Barclays Stock Faces Fresh Pressure From The Bank Of England Coal Bond Crackdown
The Bank of England’s move to exclude thermal coal linked bonds from its collateral framework by October 2026 puts a clear price on regulatory risk. For investors, this is a moment to reassess exposure to companies whose business models are closely tied to coal financing and production, and to consider how funding pressures or asset repricing could ripple through portfolios. This article walks through 3 stocks that appear particularly exposed to the new policy signals, all on the negative side, to help you decide whether these risks fit, or no longer fit, with your approach to listed markets.
Barclays (LSE:BARC)
Overview: Barclays PLC is a large London based banking group offering everyday banking, credit cards, mortgages, wealth management and a global investment bank for clients across the UK, US and other major regions.
Operations: Barclays generates most of its revenue from its investment bank at about £12.7b, followed by Barclays UK at about £8.5b, with smaller contributions from its US consumer bank, UK corporate bank, private bank and a head office segment.
Market Cap: £69.7b
Investors looking at Barclays should weigh an apparently low valuation against some uncomfortable fault lines. The bank is trading below book value and is running buybacks. At the same time, it carries a relatively high 64% reliance on wholesale funding and a bad loans ratio of 2.1% with only 70% coverage, which could bite if conditions turn. The Bank of England’s move to exclude thermal coal linked bonds from collateral puts extra focus on Barclays’ fossil fuel exposure, just as regulators are already scrutinising its controls and culture. Management highlights the shift to a low carbon economy and Barclays has advised on large renewable deals, but the question is whether this is enough to offset regulatory, credit and transition risks.
Barclays’ low P/B and ongoing buybacks might look tempting, but its high reliance on wholesale funding and relatively thin bad loan coverage suggest that the real story sits in the 3 key rewards and 3 important warning signs
Glencore (LSE:GLEN)
Overview: Glencore is a global commodities group that mines and processes metals, minerals and coal, then stores, transports and markets these materials and energy products to industrial customers such as battery makers, automakers, construction, steel and energy companies worldwide.
Operations: Glencore generates about US$219.6b from its Marketing Activities and US$57.5b from Industrial Activities, partly offset by US$29.5b of inter segment eliminations.
Market Cap: £60.5b
Glencore attracts attention because it sits at the heart of energy transition metals like copper and cobalt while still carrying heavy exposure to thermal coal, just as the Bank of England is putting a price on that risk by excluding coal linked bonds from collateral. The stock screens as good value on P/S and has returned cash via a recent special dividend. However, a large US$771m one off loss, weak interest and dividend cover, and full reliance on external funding raise questions about resilience if coal assets lose favour or funding costs rise. In addition, lingering regulatory and ESG scrutiny around coal and historical conduct means Glencore’s mix of transition exposure and stranded asset risk may merit careful scrutiny rather than reliance on headline valuation alone.
Glencore’s coal exposure, weak interest cover and heavy reliance on external funding could be masking bigger pressure points in a tighter green finance world. Before assuming the P/S discount tells the whole story, walk through the 4 key rewards and 3 important warning signs (2 are major!)
NatWest Group (LSE:NWG)
Overview: NatWest Group is a large UK based banking group that provides current accounts, mortgages, personal loans, deposits and digital banking for retail customers, as well as private banking, wealth management and lending solutions for businesses and institutions in the UK and selected international markets.
Operations: NatWest generates about £8.7b from Commercial & Institutional, £6.1b from Retail Banking, £1.1b from Private Banking & Wealth Management and £0.3b from Central Items & Other.
Market Cap: £53.3b
NatWest Group has high net profit margins, a relatively low P/E, active buybacks and a 4.9% dividend yield, but the picture is not straightforward for investors focused on regulatory risk and coal exposure. As a UK focused lender that uses bond collateral in central bank operations, NatWest may face tougher collateral rules and pressure to reduce any remaining thermal coal related assets as the Bank of England tightens standards, in addition to existing regulatory uncertainty around capital buffers. Management is pursuing digital and AI projects, climate finance initiatives and cost cutting, yet credit loss coverage sits at 77% and the dividend track record has been unstable. A key consideration for investors is whether NatWest’s climate credentials and efficiency efforts adequately offset tightening green finance rules and earnings risk.
NatWest’s low P/E, high margins and 4.9% yield could be masking how tighter green finance rules and credit risks collide with its capital position, so the real tension sits in the 3 key rewards and 2 important warning signs
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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