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Barclays CEO Staley departs after Epstein probe

By Lawrence White

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Barclays CEO Staley departs after Epstein probe
© Reuters. FILE PHOTO: Barclays’ CEO Jes Staley arrives at 10 Downing Street in London, Britain January 11, 2018. REUTERS/Peter Nicholls

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By Lawrence White

LONDON (Reuters) – Barclays (LON:) Chief Executive Jes Staley is leaving the bank after a dispute with British financial regulators over how he described his ties with convicted sex offender Jeffrey Epstein.

Staley will be replaced as chief executive by the bank’s head of global markets C.S. Venkatakrishnan, who pledged on Monday to continue his predecessor’s strategy for Britain’s third-biggest bank by market value.

Staley’s shock departure comes after Barclays was informed on Friday of the unpublished findings of a report by Britain’s Financial Conduct Authority (FCA) and the Prudential (NYSE:) Regulatory Authority (PRA) into Staley’s characterisation of his relationship with Epstein, who killed himself in jail in August 2019 while awaiting trial on charges related to sex trafficking.

“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,” the bank 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,” it said in a statement.

The investigation has yet to be published, though regulators have said previously that it was focused on how truthful Staley was about his ties to Epstein.

If Staley is found to have misled regulators he could face a fine, a ban from Britain’s financial industry or both.

Barclays shares fell 2% following the announcement, before paring losses to trade down 1% at 1315 GMT, underperforming European rivals.

‘I THOUGHT I KNEW HIM WELL’

Staley dealt with Epstein during his long career at JPMorgan (NYSE:), where Epstein was a major private banking client until 2013.

A college dropout who styled himself as a brilliant financier, Epstein socialised in elite circles, including with former and future U.S. presidents. In 2008, he was registered as a sex offender but continued to maintain ties with powerful players in business and finance.

The New York Times reported in 2019 that Epstein had referred “dozens” of wealthy clients to Staley. It reported that Staley visited Epstein in prison when he was serving a sentence between 2008-09 for soliciting prostitution from a minor, while Bloomberg reported he visited Epstein’s private island in 2015.

Staley told reporters last February that his relationship with Epstein had “tapered off significantly” after he left JPMorgan in 2013, and that he had not seen the disgraced financier since taking over as CEO of Barclays in 2015.

“I thought I knew him well, and I didn’t. I’m sure with hindsight of what we all know now, I deeply regret having had any relationship with Jeffrey Epstein,” he said at the time.

Epstein’s links with prominent men have come back to haunt some of them.

Leon Black, the billionaire investor, stepped down https://www.reuters.com/article/us-apollo-global-clayton-idUSKBN2BE1E0 from Apollo Global Management (NYSE:), the private equity firm he co-founded, earlier this year after an outside review found he had paid Epstein $158 million for tax and estate planning.

Britain’s Prince Andrew https://www.reuters.com/world/uk/prince-andrew-seeks-dismissal-accuser-giuffres-lawsuit-2021-10-29 has quit royal duties over his associations with Epstein while Microsoft (NASDAQ:) co-founder Bill Gates has said it was a “huge mistake” to spend time with the financier.

Britain’s FCA and PRA regulators said in a statement they could not comment further on the Epstein investigation, which was launched https://www.reuters.com/article/us-barclays-results-idUSKBN2070NF after JPMorgan provided them with emails between Epstein and Staley from Staley’s time as head of JPMorgan’s private bank, the Financial Times reported last year.

RIGHT STRATEGY

Staley told staff in an internal memo seen by Reuters that he did not want his personal response to the investigations to be a distraction.

“Although I will not be with you for the next chapter of Barclays’ story, know that I will be cheering your success from the sidelines,” he said.

Staley has 28 days to formally notify the FCA that he is contesting its findings, after which an independent committee inside the watchdog will uphold or reject its conclusions, a source familiar with the process told Reuters.

If upheld, the investigation passes to an independent Upper Tribunal which again can back or reject the findings, the source said, in a process that could take months.

The bank’s new CEO Venkatakrishnan, who followed Staley to Barclays from JPMorgan and is known as Venkat, told staff on Monday the strategy put in place by his predecessor was “the right one”, according to a separate memo also seen by Reuters.

Venkat added that he would announce changes to the organisation of the investment bank in the coming days, likely to mean filling his previous role and any other resulting vacancies, sources at the bank said.

Barclays’ share price has fallen 9% since Staley’s joined the bank nearly six years ago, a tenure not without controversy.

His greatest success, insiders and analysts say, was to fight off a campaign by activist investor Edward Bramson in 2018 to have Staley removed on the grounds that Barclays’ investment bank was underperforming and should be cut back.

Bramson sold his stake earlier this year, and the bank’s recent results have shown the investment bank performing strongly.

Also in 2018, Britain’s financial regulators and Barclays fined Staley a combined 1.1 million pounds ($1.5 million) after he tried to identify a whistleblower who sent letters criticising a Barclays employee.

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The Bank of England buys government bonds instead of a planned sale

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UK government bonds Bank of England

The Bank of England buys government bonds. It was decided to suspend the start of the previously announced government bond sales program and instead will start buying government bonds amid a sharp rise in their yields.

“UK government bonds Bank of England will start to buy from September 28. The purpose of these purchases is to return to normal market conditions. Purchases will be made in any scale, which is necessary to achieve the goal,” – said in a statement of the British Central Bank.

The yield on U.K. 10-year government bonds reached 4.611 percent in Wednesday’s trading, recording the highest increase since 1957 since the beginning of the month. After the Bank of England’s announcement, yields fell about 45 basis points to 4.07%. The news also caused yields on other government bonds around the world to fall.

The surge in yields on British government debt is caused by the previously announced large-scale tax cuts, which, according to British authorities, will increase the budget deficit in the current fiscal year by more than 70 billion pounds.

Earlier, we reported that Goldman lowered its recommendation on global equities for the next 3 months to “below market”.

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Goldman Sachs stock forecasts: Goldman has downgraded its recommendation for global stocks for the next 3 months to “below market”

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Goldman Sachs stock forecasts

A new Goldman Sachs stock forecast has emerged. Analysts at U.S. bank Goldman Sachs Group Inc. (NYSE:GS) have downgraded their recommendation for global stocks for the next three months to “below market” and maintained an “above market” recommendation for cash amid recessionary risks, Bloomberg writes.

“Current stock valuations may not fully reflect the risks involved, and there’s a chance they will drop even further before they bottom out. Also have a disappointing Goldman Sachs economic forecast,” the Goldman strategist team, led by Christian Muller-Glissmann, wrote.

BlackRock, the world’s largest company by assets under management, advises investors to “divest from most stocks.”

Experts at Morgan Stanley (NYSE:MS) and JPMorgan Asset Management previously laid out similar concerns after the world’s top central banks signaled their firm’s resolve to fight inflation, sending global stocks plunging in the past few days.

Goldman analysts last week sharply lowered their forecast for the value of the U.S. S&P 500 stock index for the end of this year, to 3,600 points from the previously expected 4,300 points. The day before, the indicator finished trading at 3655 points.

Earlier, we reported that European stock markets are trading contradictoryly.

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European stock markets are trading contradictory today

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biggest european stock markets

During today’s trading the major European stock markets do not show unified dynamics. The composite index of the largest companies in the region, Stoxx Europe 600, decreased by 0.18% to 389.68 points.

European stock markets trading today

British stock index FTSE 100 was down 0.06%, while German DAX gained 0.19% and French CAC 40 gained 0.16%. Italian FTSE MIB rose by 1%. Spanish IBEX 35 decreased by 0.34%.

The British financial company Virgin Money UK PLC was among the leaders of the fall in the components of the Stoxx Europe 600 index, falling by 6.7%.

Shares of the Swiss manufacturer of heating and ventilation systems rose 8.4% as Berenberg’s experts improved their recommendations on the company’s securities and raised their price target.

Concerns about the state of the global economy are growing amid persistently high inflation and aggressive measures by major central banks to curb it, writes CNBC.

The elections in Italy are also in the spotlight. The Italian Democratic Party acknowledged defeat in early parliamentary elections that took place on Sunday, reported the media.

The market is also pressed by continuing geopolitical tensions with the ongoing “referendums” in several regions of Ukraine.

Meanwhile, the level of business confidence in the German economy in September fell to 84.3 points from 88.6 points in August, according to a report by the research organization IFO.

Earlier we reported that the yield of British government bonds rose to a 14-year high.

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