JPMorgan Chase (JPM) CEO Jamie Dimon shrugged off worries about the private credit sector on Tuesday, saying that the concerns weren’t “systemic.”
“It almost can’t be systemic at that size relative to anything else,” Dimon said during a Tuesday earnings call with analysts.
“I’m not particularly worried about it,” he added.
Dimon said that during a wider credit downturn, some lending business “will probably come back to banks.”
The private credit industry has grown rapidly in the years following the financial crisis, due in large part to US banking reforms that curtailed riskier lending.
Over the last quarter, private credit funds have seen unprecedented levels of investor redemption requests, spurred a growing number of managers to limit withdrawals to 5%.
The moment coincides with rising worry some private debt funds hold a lot of loans tied to software companies at risk of disruption from advances in artificial intelligence.
Big banks not only lend to these funds, but they also manage some of their own.
JPMorgan said earlier this year that the bank carries about $50 billion of exposure to the private credit industry.
On Tuesday other banks shared their exposure as well. Wells Fargo said it holds roughly $36 billion exposure to private credit firms. Citigroup said exposure to private credit was $22 billion in the fourth quarter.
David Hollerith covers the financial sector, ranging from the country’s biggest banks to regional lenders, private equity firms, and the cryptocurrency space.
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