Edward Bramson Shines a Spotlight on the Concept of the Free Market

We have examined the potential reconfiguration at Barclays before in Financial Regulation Matters, and in today’s post we will pick up on some comments made in today’s business media ahead of Barclays’ AGM on Thursday. The focus and speculation surrounds that of Edward Bramson, a so-called activist investor who many believe is aiming to cause substantial change within the massive bank. In this post we will look at Bramson more closely, and then discuss a concept that is being advanced as a ‘norm’ but which calls into question the very nature of the marketplace.

Edward Bramson has held many positions as one might expect of a serious investor, but it is through his investment vehicle Sherborne and Company that he is making headlines at the moment. Through that vehicle he has amassed a 5.5% stake in the bank and it is being reported across the business media that, tomorrow (Thursday), he will ask shareholders to elect him to the Board of the bank. His stated reason for this is that he wants to scale back the Bank’s investment arm and force it to focus on areas of stability (and growth in part) in their commercial and credit card departments. However, whilst sections of the business press suggest that he is unlikely to be elected to the Board, it has been discussed that there are concerns around the performance of the investment arm and that his suggestions may carry more favour than people expect. It is indeed a battle for the ideology of the bank, with current CEO Jes Staley priming the bank to take on the Wall Street elite, and Bramson wanting to change the focus inwards. Yet, whilst the Financial Times made the interesting comparison between Bramson and the ‘Night King’ from HBO’s Game of Thrones, there is an underlying issue that has been brought into the limelight that forces us to ask what the economic reality is in today’s society.

Writing for the Financial Times, John Gapper states that, since the Crisis, ‘regulators are rightly cautious about how banks are run, and would look sceptically on an abrupt change of strategy pushed through by a maverick’. This declaration is interesting for a number of reasons. Firstly, yes it is right that regulators be cautious, but on the same day that regulators have allowed Lloyds to reduce their capital buffer, it is difficult to see complete consistency in this cautious approach. Yes, the two are very different, but the issue is that regulators are not necessarily equipped to run a multinational bank, so is it correct that they may have the opportunity to define the approach taken by one of those banks? Regular readers will know that the approach taken here in the blog is certainly not one of brazen free-market capitalism, but the suggestion made by Gapper is not insignificant. This is a leading financial media outlet supporting Staley’s view of taking Barclays further into Wall Street – but, is he right in doing so? The performance of the investment arm suggests not, but this is counteracted by the widely held belief that a diversified bank is better equipped to deal with storms. That may be widely believed, but that does not make it the only approach. It is unlikely that Bramson will be successful in the AGM, but the media coverage of this issue demonstrates a wider problem whereby massively impactful decisions are being guided by journalists and potentially rubber-stamped by regulators who may not, necessarily, have the expertise to make such decisions in the private bank’s business.


Keywords – Edward Bramson, Barclays, Banking, Business, @finregmatters

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