Federal Reserve Bank of Boston research finds large banks’ loan commitments to private equity and private credit funds surged to about USD 300bn

The Federal Reserve Bank of Boston published a supervisory research note assessing large banks’ lending links with private equity and private credit funds, finding that related loan commitments expanded rapidly from about USD 10bn in 2013 to about USD 300bn in 2023. The note argues that these growing and relatively opaque bank–non-bank financial institution (NBFI) connections warrant continued monitoring to support bank and system-wide risk assessment. The estimates are based on regulatory data from 31 banks with more than USD 100bn in assets that were subject to the Federal Reserve’s 2024 stress tests, covering more than 50,000 fund-level loan commitments. The authors focus on commitments as a measure of potential maximum exposure, noting that funds may draw only a portion of committed amounts. In 2023, fund-level commitments to private equity and private credit funds represented about 14% (USD 300bn) of large banks’ total loan commitments to NBFIs, up from about 1% in 2013, while lending to NBFIs accounted for about 10% of total large-bank lending. Mapping borrowers to their ultimate private fund “sponsors” suggests five management companies receive about USD 100bn, or roughly one-third, of these commitments, although the note cautions that risk concentration may be less pronounced given facility-specific terms and collateral.