Barclays Chief Executive Officer Jes Staley is stepping down amid a U.K. regulatory probe into how he characterized his past ties to the financier and sex offender Jeffrey Epstein.
Staley, 64, is leaving immediately, according to a statement Monday. C.S. Venkatakrishnan, who was promoted last year to run the Barclays markets division and was previously chief risk officer, will replace him as CEO.
On Friday night, regulators told Barclays the preliminary findings of a two-year investigation into how Staley explained his long-running relationship with Epstein to the bank. “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 lender said in a statement. “The board is disappointed at this outcome.” The findings have not yet been made public.
Staley’s surprise departure caps a tumultuous six years atop the British lender. He fended off a prior regulatory probe and a campaign by an activist shareholder to unseat him over his strategy to bolster Barclays’ investment bank. The Epstein probe has cast a shadow over Staley even as his firm enjoyed
Barclays promoted Venkat and global head of banking Paul Compton last year as part of its plans to eventually replace Staley. Chairman Nigel Higgins started looking outside the bank for possible successors in early 2020, but put the process on hold to avoid destabilizing the firm during the pandemic, according to people familiar with the matter. Barclays confirmed on Monday that it had reviewed external candidates but didn’t immediately respond to a request to comment further.
Former money manager Epstein was found dead in his U.S. jail cell in 2019, after being arrested and charged with sex trafficking. Epstein spent decades cultivating ties to U.S. and British elites, from Prince Andrew to Wall Street figures like Staley, Leon Black and Glenn Dubin. The turmoil at Barclays is the
Shares in Barclays were 1.9% lower at 10:53 a.m. in London.
Regulator statement
In a joint statement, the Prudential Regulation Authority and Financial Conduct Authority said they “do not comment on ongoing investigations or regulatory proceedings beyond confirming the regulatory actions as detailed in the firm’s announcement.”
Barclays said in its statement that “the investigation makes no findings that Mr. Staley saw, or was aware of, any of Mr. Epstein’s alleged crimes.” The bank will continue to pay Staley for the next year and said he’s eligible for repatriation costs to the U.S.
Staley’s exit ends a tumultuous mandate that saw the American-born, high-profile product of JPMorgan Chase reboot the investment bank built by former chief Bob Diamond — the only major securities firm to be headquartered in Britain taking on Wall Street giants in Europe.
He fine-tuned the securities business and hired a swath of lieutenants from his former employer in a bid to compete with Wall Street’s biggest firms, and outperformed many European rivals. Shares in Barclays have fallen about 9% during his tenure, outperforming a fall of about 25% in the EURO STOXX Banks index.
Venkat, one of Staley’s first hires from JPMorgan when he took the top job, has been Barclays’ preferred candidate to take over as CEO for more than a year, according to the bank’s statement.
Veteran money manager Richard Buxton welcomed the “complete continuity” that comes with Venkat’s appointment, though he still has questions about the probe. “The nature of the statement suggests that in the eyes of the regulator, at least, he was economical with the truth in terms of his description of his relationship,” said the head of strategy at Jupiter Asset Management, which is a small shareholder in Barclays. “We can’t know that without having read the thing.”
Regulatory probe
Staley’s ties with Epstein date back to his time running JPMorgan Chase’s private bank. Epstein regularly brought him business and the pair were close professionally, a person familiar with the matter has previously said.
Staley has said his relationship with Epstein “began to taper off as I left JPM and contact became much less frequent in 2013, 2014,” before ending in 2015, before he took up his role at Barclays.
In the summer of 2019, Staley volunteered to tell Barclays’s board his version of how his 15-year professional relationship with Epstein evolved. In December of that year, the FCA opened a formal investigation to scrutinize that account.
“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,” Staley told Bloomberg Television in February 2020, when the probe was made public. At the time, the board said it had “full confidence” in the CEO.
Jes Staley, chief executive officer of Barclays Plc, speaks during a panel session on the opening day of the World Economic Forum in Davos, Switzerland, on Tuesday, Jan. 23, 2018. World leaders, influential executives, bankers and policy makers attend the 48th annual meeting of the World Economic Forum in Davos from Jan. 23 - 26.
The board of Barclays did not receive updates on the progress of the investigations once they began, according to a person familiar with the matter.
Whistleblower case
The Epstein affair wasn’t Staley’s first run-in with British regulators. They concluded in 2018 that he repeatedly and improperly attempted to unmask the identity of a whistle-blower who had sent letters to members of the bank’s board. Staley kept his job, though the FCA and PRA said he failed to behave “with due skill, care and diligence.” Regulators fined him 642,000 pounds ($877,000) and Barclays reduced his 2016 bonus by 500,000 pounds.
Staley spent more than 30 years at JPMorgan, joining Barclays after a brief stretch at hedge fund BlueMountain Capital Management. His focus on the investment bank was vindicated in recent quarters as the pandemic drove capital markets activity.
Staley’s “abrupt and unplanned departure is clearly a negative,” said Edward Firth, an analyst at Keefe, Bruyette & Woods. “That said, it is impressive that, for once, a major U.K. bank has a clear succession plan with an individual who clearly has the strengths and experience to manage the business successfully.”
