Barclays said to be freeing up capacity for hedge fund lending as loan limits bite

The move comes as a separate Bank of England probe looks at how Barclays books its private credit swaps

The bank's shares have been under pressure. They fell 2.0% in Monday's session to close at 424.2p, a move Reuters linked to a Bank of England Prudential Regulation Authority probe, Tradingpedia reported. That probe is examining whether Barclays traders misclassified illiquid private credit loan derivatives, including total return swaps used to finance private credit funds, in a way that reduced regulatory capital requirements, Tradingpedia said. The central question is whether those positions were booked in the trading book or the banking book.

Early on Tuesday, Barclays stock traded at €4.93 on Lang & Schwarz, 1.40% below Monday's Xetra close, according to ad-hoc-news.de. Barclays has said it adheres to its regulatory responsibilities but has declined to comment on any specific discussions with supervisors, Tradingpedia reported. The bank is due to report third-quarter results on October 22, and investors are watching whether any required changes to how it calculates capital could affect its capital ratios or its capacity to return money to shareholders, Tradingpedia said.

If Barclays has indeed been managing around its loan limits rather than pulling back on risk, that would add detail to the exposure the New York Fed began examining in early October. It would suggest the bank is treating those limits as something to route around operationally rather than as a reason to cut its appetite for private credit risk. That keeps Barclays among the banks examiners are watching over collateral quality and risk management, and any sign of further strain on its balance sheet would feed directly into that scrutiny.