Key Takeaways
- • Barclays said its £15 billion ($19.97 billion) private credit exposure is treated in line with accounting and regulatory capital requirements, responding to a Financial Times report that the Bank of England is examining whether its traders understated risk.
- • The Financial Times reported the BoE was examining whether Barclays traders misrepresented illiquid private credit loans, according to Reuters.
- • Barclays put the mark-to-market value of its loan total return swap exposure linked to private credit assets at about £300 million, based on roughly £1.5 billion of underlying notional assets.
- • The vast majority of Barclays' total private credit exposure is held in the banking book, the bank said.
- • Barclays said it met the conditions required to classify the swaps as trading book, supported by internal governance and external advisers.
Summary
Barclays (BARC.L) said on Monday that its £15 billion ($19.97 billion) private credit exposure was treated in line with accounting and regulatory capital requirements, following a report that the Bank of England was examining whether its traders had understated the risk, according to Reuters. The Financial Times reported earlier in the day that the BoE was examining whether Barclays traders misrepresented illiquid private credit loans. Bloomberg carried a parallel report under the headline "Barclays Defends Private Credit Reporting Under BOE Scrutiny."
In a statement to Reuters, Barclays said its treatment of total return swaps is consistent with accounting and regulatory capital requirements. The bank said the mark-to-market value of its exposure to loan total return swaps linked to private credit assets was about £300 million, based on roughly £1.5 billion of underlying notional assets. Its total private credit exposure stood at £15 billion, with the vast majority held in the banking book.
Barclays said that to classify the treatment as trading book, it was required to meet certain conditions under capital rules. The bank said those conditions had been met and were supported by internal governance and external advisers. The Reuters report did not detail the scope or timing of the BoE review, and the regulator's position was not included in the source material.
In a statement to Reuters, Barclays said its treatment of total return swaps is consistent with accounting and regulatory capital requirements. The bank said the mark-to-market value of its exposure to loan total return swaps linked to private credit assets was about £300 million, based on roughly £1.5 billion of underlying notional assets. Its total private credit exposure stood at £15 billion, with the vast majority held in the banking book.
Barclays said that to classify the treatment as trading book, it was required to meet certain conditions under capital rules. The bank said those conditions had been met and were supported by internal governance and external advisers. The Reuters report did not detail the scope or timing of the BoE review, and the regulator's position was not included in the source material.
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