Barclays chief executive Jes Staley has quit with immediate effect following an investigation by City regulators into his relationship with billionaire sex offender Jeffrey Epstein.

       The bank said its board was made aware of the results of a two year inquiry by the Financial Conduct Authority (FCA) into his links with the late financier on Friday and of “Mr Staley’s intention to contest them”.

       Barclays’ shares fell as much as 3.7pc after markets opened following the news.

       Mr Staley visited the convicted paedophile while he was serving time for soliciting a minor in 2009, and then called in at Epstein's private Caribbean island for a four-hour lunch just months before taking the top job at Barclays.

       The FCA was handed a cache of emails from when the billionaire was a key client of Mr Staley’s at JP Morgan, which raise questions over whether their relationship was more friendly than professional, in defiance of what the bank chief has previously claimed.

       The investigation looked at whether he had properly explained his relationship with Epstein.

       However, investors last year warned the bank against making any knee jerk decisions until an investigation has been completed. The board said it was “disappointed” by this outcome.

       Mr Staley’s contract entitles him to 12 months’ notice from Barclays, the bank said, so he will continue to receive his current fixed pay of ￡2.4m for the year, a pension allowance of ￡120,000 for the year, and any other benefits until October 2022.

       The bank said in a statement on Monday morning that “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”.

       A spokesman for the FCA and Prudential Regulatory Authority said: “The FCA and PRA do not comment on ongoing investigations or regulatory proceedings beyond confirming the regulatory actions as detailed in the firm’s announcement.”

       Regulatory insiders said the findings will not be published today as there is typically a period of time where an individual or firm can settle the case or fight back against the conclusions.

       C.S. Venkatakrishnan, known as Venkat, the group’s head of global markets, will take over as chief executive. Barclays said succession planning had been in place “for some time”.

       Gary Greenwood from broker Shore Capital said Mr Staley’s exit was “very disappointing to us” as the AMerican banker had “done an excellent job in improving the performance of the group in recent years”.

       He added: “However, with such an investigation bubbling away in the background it was always possible that this kind of outcome could happen.”