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Pressure mounts on Barclays as key investor exits ahead of results

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Under pressure: Barclays CEO Jes Staley arrives at Downing Street for a meeting in London. Photo: TOLGA AKMEN/AFP/Getty Images

A major hedge fund backer of Barclays (BARC.L) has reportedly dumped its entire stake in the business, adding to pressure on the bank’s management.

The Financial Times reported on Sunday that Tiger Global, the US hedge fund, had sold its entire stake in Barclays. Tiger invested $1bn in the UK bank in 2017, but began reducing its holding in the middle of 2018 before exiting the stock altogether earlier this year, according to the report.

Barclays declined to comment when contacted by Yahoo Finance UK. Tiger Global could not immediately be reached for comment.

The move is a blow to Barclays CEO Jes Staley. Tiger was a supporter of Staley’s strategy to reinvigorate Barclays’ US investment bank, a plan that has been criticised by activist investor Edward Bramson.

Tiger’s departure leaves Barclays even more exposed to Ed Bramson’s Sherborne Investment Management,” Michael Ingram, the chief market strategist at WH Ireland, told Yahoo Finance UK. “This firm has built a 5.51% stake in Barclays and has been agitating for a withdrawal from investment banking and a return of risk capital to shareholders.”

A source told the FT that Tiger’s exit was motivated more by opportunities elsewhere than by Barclays’ performance. But Michael Hewson, the chief market analyst at CMC Markets UK, said in an email on Monday that Tiger’s selldown can “hardly be described as a vote of confidence.”

“The sale of this stake by Tiger Global is likely to increase the pressure on senior management from activist investor Edward Bramson who has been pressuring CEO Jes Staley to sell the underperforming investment banking division,” Hewson said.

Barclays stock was down by 0.4% as of lunchtime in London.

News of the sale comes ahead of Barclays’ fourth quarter results on Thursday, which are expected to show a tough few months for the investment bank. UBS said in a note on Monday that it is forecasting a 13% decline in revenues to $1.9bn for the division.

While this is largely in-line with a wider slump for investment banking in the fourth quarter, caused by a slowdown in trading activity, it will likely give Bramson more ammunition to attack Staley with.

Bramson, who has previously targeted firms such as Electra Private Equity, has been pushing for a Barclays board seat after the bank rebuffed his calls to change strategy. He has written to Barclays investors to try and gain support for his plan and hopes to force his way onto the bank’s board at Barclays AGM in May.

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Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.

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