Barclays’ private credit derivatives face reported review by UK banking regulator

Barclays’ handling of derivatives used to finance private credit loans is reportedly under review by the UK’s Prudential Regulation Authority, according to Financial Times reporting cited by the Guardian on 19 October 2026. The concern is that the contracts may have been recorded in a portfolio that made them appear less risky, potentially affecting the capital Barclays held against losses.

According to the Guardian’s account of the Financial Times report, a Barclays insider raised concerns and the PRA began its review earlier in 2026. The Bank of England, which oversees the PRA, declined to comment to the Guardian.

Why the derivatives classification matters

Sources cited by the Financial Times described Barclays’ exposure to private credit loans through derivatives as billions of dollars, according to the Guardian. Barclays said in a statement quoted by the Guardian: ‘Barclays takes seriously its regulatory obligations in markets where it operates. Barclays does not comment on its interactions with regulators.’

PRA scrutiny of lending to non-bank firms

The PRA’s 2026/27 business plan identifies counterparty credit risk as a supervisory priority as banks’ exposures to non-bank financial institutions grow and their relationships become more complex. It says earlier supervisory work found gaps in data quality, availability and aggregation that can prevent firms from forming a complete picture of those risks. The PRA says it will continue assessing firms’ understanding of exposures under current and stressed conditions, including exposures to private markets and hedge funds.

Private credit firms typically use investors’ money to lend to companies, while banks can finance the firms or their funds, the Guardian explained. Barclays shares fell 3.5% on Monday, the Guardian reported, making it the FTSE 100’s second-largest faller that day. Barclays was due to report its latest financial results on Thursday, 22 October.