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Barclays LCR Hits Three-Year Low Amid Rising Outflows

Created at 5 Aug · 3:36 AM1 source↑ Market-relevant
IN SHORT

Barclays' liquidity coverage ratio (LCR) has fallen to its lowest point in three years, dropping to 157.7% in the second quarter. This decline is attributed to an increase in modelled stressed cash outflows, which offset stable high-quality liquid asset holdings.

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Key Numbers

157.7%Barclays' Q2 LCR
7.7 ppQ2 LCR decrease from Q1
165.4%Barclays' Q1 LCR
100%Regulatory minimum LCR
£9.4 billionIncrease in net stressed outflows

Who's Involved

Barclays
Bank whose LCR fell to a three-year low

↳ Why This Matters

A declining LCR, even if above regulatory minimums, can signal increased liquidity risk for a bank, potentially impacting investor confidence and its ability to meet short-term obligations.

Key facts

  • Barclays' liquidity coverage ratio (LCR) decreased to 157.7% in the second quarter.
  • This is the lowest LCR recorded by the bank in three years.
  • The decrease was caused by higher modelled stressed cash outflows.
  • High-quality liquid assets remained broadly stable.

Barclays' liquidity coverage ratio (LCR) has fallen to its lowest level in three years, with the bank reporting an average LCR of 157.7% in the second quarter. This represents a decrease of 7.7 percentage points from 165.4% in the first quarter, marking the lowest ratio since the second quarter of 2023. The decline is attributed to an increase in modelled stressed cash outflows, which rose by £9.4 billion, while the bank's holdings of high-quality liquid assets (HQLAs) remained largely unchanged. Despite the drop, the LCR remains well above the regulatory minimum of 100%.

Frequently asked questions

The LCR is a measure of a bank's high-quality liquid assets (HQLA) relative to its total net cash outflows over a 30-day stress period, designed to ensure banks can meet their short-term obligations.

HQLAs are assets that can be easily and immediately converted into cash with little or no loss of value, such as central bank reserves and certain government securities.

Stressed cash outflows represent the potential amount of cash a bank might need to disburse during a period of financial stress, as modelled by regulators.

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How It Developed

Barclays' LCR fell to 157.7% in Q2.
This marks the lowest LCR since Q2 2023.
The decline was driven by increased stressed cash outflows.

Sources

T1
Barclays LCR hits three-year low as outflows riseRisk.net

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