# Barclays Under PRA Investigation for Alleged Private Credit Risk Misrepresentation

> The Bank of England's Prudential Regulation Authority is investigating Barclays following an insider complaint alleging the bank misrepresented risk associated with derivatives used to finance private credit loans by misallocating them to its trading book.

By PrimaryBrief newsroom · Published 2026-10-19T15:46:48.228865Z
Canonical: https://primarybrief.com/article/barclays-under-pra-investigation-for-alleged-private-credit-risk-misrepresentation-4f60c8ea

The Bank of England's Prudential Regulation Authority (PRA) is investigating Barclays over allegations that the bank misrepresented the risk of derivatives linked to private credit loans [1][3]. An insider complaint, lodged earlier in 2026, claims Barclays assigned total return swaps, which reference illiquid private credit loans, to its trading book [3]. This practice is a concern because the trading book is designated for easily sellable assets, while harder-to-sell loans requiring higher capital are typically placed in the banking book [3].

Misallocating illiquid assets to the trading book could decrease capital requirements for Barclays and potentially increase the bank's profitability [3]. PRA rules explicitly forbid banks from assigning derivatives backed by illiquid collateral to their trading book without adequate justification [3]. The PRA has previously issued warnings against manipulating capital rules by reclassifying illiquid assets [3]. Barclays has accumulated billions of dollars in private credit loan exposure through these derivatives [3].

## What the Records Show

The PRA received a complaint earlier in 2026 alleging Barclays' handling of derivatives used to finance private credit loans breached the regulator's rules [3]. The complaint focused on the bank's allocation of total return swaps, which refer to illiquid private credit loans, to its trading book [3]. These swaps are derivatives that enable a bank to finance loans for private credit funds, passing economic performance to clients in exchange for a fee [3]. Banks typically categorize assets into either their banking book or trading book, a decision that influences the amount of capital they must set aside to cover potential losses [3]. The banking book holds less liquid loans that demand more capital, while the trading book is meant for easily tradable assets [3].

## Timeline

Earlier in 2026, an insider complaint was lodged with the Bank of England's Prudential Regulation Authority regarding Barclays' practices with private credit derivatives [1][3]. In February 2026, reports indicated Barclays had a £600 million exposure to the collapsed UK mortgage lender Market Financial Solutions Ltd (MFS) [6]. Separately, in October 2025, Barclays CEO CS Venkatakrishnan stated the bank maintained appropriate controls for its £20 billion private credit exposure and ran a "very risk-controlled shop" [4][5]. More recently, in October 2026, the Rosen Law Firm launched an investigation into potential securities claims against Barclays [6][13]. Also in October 2026, several former Barclays traders had their convictions for historical LIBOR and EURIBOR rate-rigging scandals overturned by a London court [7][9][10].

## What Changed and for Whom

The PRA's investigation signals increased scrutiny over Barclays' private credit exposure and its classification of financial instruments [1][3]. If the allegations prove true, Barclays could face regulatory action for breaching capital rules, potentially impacting its profitability and reputation. The simultaneous investigation by the Rosen Law Firm for shareholders and the overturned convictions of former traders highlight a period of multiple legal and regulatory challenges for the bank [6][7][13]. These developments could affect investor confidence and necessitate changes in Barclays' risk management practices.

## What the Subject Has Said Publicly

In October 2025, CS Venkatakrishnan, Barclays' CEO, publicly stated that the bank possessed the necessary controls for its £20 billion exposure to private credit [4][5]. He also affirmed that Barclays operated a "very risk-controlled shop" [4][5]. These statements, made before the current insider complaint, were general remarks about the bank's management of private credit [4][5].

## What we could not confirm

We could not confirm the exact dates in October 2025 when CS Venkatakrishnan made his statements regarding private credit exposure. We could not confirm the precise date earlier in 2026 when the insider complaint was lodged with the PRA.

## Evidence cited
1. BoE scrutinises Barclays over claim traders misrepresented private credit exposure (www.ft.com) — https://www.ft.com/content/f3127b4f-d33a-4431-acff-021829f3aa72?syn-25a6b1a6=1
2. Private credit has had more media attention than usual in 2026. Headlines have focused on loan valuations, exposure to software assets and a handful of high‑profile bankruptcies. This has prompted questions about whether the asset class is facing broader structural challenges. In reality, much of the noise reflects issues that are specific to certain fund structures, strategies or individual situations, rather than a systemic deterioration across private credit as a whole. (Barclays) — https://www.barclays.com/
3. The Bank of England is examining whether Barclays traders misrepresented illiquid private credit loans to understate their risk after concerns were raised by an insider. The BoE's Prudential Regulation Authority received a complaint earlier this year about how the bank was recording derivatives used to finance private credit loans, according to people familiar with the matter. It alleged that the way the bank handled the deals was in breach of the PRA's rules, the people said. Banks have helped  (Financial Times) — https://www.ft.com/
4. Barclays has insisted it has the right controls in place to manage a £20bn exposure to the under-fire private credit industry despite warnings from the International Monetary Fund (IMF) and the Bank of England. The bank's chief executive, CS Venkatakrishnan, said it ran a “very risk-controlled shop” and was comfortable… (managersofwealth.com) — https://www.managersofwealth.com/
5. Barclays has insisted it has the right controls in place to manage a £20bn exposure to the under-fire private credit industry despite warnings from the International Monetary Fund (IMF) and the Bank of England. The bank's chief executive, CS Venkatakrishnan, said it ran a “very risk-controlled shop” and was comfortable with its lending standards for the private credit industry. (The Guardian) — https://www.theguardian.com/
6. Rosen Law Firm, a global investor rights law firm, continues to investigate potential securities claims on behalf of shareholders of Barclays PLC (NYSE: BCS) resulting from allegations that Barclays may have issued materially misleading business information to the investing public. ... On February 27, 2026, Reuters published an article entitled "Wall Street hit by UK mortgage lender collapse, raising fears of more credit 'cockroaches'." The article stated that lenders were "rocked by the implosi (wboc.com) — https://www.wboc.com/
7. The Court of Appeal has overturned the convictions of five former Barclays traders who were convicted and sentenced to up to 8 years in jail for conspiracy to defraud following the 2007-2009 credit crisis. ... The traders had been convicted on the basis of alleged attempts to influence the London Inter-bank Offered Rate (LIBOR) or the Euro Inter-bank Offered Rate (EURIBOR). (matrixlaw.co.uk) — https://www.matrixlaw.co.uk/
8. Following a one-week interval since the Court of Appeal threw out the convictions of five ex-Barclays Plc bankers and former Deutsche Bank AG trader Christian Bittar, the regulator took its step. Those reversals followed the UK Supreme Court's decision to overturn Tom Hayes' conviction. (briefs.co) — https://www.briefs.co/
9. Five former Barclays traders have had their convictions for rate-rigging overturned by a London court. Alex Morgan explains. (YouTube) — https://www.youtube.com/
10. A British court on Wednesday quashed the convictions of five traders accused of manipulating benchmark interest rates in one of the biggest banking scandals to come out of the 2008 global financial crisis. The Court of Appeal threw out the fraud convictions of former Barclays employees Jonathan Mathew, Jay Merchant, Alex Pabon, Philippe Moryoussef and Colin Bermingham. (investmentexecutive.com) — https://www.investmentexecutive.com/
11. As we predicted here last week, Christian Bittar, the legendary Deutsche Bank rates trader who once made a bonus of $140m while speaking softly and eating boiled eggs and junk food, and who was imprisoned for nearly two years, has had his conviction for conspiracy to defraud via manipulation of the Euribor rate quashed. So, too, have five former traders from Barclays. (efinancialcareers.com) — https://www.efinancialcareers.com/
12. Barclays Subject To Securities Investigations Over MFS Exposure (stl.news) — https://stl.news/
13. Rosen Law Firm Announces Investigation of Potential Securities Claims Against Barclays PLC - BCS - PR Newswire (PRNewswire) — https://www.prnewswire.com/news-releases/rosen-law-firm-announces-investigation-of-potential-securities-claims-against-barclays-plc--bcs-302325330.html