Barclays: Why the bank's board did not fire Staley in December

It has been no secret that Jes Staley had a professional relationship with Jeffrey Epstein.

Epstein moved in rich circles, and as a head of JP Morgan's investment bank and sometime head of its wealth division so did Staley.

In the summer of 2019, when Epstein was re-arrested 11 years after his first conviction ignited renewed interest in Epstein and his associates, Jes Staley volunteered an account to Barclays' board of his previous relationship.

The financial watchdog launched an inquiry into that past relationship to which Barclays responded. The nub of this current investigation - which started in December - is whether Mr Staley and the Barclay's board characterisation of the nature of their relationship, in that response, was sufficiently accurate.

After his first conviction for soliciting an underage prostitute, Epstein remained an important client of JP Morgan which required Staley to continue a relationship with him.

Barclays conducted its own review with outside lawyers into whether Staley had been straight with them about the nature of that relationship. That review satisfied the board that he had been.

The financial watchdogs are conducting their own probe. A Barclays insider told the BBC "the line of least resistance for the board would have been to fire Jes back in December; to say we didn't need this whiff of scandal - you're out".

This rings true given that this is not Mr Staley's first brush with the regulators. He was disciplined and fined £600,000 for inappropriately pursuing a whistle blower in 2018.

The fact that they did not do that suggests, say Barclays sources, that the board really do believe Mr Staley's account.

The reason this is coming out now is that the board are proposing Mr Staley for re-election at the bank's Annual General Meeting in May and are required to disclose any regulatory proceedings in which he is involved.

The board unanimously back him and the ongoing probes may yet end up agreeing with that conclusion.

The matter overshadowed a conference call to announce Barclays improving financial performance. On that call he expressed regret at his relationship with Epstein, saying he was not the man he believed him to be. He is not the first one to say that.