HSBC Holdings plc has paused plans to deploy $4bn into private credit funds, nearly a year after announcing an initiative aimed at expanding its presence in the fast-growing alternative lending market, according to a report by the Financial Times.
The London-listed lender had previously outlined intentions to channel capital through its asset management arm into private credit strategies, positioning the move as a way to leverage its balance sheet and compete more directly with major private capital firms such as Apollo Global Management and Blackstone Inc.
However, the report cites unnamed people familiar with the matter as revealing that no capital has yet been deployed and there are currently no active plans to proceed with the allocation. The original strategy was described internally as part of a broader “arms race” in private credit, reflecting heightened competition between banks and non-bank lenders.
The pause comes as the wider private credit market faces increased scrutiny, with concerns mounting over underwriting standards, asset valuation transparency, and rising redemption pressure across retail-facing funds. Recent instability in segments of the US private credit market has reportedly made some institutions more cautious about expanding exposure.
HSBC said it remains committed to its asset management business and continues to support its private credit offerings, despite the delay in deployment.
The decision follows a period of financial volatility for the bank, which recently reported a $400m charge linked to back-leverage exposure involving an Apollo-affiliated credit structure. The charge contributed to a share price decline after earnings results, although the stock has still posted gains year-to-date.
The broader context includes increasing stress across non-bank lending markets, where concerns over borrower quality and potential fraud cases have added to investor caution. Some asset managers, including Blue Owl Capital, have also faced withdrawal pressure from retail and wealth clients.
HSBC’s exposure is partly linked to indirect financing arrangements connected to distressed lending portfolios, highlighting how traditional banks can still be affected by risks embedded within private credit structures.
