Bank of England probing Barclays over claims traders misrepresented private credit risk, FT reports

The Bank of England is examining whether Barclays traders misrepresented illiquid private credit loans to understate their risk after an insider raised concerns, the Financial Times reported on Monday.

The Bank’s Prudential Regulation Authority received a complaint earlier this year about how Barclays was recording derivatives used to finance private credit loans, according to the FT report carried by Reuters. The report alleged that the way the bank handled the deals breached the PRA’s rules.

Barclays did not immediately respond to a Reuters request for comment, and the Bank of England could not be immediately reached outside regular business hours.

The report weighed on the bank’s shares. Barclays stock fell around 2% in early trade and later lost 2.7%, Reuters reported, helping to drag London’s FTSE 100 down 0.9% to 10,787.93 by 0958 GMT. The broader banking sector was down 1.8%, according to the Reuters market report.

The episode adds to scrutiny of lenders’ exposure to the fast-growing private credit market, where banks finance loans that are often difficult to value or sell.