Barclays to cut investment-bank bonuses as Bramson looms

Barclays not rewarding their underperforming division. (Bloomberg pic)

SAN FRANCISCO: Barclays Plc plans to cut bonuses for investment bankers in a bid to improve performance and ward off activist investor Edward Bramson, the Financial Times reported.

Bonuses for the first quarter at the underperforming investment-bank division may decline by double digits from a year earlier, the newspaper reported, citing people it didn’t identify who were briefed on the plans. The payments will be more closely tied to performance as the London-based bank seeks to cut costs, the Financial Times said.

Barclays Chief Executive Officer Jes Staley, in charge since 2015, has pushed a strategy of expanding the firm’s investment-banking operations – a plan that has come under increased pressure since Bramson’s Sherborne Investors began buying up shares and agitating for change. The division that houses trading and investment banking has the lowest return on equity, a measure of profit, of any unit at the UK bank.

Simon Hailes, a spokesman for Barclays in London, declined to comment.

The bonus shake-up is part of efforts to oppose Bramson before Barclays’ annual meeting on May 2, the newspaper reported. The investor is seeking to get a seat on the bank’s board, a move that directors have opposed. Shareholder advisory firm Glass Lewis & Co. has also recommended against his nomination.

In a letter on April 8, Bramson said Barclays could be forced to raise capital, sell lucrative businesses or cut dividends if it persists in prioritizing its investment bank. The abrupt departure of Tim Throsby, who ran the investment bank until last month, put the division under the direct control of Staley.