Big banks are allocating more to private credit
Banking giants that once had the most ground to lose to the burgeoning world of private credit keep finding more ways — and much more money — to pump into the sector.
For years, the threat was that direct lenders would unseat incumbents by luring away clients and siphoning off corporate-loan business. Now, it seems the biggest US lenders have decided if they can’t avoid that competition, they will throw themselves into it.
Banks including Goldman Sachs Group Inc., Citigroup Inc. and Wells Fargo & Co. have announced plans to cobble together more than $50 billion to plow into private credit in recent months, according to an analysis by Bloomberg. Some are offering investing clients more ways to wriggle into the action, with JPMorgan Chase & Co.’s asset management arm looking to scoop up a private credit firm, Bloomberg has reported.
“We cannot ignore it,” Daniel Pinto, JPMorgan’s president and chief operating officer, told investors this month. “We need to really embrace it, and make sure that we are properly positioned to participate in that market.” While many banks have pointed to multibillion-dollar efforts, there have been a range of approaches to seizing on the interest. Some firms have built upon long-established private debt franchises in their asset management units. Some have earmarked funds from their balance sheets. Some have partnered with other firms and will provide access to borrowers, or money, or both.
The deepening forays into private credit have the potential to leave banks competing with their own traditional lending desks. But in some cases, the banks may find it more profitable to earn fees by taking money from investors such as pension funds and insurers to fund loans, rather than agreeing to put
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