JPMorgan Chase has declined to disclose its lending to the rapidly expanding private credit sector, despite regulatory efforts to gain insight into the connections between banks, buyout firms, and this increasingly systemic concern. While other major banks provided detailed breakdowns of their exposures, JPMorgan labelled its $133 billion in lending to non-banks as 'other', citing operational risks associated with reporting to different agencies. Regulators are seeking more transparency regarding banks' involvement in the private credit market, which has grown to nearly $1.2 trillion, as concerns about systemic risks rise.
JPMorgan Chase has dealt a blow to regulators’ efforts to understand the depth of ties between banks, buyout firms and the fast-growing private credit sector, declining to disclose its lending in an area of increasing systemic concern. US banking regulators imposed a deadline of February 4 for lenders to disclose their year-end exposure to different types of “non-bank financial institutions” on a “best-efforts basis”. Banks have until after the end of the second quarter to be fully compliant.
“Non-banks have become some of the most important and potentially risky borrowers of the large US banks,” said Viral Acharya of New York university’s Stern School of Business. “Right now the only one who has a picture of how much of risky this is, it’s the Fed, and only of the banks that it stress tests.” Loans by banks to “non-depository financial firms” have soared from just over $50bn in 2010, according to data from the US Fed.
PRIVATE CREDIT BANK REGULATION JPMORGAN CHASE FINANCIAL RISKS NON-BANK LENDERS
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