Barclays faces showdown with activist Bramson

At Barclays' annual meeting on Thursday the bank will try to fend off an attempt by activist investor Edward Bramson to elbow his way onto the board.

Bramson, whose Sherborne Investors has a 5.5% stake in Barclays, wants the bank to scale back its investment bank, which he says is underperforming and a drain on capital. He has the support of some institutional investors that have bought into his fund.

Barclays has held talks with Bramson and appears to have responded to some of his criticisms. It has acknowledged that returns at the investment bank are too low and has let it be known it is taking a tougher line on pay at the division. John McFarlane, a target for shareholder criticism, will stand down at the meeting.

But the bank has urged shareholders to vote against a resolution appointing Bramson to the board. Bramson has argued he needs a board seat to get the information required to make detailed proposals on Barclays' strategy.

Bramson, based in New York, built his reputation by investing in a series of underperforming UK companies in the past 15 years. His customary strategy is buy a stake and force his way onto the board while agitating for cost cuts and shareholder payouts.

Unlike some activist investors, Bramson prefers to work behind the scenes than to use publicity to get his way. The annual meeting will be his most public engagement so far with Barclays.

Barclays is by far Bramson's biggest bet and is proving a tougher nut to crack. Though shareholders are unhappy with the bank's performance, many are unsure about Bramson. As a highly regulated company, Barclays may also be shielded by the Financial Conduct Authority, which may not want an aggressive outsider on the board.

Two investor advisory groups, ISS and Glass Lewis, backed Barclays by recommending shareholders reject Bramson's resolution. Pirc, another shareholder adviser, recommended abstaining but put Barclays on notice that change was needed to ward off Bramson.

Pirc said: "Accusations that the election of Mr Bramson would lead to a destabilisation of the ‘board team’ ring somewhat hollow when the bank’s board has been unsatisfactory for a number of years … We understand that new board appointments are being considered. Until there is clarity on who those people will be and without improved performance, effective board replenishment and sharpened strategic focus, Mr Bramson or another candidate may be a more attractive option in 2020."