Barclays CEO Under Investigation Over Links to Jeffrey Epstein -- 2nd Update
February 13 2020 - 6:34AM
Dow Jones News
By Simon Clark
LONDON -- Barclays PLC said U.K. regulators are investigating
the relationship between Chief Executive Jes Staley and Jeffrey
Epstein, the disgraced financier who died in jail last year.
The U.K.'s Financial Conduct Authority is examining how Mr.
Staley characterized his relationship with Mr. Epstein to Barclays
and how the U.K. lender described it to the regulator, the bank
said Thursday.
The probe marks the latest brush with authorities for Mr.
Staley, an American. In 2018, he was hit with penalties equal to
about a quarter of his 2016 pay over his efforts to unmask a
whistleblower, which U.K. regulators called a "serious error of
judgment." U.S. authorities also fined him over the episode.
"Mr. Staley retains the full confidence of the board, and is
being unanimously recommended for re-election at the annual general
meeting," the London-based bank said.
Mr. Staley worked at JPMorgan Chase & Co. for more than 30
years before becoming Barclays's CEO in December 2015. He told
journalists Thursday that his contact with Mr. Epstein went back to
2000, when he led JPMorgan's private bank and the financier was a
client. He said his contact with Mr. Epstein began to "taper off"
after he left JPMorgan in 2013 and the last time he had contact
with him was in the "middle to fall" of 2015.
"I thought I knew him well and I didn't," Mr. Staley said. "For
sure, with hindsight, with what we all know now, I deeply regret
having had any relationship with Jeffrey Epstein."
Mr. Epstein was found dead in August last year at a New York
detention center, where he was awaiting trial on federal
sex-trafficking charges, in what the New York medical examiner
ruled as a suicide.
Barclays said Thursday that Mr. Epstein's death prompted renewed
interest in Mr. Staley's relationship with him, and that the CEO
gave an explanation to executives, including Chairman Nigel
Higgins. Mr. Staley confirmed to the board that he had no contact
with Mr. Epstein after taking up his role as Barclays's CEO, the
bank said.
The FCA tests executives to ascertain whether they are "fit and
proper" to lead. Considerations include honesty, openness with
self-disclosures, integrity and reputation, as well as competence
and financial soundness, according to the FCA's website.
The announcement of the investigation overshadowed Barclays's
annual results, which were also released Thursday.
The bank's net profit rose 54% to GBP2.46 billion ($3.19
billion) in 2019 from 2018 and revenue was flat at GBP19.72
billion, but Mr. Staley gave a cautious outlook for the year ahead.
Barclays said it hit its return-on-tangible-equity target of 9.0%
in 2019, excluding GBP1.58 billion of litigation and misconduct
costs, but improving on that will be difficult.
"We continue to believe that it is appropriate to target a
return greater than 10%, and we are managing our business to
achieve that," Mr. Staley said. "However, given the low interest
rate environment, it has become more challenging to achieve that
target in 2020."
Shares in Barclays dropped 2.4% in early trading Thursday, and
was among the weakest performers in the Stoxx Europe 600 Banks
index, which also fell.
Executives at banks across Europe have blamed ultralow interest
rates for making the business of lending more challenging. Activist
investor Sherborne Investors has been waging a campaign to have
Barclays scale back in investment banking. Mr. Staley has defended
Barclays's mix of businesses, saying it makes the bank resilient to
market conditions to have a large U.K. retail and business bank, a
New York- and London-based corporate and investment bank and a U.S.
credit-card business. Mr. Staley said Thursday that the model is
working.
Write to Simon Clark at simon.clark@wsj.com
(END) Dow Jones Newswires
February 13, 2020 06:19 ET (11:19 GMT)
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