Portfolio

Barclays calls on shareholders to vote against Bramson appointment

By Michele Maatouk

Date: Thursday 11 Apr 2019

Barclays calls on shareholders to vote against Bramson appointment

(Sharecast News) - Barclays released a statement on Thursday highlighting its opposition to the appointment to the board of Edward Bramson, the activist investor calling for the bank to shrink its investment arm.
The statement came in response to an open letter earlier in the week from Bramson's fund, Sherborne Investors, which owns a 5.5% stake in the bank.

In the letter, Sherborne said: "We believe that the market's evaluation of Barclays' shares reflects the growing risks that the CIB poses to Barclays' overall financial position and that the market does not share the board's optimism that the hidden merits of its strategy will eventually become apparent.

"Continuation on the existing course represents a real threat that more new capital will need to be raised to underpin the activities of the CIB. We believe that any new capital invested in the CIB is almost certain to cause an immediate destruction of shareholder value, as it would be valued in the market at significantly less than the amount invested in it, which we also believe is true of the capital invested in the CIB today."

Sherborne went on to say that as a chairman or chief executive of several quoted commercial, industrial, and financial companies in the UK and US, Bramson has "substantial familiarity" with public companies in the course of organisational change.

"In view of Barclays' most recent announcements of sudden management realignments and departures, we believe that Mr. Bramson's experience and temperament would be a strongly stabilising influence on the board," it said.

But Barclays hit back on Thursday, unanimously recommending that its shareholders vote against the resolution requisitioned by Sherborne at the Barclays AGM on 2 May.

Chairman John McFarlane said: "Shareholders will have received a request for Mr Bramson, representing a shareholder, to join the Board to promote a reduced investment by the Group in Barclays' CIB franchise. In considering this, shareholders need to appreciate how damaging this could be. Essentially we have a leveraged investor seeking enhanced returns by disrupting the deliberations of the board in favour of its specific interest.

"One thing we do have in common with Mr Bramson is that we are well aware that returns from this business have been below our required return level, and we are taking the necessary steps to remedy this. For the avoidance of doubt, Barclays has no strategy to commit significantly more financial resources to its CIB."

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