Barclays PLC said U.K. regulators are probing the relationship between its American Chief Executive Jes Staley and Jeffrey Epstein, the disgraced financier who died in jail last year.
An investigation by the Financial Conduct Authority is ongoing, Barclays said Thursday.
“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 in a statement.
Barclays disclosed the investigation the same day it reported annual results. Profit before tax rose 26% to £4.4 billion ($5.7 billion) in 2019 from 2018, but Mr. Staley gave a cautious outlook for the year ahead. Barclays said it hit its target return on tangible equity of 9.0% in 2019, excluding £1.58 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 in a statement. “However, given the low interest rate environment, it has become more challenging to achieve that target in 2020.”
Barclays shares were down 2.5% in early European trading.
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’ mix of businesses, saying it makes the bank resilient to market conditions by having a large U.K. retail and business bank, a New York- and London-based corporate and investment bank and U.S. credit cards. Mr. Staley said Thursday the model is working.
U.K. regulators are investigating the “characterization” Mr. Staley gave of his relationship with Mr. Epstein to Barclays executives, including Chairman Nigel Higgins, “and the subsequent description of that relationship in the company’s response to the FCA,” the bank said.
“Earlier in his career Mr. Staley developed a professional relationship with Mr. Epstein,” the bank said. “In the summer of 2019, in light of the renewed media interest in the relationship, Mr. Staley volunteered and gave to certain executives, and the chairman, an explanation of his relationship with Mr. Epstein. Mr. Staley also confirmed to the board that he has had no contact whatsoever with Mr. Epstein at any time since taking up his role as Barclays Group CEO in December 2015.”