BCS Barclays PLC

By Max Colchester 

LONDON--U.K. regulators have begun an investigation into Barclays PLC Chief Executive Jes Staley over his attempts to unmask a whistleblower who raised questions over one of the bank's hires.

The U.K.'s Prudential Regulation Authority and Financial Conduct Authority are probing both Mr. Staley and the bank over its treatment of whistleblowers after Mr. Staley tried to identify the source of an anonymous letter that criticized someone he recruited, Barclays said in a statement Monday. The bank added that it had issued a formal reprimand to Mr. Staley and will make a "significant" cut to his bonus. It is also conducting its own review into Barclays's controls.

The hire in question was Tim Main, a former colleague of Mr. Staley's who was brought in from Evercore Partners to chair Barclays' financial institutions group, according to a person familiar with the matter. Mr. Main couldn't be immediately reached for comment.

"I have apologized to the Barclays board, and accepted its conclusion that my personal actions in this matter were errors on my part," Mr. Staley said in a statement.

In June 2016, Barclays's board and a senior executive received anonymous letters raising concerns over Mr. Main's hire that month in New York. Mr. Staley initially asked Barclays's internal security team to try to identify the authors of the letter, believing the accusations were unfair. He was told that he wasn't permitted to do so. However in July he followed up the request and the security team received help from a government authority. The whistleblower's identity was never revealed, the bank says.

A Barclays employee flagged the matter to the bank's board in early 2017. The board then commissioned its own probe and shared its findings with the U.K. regulators. Barclays said an internal investigation into Mr. Staley's actions concluded that he honestly, but mistakenly, believed that it was permissible to identify the author of the letter.

The issue is another knock to Barclays as it tries to overhaul its image after years of scandals. "This latest revelation represents a very significant embarrassment for the board as it tries to rebuild the group's reputation," said Gary Greenwood, an analyst at Shore Capital.

Since his arrival in late 2015, Mr. Staley has refreshed the bank's management team, bringing in a series of new executives. Many of them were from his alma mater, J.P. Morgan Chase & Co. He has replaced the bank's chief risk officer, chief operating officer and the head of the lender's investment bank. Some within Barclays grumbled that Mr. Staley wasn't giving insiders a fair chance and leaning too heavily on J.P. Morgan, where he spent nearly three decades of his career.

Barclays board said in a statement that they support Mr. Staley's reappointment at the bank's annual shareholder meeting in May. "I am personally very disappointed," Chairman John McFarlane said in a statement.

Write to Max Colchester at max.colchester@wsj.com

(END) Dow Jones Newswires

April 10, 2017 04:35 ET (08:35 GMT)

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