Deutsche Bank, UBS, and Crédit Agricole all state that private credit exposure quality is high and do not believe it poses a systemic risk.

As concerns in the industry about credit review standards and the impact of artificial intelligence on certain borrowers intensify, executives from Deutsche Bank, UBS, and Société Générale have stated that their respective banks still maintain high-quality risk exposure in the private credit sector.

Slawomir Krupa, CEO of Société Générale, said that the re-pricing level of the bank’s collateral is “not significant,” and that “problem loans involving thousands of entities account for a very small proportion.” Christian Sewing, CEO of Deutsche Bank, stated that the German bank has not yet experienced any losses on its private credit exposure.

Todd Tuckner, CFO of UBS, said that no systemic stress has been observed in the private credit sector so far. Tuckner expressed confidence in UBS’s risk exposure levels in private credit.

Following some high-profile corporate defaults that have raised concerns about loan quality and exposure to software companies, the private credit market, valued at $1.8 trillion, is experiencing investor withdrawals. The business models of software companies are being impacted by the rapid development of artificial intelligence. After downgrading the valuations of some loans in private credit funds, JPMorgan Chase has tightened its lending on certain loans.

Sewing said at a conference in London on Tuesday, hosted by Morgan Stanley, “Over the past ten-plus years, we haven’t lost a single dollar in private credit. But I believe that the noise surrounding private credit won’t disappear in the short term. The real difference lies in who makes the lending decisions and what the standards are.”

Although the broader private credit industry may face some volatility, these executives stated they do not believe this asset class poses a systemic risk.

Krupa said, “The market will go through a cleanup process.” He also mentioned maintaining long-term relationships with some industry participants. He noted that some high-profile risk events widely reported by the media in recent months have not affected the bank.

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Editor in charge: Li Tong