BoE reportedly looks into claim Barclays misrepresented private credit exposure
BCS•The Bank of England is examining whether Barclays misrepresented the risk of illiquid private credit loans after an insider complaint to the Prudential Regulation Authority. The complaint concerned derivatives used to finance the loans; Barclays shares fell 2.6%.
1. Regulatory complaint
The Bank of England is examining whether Barclays traders misrepresented illiquid private credit loans to understate their risk, the Financial Times reported. The report said the Prudential Regulation Authority received a complaint earlier this year about Barclays’ recording of derivatives used to finance private credit loans.
2. Alleged rule breach
The complaint centred on Barclays’ allocation of total return swaps referencing illiquid private credit loans to its trading book. It alleged the treatment breached PRA rules restricting banks from assigning derivatives backed by illiquid collateral to the trading book unless they can provide enough evidence to justify it. Barclays said it takes its regulatory obligations seriously and declined to comment further on its interactions with the regulator. Its shares fell 2.6% to 421.4 pence.
