Bramson aims too high
ONE completely understands why so many UK long funds are invested in disrupter Ed Bramson’s Guernseybased Sherborne Investors.
He has in the past delivered stonkingly good returns from holdings such as Elementis and F&C.
But he also laid waste to Electra, which was a valuable fund investing in a diverse portfolio of private enterprises.
It bridged a gap in the UK financial system between venture capital and nextstage investment. The way in which Bramson plundered its holdings was shameful.
His attack on Barclays is a huge step up from the past. Barclays’ market value of £27bn is twenty times that of Electra. As a bank it stands at the heart of the nation’s economy and it is highly regulated.
Hopefully, fund managers who have done so well out of some of Sherborne’s previous raids are aware of this.
The big investors in Sherborne’s most recent fundraising – Invesco, Aviva Investors, Janus Henderson, Jupiter and Schroders – read like a Who’s Who of the City.
Indeed, many of these investors were the very same funds who turned their guns on Paul Polman and Unilever when it tried to shift the leading consumer group’s domicile from London to Rotterdam.
What the fund managers now need to consider is whether they back Bramson’s knowledge of banking over that of Jes Staley, chief executive of Barclays and veteran of JP Morgan, and a board stuffed with the great and good of British business.
The chief investment officer of Aviva Investors David Cummings, among others, might also want to think about the broader implications of the attempt to pull Barclays out of corporate and investment banking.
It would leave Britain without a full service investment bank, reduce competition and allow the Americans to tighten their grip and pricing power.
As importantly, if Barclays can be a target for activist mischief then what about Aviva itself, about half the size of Barclays with a market value of £15bn, and the subject of uncertainty following the sudden departure of New Zealand boss Mark Wilson?
Aviva chairman Sir Adrian Montague, a City grandee, ought to be less than happy that its investment arm is backing a Guernsey fund against a pillar of British finance.
As the regulator, the Bank of England cannot look at Bramson’s raid kindly.
The Bank has a history of intervening to keep Britain’s banks safe and their reputation intact, and was instrumental in ridding Barclays of Bob Diamond after the Libor scandal. It is unthinkable it would regard Bramson as a proper person to grace Barclays’ board.
Kim’s world
THE sudden resignation of Jim Yong Kim from the World Bank caught Britain’s Department for International Development on the hop.
As a big shareholder in the World Bank and a major donor to its International Development Association arm, which finances poor nations, the UK has more than a passing interest in what happens.
It was only a few months ago that Kim was making passionate pleas for his new human development index, which seeks to lift young people out of poverty by targeting stunted growth and education.
Kim has never been wildly popular at the Bank because of his insistence that it cut staff extravagance. But he delivered where some predecessors struggled, in the shape of new capital which increased lending capacity. Indeed, it is one of the few multilateral institutions to have been fully funded since Trump arrived at the White House.
Who will replace Kim? Historically, the Bank has been headed by an American and the idea that Trump, of all people, will be looking to cede the top slot to someone from the developing world looks unlikely.
The best the Bank and international community can hope for is a least-bad choice rather than an extremist such as Steve Bannon. Trump potentially could revert to the practice of turning to Wall Street – if he can find an untainted candidate.
Full baskets
THE main argument made for the Sainsbury’s-Asda merger is that Britain’s grocers face some kind of existential crisis given the threat of Silicon Valley competition.
That is not borne out by the Kantar Christmas trading data, which shows consumers spent a record £29.3bn with the grocers over the period, an average of £393 per household. Case unproven.