Barclays boss Jes Staley was fighting for his credibility last night as questions raged over his deep links with notorious paedophile Jeffrey Epstein. The 63-year-old said he "deeply regrets" his decades-old relationship with the disgraced financier after it emerged regulators were investigating his ties with Mr Epstein, a billionaire convicted sex offender who was found dead in a prison cell in August. Mr Staley was a guest on the businessman"s private island, visited him while he was serving his sentence and was even listed as a referee - he says without his knowledge - when Mr Epstein set up a bank. Mr Staley told reporters: "I thought that I knew him well, and I didn"t." The banking chief is facing an investigation by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) over whether he has properly explained his relationship with Epstein - the second inquiry into his fitness for the job since he took the helm in December 2015. The watchdogs opened the investigation after receiving a cache of emails from Mr Staley"s former employer JP Morgan which suggested the relationship was friendlier than claimed, sources told The Financial Times. JP Morgan and Barclays declined to comment. Shareholders said the bank is now under close observation, while analysts warned it could be dogged for months by questions over the scandal. A lawyer for victims urged Mr Staley - who was paid £5.9m last year - to cooperate with investigations into Mr Epstein without delay. Mr Epstein was arrested on charges of sex trafficking of underage girls in July 2019. He died in prison in August by suspected suicide. The pair first developed a relationship in 2000, while the American banking boss was a top executive at JP Morgan. Mr Staley said on Thursday that his contact with Mr Epstein "tapered off" when he left the Wall Street bank in 2013 and gradually became less frequent, ending before he became chief executive of Barclays in 2015. He is reported to have taken a yacht to visit the private Carribean island of the convicted billionaire paedophile early that year. A year before joining Barclays, in 2014, the banking boss was also listed as one of two referees for Mr Epstein in a banking licence application in the Virgin Islands, The New York Times reported last week. The Virgin Islands bank was sent $12.9m (£9.9m) from Epstein"s estate after his death, sparking questions from a judge tasked with overseeing his assets and potentially creating a victims" fund. Lawyers for the estate said the money was moved in error. A spokesman for Mr Staley said he was unaware his name had been included as a reference. It has also been widely reported that Mr Epstein referred dozens of clients to Mr Staley and JP Morgan, including hedge fund boss Glenn Dubin who later struck a major deal with the bank. Mr Staley is understood to have visited Epstein"s Florida office where he was serving some of his sentence following the 2008 conviction of soliciting underage prostitutes. Barclays" latest regulatory probe comes just two years after Mr Staley was fined by the City watchdog for trying to unmask a whistleblower. Mr Staley apologised in 2017 for his "mistake" when he ordered his security team to track down the source of personal allegations about a colleague a year earlier. Authorities found Mr Staley, who has also seen off a concerted challenge to his leadership from activist investor Ed Bramson, had failed to act with due skill, care and diligence. However former Barclays" chairman John McFarlane, who stood down from the 328-year-old bank last year, leapt to his former colleague"s defence. He said the situation was "unfortunate". Mr McFarlane said: "While it does appear that a business relationship had existed, honestly, I simply cannot imagine Jes knowingly having been involved in anything untoward." Mr Staley did not comment when The Telegraph asked about his links with Mr Epstein last October, when Barclays reported its third-quarter results. One major Barclays shareholder said that although he was not entirely happy with Mr Staley, he did not think anyone should "pull the trigger" on his role at this stage. The investor said: "I think the board will protect him and I don"t get the sense that [chairman] Nigel Higgins wants an excuse to get rid of him. "If anything else unsavoury comes out, then maybe he should go. At the moment he"s under observation from investors." The lender said it conducted a review with external lawyers and believes Mr Staley had been "sufficiently transparent with the company" regarding the relationship with Mr Epstein, adding that he has the "full confidence of the board". The board will continue to co-operate fully with the regulatory investigation, Barclays said. It is not known whether the regulators have interviewed Mr Staley or any other members of the bank"s board. The watchdogs’ powers enable them to censure individuals and institutions, impose fines or even ban people from working in the City. Lisa Bloom, a lawyer for some of Epstein’s victims, said: “Jeffrey Epstein became one of the world"s most prolific predators with the help of many powerful friends. It is imperative that each of them now cooperate with law enforcement so that the victims can get justice. We call upon Mr Staley to fully cooperate with the UK investigators.” The Barclays boss should also comply with any request for answers from the FBI and go to the US for questioning if asked, she added. There is no suggestion that Mr Staley has committed a crime. Regulators first asked Mr Staley about his links to Epstein following press reports last summer. In response Barclays sent a letter to the authorities saying the pair had a professional relationship. An investigation into the bank and Mr Staley was formally opened by the PRA and the FCA in December, focused on whether this was an accurate description of his ties to Epstein in light of emails suggesting that they may have been closer. The revelation overshadowed the bank"s financial results as it reported a 25pc increase in pre-tax profits to £4.36bn in 2019. Excluding legal and conduct costs, profit rose 9pc to £6.2bn, beating analyst estimates. Analysts at RBC said the results were reasonable but would be overshadowed by the FCA probe. Ian Gordon, banking analyst at Investec, said the investigation was “an unwelcome distraction from solid numbers”. Shares fell 2.2pc to 175p. Barclays" annual report was also published, showing that Mr Staley took home a pay packet of £5.9m in 2019, up from £3.9m a year earlier. Meanwhile the bank said that the manner in which the UK leaves the EU will have a marked impact on economic conditions both in in Britain and the bloc. It added that the UK"s future relationship with the EU could take a number of years to resolve, leading to prolonged uncertainty, unstable economic conditions and market volatility.