Shore Capital has reiterated its 'buy' recommendation on Barclays with a 550p price target, saying a report about regulatory scrutiny of the bank's private credit exposures raises uncertainty but cannot yet be quantified in financial terms.
According to the Financial Times, the Bank of England's Prudential Regulation Authority is investigating allegations that derivatives used to finance illiquid private credit loans were improperly booked.
This potentially would allow Barclays to hold less capital than required.
The probe centres on whether those exposures should have sat in the banking book rather than the trading book, a distinction that carries significant implications for how much capital a bank must set aside against potential losses.
Greenwood said the precise size of the exposure under scrutiny had not been disclosed, making it impossible at this stage to assess the potential financial or capital impact.
He added that there was also uncertainty over whether Barclays could face a regulatory penalty and, if so, how large it might be.
Barclays told the FT it takes its regulatory obligations seriously but declined to comment on interactions with regulators.
Shore said it viewed the report as introducing uncertainty rather than signalling a quantifiable hit, and kept its buy rating intact with 27% upside to its target from the current share price of 433p.
The broker's conviction will be tested on Thursday, when Barclays reports third-quarter results.
Consensus expectations point to group pre-tax profit of £2.4 billion for the quarter, up from £2.1 billion a year earlier, alongside a CET1 capital ratio of 14.3% and a further share buyback of around £600 million.
CET1, or common equity tier one, is the key measure of a bank's financial resilience used by regulators.
