Activist investor Bramson looks to influence Barclays’ chairman succession plans

Activist investor Bramson looks to influence Barclays’ chairman succession plans

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John McFarlane
Barclays chairman John McFarlane

Activist investor Ed Bramson is flexing his muscles at British bank Barclays as he looks to influence the bank’s succession plans for chairman John McFarlane.

Mr Bramson’s fund Sherborne Investors said the chairman’s replacement was among a number of issues it raised with the lender after taking a 5.4% stake earlier this year.

In a statement released alongside its half year results, Sherborne said it was “engaging with Barclays” on issues including “capital allocation quality of earnings, capital adequacy, cost structure, and the search process for and mandate of a new chairman.”

The firm said it “believes that addressing these matters could improve Barclays’ financial strength and its long-term competitive position, leading to an increase in shareholder value in line with the Investment Manager’s customary return objectives.”

It now plans to “continue its dialogue with Barclays for as long as it appears to be appropriate to do so.”

Barclays declined to comment.

Mr McFarlane – known as Mack the Knife given his penchant for cost cutting, restructuring and executive shake ups – joined the bank in 2015, replacing Sir David Walker.

The chairman stressed earlier this year he planned to serve a minimum of four years, and speculation over his imminent departure was “somewhat premature.”

But speaking at Barclays’ AGM earlier this year, Mr McFarlane said he would make sure the bank was ramping up succession plans before he eventually steps down.

“Managing chair succession, particularly in major banks, can be a difficult matter and take an extended period. In my own case it took well over a year,” he told shareholders.

Mr McFarlane said he had asked the bank’s nomination committee “to be fully prepared for this eventuality, internally and externally, and to confirm to the board that this is well in hand.”

Barclays, Finance

Sherborne has been relatively tight lipped about its intentions Barclays stake, though reports suggest Mr Bramson is seeking higher returns from Barclays’ investment bank and looking for bigger payouts for shareholders.

Barclays chief executive Jes Staley confirmed last week he had met with Mr Bramson and would be meeting with him again after the bank released its half year results.

He said the activist investor had not outlined its strategy to Barclays.

Barclays last week reported a 29% fall in pre-tax profit to £1.7 billion for the six months to June 30, while total income for the period was flat at £10.9 billion.

Profits were knocked by a £400 million PPI charge and a £1.4 billion settlement with US authorities over its sale of mortgage-backed securities in the lead-up to the financial crisis – both of which were logged in the first quarter.

When stripped of litigation and conduct costs, half-year pre-tax profits rose 20% to £3.7 billion.

Barclays corporate and investment bank (CIB) reported a 17% rise in pre-tax profits for the half year to £2 billion, while total income from the division rose just 1% to £5.4 billion.

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