Bank of England reviews Barclays' private credit derivatives handling

Summarised from 2 outlets · Updated 19 Oct, 13:19 · Archive

The Bank of England is investigating whether Barclays misrepresented the risk of derivatives used to finance private credit loans.

The Bank of England's Prudential Regulation Authority is investigating Barclays over allegations that it misrepresented the risk of derivatives used to finance private credit loans. A Barclays insider raised concerns earlier this year that the financial contracts were incorrectly logged in the wrong portfolio, indicating they were less risky than they actually were. The Guardian reports that Barclays has built up billions of dollars of exposure to private credit loans using derivatives.

If the derivatives were indeed misclassified, the bank may not have held enough capital to cover potential losses, and could have boosted its reported profitability. Barclays stated that it takes seriously its regulatory obligations in markets where it operates but declined to comment on its interactions with regulators. The Bank of England also declined to comment.

Shares in Barclays fell by 3.5 per cent on Monday, making it the second-biggest faller on the FTSE 100 index. The bank is due to report its latest financial results on Thursday. Last year, Barclays' chief executive, CS Venkatakrishnan, insisted it had the right controls in place to manage its exposure to the private credit industry.

How it is being reported

• Bank of England said to be reviewing Barclays’ handling of private credit loansConcerns financial contracts known as derivatives were incorrectly logged, potentially boosting Barclays’ profits The Bank of England is reportedly looking into Barclays’ handling of loans linked to the embattled private credit sector. The Bank’s regulatory arm, the Prudential Regulation Authority, started reviewing the matter earlier this year after concerns were raised by a Barclays insider, according to the Financial Times. Continue reading...The Guardian · 19 Oct, 12:59
• BoE scrutinises Barclays over claim traders misrepresented private credit exposureRegulator received complaint that UK lender understated the risk of derivatives it used to finance private credit loansFinancial Times · 19 Oct, 05:00

In this story: Barclays · Bank of England · Prudential Regulation Authority · CS Venkatakrishnan

This summary was written by AI from the headlines and standfirsts above, and states as fact only what at least two outlets report. How we use AI · Report a problem