JPMorgan Chase is reportedly earmarking another $50 billion for its direct lending efforts.
It’s part of an effort by the banking titan to gain a greater foothold in the fast-growing private credit market, Reuters reported Monday (Feb. 24).
As that report notes, traditional lenders like Wells Fargo, JPMorgan and Citigroup are scrambling to get a piece of this market, traditionally dominated by private capital providers. Private credit is expected to become a $3 trillion business by 2028, the report said, citing data from Moody’s.
JPMorgan, the report adds, has in the last four years deployed over $10 billion across more than 100 private credit transactions, while also working with lending partners to allocate an additional $15 billion in private credit.
“Pairing our vast origination platform with our lender client base has supercharged our ability to deliver in size for borrowers and increased deal flow for lenders,” Kevin Foley, global head of capital markets at JPMorgan, told Reuters.
According to Reuters, banks are increasingly also working with investment firms to push deeper into the private credit market. For example, Citigroup and Apollo last year launched a $25 billion private credit platform, while Wells Fargo in 2023 joined forces with investment firm Centerbridge Partners to issue loans to middle-market companies.
As covered here last week, JPMorgan was the only one of America’s banking giants not to share details of its loans to non-bank entities with the Federal Deposit Insurance Corporation (FDIC).
The advent of non-bank financial institutions (NBFIs) — otherwise known as shadow banks or non-depository financial institutions (NDFIs) — has attracted attention from regulators like the Fed, FDIC and Office of the Comptroller of the Currency.
“The risks have been highlighted in recent months, and the risks transcend borders,” PYMNTS wrote in late 2024.
Months earlier, Financial Stability Board Chair Klaas Knot warned that recent “incidents of market stress and liquidity strains” have been tied to NBFIs.
More recently, as PYMNTS wrote last week, the Federal Reserve announced plans for an “exploratory analysis” focused on “certain risks” posed to banks by NBFIs, as the latter “operate with high leverage and are dependent on funding from the banking sector.”
Those findings are set to be published in June and will take into account the impact of credit and liquidity shocks in the NBFI space during severe global recessions and “market shocks” that would accompany muted global economic activity and higher inflation expectations.
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