Barclays Activist Investor Edward Bramson Sells Entire Stake -- 2nd Update

By Simon Clark 

LONDON -- Edward Bramson's Sherborne Investors said it sold its entire stake in Barclays PLC, giving up on a yearslong activist campaign to restructure the bank the British bank with a major Wall Street presence.

Sherborne, which seeks to influence the strategy of companies it owns shares in, was one of the bank's biggest shareholders with a 6% stake, worth around $2.5 billion.

Mr. Bramson unsuccessfully attempted to join the board of Barclays and petitioned its chief executive, American banker Jes Staley, to scale back investment-banking operations in favor of investing more in its U.K. retail bank.

Sherborne struggled to turn a profit on Barclays. Since it disclosed its stake in March 2018, Barclays shares, including dividends, returned a loss of around 8%, according to FactSet. The S&P 500 over that time has given investors a total return of more than 60%. Barclays shares rose 2% Friday.

"It is a pity that the opportunity did not arise to join the board of Barclays to assist in a turnaround," Sherborne said in a statement.

A Barclays spokesperson declined to comment.

Other investors have also found it difficult to capitalize on the troubles of Europe's deeply discounted banks. New York-based private-equity firm Cerberus Capital Management LP acquired large stakes in Germany's Deutsche Bank AG and Commerzbank AG in recent years and pushed for changes, while the share prices of both banks have languished.

Mr. Bramson's retreat is a vindication for Mr. Staley, who opposed Mr. Bramson's vision for a smaller, less risk-taking Barclays that would focus more on its bread-and-butter U.K. lending business. He kept a large investment-banking operation, which proved to be a strong source of profits during the pandemic.

"The war is over," Investec Securities analyst Ian Gordon wrote in a note. "Barclays' management had de facto already 'won the argument' with Sherborne regarding the future business mix of the group."

The conflict between Mr. Bramson and Mr. Staley was tense at times. Early on, Mr. Staley told colleagues: "He wants us to retreat into a foxhole? He should go back to Connecticut," referring to the state where Mr. Bramson had a home.

Mr. Bramson also criticized Mr. Staley for his professional relationship with late financier and convicted sex offender Jeffrey Epstein.

In March 2020, Sherborne called on Barclays to withdraw its support for Mr. Staley and said it would vote against his re-election at the bank's annual meeting. A month later, Sherborne said that "with great reluctance" it would only withhold its vote on Mr. Staley's re-election because of the challenges the bank faced during the coronavirus pandemic.

"We continue to believe that Mr. Staley has not demonstrated the level of judgment befitting a director or senior executive of the company," Sherborne said in April 2020.

The U.K.'s Financial Conduct Authority and Prudential Regulation Authority have been examining Mr. Staley's characterization to Barclays of his relationship with Mr. Epstein and the bank's subsequent description of the relationship to regulators.

Mr. Staley previously led JPMorgan Chase & Co.'s private bank, where he met Mr. Epstein, who was a client. Last year, he said he regretted having had any relationship with Mr. Epstein.

Sherborne struck a more conciliatory note as it sold its shares in Barclays.

"Business is not a science and so people of goodwill may, therefore, sometimes differ," Sherborne said Friday.

Sherborne said it had begun building a position in another unidentified company.

"We think that the new investment will produce better returns and has a clearer prospect of our becoming engaged in an operating turnaround, which is the primary contributor to Sherborne Investors' investment returns," the company said in a statement.

Write to Simon Clark at [e-mail]

(END) Dow Jones Newswires

May 07, 2021 07:47 ET (11:47 GMT)

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