Bank of England probes Barclays' accounting of private-credit loan derivatives
The Bank of England’s Prudential Regulation Authority has opened a review of Barclays over how it recorded derivatives used to fund private-credit loans.
The Prudential Regulation Authority, the supervisory arm of the Bank of England, is examining Barclays’ treatment of derivatives that finance its private-credit loan business. An internal whistle-blower prompted the review, alleging that the derivatives were placed in an incorrect portfolio, thereby understating their risk and potentially leaving the bank under-capitalised. Sources say Barclays has amassed billions of dollars of exposure to private-credit firms via these instruments.
The bank issued a brief statement emphasizing its commitment to regulatory duties but offered no details on the probe. The Bank of England declined to comment, and Barclays’ stock slipped 3.5%, making it the second-largest decliner on the FTSE 100. The investigation comes as the private-credit sector faces heightened scrutiny after several high-profile defaults and large fund withdrawals.
Why it matters
Regulatory scrutiny of Barclays could affect its capital position and signal broader risks in the fast-growing private-credit market.
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