London, May 15, 2026, 10:02 BST
- HSBC says it’s still committed to private credit, following a Financial Times report that said the bank had hit pause on its $4 billion investment plan.
- This comes after a $400 million provision tied to the collapse of UK mortgage lender Market Financial Solutions.
- Regulators have their eye on banks’ links to the $3.5 trillion private credit market, a space where lending tends to be murkier than what’s seen in public markets.
HSBC Holdings Plc on Friday reaffirmed its commitment to private-credit funds, responding after the Financial Times reported the bank had halted a $4 billion investment plan in the sector. The move marks another challenge for the London-based lender as it expands into private credit—a market drawing more scrutiny even as it grows rapidly.
Timing is key here. Barely more than a week ago, HSBC booked a $400 million provision after the fall of British mortgage lender Market Financial Solutions—a move that’s left investors probing the extent of risk banks like HSBC face from private credit. In this corner of the market, loans bypass public bond and syndicated-loan channels.
“We are committed to our asset management’s offering in private credit funds,” an HSBC spokesperson wrote in an email to Reuters. Back in June 2025, the bank rolled out its $4 billion private-credit investment plan. Reuters
According to people with knowledge of the situation, HSBC hasn’t moved any money into the private-credit funds and isn’t planning to right now, the Financial Times said. The idea was to tap HSBC’s own balance sheet to better challenge big players like Apollo and Blackstone in private credit.
Private credit boils down to loans made by funds or other non-bank players, instead of tapping the public debt markets. The industry’s ballooned to $3.5 trillion, according to Reuters, but regulators are increasingly uneasy. Their worries: banks’ indirect ties to these loans and the lack of transparency about who might end up shouldering any losses.
HSBC attributed the $400 million charge to “private credit-related loans,” according to Chief Financial Officer Pam Kaur, who spoke to reporters during the bank’s first-quarter earnings call. Two people with knowledge of the situation told Reuters the loss stemmed from HSBC’s lending to Atlas SP, a firm backed by Apollo, which in turn financed Market Financial Solutions. Reuters
Kaur added that HSBC had taken a fresh look at its high-risk exposures and found no parallels. “We don’t see anything comparable there,” she said, addressing the fraud-related charge. Reuters
HSBC Chairman Brendan Nelson, speaking to shareholders on May 8, said the bank had “substantially completed” its review of lending policies and practices following the provision. Nelson added that HSBC was examining other, comparable facilities for possible lessons, but so far the issue appeared to be an isolated incident, not a broader problem. Reuters
The provision hasn’t hit the books as a loss—at least not yet. “There is a long way to go before we determine the actual amount lost,” Nelson said. He noted HSBC could still claw back part of the funds. Reuters
HSBC faces the prospect that this setback could put the brakes on an area it’s been pushing to expand, right when competition among fund managers and banks for private markets heats up. The Financial Stability Board has flagged mounting risks tied to banks’ exposure to private credit—think defaults, big bets on a handful of deals, and a lack of clear disclosure.
There’s a rates twist, too. Polymarket traders were assigning a 57% probability to the Bank of England lifting rates at some stage in 2026—a sign the market expects funding costs to stay elevated for borrowers. That scenario could pad banks’ margins, yet it also risks putting shakier loans under stress.
HSBC posted its first-quarter results on May 5, dropping investor materials and a presentation that morning. Pretax profit hit $9.4 billion—short of the $9.59 billion average forecast from analysts polled by HSBC, according to Reuters. The miss came after the bank took on higher credit charges, including a provision tied to fraud.
Right now, HSBC isn’t walking away from private credit—that much is clear. Still, the pause report, the provision, and the lending review combine to leave investors wrestling with a harder question: can the bank really grow in private markets without stepping into risks that only surface when things go wrong?
