Bank of England reviewing Barclays' handling of private credit loans
Britain's banking regulator is reviewing how Barclays recorded complex deals tied to lending for private credit firms, after concerns were raised by a Barclays insider.
The Prudential Regulation Authority, the Bank of England unit that oversees the safety of banks, started the review in 2026, The Guardian reported. The Bank of England declined to comment on the reported review.
The review concerns Barclays' logging of total return swaps used to finance loans it issues to private credit firms. Those contracts were allegedly placed in the wrong portfolio, in a way that made them look less risky than they were. Barclays is reported to have built up billions of dollars in exposure to private credit loans through the use of derivatives.
Barclays said its treatment of the total return swaps is consistent with accounting and regulatory capital requirements. It said its total exposure to the private credit sector was about £15bn, with the relevant derivatives accounting for £300m of that total.
The case carries an added sensitivity at the regulator. Katharine Braddick spent six years as Barclays' head of strategic policy and senior adviser to its chief executive before becoming head of the PRA in spring 2026. The Bank of England said Braddick is recused from all matters relating to Barclays until the end of 2026.
Barclays shares fell by 3.5% on October 19, 2026, amid a wider sell-off in the banking sector.
Regulators have been paying closer attention to private credit for several years. The Bank of England asked banks to report their private credit exposure after the PRA identified risks in private credit and leveraged lending, Reuters reported in 2023. The PRA later asked Barclays to review its exposure to leveraged finance, and in March 2026 the Bank of England questioned lenders including Barclays about their exposure to the collapsed mortgage lender Market Financial. Scrutiny sharpened further in 2026, when U.S. private credit firms marked down more loans as investors questioned opaque valuations.
