Exclusive-HSBC explores private credit push.
HSBC is preparing a foray into the white-hot market for private credit, five sources with knowledge of the plans said, the latest move by a global bank to get in on the booming sector.
HSBC’s plan, reported here for the first time, shows how the bank is looking at ways to increase revenue after months of restructuring, job cuts and its biggest retrenchment from investment banking in decades. HSBC has held talks with private credit firms about a potential partnership, two of the sources said, without identifying them. The talks are at various stages and there can be no certainty that they will lead to a formal partnership, the sources said. The bank is likely to stop short of a full-blown push into private credit as some rivals have done, as senior executives, including CEO Georges Elhedery, are sceptical the revenue will outweigh the costs, one of the sources with knowledge of management’s thinking said.
U.S. President Donald Trump’s sweeping tariffs have alsoimpacted near-term demand for credit as corporate borrowers take stock of the turmoil, meaning HSBC will take a more cautious approach, a third source said. A spokesperson for HSBC declined to comment.
When banks team up with private credit firms, the latter typically provide the loan while banks earn fees for finding the customer and arranging the deal. The tie-ups enable banks to maintain customer relationships with limited or no risk to their capital.
Markham did not immediately respond to a request for comment via Linkedin. BANKS FIGHT BACK The share of private lending globally on bank balance sheets has slumped from 55% in the 1970s to 33% in 2023, data from the U.S. National Bureau of Economic Research showed, alongside huge growth in bond markets as a finance source, and, more recently private credit.
Credit rating agency Moody’s estimates assets under management in private credit are expected to double to $3 trillion by 2028. Among other banks, JPMorgan said in February it had set aside $50 billion more for direct lending deals.
Source: Globalbankingandfinance