Chief executive officer of Barclays, Jes Staley, takes part in the Yahoo Finance All Markets Summit in New York

London - Barclays CEO Jes Staley, who has demanded the highest ethical standards from staff, will face a “significant” pay cut and is being probed by regulators for violating policy in trying to unmask a whistle-blower last year.

The UK Financial Conduct Authority is investigating both Staley’s individual conduct relating to the complaint and the bank’s responsibilities and controls in connection with whistle-blowing, the bank said in a statement. Staley, who will be reprimanded by the firm, has admitted his error and formally apologized to the board, Barclays said. He could be fined and faces a ban if he is deemed by the FCA not to be a “fit and proper” person to lead a bank.

Staley tried to identify a tipster who alerted the bank to a personal matter involving a senior executive, the bank said, confirming what a person with knowledge of the matter told Bloomberg earlier Monday. An investigation by law firm Simmons & Simmons commissioned by Barclays concluded that Staley “honestly, but mistakenly” believed that it was permissible to identify the author of the letter. The case is also under scrutiny by the Department of Financial Services in New York, the person said.

“At present Staley will probably survive as CEO, but if other allegations of unethical behaviour emerge, this could change,” said Andre Spicer, a professor specializing in organisational behaviour at the Cass Business School at City University in London. "No one within the bank is likely to trust the whistle-blowing system anymore."

Staley, 60, has made overhauling Barclays’s culture and restoring its reputation the centerpiece of his tenure, after the bank was fined billions of pounds over scandals including rigging Libor, gaming currency markets and wrongfully selling customers insurance products they didn’t need. The FCA and Serious Fraud Office are also investigating the bank’s 2008 emergency fundraising backed by Qatar, where questions have been raised about the proper disclosure of fees and services agreements between the two parties.

Barclays shares dropped as much as 1.2 percent in London trading, and were little changed at 215.35 pence as of 11:07 a.m. The stock has fallen about 3.6 percent this year, giving the company a market value of about 36.7 billion pounds ($45.4 billion).

“I have apologised to the Barclays board and accepted its conclusion that my personal actions in this matter were errors on my part,” Staley said in the statement. “I will also accept whatever sanction it deems appropriate. I will cooperate fully with the FCA and the Prudential Regulatory Authority, which are now both examining this matter.”

Rebuffing

Staley has recruited several former colleagues from JPMorgan Chase & Co, where he spent more than three decades. The CEO rebuffed calls to spin off or radically shrink the securities unit, instead opting to speed up sales of unwanted assets and sell down the firm’s African banking stake to reduce the bank’s capital requirements.

Staley received a 1.3 million-pound annual bonus and he may be docked the entire amount as a result of the scandal, according to a person familiar with the board’s investigation. The bank will not make a decision about how much to deduct until after the UK regulators complete their investigation. The CEO was awarded 7.53 million pounds in total compensation including benefits for last year.

Given the bank’s history of regulatory mishaps, the latest investigation is a “very significant embarrassment” for the board as it tries to rebuild Barclays’s reputation, and a “serious knock” for Staley, Shore Capital analyst Gary Greenwood wrote in a note to investors, adding he doesn’t think the CEO should be fired. “It remains to be seen whether the PRA and FCA come to the same conclusion as the Board in allowing him to remain in his post. It is possible that the group may also be fined by the regulators.”

Read also: Barclays to pay R13bn to split from African business

The attempt to identify the whistle-blower came to the attention of the Barclays board early this year after an employee raised concerns. The board notified the FCA and the PRA and other authorities.

“The Board has concluded that Jes Staley, group chief executive officer, honestly, but mistakenly, believed that it was permissible to identify the author of the letter and has accepted his explanation that he was trying to protect a colleague who had experienced personal difficulties in the past from what he believed to be an unfair attack, and has accepted his apology,” Chairman John McFarlane said in the statement.

US law enforcement

In June, the board received a letter and a senior executive another anonymous letter raising concerns about an employee recruited by Barclays earlier that year. Amongst other issues, the letters raised concerns of a personal nature about the senior employee, Staley’s knowledge of and role in dealing with those issues at a previous employer.

Staley requested that the bank’s Group Information Security team identify the author, yet was informed it was “not appropriate” to do so. The following month, the CEO again asked the GIS team to unmask the whistle-blower and this time received assistance from US law enforcement agencies, according to Barclays’s statement.

The allegations in the letters relate to Tim Main, who was hired in June as chairman of the bank’s global financial institutions group, according to a person familiar with the case. Main joined from Evercore Partners and previously worked under Staley at JPMorgan.

Other Barclays employees, in addition to Staley, are also under probe for violating conduct, the person said.

Main didn’t immediately respond to an email and a spokesman for Barclays declined to elaborate on the case. Patrick Burton, a spokesman for JPMorgan in London, declined to comment.

BLOOMBERG