Deutsche Bank says its private-credit exposure has increased to $30 billion - one of the highest of Wall Street banks

By Nora Redmond

Deutsche Bank disclosed a $30 billion exposure to private credit.

Another bank has revealed its exposure to private credit as the struggling industry faces growing concern from anxious investors.

In its annual report released Thursday, Deutsche Bank (DB) (XE:DBK) said it had a $30 billion private-credit exposure for the year of 2025.

The banking giant listed "the rapid expansion, lack of transparency and potential interconnected risks" associated with private credit and non-bank financial institutions exposure as a developing risk theme before saying that its private credit loan portfolio accounts for EUR25.9 billion, or $30 billion.

This marks an increase of 6% on the previous year's exposure, with a value of EUR24.5 billion in 2024.

Deutsche Bank shares slumped 5% in Frankfurt trade. The stock is now down 22% this year.

"Loans to Private Credit, generally categorized as NBFI Lending, are subject to heightened scrutiny due to recent default events in the market," Deutsche Bank noted.

Despite the greater risk, Deutsche Bank said it plans to increase its private-credit offerings through its asset-management unit, DWS (XE:DWS).

Private-credit concerns were already stirred on Wednesday when Morgan Stanley's North Haven Private Income Fund, which has $8 billion in assets under management, revealed it won't meet over half of its redemption requests, saying that its capping withdrawals at the pre-established 5% quarterly threshold limit for shares, far below the roughly 10.9% requested for repurchase.

Also on Wednesday, the Financial Times reported that JPMorgan told investors that it had downgraded the value of certain loans in private-credit portfolios. And on Monday, Bloomberg reported that Cliffwater's flagship $33 billion private-credit fund suffered from heavy redemptions, approving 7% of the 14% of requests for repurchases.

The outflows from private-credit funds come as traders have become more concerned about the software industry as developments in artificial intelligence have been seen to threaten the models of these companies.

According to Moody's, which provides credit ratings for companies and governments, U.S. banks' exposure to private credit was nearly $300 billion, as of June last year. Wells Fargo (WFC) was by far the leader, with $59.7 billion, followed by Bank of America (BAC) at $33.2 billion.

Joe Kalish, chief macro strategist at Ned Davis Research, wrote in a note on Wednesday that several members at the last Federal Open Market Committee meeting outlined vulnerabilities to the private credit sector. That said, he added, private credit strains and defaults are not part of the Fed's annual bank stress test for 2026, nor was it mentioned by the Fed's vice chair for supervision during a recent speech on financial stability.

-Nora Redmond

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

03-12-26 1032ET