Barclays faces reported regulatory review over private credit derivatives

The Bank of England’s Prudential Regulation Authority began reviewing Barclays’ handling of private credit derivatives in 2026 after an insider raised concerns, the Guardian reported on 19 October, citing the Financial Times. Total return swaps allegedly went into a portfolio that understated their risk, potentially leaving insufficient capital against losses and increasing reported profitability.

Barclays disputed the concerns, saying its treatment met accounting and capital requirements and had internal governance and external adviser support. It put its private credit exposure at about £15bn, including £300m in the relevant derivatives. The Bank of England said PRA chief Katharine Braddick, a former Barclays executive, was excluded from Barclays matters until the end of 2026.

The report highlighted links between traditional banks and private credit firms, which fund corporate loans with investor money and face less regulation. Regulators had warned that problems in private credit could destabilise connected banks. Barclays had already suffered losses from Tricolor’s collapse and a £228m hit following Market Financial Solutions’ failure.