Edward Bramson has revived his activist campaign against Barclays’ investment bank, despite this division at the UK lender benefiting from a surge in revenues this year.
In a letter to shareholders in his investment vehicle, Sherborne Investors, this week, Mr Bramson said the effects of the coronavirus crisis had “significantly distorted the first-half results of all the banks” and renewed his call for Barclays to cut its trading division to boost profitability.
Trading in equities and fixed income has been a rare bright spot for global banks throughout the coronavirus crisis, as clients rushed to reposition their portfolios throughout the frenzied markets in the first half of the year.
Barclays recorded a 106 per cent annual increase in fixed income trading in the first three months of the year, followed by a 60 per cent rise in the second quarter.
Over the past two years Mr Bramson has called on Barclays to follow the example of German lender Deutsche Bank and retreat from investment banking, in a campaign that has so far failed to muster much support from the UK bank’s other shareholders.
“In the real world, investors continually show that they just do not care very much about the trading business,” Mr Bramson wrote in the letter, which was seen by the Financial Times. “If Barclays sincerely intends to prioritise shareholder value, this is something that, like [Deutsche], it will need to understand.”
Mr Bramson’s letter said that Barclays should think to reduce assets in its corporate and investment bank by 24 per cent, the first time he has publicly quantified this suggestion. The letter also revealed that he had increased his stake in Barclays, from 5.8 per cent to 5.9 per cent.
Barclays’ shares are down more than 40 per cent this year as increased trading revenue has failed to offset the £3.7bn of reserves the bank has been forced to set aside in expectation of a surge in loan losses.
Meanwhile shares at Deutsche, which is amid a structural overhaul, are up 12 per cent this year as the lender has held back just €1.3bn of provisions for bad loans.
In April, Mr Bramson paused his campaign to unseat Barclays chief executive Jes Staley because of the coronavirus crisis, although he continued to press the board to begin a formal search for his successor.
Mr Bramson wrote to Sherborne investors at the time that “in recognition of the complexity of the management situation presented during the Covid-19 pandemic”, it would withhold its vote for Mr Staley’s reappointment at Barclays’ shareholder meeting the following month.
Barclays declined to comment.
Get alerts on Barclays PLC when a new story is published