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LONDON (Reuters) – For nearly six years running British bank Barclays (LON:BARC), American Jes Staley built a reputation as a corporate survivor but the former JPMorgan (NYSE:JPM) dealmaker could not escape his past.
During a tumultuous tenure, Staley, 64, fought off a corporate raider’s attempts to break up the bank, survived a probe into his mistreatment of a whistleblower, and navigated Britain’s third-biggest lender through the coronavirus pandemic.
But it was Staley’s links to convicted sex offender Jeffrey Epstein starting from his time at JPMorgan that finally forced him out.
Barclays said on Monday that Staley had stepped down as chief executive following an investigation by British regulators into his characterisation of his relationship with Epstein – both to Barclays and the regulators.
Details of the findings have yet to be published but the Bank of England and the UK’s Financial Conduct Authority have said previously the investigation was focused on how truthful Staley was about his ties to Epstein, who died in jail in August 2019 awaiting trial on charges related to sex trafficking.
While it was known that Epstein was Staley’s client at JPMorgan, media reports have painted a picture of a potentially deeper relationship, including a trip with his wife to Epstein’s Caribbean island.
Barclays said Staley intended to contest the findings of the UK investigation. It said the probe did not find that Staley either saw, or was aware of, any of Epstein’s alleged crimes.
Staley has said previously he deeply regretted his ties to Epstein, which he says began in 2000 while at JPMorgan and ended in late 2015 – before he joined Barclays in December that year.
Epstein was registered as a sex offender in 2008 after a conviction for soliciting a minor for prostitution. The New York Times reported that Staley visited Epstein in prison when he was serving his sentence.
Staley did not respond to a request for comment made through Barclays on Monday.
Staley joined Barclays when its board rolled the dice and hired the U.S banking veteran – once tipped as a successor to JPMorgan Chief Executive Jamie Dimon – to turn around its investment bank, which was badly trailing Wall Street rivals.
After years of underwhelming trading results at the division, the bank faced a big test when activist investor Edward Bramson built up a stake of more than 6% stake and pushed to split the investment bank from its retail business.
Staley stuck to his guns and fought off the attack. His strategy was vindicated when volatile markets during the COVID-19 pandemic led to a jump in investment banking profits. Bramson admitted defeat in May this year.
Barclays insiders, especially traders in its investment bank, generally revered Staley for returning some swagger as the bank took on Wall Street rivals on their home turf, following the comparatively dour tenure of his predecessor Antony Jenkins.
Staley, who says he greatly admires his former boss Dimon, sought to emulate his mentor by hiring a raft of lieutenants from JPMorgan as he bet big on investment banking at a time when British rivals were cutting back.
He worked at the U.S. bank for 34 years, climbing up the ranks to lead its private bank, asset management unit and later chair its investment bank before leaving in 2013 to join a hedge fund after being sidelined in a management reshuffle.
Staley’s judgment has been questioned during his time at Barclays. Lawyers said he was lucky to survive an investigation by regulators into his attempts to unmask a whistleblower who sent letters criticising a senior employee.
Regulators found that the bank’s efforts to track down the whistleblower became a transatlantic effort, with Staley’s office enlisting the support of the lender’s security team and an employee in the United States.
Staley was fined a combined 1.1 million pounds by regulators and Barclays but escaped more severe sanctions.
“This is not the first time Staley has faced negative headlines,” said Russ Mould, investment director at AJ Bell. “Ultimately his departure shows how important governance can be, particularly for a high profile company like Barclays which faces the glare of political and regulatory pressure.”