Wall Street banks reported at least $100 billion of exposure to private-credit firms, offering a glimpse at what has become a closely watched industry with many investors on edge over credit quality and the growing impact of artificial intelligence.
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, noting that it’s had zero losses over the life of the portfolio.
JPMorgan Chase & Co. put the figure at $50 billion, with Chief Executive Officer Jamie Dimon saying on a call with analysts that he wasn’t “particularly concerned about it.”
“You have to have very large losses in private credit before at least it looks like banks are going to get hit,” Dimon said. “It doesn’t mean you won’t feel some stress and strain and you might have to do something about it. But I’m not particularly worried about it.”
The extent of Wall Street’s lending to financial firms other than banks has garnered greater attention recently as private credit has faced increasing scrutiny over the underlying quality of loans and exposure to firms vulnerable to AI disruption, such as software developers.
For Wells Fargo, companies in the business services, software and health-care industries make up about half of the total value of the collateral, with software companies accounting for 17%.
For more than 98% of those transactions, Wells Fargo can adjust the margin if the credit performance of the underlying assets worsens. The loan portfolios would have a roughly 40% cushion, meaning the funds the bank lends to would absorb about 40% of losses before they are recognized by Wells Fargo, according to an investor presentation Tuesday.
BDC Loans
Roughly $8 billion of those loans were made to business-development companies as the equity counterparty — mostly private BDCs, Wells Fargo said.
They’re part of the portfolio showing Wells Fargo’s lending to financial firms other than banks, which totaled $210.2 billion as of March 31. These loans include both securitized loans backed by pools of assets and loans originated through its own underwriting on a loan-by-loan basis.
Business development companies, investment vehicles often used by direct lenders, have gotten hit in recent months amid fears over valuations and the impact of AI on certain companies. That’s led to a surge in redemption requests for BDCs tied to certain companies including Blue Owl Capital Inc. and Apollo Global Management Inc.
Citigroup clarified on Tuesday that less than 1% of its loans to non-bank financial institutions are to BDCs. The lender reported a total of $118 billion in loans to financial firms other than banks at year-end.
At Wells Fargo, among the financial firms the bank has loaned to, the most went to asset managers and funds. That includes subscription lines to private equity firms typically backed by their limited partners’ commitments. This segment grew the fastest in 2025, rising 42%, with only $1 million of non-accrual, or potentially bad loans, recorded, according to an earlier annual filing.
Wells Fargo also lends to other financial firms in the consumer and real estate industries. Among all of the company’s non-bank borrowers, non-accrual loans rose to $245 million last year from $24 million in 2024.
The way Wells Fargo characterizes such loans is different from regulatory reporting. Starting about a year ago, regulators required banks to report their loans to non-depository financial institutions. The broad and nebulous bucket contains the closest proxy for investors to gauge banks’ interconnectivity with private credit, which are NDFI loans to so-called business-credit intermediaries.
Written by: Yizhu Wang and Todd Gillespie — With assistance from Hannah Levitt @Bloomberg
The post “Banks Tally $100 Billion of Private-Credit Loans as Calm Urged” first appeared on Bloomberg