Increasing loans to us non -banking financial groups raising methodological risks

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American banking lending for acquisition companies and private credit groups helped fuel acute loans in loans to non -bank financial institutions, even when organizers feel twisting that increasing relations between the two sectors can become regular risks.

Loans for non -banks reached about 1.2 trillion by the end of March, according to a report. Fitch classifications20 percent increase on an annual basis driven by lending to make private capital. Commercial loans increased by 1.5 percent only during the same period.

This increase comes at a time when the organizers are operating in banks ’interconnection with private stocks and a high -growing credit sector, which is an unexplained area in the market that has a few regulatory control. Organizers asked banks to reveal more information about their relationships with the so -called NBFis for a better overview of their exposure to the sector.

Fitch data shows that NBFis bank loans increased since the beginning of the epidemic, from about 600 million dollars at the end of 2019 to more than one dollar at the beginning of this year, as companies have increased into a special balance of financing.

This has put credit companies, especially in direct competition with banks, while converting them to some of their most important customers by providing a leverage that helps to increase the returns. Banks also have complex and layer relationships with acquisition groups, some of which work on the largest private credit companies.

Borrowers whose source is funded from private credit boxes and direct lenders are usually more dangerous and more crazy. Since some of these loans are made of borrowed funds from banks, there are fears that bad credit can bleed to the wider financial system.

The Fitch report states that at the present time, it is unlikely to have broad financial stability on the largest bank.

The International Monetary Fund in the Global Financial Stability Report warned last month against increasing lending to NBFis by banks “can make the financial system more vulnerable to high levels of leverage and interconnection.” He also highlighted that more than 40 percent of borrowers from private sector lenders have a negative free cash flow at the end of last year, up from 25 percent before three years.

Most exposure to Nbfis It is concentrated between 13 banks, including JPMorgan Chase and Wells Fargo. Categories include real estate intermediaries, business and consumers, as well as private stock funds and other loans for financial institutions that do not take deposits.

American banks recently started to destroy their loan books through the class assets in quarterly reports submitted to the Federal Deposit Insurance Corporation.

JPMorgan was among the largest banks in the last quarter by describing $ 133 billion in lending to non -banks as “others” instead of dividing them with a kind of borrower. But the largest bank in America has since provided more details about private credit loans, private shares and unsuccessful obligations.

The report concluded that “strong growth in bank lending for non -banks calls for accurate monitoring because excessive growth in credit has led to the problems of the quality of assets that negatively affect banks.” But he added that bank exposure to non -banks is usually better than lending to basic borrowers.