(7 July 2026 – United Kingdom) HSBC is withdrawing from higher-risk private credit lending, notifying some clients it will not renew facilities where returns were deemed insufficient to justify the risk.
The bank will instead concentrate on lower-risk private credit funds, according to the Financial Times.
The retreat follows a difficult period for HSBC in the sector. In May, the bank took a $400 million hit linked to the collapse of British mortgage lender Market Financial Solutions, and subsequently paused a planned $4 billion investment in its own private credit funds – though it affirmed its broader commitment to the asset class at the time.
In a statement, an HSBC spokesperson said the bank remains focused on “supporting deals globally for our most important clients, in regions where we see the most potential for growth and aligned to our strategy.”
The move reflects widening pressure across the $3.5 trillion private credit industry. Regulators are increasing scrutiny of banks’ exposure to the sector, while wealthy investors have been withdrawing capital from private credit vehicles amid concerns over weakening underwriting standards and fears of AI-driven disruption among software company borrowers.
HSBC is the latest in a string of banks to recalibrate their private credit exposure following a series of high-profile bankruptcies that have cast doubt on lending standards across the industry.