Bank of America Intensifies Focus on Private Credit Amid Growing Concerns
Despite the growing alarm bells on Wall Street concerning private credit, banks and their regulators remain steadfast. A standout among these lenders is Bank of America, which has recently shown a renewed focus on private credit lending as the sector’s needs continue to expand.
The $1.8 Trillion Private Credit Market
The private credit market, valued at $1.8 trillion, has seen remarkable growth in recent years. Traditional lenders have ventured deeper into the sector, lending to nonbank financial institutions in what has now become the fastest-growing loan segment in the banking industry. According to American Banker, banking giants like Bank of America have not just dipped their toes but have taken a deep dive into this bustling market.
Bank of America’s Strategic Move
Bank of America is the latest old-school lender to take a bigger leap into the business. The bank plans to allocate $25 billion from its balance sheet to private-credit deals to meet the growing needs of the sector. This move represents a significant shift in the bank’s focus towards the private credit business.
The bank has also recently appointed new leaders to head up its private credit strategy. This decision indicates its commitment to the sector, despite the current financial climate.
The Current State of Private Credit
The bank’s strategic decision comes at a somewhat volatile moment for the business. The stock prices of major asset managers tumbled recently following Blue Owl Capital’s announcement to restrict withdrawals from one of its funds. This decision sparked fears among investors about potential cracks in the business, given that the industry was already under strain due to concerns that advances in artificial intelligence could pose a threat to software companies and their private-credit lenders.
Despite this, Bank of America’s stock remained largely unscathed by the news of its financial commitment to private credit. This resilience demonstrates the bank’s confidence in its strategy and the robustness of its financial position.
Regulatory Concerns and Calls for Scrutiny
Senator Elizabeth Warren has called for increased regulatory scrutiny of banks’ exposure to private credit. She expressed concerns about the “shadowy” nature of firms like Blue Owl and urged the Trump administration to increase banks’ capital requirements for private credit exposures, compel transparent data from these companies, and conduct a stress test on the market immediately.
However, many experts argue that the growth of private credit was mainly driven by the tighter regulatory environment for banks following the 2008-2009 financial crisis. With some restrictions on leveraged lending being rolled back under the Trump administration, there is speculation that this could lead to a slowdown in private credit’s growth.
Banks and Private Credit: A Dynamic Relationship
Other banking giants, such as JPMorgan Chase, have also increased their loans to private credit, indicating a dynamic and evolving relationship between traditional banks and nonbank peers. As of the third quarter of 2025, banks with assets exceeding $100 billion held approximately 86% of total industry loans to nonbank financial institutions, per a Federal Deposit Insurance Corp. analysis. These loans have shown no signs of souring, affirming banks’ confidence in the robustness of the sector.
In conclusion, despite the rising concerns, Bank of America and other banking giants continue to focus on private credit, demonstrating their confidence in the sector’s resilience and growth potential. However, the need for increased regulatory scrutiny and transparency in the industry remains a topic of ongoing debate.
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