* Bramson's stake seen as too small for board seat
* Bramson has history of joining boards to drive change
* Woos investors ahead of May 1 annual meeting
By Sinead Cruise and Simon Jessop
LONDON, April 19 (Reuters) - Major Barclays shareholders will baulk at any bid by activist Edward Bramson to gain a seat on the bank's board, despite giving their cautious backing to the biggest bet of his career.
Bramson's 5 percent shareholding, revealed last month, was broadly cheered by investors as pressure mounts on Barclays to fix low returns at its investment bank, the lender's biggest profit engine before the financial crisis.
But there is speculation that Bramson, a turnaround expert - famed for leading corporate shake-ups from within - might push for a boardroom makeover at Barclays' annual shareholder meeting on May 1 as part of a plan to boost its depressed stock.
Bramson, together with Stephen Welker, co-managing director of investment vehicle Sherborne Investors, has pursued 10 activist campaigns since 2003, six of which involved direct engagement with the companies' boards, according to filings.
All six of the campaigns eventually saw principals of Sherborne Investors join those boards.
But several shareholders in the British bank said any agitation for a Barclays board seat would be inappropriate given that so little is known about Bramson's aims, forcing him to tackle Barclays as an outsider.
"I can't think of any particular reason to want him on the board with a 5 percent stake," James Mahon, chief executive and chief investment officer at Church House Investments, said.
"I know it's forever getting bad press, but actually I think [Barclays management] are doing the right things now and I'm not quite sure what Bramson is going to bring to it," he added.
Sherborne Investors C, the investment vehicle which owns the 5 percent stake, has until April 24 to make any statement to shareholders that might affect the tone of the AGM or prompt a management response.
Bramson has until 48 hours before the May 1 meeting to call for an amendment to any resolution already proposed and could requisition a special shareholder meeting (EGM) at any time.
A spokesman for Sherborne declined to comment. Barclays declined to comment.
Industry sources said New York-based Bramson had visited London in recent weeks to reconnect with Sherborne shareholders but details on his Barclays plans remain sparse.
Some shareholders say Bramson is most likely to target perceived structural and operational weaknesses in Barclays International, where capital is shared between the successful corporate lending, credit cards and payments businesses and the investment bank.
"You'd think it was something to do with the investment bank as it's the nettle to be grasped. The trouble is, a lot of the value that's created goes to the staff," one investor told Reuters, highlighting the issue of staff costs that Bramson might have in his sights.
"I don't believe a shareholding of 5 percent merits a position on the board in a company as large and as complex as this," the investor, who did not want to be named, added.
Some question whether Bramson's strategy would be materially different from the bank's own drive to boost performance.
"I think management are doing quite a good job," Steve Magill, Head of European Value at UBS Asset Management told Reuters.
"[Barclays Chief Executive] Jes Staley and his predecessors have done a lot of work and the company is in much better shape than it was," Magill said, adding that he would need more information on Bramson's agenda before backing any move to join the board.
Neverthless, Bramson's track record in forcing companies to deliver greater shareholder value has given investors grounds for optimism.
According to filings, Sherborne made an average 166 percent total return for unaffiliated shareholders in four of its UK targets - 4imprint, Elementis, Spirent Communications and F&C, now BMO Global Asset Management.
Bramson's low profile approach has unsettled some longer term investors, who say greater transparency is important for minimising the potential for market rumours, which could distract management and destabilise the shares.
One top-50 investor said any Bramson move to trim capital employed in the investment bank would hit revenues and raise costs at arguably the wrong point in the cycle. It could even need a new CEO and chairman to push the plans through.
"For this reason we wouldn't, I suspect, support Bramson going on the board," he said, speaking on condition of anonymity.
To date, Sherborne has had one meeting with Barclays' Company Secretary and the head of investor relations after the bank's results in February, but is yet to meet Staley or Chairman John McFarlane, two sources familiar with the matter said.
"We are all sitting a little bit in the dark until he's a bit more vocal," said a top-20 investor, who would also resist a push for a board seat with such a small shareholding. "For me it's more a point of principle."
Barclays is approaching the end of a multi-year revamp, including the sale of billions of pounds of assets and the settlement of almost all its historic misconduct charges.
The arrival of rainmakers like Tim Throsby at Barclays and a focus on key businesses like bond, stock and currency trading and M&A advisory has put the investment bank on track to deliver higher returns by the next financial year.
The bank has also restored its dividend and pledged to consider share buybacks after settling a U.S. probe into the bank's alleged misselling of mortgage-backed bonds.
Barclays shares are up 5.3 percent in the year to date, but are down 0.5 percent since Sherborne's stake became public on March 19.
Some industry sources say this reflects scepticism that Bramson can achieve anything more than holding management to account for their restructuring efforts.
With the bank's makeover mostly complete, and a profit-boosting change in global interest rates imminent, Mahon said Bramson was just "pushing on an open door".
"Because we've all hated the banks for so long, one has rather lost sight of the fact that if rates go up, banks will benefit," Mahon said.
"So I think that he has probably, quite shrewdly, timed it rather well. I'm not sure it's much more subtle than that." (Editing by Jane Merriman)