London, 09:08 GMT, January 12, 2026 — Regular session
- Barclays dropped up to 4.5% amid a sell-off in European bank shares triggered by news of U.S. rate caps
- Trump designated Jan. 20 as the kickoff for a one-year 10% cap but didn’t provide specifics on enforcement
- Investors remain jittery following Fed Chair Powell’s claim that the administration threatened him with indictment
Shares of Barclays PLC (BARC.L) dropped as much as 4.5% on Monday, hitting their lowest point in nearly a month. The slide led European banks lower after U.S. President Donald Trump renewed his push to cap credit card interest rates at 10%. The broader European banks index fell 1.1%, with HSBC shares down around 1%.
This matters since Barclays operates a U.S. consumer bank in addition to its UK branches, making it more vulnerable than many European rivals to changes in American credit-card regulations.
Markets jittered for another reason: Federal Reserve Chair Jerome Powell revealed the Trump administration threatened him with a criminal indictment related to his testimony on a Fed building renovation project. The comments raised fresh concerns about political interference in monetary policy.
On Friday, Trump announced on social media that a one-year cap would take effect starting Jan. 20 but offered no details on enforcement or backing for any specific bill in Congress. “When companies can’t price the risk properly, they’ll just reduce credit lines,” said Brian Jacobsen, chief economic strategist at Annex Wealth Management, in an email. Banking groups cautioned that the cap could tighten credit availability and push borrowers toward riskier, costlier alternatives. Reuters
Barclays dipped as low as 461.70 pence before bouncing back to roughly 467 pence, marking a 3.6% drop from Friday’s 484.90 pence close, per Investing.com data.
Credit cards usually come as unsecured loans, meaning there’s no collateral behind them. That’s why lenders demand higher interest rates compared to mortgages or auto loans. When a hard ceiling is imposed, it squeezes the margin banks rely on to absorb losses and cover their operating expenses.
Investors fear banks might react by changing terms, pushing fees higher, or stepping away from riskier clients. This could slow balance-sheet expansion, even as it eases pressure on some borrowers.
But the proposal faces hurdles. Trump’s post lacked details on any legal process, and previous analyses have flagged the necessity of congressional approval and potential legal battles.
Barclays faces policy chatter just as it enters a crucial earnings season, when investors usually zero in on costs, credit quality, and capital returns without overextending balance sheets. Monday’s selloff underscored how fast that narrative can be overtaken.
Investors will be watching closely for any firm action from the White House before Jan. 20. Barclays’ full-year results, due Feb. 10, are also key. On that date, the bank’s management will face questions about the U.S. cards unit and plans for capital returns.
