"The reality is lenders and private credit funds are not so distinct. The two have entwined their fates, with banks extending hundreds of billions of dollars in financing that boosts private credit funds’ returns.

Regulators, economists and government officials have started to voice concerns.

The IMF last month warned “beneath the calm surface, the ground is shifting”. The European Central Bank has observed that links between banks and private credit are creating channels through which “shocks can be transmitted, amplified and redistributed” across the financial system.

One senior private credit executive put it more bluntly: “The [private credit] model is going to be pushed to extremes.”

“This was the problem in 2008, we got to the end of the possible in the banking system and then we were lifting cushions in the conference rooms in the hope that someone’s coins fell out.”
These are the ties between banks and private credit funds that have fuelled the rise of non-bank financing."

https://www.ft.com/content/535b3d0c-429c-4e67-a73d-3513e4e730d8

#Banks #Banking #CreditBoom #Finance #Financialization #PrivateCreditFunds