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Activist investor Edward Bramson gives up on Barclays fight

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·Senior City Correspondent, Yahoo Finance UK
·2-min read
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Barclays offices in New York, US. Photo: Seth Wenig/AP
Barclays offices in New York, US. Photo: Seth Wenig/AP

Jes Staley's bête noire has waved the white flag.

Sherborne Investors, the investment vehicle of activist investor Edward Bramson, has sold its entire stake in Barclays (BARC.L). A Sherborne feeder fund (SIGB.L) said in a filing in Guernsey on Friday that it had sold its 6% stake in the bank.

Bramson waged a three year battle to convince Barclays to slim down its investment bank, arguing it would improve the bank's share price. His retreat is a victory for Barclays chief executive Staley, who has long defended the investment bank.

Read more: Edward Bramson's full letter to Barclays shareholders calling for board seat

Sherborne said there were better ways to invest its money.

"The risk of and rewards from a new investment opportunity that [Sherborne] has identified offers a better return to the Company's shareholders than a continuing investment in Barclays," the company said.

Sherborne first invested in Barclays in 2018, taking just over a 5% stake in the bank and becoming its fourth largest shareholder.

The company then quietly waged an activist campaign to wind down investment banking activities at Barclays, arguing the division was weighing down the share price. Notoriously private Bramson petitioned investors in 2019, asking them to elect him to the Barclays' board to push for change. He ultimately suffered a heavy defeat

Watch: Barclays Chief India Economist Bajoria on India's Growth Outlook

Read more: Edward Bramson suffers heavy defeat in Barclays battle

Bramson vowed to fight on and last summer he renewed his call for Barclays' to slim down its investment bank in a letter to shareholders.

In recent quarters, Barclays' investment bank has been a standout performer. Surging business at the division helped Barclays to report its highest quarterly profit in a decade at the start of 2021.

The performance appeared to validate Barclays chief executive Jes Staley's argument that a diversified business model would help the bank weather different economic climates. Staley has consistently resisted Bramson's calls for change.

"Since the early days of the pandemic last year, our diversified business has demonstrated the resilience critical to ensuring Barclays’ financial integrity," Staley said in an earnings statement last week.

"Staley was mainly right, Bramson was mainly wrong," said Neil Wilson, chief market analyst at Markets.com. "When consumer and business growth markets are strained – like during the pandemic – volatility in financial markets creates a good environment for trading revenues to prosper."

Sherborne's announcement helped Barclays' shares jump 1.4% in early trade in London on Friday, outperforming rivals. The stock is around 14% below the level Sherborne invested at.

Watch: What are negative interest rates?

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