HomeBusinessMoneyBarclays shares fall as CEO exit on Epstein probe proves 'unsettling'

Barclays shares fall as CEO exit on Epstein probe proves ‘unsettling’

Barclays shares have fallen by more than 3 per cent in early trading after it emerged that group chief executive Jes Staley will stand down in response to an investigation by UK regulators concerning convicted paedophile Jeffrey Epstein.

The bank’s performance under Staley’s leadership has been strong, particularly within its investment banking division, and analysts suggest change at the top of Barclays could prove ‘unsettling’ for investors.

The bank said it was made aware on Friday about the findings around Staley’s ‘characterisation to Barclays of his relationship with the late Epstein, and the subsequent description of that relationship in Barclays’ response’ to the Financial Conduct Authority.

‘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,’ says Barclays

Investors have been awaiting the results of the FCA and Prudential Regulation Authority probe for some time, with the regulators concerned Staley did not accurately disclose to Epstein.

Barclays posted profits of £6.9billion for the first nine months of the year – a record high and up 187.5 per cent on the same period in 2020. Third quarter profits alone hit £2billion, 20 per cent ahead of expectations.

The performance was once again driven by the investment bank, vindicating the strategy pursued by chief executive Staley who fought off efforts by activist investor Ed Bramson to scale back the division.

Barclays said on Monday that it was ‘disappointed at [the] outcome’ of the regulator’s investigation, highlighting the ‘successful’ leadership, ‘commitment and skill’ of Staley, but added it would be inappropriate to comment further.

As Barclays shares slipped on Monday morning, Senior investment and markets analyst at Hargreaves Lansdown Susannah Streeter said: ‘For the Chief Executive, Jes Staley to step down following an investigation by city regulators into his into his dealings with Epstein, it’s clear the conclusions of the probe are critical.

‘While the probe did not centre on Mr Staley’s role at Barclays but what he disclosed about his previous position at JP Morgan, what was under question was how he characterised his former relationship with the disgraced financier.

Although detail is limited, it appears regulators believe there was a distinct lack of transparency over this relationship. It’s understood Mr Staley will contest the conclusions, and clearly the board want to distance Barclays from what could be a long drawn out process.

Barclays has performed well under Staley's leadership, with particular success within investment banking

Barclays has performed well under Staley’s leadership, with particular success within investment banking 

‘Sudden change at the top is always unsettling, and the departure of Mr Staley who propelled its successful investment banking expansion strategy may be particularly unnerving for investors, with shares falling 3% in early trading.’

However, Streeter noted ‘continuity will be provided to some extent’ by Staley’s successor.

Staley has been handed 12 months’ notice from Barclays under his contract of employment, and will therefore continue to receive his current fixed pay of £2.4million per annum delivered in cash and Barclays shares, pension allowance of £120,000 per annum, and other benefits until 31 October 2022.

He will also be eligible to receive repatriation costs to the US.

Staley will be replaced from today as group CEO and director by C.S. ‘Venkat’ Venkatakrish-nan, who has served as head of global markets and co-president of Barclays since October 2020, and group chief risk officer from 2016 to 2020.

Prior to joining Barclays in 2016, he worked at JP Morgan Chase from 1994, holding senior roles in asset management where he was chief investment officer in global fixed income.

Barclays said: ‘The board has had succession planning in hand for some time, including reviewing potential external appointees, and identified Venkat as its preferred candidate for this role over a year ago,

‘The board has long been confident in Venkat’s capabilities to run the Barclays Group and is delighted to have such a strong internal candidate. The board is confident that Barclays under his leadership will continue its strategic direction and improve performance in line with the progress of recent years.’ 

On appointment, Venkat will receive fixed pay of £2.7million, delivered 50 per cent in cash paid monthly and 50 per cent delivered in Barclays shares.

The shares will be delivered quarterly and he will also receive a cash payment in lieu of pension of £135,000 per annum.

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