Last checked at 
* Staley leaves with immediate effect
* Replaced by C.S. Venkatakrishnan
* Staley says will contest regulators' findings
* Watchdog's review of its probe could take months -source
(Adds more details, updates share price)
By Lawrence White
LONDON, Nov 1 (Reuters) - Barclays 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on Friday of the unpublished findings of a report by Britain's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 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, 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, 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 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.
(Reporting by Rachel Armstrong and Lawrence White; Additional
reporting by Carolyn Cohn and Huw Jones; Editing by Louise
Heavens, Kirsten Donovan and David Clarke)
