European financial regulators are facing resistance from US authorities in their efforts to obtain more detailed information on banks’ exposure to private credit markets, reflecting growing differences over how the rapidly expanding asset class should be supervised, according to a report by Reuters.
Officials across Europe have stepped up scrutiny of the global private credit sector, which is estimated to be worth around $2tn and is largely concentrated in the United States. Regulators are seeking better visibility into the industry’s underlying assets, valuation practices and interconnectedness with the wider financial system amid concerns that limited disclosure could mask emerging risks.
According to officials familiar with the discussions, European supervisors have requested more detailed information on borrowers, collateral, valuation methodologies and other underlying assets held within private credit portfolios. However, US Treasury officials have reportedly opposed broader data sharing, arguing that confidentiality rules and additional reporting obligations could place unnecessary burdens on firms.
Michael Theurer, a member of the Executive Board of Germany’s Bundesbank, acknowledged that international supervisors have encountered resistance from some jurisdictions, citing both legal restrictions on information sharing and concerns over expanding regulatory reporting requirements.
The issue has been discussed through international regulatory bodies, including the Financial Stability Board (FSB), where authorities are attempting to develop a clearer understanding of cross-border risks associated with private credit.
An FSB spokesperson noted that inconsistent reporting standards and varying definitions across jurisdictions continue to hamper efforts to compare risks globally, reinforcing the case for more consistent disclosure frameworks.
European policymakers have warned that if regulators cannot obtain sufficient information to assess exposures accurately, supervisors may need to take a more conservative approach by requiring banks to hold additional capital against potential private credit-related risks.
The US Federal Reserve and Treasury Department declined to comment on the discussions, while the Securities and Exchange Commission said it participates in international regulatory forums but remains subject to legal constraints governing confidential supervisory information.
Although recent European Central Bank analysis found that eurozone banks’ direct exposure to private credit remains relatively modest—estimated at approximately €62.5 billion, or around 0.2% of total banking assets—regulators believe headline figures do not provide a complete picture. Exposures are concentrated among a relatively small number of major financial institutions, particularly in Germany, France and the Netherlands.
Supervisors are increasingly concerned that private credit assets are being repackaged and distributed through increasingly complex investment structures involving banks, insurers, pension funds and other non-bank financial institutions, making it more difficult to identify where risks ultimately reside.
Theurer pointed to the growing use of collateralised loan obligations, leveraged lending structures and asset-backed reinsurance transactions as examples of layered financial products that can obscure underlying credit risks.
Recent stress testing by the ECB suggested that direct losses from a severe downturn in private credit would likely remain manageable for European banks. However, the analysis found that broader market volatility and valuation declines across interconnected financial markets could generate significantly larger losses than the underlying loans themselves.
That conclusion has reinforced calls among European supervisors for more granular data on the sector, particularly given concerns that aggregate exposure figures may underestimate systemic vulnerabilities.
In the United States, Federal Reserve Vice Chair for Supervision Michelle Bowman said earlier this year that defaults among private credit borrowers would need to reach unusually high levels before posing a material threat to the banking system. She also noted that the Federal Reserve is introducing more detailed reporting requirements for banks’ lending to non-bank financial institutions in order to improve oversight of concentration risks.
