Deutsche Bank, 26 billion exposure to private credit

26 billion euro exposure to the private credit market for Deutsche Bank. This was stated by the German bank itself in its annual report published yesterday, in which the segment is identified as a 'key risk', even though the document does not report losses or provisions related to this exposure, which represents around 5% of the institution's loan portfolio. Indeed, the institution itself specified that it was not exposed to 'significant risks' related to non-banking financial institutions, although it acknowledged the possibility of indirect risks through interconnected portfolios and counterparty relationships.

The German bank's shares closed trading yesterday with a 5.9 per cent drop on the Frankfurt stock exchange.

The global private credit market, estimated at $1.8 trillion, is experiencing a substantial outflow of investors after a number of high-profile corporate failures that have fuelled fears about the quality of loans and high exposure to software companies, whose business models could be put under pressure by rapid advances in artificial intelligence. The latest jolt to the credit market came from the collapse of UK mortgage lender Market Financial Solutions, which was implicated in allegations of fraudulent behaviour. Similar incidents had emerged last year in the bankruptcies of US auto parts manufacturer First Brands Group and subprime car lender Tricolor Holdings. "The failure of a number of subprime operators in the US has heightened investor attention to the risks associated with private credit, raising broader concerns about lending standards and fraud risks," Deutsche Bank noted in the report.

Signs of caution towards the sector also came from large US banking groups. JPMorgan Chase, for example, has started to limit some of its lending to private credit funds after reducing the value of some loans in its portfolios.

Deutsche Bank's private credit loan portfolio, according to the annual report, increased to EUR 25.9 billion recorded at amortised cost, up from EUR 24.5 billion in 2024. Credit exposure to the technology sector, including software, amounted to EUR 15.8 billion, up from EUR 11.7 billion in the previous year.