Barclays is scaling back lending to smaller businesses and private credit firms after suffering losses linked to the collapse of several high-risk lenders, in a move that signals growing caution across the banking sector.

The lender is understood to be reducing its exposure to asset-based lending for smaller borrowers and shifting its focus towards larger, more established corporate debt providers. The strategy change follows the failures of firms including Market Financial Solutions and Tricolor Holdings, which have triggered losses and heightened concerns about risk within the fast-growing private credit market.

According to reports, Barclays has withdrawn from a number of deals and increased pricing on others to reflect the higher perceived risk environment. The move reflects a broader reassessment of private credit, a sector that has attracted significant investment in recent years due to its promise of higher returns, often in the range of 8 to 10 per cent annually.

However, those returns are frequently underpinned by leverage, amplifying both gains and potential losses. Recent events have exposed vulnerabilities in the sector, including concerns over transparency, asset valuations and rising default rates in a higher interest rate environment.

The collapse of Market Financial Solutions has been particularly damaging. The lender entered administration earlier this year after a High Court judge ordered an investigation into alleged fraud and financial mismanagement. Insolvency practitioners have since claimed there is compelling evidence of serious irregularities, including the possibility that some loans may be entirely unsecured.

Central to the investigation are allegations of “double pledging”, where the same property is used as collateral for multiple loans, a practice that can render assets unrecoverable if borrowers default. Alongside Barclays, several global financial institutions are understood to have exposure to the failed lender.

Barclays chief executive C.S. Venkatakrishnan acknowledged the issue last week, describing the bank’s exposure as “disappointing” but indicating that total losses would remain below £500 million.

The bank’s actions are also under scrutiny. Barclays froze Market Financial Solutions’ accounts last November, a move that insolvency practitioners have suggested may indicate concerns about potential money laundering or other criminal activity. Investigations are ongoing, including oversight from the Financial Conduct Authority.

The fallout has extended beyond the UK. The collapse of Tricolor Holdings, a US-based subprime automotive lender, has added to concerns about the resilience of private credit markets globally, particularly as higher borrowing costs strain borrowers and investors alike.

Recent developments have also unsettled investors, with some private credit funds restricting withdrawals amid rising uncertainty. Analysts say this reflects a shift in sentiment as the sector faces its first significant stress test since its rapid expansion following the global financial crisis.

For Barclays, the decision to pivot towards larger corporate clients suggests a more conservative approach to risk as market conditions tighten. It also raises questions about access to finance for smaller businesses, which may find credit conditions becoming more restrictive as banks reassess their exposure.

The situation underscores the growing tension within financial markets between the search for higher returns and the need for robust risk management — a balance that is being tested as economic conditions become more volatile.

As the investigations continue and the full scale of losses becomes clearer, the implications for both lenders and borrowers are likely to reverberate across the private credit landscape.

Amy Ingham

Amy is a newly qualified journalist specialising in business journalism at Business Matters with responsibility for news content for what is now the UK’s largest print and online source of current business news.

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Here is what we know about the behind-the-scenes mediation efforts:

What is on the table?

After announcing “very good” talks with an unnamed “top person” in Iran on Monday, Trump said Tuesday that he had sent a plan and that it “all starts with, they cannot have a nuclear weapon.”

A 15-point proposal to stop the fighting has been conveyed to Iran via Pakistan, Pakistani officials have confirmed.

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But the exact contents remain unknown and the identity of Trump’s “top person” is a mystery, if he exists at all.
The New York Times and Al Jazeera have reported that Trump is proposing a one-month ceasefire during which the two sides would restart talks about the same issues they were discussing before the war.
These include a US demand that Iran hand over its enriched uranium stockpile, stop any further enrichment, and agree to limits on its missile programme, as well as cease support for militant groups in the region.
If Iran met US conditions and opened up the strategic Strait of Hormuz for shipping, which it has effectively closed, Trump is offering relief from all sanctions, the reports suggest.

After saying that Iran wanted to make a deal “so badly”, the US president warned Thursday that they “better get serious soon”.

The head of the UN nuclear watchdog Rafael Grossi has said a meeting in Islamabad at the weekend is under discussion.

What does Iran say?
Publicly, no Iranian official has confirmed any negotiations, but the language used is ambiguous.

Iranian Foreign Minister Abbas Araghchi said messages were “being exchanged through friendly countries or through certain different individuals” but insisted that “this is neither called dialogue nor negotiation”.

But he added that “if it is necessary for a position to be taken, it will certainly be decided”.

Pakistani and Egyptian officials have confirmed they are serving as diplomatic backchannels.

What are Iran’s demands?
According to an unidentified Iranian official cited by Iran’s Press TV on Wednesday, Tehran has sent five conditions for an end to hostilities.

These include ending “aggression and assassinations”, setting up a mechanism guaranteeing that neither Israel nor the United States would resume the war, as well as financial compensation.

They also include a cessation of hostilities on all fronts, meaning Israel would stop bombarding Tehran-backed Hezbollah in Lebanon and possibly Hamas in Gaza.

The official also said Tehran wanted international recognition of its sovereignty over the Strait of Hormuz.

On March 11, Iranian President Masoud Pezeshkian laid out Iranian terms as “recognising Iran’s legitimate rights, payment of reparations, and firm international guarantees against future aggression”.

The Wall Street Journal reported that Tehran was also demanding the closure of US military bases in the Gulf.

Can compromises be found?
Analysts say the conflict has strengthened hardliners in Tehran where the rhetoric is defiant and increasingly confident.

Trump has bombed the country twice amid negotiations, first in June last year and again on February 28.

As for US demands, Tehran has insisted since 2003 it is not seeking a nuclear weapon but has a right to enrich for civilian nuclear energy purposes.

It has also refused curbs on its ballistic missile programme or discussions about its support for militant groups such as Hezbollah or the Houthis in Yemen.

Tehran’s demand for reparations is likely a non-starter, as is any suggestion of the US closing Gulf military bases.

It is not clear how its sovereignty over the Strait of Hormuz would work, or how meaningful security guarantees could be formulated, unless they involved outside powers such as Russia or China.

So is there no hope?
The outcome may come down to how badly Trump wants to end the war, and whether Iran’s leaders view their interests as being best served by a ceasefire.

Trump would walk away claiming victory, saying he has destroyed Iran’s military and nuclear capabilities.

The Islamic republic could also claim victory, pointing to how its forces resisted four weeks of US and Israeli onslaught while also landing blows on US interests in the region and in Israel.

“Both sides need to be able to claim victory and save face, whatever deal they agree on,” a diplomat based in the Middle East told AFP on condition of anonymity. “The process will take some time.”

But even with a ceasefire, the question of Iran’s nuclear programme and its 440-kilogram stockpile of highly enriched uranium remains unresolved.

Some analysts believe the talks are a smokescreen as Trump prepares a ground offensive to re-open the Strait of Hormuz by force or seize Iranian oil assets.

Iran has signalled it would use its Houthi allies in Yemen to attack shipping in the Red Sea, which would open up a new front in a war of spiralling economic, political and military repercussions.

SYDNEY — Commonwealth Bank of Australia, the nation’s largest lender, has increased home loan interest rates for the second time in March 2026, adding further pressure to mortgage holders already grappling with higher borrowing costs following two Reserve Bank of Australia cash rate rises this year.

On Tuesday, CBA announced a 0.30 percentage point increase to all its fixed-rate home loan products, effective Friday, March 28. The move follows the bank’s earlier 0.25 percentage point hike to variable rates, effective March 27, in response to the RBA’s March 17 decision to lift the official cash rate by 0.25 percentage points to 4.10 per cent.

The latest fixed-rate adjustment pushes some owner-occupier fixed loans as high as 7.19 per cent and investor loans to 7.04 per cent, depending on loan-to-value ratio and product type. This comes after CBA passed on the full 0.25 per cent RBA increase to variable rates earlier in the month, with changes taking effect on March 27.

CBA Group Executive for Retail Banking Angus Sullivan said the bank’s priority remains supporting customers through clear communication and practical assistance options, including repayment pauses or switching to interest-only periods where eligible. However, the back-to-back increases have drawn criticism from consumer groups concerned about affordability strains on Australian households.

Impact on Borrowers

For a typical $600,000 mortgage with 25 years remaining, the combined March hikes could add roughly $90 to $100 or more to monthly repayments, depending on the product mix and whether the loan is fixed or variable. Borrowers on fixed rates rolling off in coming months face particularly sharp resets if they move to higher current fixed or variable offerings.

The RBA’s March decision marked the second cash rate increase of 2026, following a 0.25 percentage point hike in February that took the target from 3.60 per cent to 3.85 per cent before the latest move to 4.10 per cent. The board’s vote was split, with five members supporting the rise and four preferring to hold steady, citing persistent inflation risks and tighter labour market conditions.

All major banks — CBA, Westpac, NAB and ANZ — passed on the full March variable rate increase, with slight variations in effective dates. Westpac’s variable hike takes effect March 31, while CBA, ANZ and NAB implemented theirs on March 27.

Fixed-rate products have also faced upward pressure. CBA’s latest 0.30 per cent adjustment across fixed terms reflects funding cost increases and market expectations of potentially higher rates persisting into 2026.

Broader Market Context

Sydney and other capital city homeowners, already dealing with elevated property prices and cost-of-living pressures, now confront a higher-for-longer interest rate environment. Analysts note that three consecutive rate hikes — February, March and a potential May move — could add up to $8,000 annually to repayments for some metropolitan borrowers, according to earlier forecasts from major banks and comparison sites.

Consumer advocates have urged borrowers to review their loans, contact their lender early for hardship assistance if needed, and consider fixed-rate options or refinancing where savings are available. However, with many lenders tightening or raising fixed rates, refinancing opportunities have narrowed for some customers.

CBA’s announcements align with actions by other big four banks, though smaller lenders and non-banks have shown mixed responses, with some passing on less than the full RBA increase to remain competitive.

Customer Support Measures

In its statement, CBA emphasised support tools for affected customers, including:

• Repayment pause or reduction options for eligible borrowers facing temporary hardship.
• Switching between principal-and-interest and interest-only repayments.
• Access to financial counselling and budgeting assistance through partnerships.
• Online calculators and rate comparison tools on its website to help customers understand personalised impacts.

Fixed Versus Variable Rate Considerations

The dual hikes in March highlight the differing dynamics of fixed and variable products. Variable rates respond directly to RBA moves and funding costs, while fixed rates incorporate market expectations of future rate paths. With the cash rate now at 4.10 per cent and inflation risks skewed higher due to global uncertainties, including Middle East tensions, many economists anticipate the RBA may hold or hike further in coming months.

Borrowers on expiring fixed rates this year could see significant step-ups when reverting to variable rates or new fixed terms. Financial advisers recommend stress-testing budgets at rates 3 percentage points above current levels, as required by responsible lending rules.

Outlook for Mortgage Holders

The RBA has signalled a data-dependent approach, with the next board meeting scheduled for May. Markets currently price in limited immediate further hikes but acknowledge upside risks to inflation from wages growth, capacity constraints and external shocks.

For CBA customers, the March changes mean variable-rate borrowers will see the increase reflected in their April statements, while fixed-rate customers face the new pricing on new or refinanced loans from Friday onward.

Homeowners are advised to:

• Log into their CBA online banking or app to view personalised rate impacts.
• Contact CBA’s customer support line or relationship manager for tailored assistance.
• Compare rates across lenders, noting that some smaller institutions may offer more competitive packages.
• Consider locking in fixed rates if they provide payment certainty, though current levels remain elevated.
• Explore government or lender support schemes if facing genuine repayment difficulty.

While the cash rate remains well below peaks seen in 2022-2023, the rapid reversal of some prior easing has caught many households off guard after a period of relative stability. Consumer groups continue to call for greater transparency from banks on margin management and funding costs during such cycles.

As Australia navigates this tighter monetary policy phase, borrowers with larger loans or those in high-cost cities like Sydney and Melbourne face the greatest relative burden. Early engagement with lenders remains the most effective strategy for managing increased repayments.