Barclays C.E.O. Faces U.K. Inquiry on Jeffrey Epstein Ties

British banking regulators want to know if the chief executive of Barclays has been honest about his relationship with Jeffrey Epstein.

Barclays said on Thursday that regulators were investigating how its chief executive, James E. Staley, had described to bank officials his ties with Mr. Epstein, the financier who killed himself in August after facing new allegations of sex trafficking of underage girls.

Mr. Staley, one of a handful of prominent Wall Street financiers who have been linked to Mr. Epstein, said he had been fully forthcoming about their relationship, which he said had ended before he arrived at the bank five years ago.

“I feel very comfortable, going back to 2015, I have been transparent and open with the bank,” he said on a conference call with analysts on Thursday. Mr. Staley did not respond to messages seeking comment.

The bank’s announcement of an investigation by regulators including the Financial Conduct Authority, the main overseer of banks in Britain, was another black eye for Mr. Staley, who is the latest Barclays chief to have regulatory troubles. John S. Varley faced regulatory and legal charges over capital infusions from the Persian Gulf nation of Qatar, and Robert E. Diamond Jr. was caught up in the LIBOR-rigging scandal.

Even as Mr. Staley has cut costs and bolstered the company’s commitment to investment banking, his tenure has been marked by a series of questions over his judgment. The bank and Mr. Staley were both fined by regulators over a whistle-blower scandal, and other stumbles have prompted some shareholders to demand his resignation.

In a statement, Barclays said it believed that “Mr. Staley has been sufficiently transparent with the company as regards the nature and extent of his relationship with Mr. Epstein.” Mr. Staley, the bank said, retained the full confidence of its board.

The inquiry began sometime last year when the Financial Conduct Authority contacted Barclays with questions about Mr. Staley’s relationship with Mr. Epstein, according to the bank’s annual report, which was published Thursday.

Barclays responded to the regulator’s questions, but some element of that response raised questions within the agency, according to a bank official who spoke on the condition of anonymity. A more formal investigation then began in December.

Thursday’s announcement undercut a positive earnings report from the bank. Total income for 2019 rose 2 percent, and profit after taxes rose 30 percent for the year. Barclay’s shares ended the day down 1.7 percent.

Mr. Epstein portrayed himself as indispensable to corporate executives and built up a small but powerful finance network, which Mr. Staley remained a part of even after Mr. Epstein’s 2008 guilty plea to a charge of soliciting prostitution from a teenage girl. The men had known each other since at least 1999, when the future Barclays chief was running the private banking business of JPMorgan and using Mr. Epstein to connect with potential clients.

The relationship was close enough that Mr. Staley visited Mr. Epstein about 10 years ago, while he was serving time in Florida for soliciting prostitution from a minor. The visit occurred at Mr. Epstein’s Palm Beach office, where he was allowed to serve part of his 13-month sentence. They were still close enough in April 2015 for Mr. Staley and his wife, Debora, to sail their boat to Little St. James, Mr. Epstein’s private island. Mr. Staley was named chief executive of Barclays that December.

Among others, Mr. Epstein connected Mr. Staley with Glenn Dubin, who ran Highbridge Capital Management, a hedge fund in which JPMorgan bought a majority stake in 2004. The deal elevated the asset management division that Mr. Staley ran at JPMorgan into a major player in the hedge-fund world. (Mr. Dubin, who married a former girlfriend of Mr. Epstein’s, Eva Andersson, left JPMorgan in 2013. He left his most recent venture, the hedge fund Engineers Gate, last month, saying he wanted to focus on his family office.)

Mr. Epstein invoked his relationship with Mr. Staley as part of his own business maneuvers. He listed Mr. Staley and JPMorgan as references when he applied for a license to set up a bank, Southern Country International, in the Virgin Islands in 2013. Mr. Staley’s spokesman said he was unaware of this at the time.

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