly lagged U.S. rivals.
Barclays - HSBC - Tuesday - Instance - Slump
Barclays rival HSBC on Tuesday for instance reported a slump in fourth-quarter trading revenue, joining other European lenders in seeing a sharp annual decline from stock trading while U.S. rivals prospered.
Bramson’s Sherborne vehicle holds 5.5 percent of Barclays stock.
Letter - Shareholders - December - Bank - Capital
In a letter to his shareholders last December, he criticized the bank’s tactic of using considerable capital and resources to chase modest or volatile investment banking revenues by undercutting rivals, which might beef up market share temporarily but offer poor long-term returns.
Barclays declined to comment.
Barclays - Investment - Bank - Return - Equity
Barclays’ corporate and investment bank averaged an annual return on equity of 4 percent between 2015 and 2017, compared with 6 percent for Barclays UK and 23 percent for the Consumer, Cards and Payments business, a Reuters analysis showed.
Bramson also said “fortunately timed” tax income benefits and some 900 million pounds ($1.2 billion) worth of non-recurring items put a gloss on the bank’s recent earnings. The bank by contrast said the report showed its strategy working.
Investors - Bramson - Board
Investors said that while Bramson’s board...
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