Barclays’ CEO will step down after Epstein inquiry

Barclays said Monday that its chief executive, James E. Staley, would step down immediately following the results of an inquiry by British financial regulators into Staley’s relationship with disgraced financier Jeffrey Epstein.

The surprise exit of Staley, 64, roiled the leadership of Barclays, a three-century-old lender that is one of Britain’s biggest banks. And it makes him the latest prominent figure to face blowback from his association with Epstein, a convicted sex offender who killed himself in 2019 after facing new allegations of sex trafficking of underage girls.

The bank said it learned Friday of the preliminary conclusions of a nearly two-year investigation by the regulators, the Financial Conduct Authority and the Prudential Regulation Authority, into the two men’s relationship, which dates to Staley’s tenure as the head of private banking at JPMorgan Chase. Staley used Epstein to connect with potential clients.

Barclays said in a statement that Staley agreed to step down as chief executive and from his position on the board, and that he intended to contest the investigation’s findings. It added that the investigation did not make any findings that Staley “saw, or was aware of, any of Mr. Epstein’s alleged crimes” and that it was “disappointed” with the outcome.

The Prudential Regulation Authority and the Financial Conduct Authority declined to provide any details about what their inquiry had found, saying in a joint statement that they “do not comment on ongoing investigations or regulatory proceedings.”

Barclays said the investigation focused on how Staley had characterized his relationship with Epstein to the board, and the subsequent description of the relationship in Barclays’ response to the Financial Conduct Authority.

Staley previously said that he had been “transparent and open” with Barclays about his ties to Epstein.

Last month, the office of the attorney general of the Virgin Islands asked Barclays for additional information about Staley’s ties to Epstein, as part of its lawsuit against the Epstein estate.

He will be succeeded as chief executive by C.S. Venkatakrishnan, Barclays’ co-president and head of global markets. Like Staley, he is a former JPMorgan executive, who first rose to fame for warning about the “London Whale” scandal that resulted in more than $6 billion in trading losses at the U.S. banking giant. His elevation to co-president last year signaled to London’s finance community that he was a potential future leader of Barclays.

Venkatakrishnan will inherit Barclays at a crossroads. The bank said last month that its third-quarter profit more than doubled from a year ago, thanks to strong performance from its investment bank.

But the trading division saw its results drop as markets calmed down from the worst of the pandemic, making it harder to make money. And Barclays’ huge retail banking business faces stiff competition from new digital banks — including a new one from JPMorgan.

Shares in Barclays were down less than 2% in London trading.

In February 2020, Barclays announced the regulators’ investigation, noting that Staley “developed a professional relationship with Mr. Epstein” earlier in his career.

“Mr. Staley also confirmed to the board that he has had no contact whatsoever with Mr. Epstein at any time since taking up his role as Barclays Group CEO in December 2015,” the company added.

The board then recommended that Staley be reappointed as chief executive.

The board had previously stood by Staley in 2018 as New York authorities ordered the bank to pay $15 million in penalties after he tried to discover the identity of a whistleblower who had questioned the hiring of a senior banker in 2016. The New York Department of Financial Services said it had found “shortcomings in governance, controls and corporate culture” at the bank.

In stepping down, Staley becomes the latest corporate leader to suffer consequences from being linked to Epstein. In January, Leon D. Black announced his resignation as chairman and chief executive of Apollo Global Management after revelations that he had paid more than $150 million to Epstein.

Leslie H. Wexner stepped down as chief executive of L Brands, the parent company of Victoria’s Secret, after pressure over his ties to Epstein. And Bill Gates, the Microsoft co-founder, faced scrutiny after The New York Times reported in 2019 that he began a relationship with Epstein after Epstein had been convicted of sex crimes.

Staley, an American who is known as Jes, became chief executive at Barclays in 2015 after serving as a top executive at JPMorgan.

News of the investigation in 2020 prompted an activist hedge fund critical of Barclays to call for Staley’s dismissal. Sherborne Investors, which at the times described itself as the biggest single shareholder in Barclays, said in public letters that renominating Staley as a director was “extremely ill advised.”This article originally appeared in The New York Times.