Feb 28, 2019
Activist funds Barclays stake with $1.4bn BofA loan
Edward Bramson, the activist investor targeting Barclays, funded the majority of his stake with a $1.4bn loan from Bank of America under a complex arrangement that has angered other large shareholders. Mr Bramson has built a 5.5 per cent stake in Barclays and is trying to force his way on to the board of directors, where he hopes to engineer a shift in strategy that would involve jettisoning parts of the investment bank. Under an arrangement known as a "Funded equity collar", Bank of America borrowed the Barclays shares and sold them to Mr Bramson while also providing him with financing in the form of the loan. An executive at an uninvolved bank said he would not have extended a loan to Mr Bramson, because of an informal "Gentleman's agreement" that banks should not help activist investors target competitors. People familiar with the arrangement said that Bank of America was hedging its own exposure to Barclays' share price via the loan to Mr Bramson by shorting the UK lender's shares when the stock declined and buying them when it appreciated.
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