v3.25.4
Derivative financial instruments
 12 Months Ended
Dec. 31, 2025
Disclosure of nature and extent of risks arising from financial instruments [abstract]  
Derivative financial instruments Derivative financial instruments
Accounting for derivatives
Derivative instruments are contracts whose value is derived from one or more underlying financial instruments or indices
defined in the contract. They include swaps, forward-rate agreements, futures, options and combinations of these
instruments and primarily affect the Barclays Bank Group’s net interest income, net trading income and derivative assets and
liabilities. Notional amounts of the contracts are not recorded on the balance sheet. Derivatives are used to hedge interest
rate, credit risk, inflation risk, exchange rate, commodity, equity exposures and exposures to certain indices such as house
price indices and retail price indices related to non-trading positions.
All derivative instruments are held at fair value through profit or loss, except for derivatives that are in a designated cash
flow or net investment hedge accounting relationship. Derivatives are classified as assets when their fair value is positive or
as liabilities when their fair value is negative.
Hedge accounting
The Barclays Bank Group applies the requirements of IAS 39 Financial Instruments: Recognition and Measurement for hedge
accounting purposes. The Barclays Bank Group applies hedge accounting to represent the economic effects of its interest
rate, currency and contractually linked inflation risk management strategies. Where derivatives are held for risk management
purposes, and when transactions meet the required criteria for documentation and hedge effectiveness, the Barclays Bank
Group applies fair value hedge accounting, cash flow hedge accounting, or hedging of a net investment in a foreign
operation, as appropriate to the risks being hedged.
Fair value hedge accounting
Changes in fair value of derivatives that qualify and are designated as fair value hedges are recorded in the income
statement, together with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The
fair value changes adjust the carrying value of the hedged asset or liability held at amortised cost. For hedged items
classified as fair value through other comprehensive income, fair value movements attributable to the hedged risk are
transferred from other comprehensive income to the income statement.
If hedge relationships no longer meet the criteria for hedge accounting, hedge accounting is discontinued. For fair value
hedges of interest rate risk, the fair value adjustment to the hedged item is amortised to the income statement over the
period to maturity of the previously designated hedge relationship using the effective interest method. If the hedged item is
sold or repaid, the unamortised fair value adjustment is recognised immediately in the income statement.
Cash flow hedge accounting
For qualifying cash flow hedges, the fair value gain or loss associated with the effective portion of the cash flow hedge is
recognised initially in other comprehensive income, and then recycled to the income statement in the periods when the
hedged item will affect profit or loss. Any ineffective portion of the gain or loss on the hedging instrument is recognised in
the income statement immediately.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognised when the hedged item is ultimately
recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss
that was recognised in equity is immediately transferred to the income statement.
Hedges of net investments
The Barclays Bank Group’s net investments in foreign operations, including monetary items accounted for as part of the net
investment, are hedged for foreign currency risks using both derivatives and foreign currency borrowings. Hedges of net
investments are accounted for similarly to cash flow hedges; the effective portion of the gain or loss on the hedging
instrument is being recognised directly in other comprehensive income and the ineffective portion being recognised
immediately in the income statement. The cumulative gain or loss recognised in other comprehensive income is recognised
in the income statement on the disposal or partial disposal of the foreign operation, or other reductions in the Barclays Bank
Group’s investment in the operation.
Barclays Bank Group
2025
2024
Notional
contract
amount
Fair value
Notional
contract
amount
Fair value
Assets
Liabilities
Assets
Liabilities
£m
£m
£m
£m
£m
£m
Total derivative assets/(liabilities) held for trading
99,839,732
250,285
(240,158)
83,571,610
291,562
(278,636)
Total derivative assets/(liabilities) held for risk management
239,559
1,907
(599)
221,158
794
(695)
Derivative assets/(liabilities)
100,079,291
252,192
(240,757)
83,792,768
292,356
(279,331)
The fair values and notional amounts of derivatives held for trading are set out in the following table:
Derivatives held for trading and risk management
2025
2024
Barclays Bank Group
Notional
contract
amount
Fair value
Notional
contract
amount
Fair value
Assets
Liabilities
Assets
Liabilities
£m
£m
£m
£m
£m
£m
Derivatives held for trading
Foreign exchange derivatives
OTC derivatives
8,229,535
73,979
(71,525)
8,242,887
123,379
(116,485)
Derivatives cleared by central counterparty
276,189
251
(221)
240,612
228
(235)
Exchange traded derivatives
20,733
1
(1)
27,441
7
(7)
Foreign exchange derivatives
8,526,457
74,231
(71,747)
8,510,940
123,614
(116,727)
Interest rate derivatives
OTC derivatives
32,272,598
90,814
(77,199)
26,437,086
92,206
(79,936)
Derivatives cleared by central counterparty
42,100,741
1,409
(1,124)
36,249,392
1,443
(1,319)
Exchange traded derivatives
11,473,470
1,498
(1,457)
7,672,496
2,664
(2,698)
Interest rate derivatives
85,846,809
93,721
(79,780)
70,358,974
96,313
(83,953)
Credit derivatives
OTC derivatives
671,066
4,169
(4,666)
593,702
3,474
(4,307)
Derivatives cleared by central counterparty
1,065,702
3,682
(3,713)
943,413
3,424
(3,148)
Credit derivatives
1,736,768
7,851
(8,379)
1,537,115
6,898
(7,455)
Equity and stock index derivatives
OTC derivatives
739,153
22,180
(27,092)
598,024
21,964
(26,318)
Exchange traded derivatives
2,769,230
50,161
(51,063)
2,347,247
40,947
(42,309)
Equity and stock index derivatives
3,508,383
72,341
(78,155)
2,945,271
62,911
(68,627)
Commodity derivatives
OTC derivatives
4,681
15
(16)
7,084
17
(32)
Exchange traded derivatives
216,634
2,126
(2,081)
212,226
1,809
(1,842)
Commodity derivatives
221,315
2,141
(2,097)
219,310
1,826
(1,874)
Derivative assets/(liabilities) held for trading
99,839,732
250,285
(240,158)
83,571,610
291,562
(278,636)
Total OTC derivatives
41,917,033
191,157
(180,498)
35,878,783
241,040
(227,078)
Total derivatives cleared by central counterparty
43,442,632
5,342
(5,058)
37,433,417
5,095
(4,702)
Total exchange traded derivatives
14,480,067
53,786
(54,602)
10,259,410
45,427
(46,856)
Derivative assets/(liabilities) held for trading
99,839,732
250,285
(240,158)
83,571,610
291,562
(278,636)
Derivatives held for risk management
Derivatives designated as cash flow hedges
Currency Swaps
26,048
1,677
(39)
26,564
611
(307)
Interest rate derivatives cleared by central counterparty
101,099
—
—
86,759
—
—
Derivatives designated as cash flow hedges
127,147
1,677
(39)
113,323
611
(307)
Derivatives designated as fair value hedges
Interest rate swaps
4,900
75
(517)
7,234
147
(322)
Interest rate derivatives cleared by central counterparty
103,193
—
—
96,588
—
—
Derivatives designated as fair value hedges
108,093
75
(517)
103,822
147
(322)
Derivatives designated as hedges of net investments
Forward foreign exchange
4,319
155
(43)
4,013
36
(66)
Derivatives designated as hedges of net investments
4,319
155
(43)
4,013
36
(66)
Derivative assets/(liabilities) held for risk management
239,559
1,907
(599)
221,158
794
(695)
Total OTC derivatives
35,267
1,907
(599)
37,811
794
(695)
Total derivatives cleared by central counterparty
204,292
—
—
183,347
—
—
Derivative assets/(liabilities) held for risk management
239,559
1,907
(599)
221,158
794
(695)
Hedge accounting
Hedge accounting is applied predominantly for the following risks:
▪Interest rate risk – arises due to a mismatch between fixed interest rates and floating interest rates
▪Currency risk – arises due to assets or liabilities being denominated in different currencies than the functional currency of
the relevant entity. At a consolidated level, currency risk also arises when the functional currency of subsidiaries are
different from the parent
▪Contractually linked inflation risk – arises from financial instruments within contractually specified inflation risk. The
Barclays Bank Group does not hedge inflation risk that arises from other activities
In order to hedge these risks, the Barclays Bank Group uses the following hedging instruments:
▪Interest rate derivatives to swap interest rate exposure into either fixed or variable rates
▪Currency derivatives to swap foreign currency exposures into the entity’s functional currency, and net investment
exposure to local currency
▪Inflation derivatives to swap inflation exposure into either fixed or variable interest rates
In some cases, certain items which are economically hedged may be ineligible hedged items for the purposes of IAS 39, such
as core deposits and equity. In these instances, a proxy hedging solution can be utilised whereby portfolios of floating rate
assets are designated as eligible hedged items in cash flow hedges.
In some hedging relationships, the Barclays Bank Group designates risk components of hedged items as follows:
▪Benchmark interest rate risk as a component of interest rate risk, such as the Risk Free Rate (RFR) component
▪Inflation risk as a contractually specified component of a debt instrument
▪Exchange rate risk for foreign currency financial assets or financial liabilities
▪Components of cash flows of hedged items, for example certain interest payments for part of the life of an instrument
Using the benchmark interest rate risk results in other risks, such as credit risk and liquidity risk, being excluded from the
hedge accounting relationship.
In respect of many of the Barclays Bank Group’s hedge accounting relationships, the hedged item and hedging instrument
change frequently due to the dynamic nature of the risk management and hedge accounting strategy. The Barclays Bank
Group applies hedge accounting to dynamic scenarios, predominantly in relation to interest rate risk, with a combination of
hedged items in order for its financial statements to reflect as closely as possible the economic risk management
undertaken. In some cases, if the hedge accounting objective changes, the relevant hedge accounting relationship is de-
designated and is replaced with a different hedge accounting relationship.
Changes in the GBP value of net investments due to foreign currency movements are captured in the currency translation
reserve, resulting in a movement in CET1 capital. The Barclays Bank Group mitigates this by matching the CET1 capital
movements to the revaluation of the foreign currency RWA exposures. Net investment hedges are designated where
necessary to reduce the exposure to movement in a particular exchange rate to within limits mandated by Risk. As far as
possible, existing external currency liabilities are designated as the hedging instruments.
The hedging instruments share the same risk exposures as the hedged items. Hedge effectiveness is determined with
reference to quantitative tests, predominantly regression testing, but to the extent hedging instruments are exposed to
different risks than the hedged items, this could result in hedge ineffectiveness or hedge accounting failures.
Sources of ineffectiveness include the following:
▪Mismatches between the contractual terms of the hedged item and hedging instrument, including basis differences
▪Changes in credit risk of the hedging instruments
▪If a hedging relationship becomes over-hedged, for example in hedges of net investments if the net asset value designated
at the start of the period falls below the amount of the hedging instrument
▪Cash flow hedges using external swaps with non-zero fair values
Hedged items in fair value hedges
Barclays Bank Group
Accumulated fair value
adjustment included in carrying
amount
Carrying
amount
Total
Of which:
Accumulated
fair value
adjustment on
items no longer
in a hedge
relationship
Change in fair
value used as a
basis to
determine
ineffectiveness
Hedge
ineffectiveness
recognised in
the income
statement1
Hedged item statement of financial position
classification and risk category
£m
£m
£m
£m
£m
2025
Assets
Loans and advances at amortised cost
- Interest rate risk
698
(155)
1
4
(1)
- Inflation risk
280
188
79
(9)
—
Debt securities classified as amortised cost
- Interest rate risk
11,388
27
(1)
100
32
- Inflation risk
8,127
(1,332)
1
(9)
16
Financial assets at fair value through other
comprehensive income2
- Interest rate risk
27,807
(1,378)
(429)
(163)
127
- Inflation risk
1,324
(62)
(20)
(5)
(13)
Total Assets
49,624
(2,712)
(369)
(82)
161
Liabilities
Debt securities in issue
- Interest rate risk
(1,333)
1
(31)
5
1
Subordinated liabilities
- Interest rate risk
(38,611)
1,576
1,006
(514)
(22)
Deposits at amortised cost from banks and
customers
- Interest rate risk
(12,916)
(14)
(1)
(2)
3
Total Liabilities
(52,860)
1,563
974
(511)
(18)
Total Hedged Items
(3,236)
(1,149)
605
(593)
143
2024
Assets
Loans and advances at amortised cost
- Interest rate risk
711
(160)
(1)
(18)
4
- Inflation risk
318
219
102
(18)
7
Debt securities classified as amortised cost
- Interest rate risk
7,673
(44)
8
50
66
- Inflation risk
8,348
(1,342)
2
(598)
(29)
Financial assets at fair value through other
comprehensive income2
- Interest rate risk
29,514
(1,162)
(452)
(132)
176
- Inflation risk
2,979
(96)
(31)
(59)
(22)
Total Assets
49,543
(2,585)
(372)
(775)
202
Liabilities
Debt securities in issue
- Interest rate risk
(1,417)
8
(24)
(18)
2
Subordinated liabilities
- Interest rate risk
(37,531)
2,257
1,182
398
(8)
Deposits at amortised cost from banks and
customers
- Interest rate risk
(8,596)
(12)
(1)
(4)
(2)
Total Liabilities
(47,544)
2,253
1,157
376
(8)
Total Hedged Items
1,999
(332)
785
(399)
194
Notes
1Hedge ineffectiveness is recognised in net interest income.
2For items classified as fair value through other comprehensive income, the hedge accounting adjustment is not included in the carrying amount,
but rather adjusts other comprehensive income.
Amount, timing and uncertainty of future cash flows
The following table shows the fair value hedging instruments which are carried on the balance sheet:
Barclays Bank Group
Carrying value
Nominal
amount
Change in fair value
used as a basis to
determine
ineffectiveness
Derivative
assets
Derivative
liabilities
Loan liabilities
Hedge type
Risk category
£m
£m
£m
£m
£m
As at 31 December 2025
Fair value
Interest rate risk
2
(3)
—
95,612
710
Inflation risk
73
(514)
—
12,481
26
Total
75
(517)
—
108,093
736
As at 31 December 2024
Fair value
Interest rate risk
26
(16)
—
89,602
(38)
Inflation risk
121
(306)
—
14,220
631
Total
147
(322)
—
103,822
593
The following table profiles the expected notional values of current hedging instruments for fair value hedging in future
years:
2025
2026
2027
2028
2029
2030
2031 and
later
As at 31 December 2025
£m
£m
£m
£m
£m
£m
£m
Barclays Bank Group
Fair value hedges of:
Interest rate risk (outstanding notional amount)
95,612
76,744
65,798
61,019
53,609
40,763
32,092
Inflation risk (outstanding notional amount)
12,481
11,728
10,965
9,494
8,850
7,821
7,076
For Barclays Bank Group, there are 1023 (2024: 946) interest rate risk fair value hedges with an average fixed rate of 2.7%
(2024: 2.6%) across the relationships and 87 (2024: 105) inflation risk fair value hedges with an average rate of 0.3% (2024:
0.2%) across the relationships.
Hedged items in cash flow hedges and hedges of net investments in foreign operations
Barclays Bank Group
Change in
value of
hedged item
used as the
basis for
recognising
ineffectiveness
Balance in
cash flow
hedging
reserve for
continuing
hedges
Balance in
currency
translation
reserve for
continuing
hedges
Balances
remaining
in cash
flow
hedging
reserve for
which
hedge
accounting
is no
longer
applied
Balances
remaining
in currency
translation
reserve for
which
hedge
accounting
is no
longer
applied
Hedging gains
or losses
recognised in
other
comprehensive
income
Hedge
ineffectiveness
recognised in
the income
statement1
Description of hedge relationship
and hedged risk
£m
£m
£m
£m
£m
£m
£m
2025
Assets
Cash flow hedge of:
Interest rate risk
Loans and advances at amortised
cost
(336)
(92)
—
918
—
(336)
6
Cash and balances at Central Banks
(553)
(149)
—
604
—
(553)
(19)
Foreign exchange risk
Loans and advances at amortised
cost
(1,637)
120
—
—
—
(1,637)
17
Inflation risk
Debt securities classified at
amortised cost
(113)
(143)
—
(21)
—
(113)
8
Liabilities
Cash flow hedge of:
Foreign exchange risk
Subordinated Liabilities
9
16
—
—
—
9
—
Total cash flow hedges
(2,630)
(248)
—
1,501
—
(2,630)
12
Hedge of net investment in foreign
operations
USD foreign operations
(484)
—
1,151
—
—
(484)
—
EUR foreign operations
146
—
100
—
—
146
—
Other foreign operations
(161)
—
(103)
—
60
(161)
—
Total foreign operations
(499)
—
1,148
—
60
(499)
—
2024
Assets
Cash flow hedge of:
Interest rate risk
Loans and advances at amortised
cost
438
182
—
1,552
—
438
(8)
Cash and balances at Central Banks
495
123
—
1,495
—
495
22
Foreign exchange risk
Loans and advances at amortised
cost
300
106
—
—
—
300
5
Inflation risk
Debt securities classified at
amortised cost
118
(73)
—
25
—
118
—
Liabilities
Cash flow hedge of:
Foreign exchange risk
Subordinated Liabilities
18
(9)
—
—
—
18
—
Total cash flow hedges
1,369
329
—
3,072
—
1,369
19
Hedge of net investment in foreign
operations
USD foreign operations
136
—
1,449
—
—
136
—
EUR foreign operations
(109)
—
(26)
—
—
(109)
—
Other foreign operations
(17)
—
34
—
96
(17)
—
Total foreign operations
10
—
1,457
—
96
10
—
Note
1Hedge ineffectiveness is recognised in net interest income.
The following table shows the cash flow and net investment hedging instruments which are carried on the balance sheet:
Barclays Bank Group
Carrying value
Nominal
amount
Change in fair value
used as a basis to
determine
ineffectiveness
Derivative
assets
Derivative
liabilities
Loan liabilities
Hedge type
Risk category
£m
£m
£m
£m
£m
As at 31 December 2025
Cash flow
Interest rate risk
—
—
—
94,727
876
Foreign exchange risk
1,677
(39)
—
26,048
1,645
Inflation risk
—
—
—
6,372
121
Total
1,677
(39)
—
127,147
2,642
Net investment
Foreign exchange risk
155
(43)
(6,109)
10,428
499
As at 31 December 2024
Cash flow
Interest rate risk
—
—
—
80,382
(919)
Foreign exchange risk
611
(307)
—
26,564
(313)
Inflation risk
—
—
—
6,377
(118)
Total
611
(307)
—
113,323
(1,350)
Net investment
Foreign exchange risk
36
(66)
(7,588)
11,601
(10)
For Barclays Bank Group there is 1 (2024: 2) foreign exchange risk cash flow hedge with an average foreign exchange rate of
JPY 162.56: GBP 1 (2024: JPY 149.87: GBP 1), 11 (2024: 11) with an average foreign exchange rate of USD 1.26: GBP 1
(2024: 1.27) and 12 (2024: 9) with an average foreign exchange rate of AUD 1.98: GBP 1 (2024: 1.94).
The effect on the income statement and other comprehensive income of recycling amounts in respect of cash flow hedges
and net investment hedges of foreign operations is set out in the following table:
Barclays Bank Group
2025
2024
Amount recycled
from other
comprehensive
income due to
hedged item
affecting income
statement
Amount recycled
from other
comprehensive
income due to sale
of investment, or
cash flows no
longer expected to
occur
Amount recycled
from other
comprehensive
income due to
hedged item
affecting income
statement
Amount recycled
from other
comprehensive
income due to sale
of investment, or
cash flows no
longer expected to
occur
Description of hedge relationship and hedged risk
£m
£m
£m
£m
Cash flow hedge of interest rate risk
Recycled to net interest income
(1,162)
(1)
(1,697)
(2)
Cash flow hedge of foreign exchange risk
Recycled to net trading income
1,669
—
(251)
—
Hedge of net investment in foreign operations
Recycled to other income
—
(34)
—
(1)
A detailed reconciliation of the movements of the cash flow hedging reserve and the currency translation reserve is as
follows:
Barclays Bank Group
2025
2024
Cash flow
hedging reserve
Currency
translation
reserve
Cash flow
hedging reserve
Currency
translation
reserve
£m
£m
£m
£m
Balance on 1 January
(2,448)
3,690
(2,895)
3,783
Currency translation movements
24
(1,640)
20
(194)
Hedging (losses)/gains for the year
2,630
499
(1,369)
50
Amounts reclassified in relation to cash flows affecting profit or loss
(506)
34
1,950
1
Tax
(607)
(49)
(154)
50
Balance on 31 December
(907)
2,534
(2,448)
3,690