Barclays boss facing FCA investigation over ties to Epstein

Barclays CEO Jes Staley participates in the Yahoo Finance All Markets Summit at Union West

Barclays announced Thursday that CEO Jes Staley is being investigated by British financial authorities over ties to financier and accused USA sex trafficker Jeffrey Epstein.

The same applies to the board itself since it is backing Staley all the way and the regulatory inquiry also concerns the bank's "subsequent description" of the relationship in its response to the FCA. Barclays said the CEO retains the "full confidence" of the bank's board.

Epstein died in a NY jail in August while he was awaiting trial on sex trafficking charges.

In a statement released on Thursday, the bank announced that the widely reported ties between the financiers are the subject of an ongoing probe, launched by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA).

Staley and the disgraced American financier developed a professional relationship when Staley held a senior position at JPMorgan. He said Epstein was an existing client of the bank.

Barclays, which docked his pay by £500,000, was also fined US$15mln by the New York State Department of Financial Services for the "shortcomings in governance, controls and corporate culture".

An article stated Staley visited Epstein while he was serving time for soliciting prostitution from a minor and suggested the pair had a close business relationship over many years.

"The investigation is actually focused on transparency, and whether I was transparent and open with the bank and with the board with respect to my relationship with Jeffrey Epstein", Staley said on Bloomberg Television.

"Obviously I thought I knew him well", Staley told journalists. Starting in 2000, Epstein regularly brought Staley business when he ran JPMorgan's private bank and the two were close professionally, a person familiar with the matter said previous year. "I deeply regret having had a relationship" with Epstein, he added.

Barclays shares were down 2.5% at $2.27 on the London Stock Exchange.

Barclays paid Staley $7.6 million previous year, up from his $4.36 million salary in 2018. The sum was boosted by the paying out of a long-term incentive plan worth 1.48 million pounds ($1.92m).

Both Staley and Finance Director Tushar Morzaria took cuts to their pension allowances in 2019, and will now receive fixed cash contributions equating to 10 percent of salary in line with the broader workforce.

Analysts had expected Barclays to report a pretax profit of GBP4.44 billion, taken from FactSet and based on 14 analysts' estimates.

The UK lender also reiterated its ambition of achieving a 10 percent return on equity this year, although it repeated a warning from October that the worsening economic outlook might make reaching that target hard.

Staley has said that Barclays' mix of investment and retail banking businesses should partly insulate it from economic and market fluctuations.

Barclays paid a dividend of nine pence ($0.12) for the year, compared with 6.5 pence ($0.08) for 2018, as its core capital ratio came in at a better-than-expected 13.8 percent.

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