Several major US banks have provided fresh disclosure on their exposure to private credit-linked lending, seeking to reassure investors about risk management practices as scrutiny of the sector intensifies, according to a report by the Wall Street Journal.
In quarterly earnings updates, lenders including Wells Fargo, JPMorgan Chase and Citigroup expanded on their financing to non-bank credit providers and described the collateral structures underpinning these exposures.
Wells Fargo reported approximately $36bn of lending tied to corporate debt financing within its non-bank financial institution exposure. Of that, around 23% related to business development companies (BDCs), split between roughly 6% exposure to public vehicles and 17% to private BDCs. The bank indicated this equates to about $6 billion of lending to private BDCs, representing a small fraction of its overall loan book.
The bank also said a portion of its collateral base is concentrated in software-related loans, while emphasising that its structures are designed with significant loss-absorbing capacity. According to its disclosures, lending is secured against only part of the underlying collateral pool, allowing it to withstand estimated portfolio-level loss rates of up to 40% before incurring bank-level losses.
JPMorgan Chase separately disclosed around $50bn of exposure to what it broadly categorises as “private credit” financing, including lending to non-bank financial institutions and structures backed by leveraged loan portfolios.
Citigroup reported approximately $22bn in so-called private credit warehouse financing. The bank also noted that the vast majority of these exposures are investment grade in nature and highlighted a history of zero credit losses across the portfolio.
While disclosure frameworks differ across institutions, the updated figures reflect growing investor focus on how traditional banks interact with the expanding private credit ecosystem. Categories such as non-depository financial institution lending and business credit intermediary exposure remain relatively new and inconsistently defined across the sector.
Banks have maintained that these lending arrangements are highly structured, typically secured by collateral they help select, and therefore materially different from direct exposure to underlying private credit assets.
