Bank of America Corp. disclosed it has about $20 billion in private-credit exposure, as the bank and its Wall Street peers seek to calm concerns about the industry’s exposure to the asset class.
In the private-credit space, “we remain well-positioned,” Chief Financial Officer Alastair Borthwick said Wednesday, and Bank of America hasn’t experienced “material losses.” The lender has the ability to mark down eligible collateral in the event of credit deterioration, according to a presentation on its website.
“We’re watching and paying attention to the environment,” with underlying lending portfolios being monitored, Borthwick told reporters on a conference call. “We haven’t seen a reason to change anything at this point.”
The $1.8 trillion private-credit market has been rattled by concerns over valuations and the impact of artificial intelligence on software-company borrowers. That’s caused some retail funds to face higher redemption requests from investors trying to pull money.
Some of the biggest US banks started giving investors a more detailed view into their private-credit financing portfolios. JPMorgan Chase & Co. put its exposure at $50 billion. Wells Fargo & Co. said its exposure to private-credit firms was roughly $36.2 billion in the first quarter, while Citigroup Inc. reported $22 billion of such loans in the fourth quarter.
The companies also sought to calm investors’ nerves. Citigroup said its corporate private-credit warehouse financing portfolio has “substantial” equity cushions and structural protections, and that it’s had zero losses over the life of that portfolio. JPMorgan Chief Executive Officer Jamie Dimon said he wasn’t “particularly worried” about the bank’s private-credit exposure.
Also on Wednesday, Pittsburgh-based regional lender PNC Financial Services Group Inc. said its exposure to private-credit firms stood at $7 billion. And Morgan Stanley CFO Sharon Yeshaya said Wednesday that the “vast majority” of her firm’s lending to business-credit intermediaries is direct lender financing — a $20.1 billion figure as of the fourth quarter, according to regulatory filings.
US Treasury Secretary Scott Bessent said at a CNBC event Wednesday that his department sees no systemic risk in the private-credit space.
“Even Jamie Dimon, who, I think, couple months ago, said there could be cockroaches with private credit, came out yesterday and said let’s just look at the numbers, it’s not big enough to be systemic,” Bessent said.
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