Barclays’ Jes Staley probed over links to Jeffrey Epstein Regulators examine disclosures made about CEO’S relationship with deceased sex offender

Jes Staley, the chief executive of Barclays, is being investigated by Britain’s two main financial watchdogs over his links to disgraced financier Jeffrey Epstein, who died last year while awaiting trial on charges that he sex-trafficked underage girls.

Barclays said that the Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority had “commenced an investigation, which is ongoing, into Mr Staley’s characterisation . . . of his relationship with Epstein”.

The probe was launched after the FCA made an inquiry to the bank over Mr Staley’s links to Epstein, the bank said in a statement on Thursday morning.

On a call with reporters to discuss the bank’s full-year results — which were overshadowed by the announcement of the investigation — Mr Staley said he regretted his relationship with Epstein but that he had always been honest about his links with the deceased financier.

“Obviously, I thought I knew him well and I didn’t and, for sure, with hindsight, I deeply regret having had any relationship with Jeffrey Epstein,” Mr Staley said.

He added: “I feel very comfortable that, going all the way back to 2015, I have been very transparent and open with the bank with respect to that relationship.”

Barclays said the FCA and PRA had opened the probe in December. The investigation followed an initial inquiry last year from the FCA, which asked the bank to provide assurances that Mr Staley had not been involved in any impropriety, according to one person briefed on the probe.

The bank responded to the FCA inquiry with a letter that contained a characterisation of Mr Staley’s relationship with Epstein that the FCA appears to have taken issue with, the person said.

The FCA and PRA subsequently opened a full investigation focused on whether the characterisation of the relationship was based on information provided by Mr Staley to the bank, the person added.

Mr Staley declined to comment on the reporters’ call when asked whether he was happy with the way the bank had described his relationship with Epstein to regulators. “I’m clear that I’ve been transparent,” he said. “Let’s let the regulatory process continue.”

Mr Staley developed a relationship with Epstein before he was Barclays’ chief executive and visited the sex offender’s island on his yacht in 2015. He has always insisted that he subsequently cut their ties.

Barclays said it had conducted a review with external lawyers and concluded that Mr Staley had “been sufficiently transparent with the company as regards the nature and extent of his relationship with Mr Epstein”.

The UK bank added that Mr Staley “retains the full confidence of the board” and would be unanimously recommended for re-election at this year’s annual meeting.

The bank said: “Mr Staley developed a professional relationship with Mr Epstein. In the summer of 2019, in light of the renewed media interest in the relationship, Mr Staley volunteered and gave to certain executives, and the chairman, an explanation of his relationship with Mr Epstein.

“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 chief executive in December 2015.

“The board will continue to cooperate fully with the regulatory investigation, and will provide a further update as and when it is appropriate to do so.”

On the call with reporters, Mr Staley said it had been “very well known” that he had a professional relationship with Epstein dating back to 2000, when he took over Jpmorgan’s private bank, which counted the disgraced financier as a client.

Mr Staley said the relationship began to “taper off” after he left the US bank in 2013 and became “much less frequent” before ending “totally” towards the end of 2015.

The FCA initiated its inquiries by asking the bank whether it was satisfied it knew all the details of Mr Staley’s relationship with Epstein while the former was at Jpmorgan, with whom Epstein banked, and whether it was satisfied that the relationship did nothing to impair Mr Staley’s standing as chief executive. The bank had already launched its own review by the time the FCA made inquiries, and responded that it was satisfied.

Both regulated firms and individuals have a duty to be fully frank and open with the watchdogs.

While the FCA has made improving culture in the City of London a priority, looking into various cases of sexual harassment and bullying, this investigation is trained on the far simpler question of whether Mr Staley ultimately lied to the regulator, according to people familiar with the probe.

The launch of the investigation comes less than two years after a whistleblowing scandal that almost cost Mr Staley his job. The FCA and PRA fined Mr Staley a total of £640,000 for twice trying to reveal the identity of an anonymous whistleblower.

Previous regulatory infractions can be taken into account if the watchdogs prove their case against Mr Staley, and can toughen any penalty.

Prior fines can also weigh on whether the PRA — and ultimately Barclays’ shareholders at its upcoming annual general meeting — consider Mr Staley the right person to lead the bank.

The FCA said: “The FCA and PRA confirm there is an investigation concerning Mr Staley. We are unable to comment any further.”

John Cronin, an analyst at Goodbody, said: “The board believes that Staley has been sufficiently transparent with the company as regards his relationship with Epstein and should be re-elected. This will raise questions in investors’ minds, however.”