Barclays trading surge bolsters CEO in activist clash

Bloomberg

Barclays Plc’s Jes Staley has a stronger case to fend off the British lender’s activist shareholder as he delivers on a promise to grow its securities trading business.
The unit saw fixed income, currency and commodities income substantially outperform US peers in the third quarter, rising almost 10 percent. Equity trading revenue surged by more than a third, the bank said on Wednesday, beating the 7.7 percent average growth pace posted by US banks in the quarter. Revenue from trading equities boomed, driven by strength in derivatives and equity financing.
Staley, 61, is a believer in investment banking after spending over 30 years at JPMorgan Chase & Co., and has staked his reputation on boosting returns at the division. Revenue had sputtered after he took the helm of the bank in 2015, and since last spring, he’s been pressured by activist investor Edward Bramson. Now, as performance recovers, the bank is returning more capital and is suggesting that more is on the way. The shares climbed as much as 2.9 percent in early morning trade in London.
Barclays delivered a “solid performance,” said Raul Sinha, analyst at JPMorgan. “While there are challenges from Brexit-related economic uncertainty in the UK, with most legacy issues now behind, the group is well placed to take action to deliver “ with cost cuts and share buybacks, he said.
As revenue rebounds, Barclays also said it planned to redeem some US preferred shares from 2008, lowering its financing costs. It also repeated its intention to pay a 6.5 pence dividend for 2018.
“We’ll be meeting with Ed in the next couple of weeks,” Staley said of Bramson in an interview on Bloomberg Television. “I look forward to his ideas.” The activist has yet to articulate specifics of his strategy, the CEO said.
Staley has previously said the bank’s board is “100 percent supportive” and retreating from his plan is out of the question. Yet, Bramson has argued the board may be open to changing a strategy that he says relies too much on one-time items to boost profit. Bramson’s Sherborne Investors holds about 5 percent of the British bank.
Still, the corporate and investment bank unit remains the worst performing division at the lender.