“We are committed to our asset management’s offering in private credit funds,” the bank said, according to a Friday report by Reuters.
The Financial Times had reported earlier Friday that HSBC paused the private credit investment after losing $400 million it had invested in a credit fund.
The FT report said that while the bank had announced in June that it would invest $4 billion into its asset manager’s private credit funds, it had not done so almost a year later.
The report cited unnamed sources who said the bank had not yet transferred any funds to the asset manager and that it had no plans to do so. One source told the FT that executives had grown cautious due to uncertainty in the U.S. credit market.
The Reuters report said that HSBC has “substantially completed” a review of its lending practices after the $400 million loss.
Advertisement: Scroll to Continue
HSBC said in a May 5 earnings release that the $400 million expected credit loss in the first quarter was caused by “fraud-related, secondary, securitization exposure with a financial sponsor in the UK” in the bank’s Corporate and Institutional Banking business.
The bank’s private credit related exposure totals $22 billion, or about 2% of its loan book, according to a presentation released May 5. Within that category, its securitization financing exposure totals $3 billion. HSBC’s total private markets exposure totals $111 billion.
HSBC Group Chief Financial Officer Pam Kaur said during a May 5 earnings call that the bank has updated its risk appetite, is incorporating lessons in its due diligence processes, and remains comfortable with its private credit related exposure remaining within 2% of its balance sheet.
It was reported in April 2025, before HSBC announced its planned investment in private credit funds, that the bank was considering getting into the private credit market to increase revenue after it underwent a restructuring, cut jobs and made a retrenchment in investment banking. At the same time, senior executives questioned whether the revenue would outweigh the costs.
