Bank of England Reviews Barclays Over Private Credit Loans

The Prudential Regulation Authority, the regulatory arm of the Bank of England, is reviewing how Barclays handled loans linked to the private credit sector. The investigation, which began earlier this year following a whistleblower report, focuses on allegations that the bank logged derivatives used to finance private credit loans in the wrong portfolio. This misclassification may have made the assets appear less risky than they were, potentially allowing the bank to boost profitability while failing to hold sufficient capital to cover potential losses.

Barclays has billions of dollars in exposure to these loans and has previously experienced losses from the collapses of Market Financial Solutions and Tricolor. Shares of the bank fell 3.5% on Monday following reports of the review. Chief Executive C. S. Venkatakrishnan had previously asserted that the bank maintained proper controls for its private credit exposure.

The investigation is complicated by a potential conflict of interest involving Katherine Braddick, the head of the Prudential Regulation Authority. Because Braddick previously served as the head of strategic policy at Barclays, the Bank of England has recused her from all matters related to the bank until the end of 2026.