Yahoo Finance Barclays defies critic Bramson as investment bank leads the charge
Barclays moved to fend off a break-up bid by activist investor Edward Bramson on Thursday with its best results for four years, including a strong performance from the investment bank Bramson wants to ditch.
Yesterday the investor upped his stake slightly to 5.41% as he agitates for change, telling investors that the investment bank eats up too much capital that could be given to shareholders.
On Thursday Barclays said that the trading arm is beating peers, especially in foreign exchange and equity derivatives. The bank also enjoyed its second-best quarter for investment banking fees, as it takes on bulge bracket players such as Morgan Stanley and Goldman Sachs in New York and London.
In the past three months Barclays saw overall profits edge up 1% to £1.7 billion. Charges for settling with the US Department of Justice over mortgage bond mis-selling and a fresh £400 million provision for PPI take it to a loss of £238 million, however.
Chief executive Jes Staley was bullish, saying the investment banking arm is now at “optimal” size, which suggests he won’t be hiring many bankers from Deutsche, which is cutting jobs.
He will meet Bramson soon, but thinks his plan is out of date.
“The horse is out of the barn. It would have been an interesting approach two years ago,” he told the Standard. “We engage with major shareholders all of the time. What we hear is very supportive of management.”
He added: “We want this engine to run for a little bit.”
Although the share price hasn’t moved much — it slipped 1p to 211p today — the balance sheet is strong enough that shareholders can expect rewards soon, said Staley.
This year’s dividend will be 6.5p and Barclays can start pondering share buy backs for the first time in 20 years.
Staley referred to Barclays “portfolio of diversified, profitable businesses”, a clear reference to Bramson’s desire for the bank to sell off much of its operations to focus on being a simple UK High Street lender.
An SFO investigation into a Qatar fund-raising back in 2008 hangs over the bank as does a claim from financier Amanda Staveley over her role in that enterprise. She claims to be owed £1.5 billion. The bank disputes the claim.
Last week the City watchdog said Staley wouldn’t have to resign over a botched attempt to identify a whistleblower, but that he would be fined. His bonus for the year is also likely to be axed.
Investec analyst Ian Gordon, in a note entitled “He’s coming for you”, said: “Yesterday’s announcement of [Bramson’s] increased stake certainly helps to concentrate the mind.” He added figures are “mixed” and “underwhelming”, with the numbers beating consensus because of an “unusually low impairment charge”.
