Barclays gears up for showdown with Edward Bramson

Barclays is considering shaking up pay in its investment banking arm, as it looks to fight off activist shareholder Edward Bramson, according to reports.

The blue chip bank, which reports first quarter numbers on Thursday, has not commented. But according to the Financial Times, Barclays is planning to cut bonuses as part of a wider cost-cutting drive at the underperforming unit.

In particular, the rate at which bankers accrue annual bonuses would be more closely tied to performance, the newspaper said, citing unnamed sources who had been briefed on the plans. The FT also said that the bank was considering taking a tougher stance on promotions.

It is the latest in a series of moves by Barclays to fend off the British-born, New York-based Bramson, who is now Barclays’s third-biggest investor after building up a 5.5% stake through his Sherborne Investors vehicle.

He is agitating for Barclays to shake up its corporate strategy and structure, including shrinking the investment banking business, refocusing on retail and improving returns. He is also seeking election to the board at the annual general meeting on 2 May.

Barclays chief executive Jes Staley, however, wants to maintain the bank's presence in global investment banking.

The board has already been shaken up, with a total of five directors either resigning or not seeking re-election. Outgoing chairman John McFarlane will be succeeded by Rothschild banker Nigel Higgins.

The lender received a boost when two shareholder advisory services – ISS and Glass Lewis – recommended investors back Barclays and vote Bramson’s resolution down. Pirc, which advises pension funds, has abstained, however, noting that shareholders might be advised to vote in favour of Bramson in 2020.

Another key factor will be the first-quarter results. Michael Hewson, chief market analyst at CMC Markets, said: “It’s set to be a big week for European banks in the wake of last week’s US bank numbers, which showed that investment bank and trading revenue was falling short of expectations in the first quarter.

"If US banks are struggling in this fashion, then one can only imagine the problems facing their UK and European peers. With Barclays, a continued underperformance in its investment banking division is likely to crystallise divisions with Bramson.”