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Banking giant Barclays is reportedly probed by the Bank of England over claims traders understated risky private credit exposure

Banking giant Barclays is reportedly probed by the Bank of England over claims traders understated risky private credit exposure

The Prudential Regulation Authority opened its investigation following a whistleblower complaint received earlier this year. At issue are total return swaps tied to illiquid private credit loans, which Barclays placed in its trading book rather than its banking book — a classification that critics argue can mask risk and lower the capital requirements the bank must meet. Barclays shares dropped 3.5 per cent to 417.5p.

Barclays traders justified the categorisation by contending the exposure counted as a traded position because a matching swap was in place to hedge it.

The PRA warned banks in 2024 against 'imprudent' gaming of capital rules.

Barclays says it treats its regulatory obligations with the utmost seriousness but declines to comment on discussions with the regulator.

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