Barclays CEO Departs Over Epstein Link Description

Tom Burroughes

1 November 2021

Jes Staley has stepped down as chief executive of UK banking group Barclays amid pressure from regulators about how he described his relationship with convicted sex offender and financier Jeffrey Epstein.

The UK’s Financial Conduct Authority and the Prudential Regulation Authority – the two principal watchdogs in the UK – told Barclays and Staley late last week of their preliminary conclusions from their investigation into the matter.

“Barclays and Mr Jes Staley, group chief executive, were made aware on Friday evening of the preliminary conclusions from the FCA and the PRA of their investigation into Mr Staley's characterisation to Barclays of his relationship with the late Mr Jeffrey Epstein and the subsequent description of that relationship in Barclays' response to the FCA,” the bank said in a statement to the London Stock Exchange today.

“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,” Barclays said.

CS Venkatakrishnan, head of global markets, will take over as chief executive immediately.

In a separate statement, the FCA and PRA said they were not commenting, other than to confirm “the regulatory actions as detailed in the firm’s announcement”.

Barclays’ statement said: “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 following the arrest of Mr Epstein in the summer of 2019.

“The board is disappointed at this outcome. Mr Staley has run the Barclays Group successfully since December 2015 with real commitment and skill. Supported by the senior team which he largely helped build and on whom the Barclays Group will be relying for the future, Mr Staley clarified the Barclays Group's strategy, transformed its operations and materially improved its results. The regulatory process still has to run its full course and it is not appropriate for Barclays to comment further on the preliminary conclusions,” it said.

The UK bank said that it has been planning for possible succession to Staley “for some time”, including potential external hires. It said that it identified Venkatakrishnan more than a year ago.

Prior to his latest appointment, Venkat served as head of global markets and co-president of Barclays Bank from October 2020 and group chief risk officer from 2016 to 2020. Prior to joining Barclays in 2016, he worked at JP Morgan Chase from 1994, holding senior roles in asset management where he was chief investment officer in global fixed income, as well as in investment.

The bank said Staley is entitled to 12 months' notice from Barclays under his contract of employment and will therefore continue to receive his current fixed pay , pension allowance and other benefits until 31 October 2022. In accordance with the DRP, Staley will be eligible to receive repatriation costs to the US.

No decisions have yet been made in respect of any further remuneration payments to be made to Staley, the bank said.

Venkat will receive fixed pay of £2.7 million, delivered half in cash and half delivered in Barclays shares. The shares will be delivered quarterly and subject to a holding period, with restrictions lifting over 5 years. Venkat will also receive a cash payment in lieu of a pension of £135,000 per annum.

Reactions
"For the chief executive Jes Staley to step down following an investigation by city regulators into his his dealings with Epstein, it’s clear the conclusions of the probe are critical. While the probe did not centre on Mr Staley’s role at Barclays but what he disclosed about his previous position at JP Morgan, what was under question was how he characterised his former relationship with the disgraced financier," Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said. "Although detail is limited, it appears regulators believe there was a distinct lack of transparency over this relationship. It’s understood that Mr Staley will contest the conclusions, and clearly the board want to distance Barclays from what could be a long drawn-out process.

"While other organisations focus on the environmental aspect of ESG this week under the shadow of COP 26, this development is a reminder of how the G, as in governance, is increasingly important for companies and investors not to lose sight of," Streeter said.