Barclays now free to pay "good and capable" traders large bonuses
Now that activist investor Edward Bramson has sold his stake in Barclays, traders at the bank can sleep more soundly at night, safe in the knowledge that they probably won't suddenly find their activities or their pay horribly curtailed.
For those with short memories, Bramson spent the past few years hassling Barclays to both trim its corporate and investment bank and part company with CEO Jes Staley. In an investor letter last August, he recommended that Barclays 'do a Deutsche Bank' and reduce assets attributed to its corporate and investment bank by 24% while 'optimising' its trading business. Deutsche Bank, needless to say, pulled out of equities sales and trading altogether in 2019. Nomura did much the same.
In the first quarter of 2021, however, Barclays' equities sales and trading business delivered revenues that were up 65%, while the corporate and investment bank generated returns of nearly 18% - disproving Bramson's argument that it couldn't cover its cost of capital. Barclays boosted spending on variable compensation (bonuses) accordingly.
In his statement announcing the sale of the Barclays stake, Bramson says the bank employs, "employs many good and capable people." Following the strong first quarter, traders and investment bankers might presume he's referring to them. Having bought Barclays' shares for 200p in March 2018 and sold them for an average of 186p recently, Bramson himself has turned out to be the loser after all.
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