Bank of England Reviews Barclays’ Handling of Private Credit Loans

By the Editorial Team · Tuesday, October 20, 2026

The Bank of England’s Prudential Regulation Authority is reviewing Barclays’ handling of total return swaps linked to private credit loans amid concerns that the bank may have underreported risk and held insufficient capital. The investigation could impact Barclays’ financial standing and oversight, especially as the bank prepares to release upcoming earnings and navigates scrutiny following insider disclosures.

The Bank of England is conducting a review of Barclays’ management of loans tied to the private credit sector after concerns were raised regarding the classification of certain financial contracts. The investigation, led by the Prudential Regulation Authority (PRA), commenced earlier this year following disclosures from a Barclays insider.

The focal point of the inquiry involves the bank’s use of total return swaps—derivative contracts that mirror the performance of underlying assets—to finance loans issued to private credit firms. Sources familiar with the matter indicate that Barclays may have recorded these derivatives in a portfolio that understated their risk, potentially resulting in insufficient capital being held to cover possible losses. This could have led to an inflated appearance of the bank’s profitability.

Barclays reportedly accumulated billions of dollars in exposure to the private credit market through these derivatives. The bank, however, maintains that its accounting and capital treatment of total return swaps complies with regulatory requirements and internal governance standards. A spokesperson emphasized that all relevant conditions were satisfied and that decisions regarding asset classification had the support of external advisers.

The bank disclosed that its total exposure to the private credit sector amounts to approximately £15 billion, with derivatives accounting for £300 million of that figure. The Bank of England declined to comment on the ongoing review.

Following news of the investigation, Barclays’ shares declined by 3.5%, marking the second-largest drop on the FTSE 100 index amid broader weakness in the banking sector. The bank is scheduled to release its latest financial results on Thursday.

The review poses a potential challenge for Katharine Braddick, who assumed leadership of the PRA earlier this year after spending six years at Barclays as head of strategic policy and senior adviser to the chief executive. To address potential conflicts of interest, the Bank of England confirmed that Braddick has been recused from all Barclays-related matters until the end of 2026.

Last year, Barclays’ chief executive, CS Venkatakrishnan, reaffirmed the bank’s confidence in its controls over exposure to the private credit industry—a sector that has drawn concern over declining lending standards among some observers.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.