, Columnist
Private Credit Is Making Bank Investors Antsy, Too
Deutsche Bank CEO Christian Sewing says his firm hasn’t lost money on a loan to a private credit fund in a decade.
Photographer: Alex Kraus/BloombergBanks making loans to specialist fund managers instead of directly to companies is meant to act like a firebreak protecting traditional lenders against the risks of businesses going bust. But losses from financing private credit firms and other nonbank lenders are coming back to bite them — and it’s making their investors antsy.
While the direct exposure of most banks to private credit is a sliver of their lending, they still need to reassure shareholders that standards have been exacting and that they have proper oversight of the collateral pledged by borrowers.