A secretive investor has mounted a £1.9bn raid on Barclays, sparking fears of open corporate warfare at one of Britain’s most important banks.
New Yorker Edward Bramson has built a stake of more than 5 per cent in the lender and could be about to demand a seat on its board.
It makes him Barclays’ fourth-largest shareholder and will give his firm, Sherborne Investors, a powerful say in how the bank is run, although he has so far not revealed his intentions.
Fears: Edward Bramson has built a stake of more than 5 per cent in the lender and could be about to demand a seat on its board
The 67-year-old, who has quietly been growing his position since midway through last year, has not met the board and has issued no demands.
But he has a notorious reputation as a corporate brawler with previous scalps at some of the City’s most prestigious firms.
It is thought the investor’s plan may be to split Barclays in two by spinning off its investment bank, leaving behind a UK retail lender.
The Bank of England is understood to be watching and is thought to have spoken to Barclays directors about the activist.
British-born Bramson bought his 5.2 per cent using £700m that Guernsey-based Sherborne Investors raised last summer, with extra cash borrowed on top.
The fund – backed by big City names including Aviva Investors and Threadneedle – was set up to buy into a single big business which is seen as underperforming. It aims to force its own staff into the role of chairman or an executive director, and then slash costs to boost the share price.
Bramson is a ruthless operator whose previous victims have included 150-year-old asset manager Foreign & Colonial and Electra Private Equity.
Any radical shake-up will pit him against Barclays chairman John McFarlane, a banking veteran with an equally tough streak who supports the bank’s current strategy and fired its previous chief executive for failing to improve the lender’s fortunes.
Justin Urquhart Stewart of Seven Investment Management said it could lead to a dramatic bust-up but added that many investors might understand the logic behind a split.
Sherborne representatives met Barclays’ investor relations officers after its annual results last month, and asked a list of questions about the business. But although insiders said the bank’s chief executive Jes Staley is willing to have a meeting with Bramson, he has not yet asked for one.
Any public row will alarm the Treasury and the Bank of England over fears it could harm financial stability.
Regulators must approve any firm which boosts its stake in a large bank beyond 30 per cent – or 10 per cent if it is working with other investors. They must also approve of new board members – and an activist demanding radical changes would likely have an extremely hard task persuading regulators to give their blessing.
Informal conversations between the Old Lady and the Barclays board are already believed to have started, but there is still no guarantee that British-born Bramson will act.
The prospectus for the investor’s fund states it may sell out of a business after building a stake if shares rise high enough that there is nothing to be gained by demanding change.
This is what happened at 3i in 2013, when Bramson sold out because shares had rallied strongly without any action by him. A Barclays spokesman said: ‘Barclays will continue to engage with Sherborne, and welcomes them as a shareholder.’
Sherborne did not respond to a request for comment.