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Barclays CEO Jes Staley resigns after Jeffrey Epstein investigation

Jes Staley, CEO, Barclays Plc

Christopher Goodney | Bloomberg | Getty Images

LONDON – Barclays CEO Jes Staley will step down after an investigation into his relationship with Jeffrey Epstein, the bank said in a statement on Monday.

C.S. Venkatakrishnan (known as Venkat) will take over the management of the company with immediate effect, subject to regulatory approval.

Barclays and Staley "were briefed on Friday evening of the preliminary conclusions" of an investigation by the UK's Financial Conduct Authority and the Prudential Regulation Authority, Barclays said.

It added that the investigation relates to "Mr. Staley's characterization of his relationship with the late Mr. Jeffrey Epstein to Barclays and the subsequent description of that relationship in Barclays' response to the FCA".

"Given these conclusions and Mr. Staley's intention to contest them, the Board of Directors and Mr. Staley have agreed that he will step down from his roles as Group Chief Executive and Director of Barclays," the bank said.

Barclays shares traded 1.2% lower on Monday morning following the announcement.

The bank said the investigation "provides no evidence that Mr. Staley saw any of Mr. Epstein's alleged crimes or knew what was the central question that raised the Barclays" Underpinned support for Mr Staley after Mr Epstein's arrest in the summer of 2019. "

Wealthy financier Epstein was arrested on child sex trafficking charges in July 2019, but hanged himself in a federal prison in Manhattan a month later.

Whistleblower scandal

Staley's ties to the dead financier have been the subject of an investigation by the UK financial regulator and the Bank of England regulator. Barclays said the "regulatory process has yet to run its full course and it is not appropriate for Barclays to comment further on the preliminary conclusions" of the investigation.

Staley became CEO of Barclays in October 2015. He previously said his relationship with Epstein, which he regrets, ended in late 2015, Reuters reported.

The news agency also said Monday that Staley told employees in an internal memo that Reuters saw that he didn't want his "personal response" to the investigation to be a distraction.

"While I won't be with you for the next chapter in Barclays history, you know I'll be cheering your success from the sidelines," he said, according to Reuters.

Fahed Kunwar, an equity analyst at Redburn, told CNBC on Monday that the financial regulators' investigation was still lacking in details. He pointed out that Staley had a somewhat difficult relationship with UK financial regulators, who fined him in 2018 for attempting to identify a whistleblower who sent letters criticizing a Barclays employee.

“Of course we have to see what the review says. But I think this makes his relationship with regulators difficult, and I think that's why he stepped down so quickly today, "Kunwar told CNBC's Squawk Box Europe," Staleys described The exit, however, was a shock for investors.

"The investment bank has been doing such a solid performance over the past few years that Mr. Staley's position has become quite entrenched and investors have really changed their minds about him and have liked Barclays' direction of travel," he added.

Venkat as CEO

Regarding Venkat's appointment, Barclays said that its board of directors “has been in charge of succession planning for some time, including reviewing potential outside appointments, and identified Venkat as his preferred candidate for that position over a year ago for the Group's position Chief Risk Officer to Head of Global Markets. "

Barclays said it was confident that under his leadership, the bank "will continue in its strategic direction and improve performance in line with progress made in recent years".

Before joining Barclays in 2016, Venkat held senior positions in asset management and investment banking at JPMorgan Chase from 1994.

Epstein's contacts

Any previous association with Epstein is now proving toxic to a wide variety of high profile people.

Epstein's close associate and former girlfriend, British celebrity Ghislaine Maxwell, is herself awaiting trial on charges of recruiting underage girls to be sexually abused by Epstein. She denies the allegations.

One of Epstein's accusers, Virginia Giuffre, has alleged that Prince Andrew of Great Britain, the Duke of York, had sex with her when she was a minor and in the clutches of Epstein and Maxwell. The prince denies the allegations.

Epstein is also known to associate with former U.S. Presidents Donald Trump and Bill Clinton, who both tried to distance themselves from Epstein and insisted they knew nothing about his crimes.

Susannah Streeter, Senior Investment and Market Analyst at Hargreaves Lansdown, commented on Monday that "" The effects of the Jeffrey Epstein scandal have gone far and now Barclays is at the center of the storm. "

"While the investigation focused not on Mr Staley's role at Barclays but on what he revealed about his previous position at JP Morgan, it questioned how he characterized his previous relationship with the disgraced financier," she said in a note.

"It is clear that Mr. Staley will challenge the conclusions and the board clearly wishes to distance Barclays from what may be a lengthy process."

Correction: This story has been updated to accurately describe Jeffrey Epstein's accumulated fortune.

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