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Activist Edward Bramson urges Barclays to end ‘cycle of disruption’

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Via Financial Times

Edward Bramson, the activist investor targeting Barclays, has called on the bank’s chairman to end the “cycle of disruption” at the lender after British regulators opened an investigation into the relationship between its chief executive and Jeffrey Epstein.

In a letter to his investors, Mr Bramson said the Epstein probe was “another example of governance weakness that has led, inevitably, to the recurrent public disappointments and embarrassments which have plagued Barclays for so long”.

Mr Bramson sent the letter, which has been seen by the Financial Times, to shareholders in his Sherborne Investors vehicle last week, shortly after the bank revealed that chief executive Jes Staley was being investigated over his characterisation of the relationship with the deceased paedophile financier.

The investigation by the Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority is focused on whether Mr Staley downplayed his relationship with Epstein by characterising it as professional, according to multiple people briefed on the probe.

It is the second time that Mr Staley has faced a regulatory enforcement investigation. The latest probe comes less than two years after he narrowly kept his job following a whistleblowing scandal, which resulted in him being fined £640,000 for twice trying to reveal the identity of an anonymous whistleblower.

Mr Bramson stopped short of calling for Mr Staley to be fired, but said he hoped that the bank’s board would take “these matters seriously”. He also urged Nigel Higgins, Barclays’ chairman, to “indicate what long-term governance changes the board will make to end this cycle of disruption”.

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Earlier this week, the FT reported that Barclays was preparing to start the search for a chief executive to succeed Mr Staley, who is planning to step down next year.

Spokespeople for Barclays and Mr Bramson declined to comment on the letter.

Sherborne Investors and other funds managed by Mr Bramson are collectively the second-largest shareholder in Barclays, according to the letter, which was first reported by Bloomberg. The activist controls about 5.5 per cent of Barclays shares, according to one person briefed on the holdings.

The missive is the latest salvo in the battle between Barclays and Mr Bramson, who first invested in the bank in 2018 before agitating for the company to restructure its low-returning investment bank. Last year, the activist investor was heavily defeated in his attempt to secure a board seat, which he wanted so he could push the bank to scale the unit back.

Mr Bramson renewed his criticism of Barclays’ investment bank in the letter, arguing that it produces “such low returns” that its other businesses — UK retail and consumer credit cards — are unable to bring the lender’s overall profitability “anywhere near to its cost of equity”.

It follows a period of uneasy truce between Barclays and Mr Bramson, who dialled down his attacks after his board seat setback, saying he wanted to give Mr Higgins some time to turn the bank around since he took his position a year ago.

However, Mr Bramson signalled that he intends to revive his attack on the bank.

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“It has been roughly a year since we had a meeting with the chairman, Mr Higgins. We have requested another meeting with him, as he has now had several quarters of results from which to devise remedies for the strategic weaknesses,” he said.

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