Barclays raider’s radical plan to shake up Jes Staley’s banking empire revealed

Shake-up: Activist Ed Bramson has laid out plans to shrink Barclays' investment banking arm: General generic barclays bank File photo dated 05/02/13 of a general view of a branch of Barclays bank. The bank has announced that its total bonus pool for 2013 rose to £2.38 billion from £2.17 billion for 2012, including a £1.57 billion payout for its i

Activist investor Edward Bramson is plotting a radical shake-up of Barclays’ investment bank by winding down its entire powerhouse trading arm to free up billions in capital.

The New York tycoon has sounded out investors about taking aim at Barclays’ Markets division, the capital intensive unit focused on trading bonds, commodities and currencies by either selling or running down the division over the next two to three years, according to three sources.

Bramson, who has built a 5% stake through Sherborne, has mentioned Citadel as a possible buyer of the division’s assets, according to one source.

Shedding the division, split across desks in Canary Wharf and Wall Street, could free up around £60 billion capital to boost Barclays’ balance sheet, paving the way for shares to soar and higher payouts for investors.

The raider’s move could put him on a collision course with Barclays chief executive Jes Staley, who has pledged to stick by the division.

“There’s going to be a bust-up,” said one source. Barclays and Sherborne declined to comment.

Sherborne’s management, led by Bramson, flew into London last week to lay out their thesis to investors but have yet to present it to Barclays.

Removing so-called “FICC” — fixed income, commodities and curriencies — would transform the investment bank division — formed 30 years ago as BZW — into a capital-light unit focused on merger and acquisition advice.

The unit employs nearly 10,000 in front office roles.

Shedding FICC was a move once championed by former chief executive Antony Jenkins but Staley, a former JPMorgan banker, wants to maintain a strong presence to compete on Wall Street.

Staley last year admitted the division was “not yet delivering” but pledged to drive up returns by reallocating capital.

Barclays has to tie up capital to back a litany of fixed income contracts under capital buffer regulations.

Barclays is expected to follow rivals Morgan Stanley and Goldman Sachs in showing a strong quarter for FICC when it unveils quarterly results next week, possibly undermining Bramson’s assault.

Winding down the Markets division could also be costly, denting the possible returns on offer from the move.

“You can’t turn water into wine that easily. There are frictional costs with it that you have to bear in mind,” said a source.

Sherborne is also understood to be keen on shaking up the Barclays boardroom saying there are too few dyed-in-the wool investment bankers as non-executives.