{"id":24987,"date":"2026-05-06T07:02:51","date_gmt":"2026-05-06T07:02:51","guid":{"rendered":"https:\/\/www.insurancejournal.com\/?p=868689"},"modified":"2026-05-06T07:02:51","modified_gmt":"2026-05-06T07:02:51","slug":"fsb-watchdog-flags-risks-in-banks-growing-private-credit-ties","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2026\/05\/06\/fsb-watchdog-flags-risks-in-banks-growing-private-credit-ties\/","title":{"rendered":"FSB Watchdog Flags Risks in Banks\u2019 Growing Private Credit Ties"},"content":{"rendered":"<p><img decoding=\"async\" src=\"https:\/\/www.insurancejournal.com\/app\/uploads\/2026\/05\/private-credit-boom-876937956-Depositphotos-580x334.jpg\"><\/p>\n<div><img decoding=\"async\" src=\"https:\/\/www.insurancejournal.com\/app\/uploads\/2026\/05\/private-credit-boom-876937956-Depositphotos-scaled.jpg\" class=\"ff-og-image-inserted\"><\/div>\n<ul class=\"nav nav-tabs tabs tabs-entry\">\n<li class=\"active\"><a href=\"https:\/\/www.insurancejournal.com\/news\/international\/2026\/05\/06\/868689.htm\">Article<\/a><\/li>\n<li><a href=\"https:\/\/www.insurancejournal.com\/news\/international\/2026\/05\/06\/868689.htm?comments\" rel=\"nofollow\">0 Comments<\/a><\/li>\n<\/ul>\n<div class=\"article-content clearfix\">\n<p class=\"reuters\">The fast-growing private credit industry\u2019s deepening links with traditional banks and asset managers create risks to the global financial system, the global Financial Stability Board watchdog said on Wednesday, warning some broader measures showed upwards trends of defaults.<\/p>\n<p>Signs of some underlying stress are emerging across private credit \u2013 typically lending to mid-sized companies by non-banks \u2013 including rising defaults, while a lack of transparency is posing challenges for regulators and investors alike, the watchdog said in its \u201c<a href=\"https:\/\/www.fsb.org\/2026\/05\/report-on-vulnerabilities-in-private-credit\/\" target=\"_blank\" rel=\"noopener\">Vulnerabilities in Private Credit\u201d report<\/a>.<\/p>\n<div class=\"bzn bzn-sized bzn-intext\">\n<ins data-revive-zoneid=\"79\" data-revive-block=\"1\" data-revive-id=\"36eb7c2bd3daa932a43cc2a8ffbed3a9\"><\/ins> <\/div>\n<p>It singled out the \u201cretailisation\u201d of private credit \u2013 particularly in the United States where funds are marketed to wealthy retail investors \u2013 as a potential amplifier of risk.<\/p>\n<div class=\"article-inline-sidebar article-inline-sidebar-left\">\n<span><span><em>\u201cInterconnectedness between private credit and insurers has also increased, with the FSB estimating that around 10% of life insurer portfolios may be in private credit, against around 3% for non-life insurers.\u201d<\/em><\/span><\/span><br \/>\n<span><em><\/em><\/span><\/div>\n<p>The FSB, which coordinates financial regulation for the world\u2019s major economies, valued the overall private credit market at between $1.5 trillion and $2 trillion using 2024 data. The Alternative Investment Management Association puts it higher at $3.5 trillion.<\/p>\n<p>The private lending sector has grown rapidly since the 2007-2009 financial crisis partly due to tighter bank regulation, according to the report, but the recent collapse of some borrowers in the U.S. and UK have left creditors nursing losses and heightened worries about poor underwriting standards.<\/p>\n<p>Europe\u2019s largest bank HSBC became the latest this week to report an unexpected $400 million loss linked to the collapse of British-based mortgage lender Market Financial Solutions.<\/p>\n<p>\u201cThe private credit ecosystem is increasingly characterized by deepening interconnections between asset managers, banks, insurers and private equity firms,\u201d said John Schindler, FSB Secretary General.<\/p>\n<div class=\"bzn bzn-sized bzn-intext-2\">\n<ins data-revive-zoneid=\"162\" data-revive-block=\"1\" data-revive-id=\"36eb7c2bd3daa932a43cc2a8ffbed3a9\"><\/ins> <\/div>\n<p>\u201cDefault rates, though still moderate, are rising. When we include broader measures, such as selective defaults and distressed exchanges, the picture becomes more concerning,\u201d he added.<\/p>\n<p>Despite recent growth aggregate bank exposure remains small, at less than 0.5% of total bank assets, the FSB said in its report.<\/p>\n<p>Schindler flagged areas for further work, including improving transparency and data gaps, scrutinizing liquidity mismatches and sharing best approaches between regulators.<\/p>\n<p><strong>Rising Retail Participation<\/strong><\/p>\n<p>The FSB pointed to growing retail participation in the sector, noting retail share of assets under management has climbed from virtually zero to around 13% in the past decade.<\/p>\n<p>Schindler warned that the expansion of open-ended and \u201csemi-liquid\u201d vehicles \u2013 products that attract retail money \u2013 may introduce liquidity mismatches, where funds offer periodic redemptions while holding long-dated, illiquid assets, an issue that was less likely when private credit was the preserve of institutional investors.<\/p>\n<p>Private credit managers KKR, Apollo, BlackRock and Blue Owl have all limited retail investor redemptions in recent weeks as investors exit.<\/p>\n<p>Concentration is another concern. The FSB said five large asset management groups account for about one-third of aggregate loan commitments across the entire private credit and private equity industry.<\/p>\n<p>Interconnectedness between private credit and insurers has also increased, with the FSB estimating that around 10% of life insurer portfolios may be in private credit, against around 3% for non-life insurers.<\/p>\n<p>(Reporting by Phoebe Seers, editing by Iain Withers, Tommy Reggiori Wilkes and Aurora Ellis)<\/p>\n<\/p><\/div>\n<div class=\"article-poll\" data-post=\"868689\">\n<div class=\"article-poll-vote\">\n<p>Was this article valuable?<\/p>\n<\/p><\/div>\n<div class=\"article-poll-feedback voted-no\">\n<form class=\"feedback-form\">\n<p>Thank you! Please tell us what we can do to improve this article.<\/p>\n<p> <textarea placeholder=\"Enter your feedback...\"><\/textarea> <button type=\"submit\" class=\"submit\" disabled>Submit<\/button> <button class=\"cancel\">No Thanks<\/button> <\/form>\n<\/p><\/div>\n<div class=\"article-poll-feedback voted-yes\">\n<form class=\"feedback-form\">\n<p>Thank you! <span class=\"percent\"><\/span>% of people found this article valuable. Please tell us what you liked about it.<\/p>\n<p> <textarea placeholder=\"Enter your feedback...\"><\/textarea> <button type=\"submit\" class=\"submit\" disabled>Submit<\/button> <button class=\"cancel\">No Thanks<\/button> <\/form>\n<\/p><\/div>\n<div class=\"article-poll-more-articles\">\n<p class=\"thank-you-text\">Here are more articles you may enjoy.<\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"subscribe-banner subscribe-banner-in-content-2\">\n<div class=\"content\">\n<h4>The most important insurance news,in your inbox every business day.<\/h4>\n<p>Get the insurance industry&#8217;s trusted newsletter<\/p>\n<\/p><\/div>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Article 0 Comments The fast-growing private credit industry\u2019s deepening links with traditional banks and asset managers create risks to the global financial system, the global Financial Stability Board watchdog said on Wednesday, warning some&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":24988,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[2049,2050,2051,24,1,2052,1173],"jetpack_featured_media_url":"https:\/\/blog.lifeinsurance-orleans.ca\/wp-content\/uploads\/2026\/05\/fsb-watchdog-flags-risks-in-banks-growing-private-credit-ties.jpg","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/24987"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=24987"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/24987\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media\/24988"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=24987"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=24987"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=24987"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}