The biggest US banks used their Q1 earnings to quantify their exposure to private credit funds — loans made to the listed Business Development Companies (BDCs) that have been hit hard on the stock market — after the Financial Stability Board signalled a forthcoming report on the topic. The disclosed figures add up to more than $120bn: JPMorgan around $50bn, Wells Fargo $36bn, Citigroup $22bn, Bank of America around $20bn. 'It would take very large losses on private credit for the banks to be affected,' Jamie Dimon said, insisting the risk is 'not systemic'. Private-credit funds are facing heavy redemption requests, with some gating withdrawals; Goldman's David Solomon framed the stress as limited to retail investors, noting the bank raised $10bn for these strategies in Q1 and expects institutional demand to keep growing. BlackRock's Larry Fink echoed the point, saying institutions are increasing allocations as spreads widen and default rates stay within historical ranges. Moody's warned that vulnerabilities could worsen as 2026-2028 maturities refinance at less favourable terms, particularly for AI-exposed software loans. The SEC is broadly supportive ('if you can't stand the heat, get out of the kitchen'), but the US Treasury has reportedly sent a questionnaire to the industry to map its performance and ties to banks and insurers. Source: Les Échos, 15 April 2026 — Bastien Bouchaud.
Wall Street lifts the veil on its $120bn+ exposure to private credit
— Summary
The story in one line: The biggest US banks used strong Q1 earnings to publish, for the first time, the size of their lending exposure to private-credit funds — more than $120bn combined — trying to reassure investors that the stress now visible in Business Development Companies is not a systemic threat.
Key numbers
- Total disclosed exposure: >$120 bn across the big US banks.
- JPMorgan: ~$50 bn — Wells Fargo: $36 bn — Citi: $22 bn — Bank of America: ~$20 bn.
- Goldman Sachs raised $10 bn for private-credit strategies in Q1.
- Private-credit “at-risk” maturities: concentrated in 2026–2028, particularly in software / IT loans exposed to AI disruption (Moody’s).
- BlackRock AUM: ~$14 tn — Fink says institutions are still adding to private credit.
Why it matters (jargon, explained)
- Private credit = direct lending to companies by non-bank funds, typically at higher rates than bank loans. Banks don’t make these loans directly any more — instead they lend to the funds that do, often via BDCs (listed vehicles that package those loans).
- The worry: if those funds take losses on their loans (especially to AI-disrupted software firms), the banks that financed the funds could be next. Dimon last year talked about “cockroaches” in the market; today he says it’s “not systemic” but won’t rule out “pressures”.
- The FSB is preparing a report. The US Treasury has reportedly sent a questionnaire to private-credit managers asking about performance and ties to banks and insurers.
Takeaway
The US banks are trying to get ahead of regulators by disclosing exposure voluntarily. The narrative is “we can absorb it” — but the timing (FSB report incoming, BDCs selling off, redemptions being gated in retail funds) suggests markets aren’t fully convinced. The 2026–2028 refinancing wall, particularly in AI-exposed software debt, is the crystallisation point to watch.
Source: Les Échos, 15 April 2026 — Bastien Bouchaud.
— Delfineo's Take
This Les Échos piece is the natural companion to our brief on the record $33bn in Q1 US bank buybacks. The same profit surge that funded those buybacks now has to absorb a stress test from private credit — the asset class where banks have been happily lending to BDCs. Dimon at $50bn alone is more than JPMorgan's entire quarterly buyback ($8.3bn). The key watch items for the banking names we track: (i) software-BDC refinancings in 2026-2028, (ii) the Treasury questionnaire response, (iii) whether BDC stress forces banks to rebuild the very capital cushions the Fed is cutting.