Shares in Barclays dropped 2.7% in early deals on Monday as investors reacted to news that the bank’s chief executive Jes Staley was resigning over a probe by the Financial Conduct Authority (FCA) into his links to convicted paedophile Jeffrey Epstein.
The British bank found itself joining other top fallers on the FTSE 100 index of blue-chip shares.
The agreement with the outgoing chief executive came after the release of preliminary conclusions in the investigation that the FCA carried out jointly with the Prudential Regulation Authority into Staley’s “characterisation to Barclays of his relationship with the late Mr Jeffrey Epstein and the subsequent description of that relationship in Barclays’ response to the FCA,” the bank said in a statement on Monday.
The bank added:
“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 the investigation did not reveal any proof that Staley “saw, or was aware of” any of the disgraced tycoon’s alleged crimes. Barclays refrained from further comment on the preliminary conclusions, acknowledging that the “regulatory process still has to run its full course”.
In an internal memo to Barclays staff, quoted by The Guardian, Jes Staley said:
“The reasons for my decision are simple. The FCA and PRA let me know on Friday evening the draft conclusions of their investigation into the characterisation of a professional relationship I developed earlier in my career. I do not want my personal response to those matters to be a distraction from the fantastic work you do every day to support our customers and clients.”
As subject to regulatory approval, taking over as chief executive with immediate effect is C.S. Venkatakrishnan (known as Venkat), the bank’s global head of markets who worked at JP Morgan Chase from 1994, prior to joining Barclays in 2016.
Epstein Links
It emerged back in February 2020 that an inquiry had been launched into Staley’s characterisation of his “dealings” with Epstein. Barclays revealed the existence of the probe in a statement to the stock exchange, saying the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA), part of the Bank of England that oversees banks, had launched the inquiry in December, centering on emails exchanged between the banker and the business tycoon. Those messages were handed to UK regulators by JPMorgan Chase.
Staley, who joined Barclays in 2015, said he had developed a relationship with Epstein, a JP Morgan client, in 2000, when he was hired to lead the private bank at JP Morgan which deals with wealthy customers.
A member of a protest group called "Hot Mess" holds up a sign of Jeffrey Epstein in front of the Metropolitan Correction Center on July 8, 2019 in New York City.
© AFP 2023 / STEPHANIE KEITH
Convicted paedophile Jeffrey Epstein had been arrested for sex trafficking and sexually abusing more than 200 women, including minors, and was awaiting trial when he died in his cell in August 2019.
In February 2020, Staley apologised for the relationship with Epstein.
“It’s been very well known that I had a professional relationship with Jeffrey Epstein… The relationship was maintained during my time at JP Morgan, but as I left Morgan the relationship tapered off quite significantly. We occasionally stayed in contact, and that all ended in late 2015.”
Staley added that the investigation “is focused on my transparency and openness with the bank regarding my relationship with Jeffrey Epstein. I feel very comfortable, that, going all the way back to 2015, I have been very transparent”. He added:
“Obviously I thought I knew him well and I didn’t. For sure, with hindsight with what we know now, I deeply regret having any relationship with Jeffrey.”
Staley is reported to have maintained communication with the billionaire for seven years after he was convicted of soliciting prostitution from a minor in 2008. Staley’s final encounter with Epstein is said to have been on the the financier's private Caribbean island in 2015, shortly the banker took over as Barclays’ chief executive in December.
This Tuesday, July 9, 2019 photo shows a view of Little St. James Island, in the U. S. Virgin Islands, a property owned by Jeffrey Epstein
© AP Photo / Gianfranco Gaglione
A Barclays spokesman said the bank, which had seen the email exchanges sent to the UK regulators, had been aware of the relationship with Epstein before Staley’s appointment in October 2015.
The board stated at the time it believed Staley had been “sufficiently transparent with the company as regards the nature and extent of his relationship with Mr. Epstein”.