Barclays CEO Jes Staley stepped down from the bank’s top post Monday amid an investigation by British regulators into how he characterized his relationship with the late disgraced financier Jeffrey Epstein.
C.S. Venkatakrishnan, Barclays’ head of global markets, will succeed Staley as CEO, the bank said Monday.
Barclays and Staley learned Friday of the preliminary conclusions the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) drew into the CEO’s ties with Epstein, the bank said Monday. "In view of those conclusions, and Mr Staley’s intention to contest them," the bank and Staley agreed to part ways, Barclays said.
Staley told staff he did not want his "personal response" to the investigations to be a distraction, according to an internal memo seen by Reuters. "Although I will not be with you for the next chapter of Barclays' story, know that I will be cheering your success from the sidelines," he wrote in the memo.
"It should be noted that the investigation makes no findings that Mr Staley saw, or was aware of, any of Mr Epstein’s alleged crimes, which was the central question underpinning Barclays’ support for Mr Staley" after Epstein’s arrest, the bank said in its statement.
Epstein was charged with child sex trafficking in July 2019 but was found dead in his jail cell a month later in a presumed suicide.
The timeline
Staley volunteered in the summer of 2019 to recount to Barclays’ board how his relationship with Epstein evolved.
Staley has said his relationship with Epstein was professional and began in 2000, when he led JPMorgan Chase’s private bank, and Epstein was a client, according to The Wall Street Journal.
The FCA opened a formal probe in December 2019, after JPMorgan provided U.S. regulators with emails that suggested the Epstein ties were friendlier than Staley had claimed, the Journal reported. U.S. regulators passed those emails on to the FCA.
Barclays acknowledged the investigation two months later, saying Staley "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."
By Staley’s account, his interactions with Epstein "began to taper off as I left JPM [in 2013], and contact became much less frequent in 2013, 2014," according to Bloomberg.
Staley allegedly visited Epstein’s private Caribbean island in 2015, according to the Journal. Staley said he last had contact with Epstein in the "middle to fall" of 2015, the publication reported.
"I thought I knew him well and I didn’t," Staley said, according to the publication. "For sure, with hindsight, with what we all know now, I deeply regret having had any relationship with Jeffrey Epstein."
The FCA and PRA said Monday in a joint statement they "do not comment on ongoing investigations or regulatory proceedings beyond confirming the regulatory actions as detailed in the firm’s announcement."
Barclays' succession plan
Barclays said Monday it is "disappointed at this outcome." However, it said, Venkatakrishnan had been the bank’s preferred candidate to take over as CEO for more than a year. Barclays promoted Venkatakrishnan — whom Staley hired from JPMorgan — from chief risk officer to head of global markets in September 2020.
The Financial Times reported last year Staley had said privately he expected to leave by the end of 2021, and that the bank was actively searching for its next CEO.
In another memo to employees Monday, seen by Reuters, Venkatakrishnan pledged to continue Staley's strategy. "The strategy we have in place is the right one, and we will continue our existing plans to transform our organization and build on our financial prowess," he said.
The bank last month reported a third-quarter profit that more than doubled from a year ago, due largely to its investment bank, which was revamped under Staley to compete on Wall Street. The CEO populated the bank’s ranks with his former JPMorgan colleagues. Barclays’ share value has fallen about 9% since Staley took over, but the bank has outperformed a number of its European rivals.
Venkatakrishnan said in the memo he would announce changes to Barclays’ corporate and investment bank in the coming days.
Barclays said it would pay Staley his £2.4 million salary for the next year, plus a £120,000 pension allowance, adding that Staley, who is American, is eligible for repatriation costs.
Venkatakrishnan, for his part, will receive fixed pay of £2.7 million, split equally between cash and Barclays shares that vest in five years. He will also receive a £135,000 cash payment per year in lieu of pension, the bank said.
Edward Firth, an analyst at Keefe, Bruyette & Woods told Bloomberg that Staley’s "abrupt" departure is "clearly a negative" but "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."
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, told CNBC that Monday’s actions show the bank’s board clearly wants "to distance Barclays from what could be a long drawn out process," referring to Staley's contesting the probe's conclusions.
Other controversies
Staley is hardly the first financial heavy-hitter to be hit with fallout from Epstein ties. Leon Black announced his resignation from Apollo Global Management’s top role in January after it was reported he paid Epstein more than $150 million.
It’s also not the first controversy in which Staley has found himself embroiled. British regulators in 2018 fined him £642,000 — and the bank reduced his 2016 bonus by a further £500,000 — after he allegedly tried repeatedly to unmask a whistle-blower who questioned the hiring of a senior banker in letters sent to members of the bank’s board.
New York's Department of Financial Services fined the bank $15 million in the matter.
Activist investor Edward Bramson — who called the Staley-Epstein controversy "a destabilising ... circus," according to the Financial Times, fought unsuccessfully to have Staley removed as CEO. Bramson sold his stake in Barclays this year.
