Bank of England Examining Barclays' Private Credit Loan Handling
The PRA is reviewing Barclays over concerns that derivatives tied to private credit loans were improperly recorded, potentially inflating profits.
The Bank of England's regulatory arm is scrutinizing how Barclays managed loans connected to the private credit sector, according to a report by the Financial Times. The Prudential Regulation Authority launched its review this year after an internal whistleblower at Barclays raised concerns about the bank's practices.
At the center of the inquiry are financial contracts known as derivatives, which regulators fear may have been incorrectly logged by the British lender. Such misclassification, if confirmed, could mean that Barclays' reported profits were artificially inflated — a serious compliance concern for one of the UK's largest banks.
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The review adds fresh regulatory pressure to the already strained private credit sector, which has drawn increasing scrutiny from financial watchdogs on both sides of the Atlantic. Private credit — loans arranged outside traditional bank lending channels — has expanded rapidly in recent years, prompting concerns about transparency, risk concentration, and valuation accuracy across the industry.
Barclays has not publicly commented on the specifics of the PRA's review. The investigation remains at an early stage, and no formal enforcement action has been reported. The PRA's involvement signals that UK authorities are intensifying oversight of how major banks account for their exposure to alternative lending markets, particularly as those markets face mounting questions about their resilience under financial stress.
Continue reading at Business | The Guardian.
