Barclays CEO Jes Staley. Picture: REUTERS/PETER NICHOLLS
Barclays CEO Jes Staley. Picture: REUTERS/PETER NICHOLLS

London/New York — Barclays CEO Jes Staley is being investigated over his ties to disgraced financier Jeffrey Epstein, his second run-in with British regulators since he joined the bank in 2015.

The bank said regulators are probing how Staley characterised his relationship with Epstein, the convicted sex offender who died in his prison cell last year. The newest probe is another distraction for Barclays as it faces additional challenges to meet its profit goals. In 2018, Staley was fined for his attempts to uncover a whistle-blower.

“I deeply regret having had a relationship with Jeffrey Epstein,” Staley said on a conference call as Barclays reported fourth-quarter results. Barclays said the CEO retains the “full confidence” of the bank’s board. Staley, a former senior banker at JPMorgan Chase, was among a swath of prominent financiers whose ties to Epstein came under the spotlight after his arrest.

Epstein died in prison after he was arrested last year on charges of sex-trafficking minors. Starting in 2000, Epstein regularly brought Staley business when he ran JPMorgan’s private bank and the two were close professionally, a person familiar with the matter said last year.

“The investigation is actually focused on transparency, and whether I was transparent and open with the bank and with the board with respect to my relationship with Jeffrey Epstein,” Staley said on Bloomberg Television. “It’s clear in my own mind, going all the way back to 2015 when I joined Barclays — I have been very transparent with the bank and have been very willing and open to discuss the relationship that I had with him.”

At the beginning of his tenure at Barclays, Staley repeatedly and improperly attempted to unmask the identity of whoever sent letters to members of the bank’s board and another executive

The probe started in December, Staley said. Barclays said earlier that in the year, Staley “volunteered and gave to certain executives, and the chair, an explanation of his relationship with Mr Epstein”. The bank also used “the support of external counsel” to review Staley’s recount of events.

The lender’s shares fell 2.6% at 11.46am in London. The revelation of the probe overshadowed the bank’s fourth-quarter results. Barclays retained its profitability target for 2020, while warning it will be challenging to achieve given macro-economic uncertainty and low interest rates. The investment bank, the centrepiece of Staley’s strategy since he took over in 2015 — and a frequent target for criticism by activist investor Edward Bramson — posted revenue in line with analysts’ estimates.

“The regulatory review is bound to raise questions regarding potential repercussions for Staley,” said John Cronin, an analyst at Goodbody in Dublin. “This could put Barclays on slightly weaker ground in the context of any renewed push on the part of the activist shareholder.”

Epstein fallout

Britain’s Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) confirmed Staley is being investigated, and declined to comment further.

At the beginning of his tenure at Barclays, Staley repeatedly and improperly attempted to unmask the identity of whoever sent letters to members of the bank’s board and another executive. After a year-long regulatory probe into that matter, Staley kept his job, though the FCA and PRA said he failed to behave “with due skill, care and diligence”.

That scandal resulted in a £642,430 personal fine, about 10% of his annual income. It also resulted in a $15m fine for the bank from New York regulators.

Barclays spokesperson Tom Hoskin said on Thursday’s conference call that “there’s always the option to make an adjustment” to Staley’s compensation, given how pay is deferred for the bank’s directors.

Staley said on Bloomberg TV that his professional ties to Epstein dated to 2000, when he took charge of JPMorgan’s private bank, where the financier was already a client. Epstein himself had previously confirmed that relationship. JPMorgan “are probably the best private bankers in the world”, Epstein said in a 2003 interview with journalist David Bank on his private Caribbean island. “The head of private banking you should talk to — Jes Staley.”

Repercussions from the Epstein scandal continue to roil the business and political worlds, given his decades of cultivating ties to US and British elites. Prominent business people with ties to him include billionaires Glenn Dubin, who has since retired from his hedge fund, and Leslie Wexner, whose L Brands apparel empire is in talks to be broken up.

Staley helped arrange JPMorgan’s 2004 acquisition of a majority stake in Dubin’s hedge fund, Highbridge Capital Management, a deal that helped elevate Staley within the bank. At the time, Staley ran JPMorgan’s asset management unit.

Staley visited Epstein in Florida when he was serving his sentence following a 2008 guilty plea of soliciting prostitution, in one case with a minor, according to a New York Times report last year. As recently as April 2015, just before he joined Barclays, Staley and his wife visited Epstein for several hours at his private Caribbean island.

Staley said on Thursday that his relationship with Epstein “began to taper off as I left JPMorgan and contact became much less frequent in 2013, 2014,” before ending in 2015. “Obviously I thought I knew him well, and I didn’t.” 

Bloomberg