Barclays CEO Jes Staley arrives at 10 Downing Street, in London, on Jan. 11, 2018.PETER NICHOLLS/Reuters
Barclays chief executive officer Jes Staley is leaving the bank after a dispute with British financial regulators over how he described his ties with convicted sex offender Jeffrey Epstein.
Mr. Staley will be replaced as CEO by the bank’s head of global markets C.S. Venkatakrishnan, who pledged on Monday to continue his predecessor’s strategy for Britain’s third-biggest bank by market value.
Mr. Staley’s shock departure comes after Barclays was informed on Friday of the unpublished findings of a report by Britain’s Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA) into Mr. Staley’s characterization of his relationship with Mr. Epstein, who died by suicide in jail in August, 2019, while awaiting trial on charges related to sex trafficking.
“In view of those conclusions, and Mr Staley’s intention to contest them, the Board and Mr Staley have agreed that he will step down from his role as Group Chief Executive and as a director of Barclays,” the bank said.
“It should be noted that the investigation makes no findings that Mr Staley saw, or was aware of, any of Mr Epstein’s alleged crimes, which was the central question underpinning Barclays’ support for Mr Staley following the arrest of Mr Epstein in the summer of 2019,” it said in a statement.
The investigation has yet to be published, although regulators have said previously that it was focused on how truthful Mr. Staley was about his ties to Mr. Epstein.
If Mr. Staley is found to have misled regulators he could face a fine, a ban from Britain’s financial industry or both.
Barclays shares fell 2 per cent after the announcement, before paring losses to trade down 1 per cent at 1:15 p.m. GMT, underperforming European rivals.
‘I THOUGHT I KNEW HIM WELL’
Mr. Staley dealt with Mr. Epstein during his long career at JPMorgan, where Mr. Epstein was a major private banking client until 2013.
A college dropout who styled himself as a brilliant financier, Mr. Epstein socialized in elite circles, including with former and future U.S. presidents. In 2008, he was registered as a sex offender but continued to maintain ties with powerful players in business and finance.
The New York Times reported in 2019 that Mr. Epstein had referred “dozens” of wealthy clients to Mr. Staley. It reported Mr. Staley visited Mr. Epstein in prison when he was serving a sentence between 2008-09 for soliciting prostitution from a minor, while Bloomberg reported he visited Mr. Epstein’s private island in 2015.
Mr. Staley told reporters last February that his relationship with Mr. Epstein had “tapered off significantly” after he left JPMorgan in 2013, and that he had not seen the disgraced financier since taking over as CEO of Barclays in 2015.
“I thought I knew him well, and I didn’t. I’m sure with hindsight of what we all know now, I deeply regret having had any relationship with Jeffrey Epstein,” he said at the time.
Mr. Epstein’s links with prominent men have come back to haunt some of them.
Leon Black, the billionaire investor, stepped down from Apollo Global Management, the private equity firm he co-founded, earlier this year after an outside review found he had paid Mr. Epstein US$158-million for tax and estate planning.
Prince Andrew has quit royal duties over his associations with Mr. Epstein, while Microsoft co-founder Bill Gates has said it was a “huge mistake” to spend time with the financier.
Britain’s FCA and PRA regulators said in a statement they could not comment further on the Epstein investigation, which was launched after JPMorgan provided them with e-mails between Mr. Epstein and Mr. Staley from Mr. Staley’s time as head of JPMorgan’s private bank, the Financial Times reported last year.
RIGHT STRATEGY
Mr. Staley told staff in an internal memo seen by Reuters that he did not want his personal response to the investigations to be a distraction.
“Although I will not be with you for the next chapter of Barclays’ story, know that I will be cheering your success from the sidelines,” he said.
Mr. Staley has 28 days to formally notify the FCA that he is contesting its findings, after which an independent committee inside the watchdog will uphold or reject its conclusions, a source familiar with the process told Reuters.
If upheld, the investigation passes to an independent Upper Tribunal, which again can back or reject the findings, the source said, in a process that could take months.
The bank’s new CEO, Mr. Venkatakrishnan, who followed Mr. Staley to Barclays from JPMorgan, told staff on Monday the strategy put in place by his predecessor was “the right one,” according to a separate memo also seen by Reuters.
Mr. Venkatakrishnan added that he would announce changes to the organization of the investment bank in the coming days, likely to mean filling his previous role and any other resulting vacancies, sources at the bank said.
Barclays’ share price has fallen 9 per cent since Mr. Staley joined the bank nearly six years ago, a tenure not without controversy.
His greatest success, insiders and analysts say, was to fight off a campaign by activist investor Edward Bramson in 2018 to have Mr. Staley removed on the grounds that Barclays’ investment bank was underperforming and should be cut back.
Mr. Bramson sold his stake earlier this year, and the bank’s recent results have shown the investment bank performing strongly.
Also in 2018, Britain’s financial regulators and Barclays fined Mr. Staley a combined £1.1-million ($1.9-million) after he tried to identify a whistle-blower who sent letters criticizing a Barclays employee.
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