The Global Risks Alliance (GRA)
Private credit competes with banks and also depends on them. Banks lend to funds through subscription lines, NAV facilities and back leverage, provide revolving credit to borrowers alongside funds, and sell loan risk to funds. These links mean stress in private credit can return to banks. This page sets out how bank-nonbank connections work, how they are measured, and who decides.
GRA · In development · service level R0
Bank and private credit connections are the lending, risk transfer and shared-borrower links through which banks finance, compete with and pass risk to private credit funds. They include subscription lines, NAV facilities, back leverage and synthetic risk transfer. Bank risk committees, supervisors and fund managers hold the decisions.
How a failure at one financial centre can spread through settlement links. Design links, not real dependencies.
The working screen behind this subject: its structure, terms and states. Names are placeholders and values illustrative.
Bank nonbank connections · Direct lending fund · Quarter 2
| Borrower 12 | 6.6 | 6.0 | 1.8 | Breach |
| Borrower 4 | 5.4 | 6.0 | 2.1 | Tight |
| Borrower 9 | 3.6 | 5.5 | 3.4 | Pass |
| Borrower 15 | 4.7 | 5.75 | 2.7 | Pass |
Origination, distribution and exposures. The dossier below sets out how the risk develops, what is measured, where the data come from, how it is modelled and who decides.
Subscription lines secured on investor commitments and NAV loans secured on portfolios let funds borrow from banks. Their use adds leverage and bank exposure.
Banks lend to funds against their loan portfolios, so a fall in loan values can trigger margin calls or covenant breaches at fund level.
Banks and funds lend to the same companies through different instruments. A borrower's distress affects both.
Synthetic risk transfers and loan sales move credit risk from banks to funds, which can reduce bank capital needs while keeping links in place.
Each term as this page uses it. Where a standard-setting body defines the term, the wording follows that body.
| Term | Definition |
|---|---|
| Subscription line | A bank facility to a fund secured on investors' uncalled capital commitments. |
| NAV facility | A loan to a fund secured on the net asset value of its portfolio. |
| Significant risk transfer | A transaction that moves enough credit risk off a bank's balance sheet to reduce its capital requirement. |
Each indicator carries its unit, its cadence, the kind of source behind it and the evidence label a value would carry. No values are shown: a programme supplies them under its own authority.
| Indicator | Unit | Cadence | Source type | Label |
|---|---|---|---|---|
| Bank lending to private credit funds | currency | quarterly | Supervisory and central bank data | OFFICIAL |
| Subscription line usage | percent of commitments | quarterly | Fund disclosures | DECLARED |
| NAV facility volumes | currency | periodic | Industry estimates | ESTIMATED |
| Synthetic risk transfer issuance | currency | annual | Industry and supervisory data | REPORTED |
| Bank exposure to nondepository financial institutions | currency | quarterly | Call Report data | OFFICIAL |
| Overlap of borrowers between banks and funds | share of borrowers | per study | Supervisory studies | ESTIMATED |
The topic as a computational graph: named sources feed the methods, an evidence review gates the outputs, and the decisions stay with the authorities that hold them.
Fig. 02Nodes carry their type, two metric rows and a state; connectors show what feeds what; dashed frames name the owners; the timeline is the cadence. Design of the pipeline, not a record of a run.
Named public datasets and institutional records, each with its licence class. Sources by agreement are used only under their terms and never republished.
| Source | What it gives | Licence class |
|---|---|---|
| FFIEC Call Reports loans to nondepository financial institutions | United States bank lending to nonbanks | Public domain |
| Federal Reserve analyses of bank lending to nonbanks | Bank exposure to private credit | Public domain |
| ECB analysis of bank-nonbank interconnections | Euro area links | Free, ECB terms |
| Bank of England system-wide exploratory scenario report | Interaction between banks and nonbanks in stress | Free, Bank of England terms |
| EBA reports on significant risk transfer | Synthetic securitisation in the EU | Free, EU reuse terms |
Private Credit prepares evidence. The decisions below are taken by the authorities named, under their own rules, and never by the platform.
| Who decides | The question | Evidence this page serves |
|---|---|---|
| Bank risk committees | How much to lend to private credit funds and on what terms | Exposure data and stress analysis |
| Prudential supervisors | Whether bank exposures to private credit are well captured and capitalised | Supervisory data and reviews |
| Fund managers | How much bank leverage to use | Cost, terms and stress resilience |
| Macroprudential authorities | Whether links pose system risk | System-wide exercises and monitoring |
Subscription lines, asset-based facilities and other fund finance.
Joint origination, forward-flow arrangements and risk transfer.
How credit risk is shared between banks, funds and their investors.
How losses or drawdowns could move between banks and private credit.
Fund finance creates direct links. Subscription lines are secured on investors' commitments; asset-based facilities are secured on loan portfolios. In stress, banks may tighten terms or face drawdowns at the same time as other pressures.
Partnerships blur boundaries. Banks originate loans and pass some to private lenders, or share risk through structured arrangements, keeping client relationships while reducing balance sheet use.
Risk transfer transactions move part of banks' credit risk to private investors. They can free bank capital while concentrating exposures in less visible places.
Competition and complementarity coexist. Private lenders have taken market share in some segments while depending on banks for financing and deal flow.
Information gaps make it hard to see total exposures, because the same borrower or portfolio may appear in bank, fund and insurer books under different forms. Mapping these links is a precondition for understanding how stress would travel.
| Method or data | What it shows | Its limit |
|---|---|---|
| Bank disclosures | Exposures to nonbank financial institutions | Categories are broad |
| Fund finance data | Facility terms and usage | Largely private |
| Network analysis | Links between banks and funds | Incomplete exposure data |
| Case studies | Partnership and risk transfer structures | Limited generalizability |
The current service level is R0: information and enquiries. An enquiry receives a reference and names the next step; applications, payments, compute allocations and registrations open only when their team, terms and review capacity exist.