* CEO probed over ties to financier
* Maintained contact with Epstein after 2008 conviction
* Staley retains full confidence of board
* Barclays profits rise 9% on trading gains
(Updates to include FT report details, comment from banks,
regulators)
By Lawrence White, Iain Withers and Sinead Cruise
LONDON, Feb 13 (Reuters) - Britain's financial regulators
are probing links between Barclays Chief Executive Jes
Staley and the U.S. financier Jeffrey Epstein, who killed
himself while awaiting trial on sex trafficking charges, after
the Financial Times reported on a trove of emails between the
two on Thursday.
Barclays disclosed earlier in the day that its board had
looked into media reports on Staley's relationship with Epstein,
and probed the chief executive's characterisation of it.
U.K. regulators launched their investigations into links
between Staley and Epstein after JPMorgan Chase & Co's
provided them with emails the two exchanged when Staley was the
head of JPMorgan's private bank, the Financial Times reported on
Thursday.
Barclays confirmed the Financial Conduct Authority (FCA) and
the Prudential Regulation Authority were now investigating the
matter. The bank did not give further details on the probe.
Barclays, JPMorgan and the FCA declined to comment on the
FT's report. The Prudential Regulation Authority did not
immediately respond to a request for comment.
Earlier on Thursday, the bank said its board believes the
chief executive has been sufficiently transparent about his ties
to Epstein, whom Staley said he had not seen since taking over
as Barclays CEO in 2015.
Speaking to reporters on Thursday, Staley said he regretted
his relationship with Epstein, which began in 2000 while he was
employed by JPMorgan and "tapered off significantly"
after he left the Wall Street lender.
The relationship ended in late 2015, Staley said.
"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.
The New York Times last year said that Epstein had referred
"dozens" of wealthy clients to Staley when the CEO ran
JPMorgan's private banking business.
There have been no public disclosures about regulatory
investigations into JPMorgan's links to Epstein.
It also reported that Staley visited Epstein in prison when
he was serving a sentence between 2008-09 for soliciting
prostitution.
Staley also went to Epstein's private island in 2015,
Bloomberg reported.
Barclays has previously said that Staley never engaged or
paid fees to Epstein to advise him or provide professional
services.
The probe is the second regulatory investigation into
Staley's conduct in recent years, after the FCA and PRA fined
him 642,000 pounds in 2018 for trying to identify a
whistleblower who sent letters criticizing a Barclays employee.
Barclays shares fell 2.3% on Thursday.
"This is clearly a cause for concern for investors; if Mr
Staley were forced out it would create significant uncertainty
for shareholders," said Peter Parry, policy director at investor
group ShareSoc.
"Mr Staley's judgement was called into question less than
two years ago with the whistle-blowing scandal. And to make
matters worse, it distracts attention from the announcement of
Barclays results today."
Staley received a bumper pay package of 5.9 million pounds
($7.6 million) in 2019, up from 3.36 million a year earlier. The
sum was boosted by the paying out of a long-term incentive plan
worth 1.48 million pounds.
His bonus also rose to 1.65 million pounds, reflecting the
bank's strong annual performance.
Both Staley and Finance Director Tushar Morzaria took cuts
to their pension allowances in 2019, and will now receive fixed
cash contributions equating to 10% of salary in line with the
broader workforce.
Lower-paid employees will see their employer pension
contributions rise to 12%.
The bank's bonus pool fell 10%.
Barclays reported on Thursday a better-than-expected profit
before tax of 6.2 billion pounds for 2019, as its investment
bank posted bumper returns from fixed-income trading.
Its profit was 9% higher than in 2018 and above the 5.7
billion pound average of analysts' forecasts compiled by the
bank.
The British lender also reiterated its ambition of achieving
a 10% return on equity this year, although it repeated a warning
from October that the worsening economic outlook might make
reaching that target difficult.
Staley has said that Barclays' mix of investment and retail
banking businesses should partly insulate it from economic and
market fluctuations.
Barclays paid a dividend of 9 pence for the year, compared
with 6.5 pence for 2018, as its core capital ratio came in at a
better-than-expected 13.8%.
($1 = 0.7723 pounds)
(Editing by Jan Harvey and Daniel Wallis)
Barclays (BARC)
