HSBC is the latest bank looking to tap into the private credit boom and is speaking with asset managers in the sector about a potential partnership.
The bank is unlikely to launch its own private credit offering, according to sources cited by Reuters, due to concerns about costs.
It may facilitate private lending via its asset management and life insurance businesses in Hong Kong, according to the report.
Jamie Markham, head of credit and capital management, who moved to HSBC from JP Morgan in February 2023, is overseeing the possible expansion into private credit, one of the sources said.
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The regulatory cost of capital has made it unattractive for banks to lend from their own balance sheet to riskier borrowers, driving the rapid growth of private credit.
But banks are looking to benefit from the lucrative returns and regular income produced by the sector, whether through partnerships or setting up their own units.
Last year, Citigroup agreed a partnership with alternative asset manager Apollo, while Goldman Sachs launched a capital solutions group in January to boost its own private markets business.
And last month, Deutsche Bank agreed a “strategic cooperation” with DWS, that will give the latter preferred access to private credit opportunities originated by the bank.