Bank of England Reportedly Examining Barclays Over Misrepresented Private Credit Loans

The Bank of England's Prudential Regulation Authority (PRA) is reportedly investigating whether traders at Barclays misrepresented illiquid private credit loans to understate their risk. This follows a complaint alleging that the bank's handling of derivatives used to finance these loans breached PRA rules, which restrict assigning derivatives backed by illiquid collateral to the trading book without sufficient justification. The regulatory concern is that such classification could understate risk and reduce capital requirements.