WASHINGTON—Bank lending to private equity funds, private credit firms and other nondepository financial institutions climbed to $1.4 trillion at year-end 2025, making it the fastest-growing loan category for banks since the 2008 financial crisis, according to the FDIC, which said the exposure is increasingly concentrated among the largest institutions, Law360 reported.
The agency flagged the sector in a new review as a rapidly expanding corner of bank balance sheets that warrants closer supervisory attention as private credit and other nonbank finance continue to grow.
The FDIC said loans to nondepository financial institutions rose 35% year-over-year and 7% from the prior quarter, underscoring how much recent commercial lending growth has been tied to banks financing nonbanks rather than traditional operating companies. The agency said the category now includes exposures to private equity, private credit and other shadow-banking-style firms, highlighting a structural shift in where banks are taking credit risk, Law360 said.
For banks and credit unions watching the broader credit landscape, the FDIC’s warning adds to a growing regulatory focus on private credit as stress pockets emerge in parts of the nonbank market. The concern is not that banks are directly replacing private credit, but that they are increasingly financing it—creating a channel through which trouble in nonbank lending could flow back into the banking system if underwriting weakens or funding conditions deteriorate.
The report arrives as private credit faces heavier scrutiny from investors and policymakers alike, with recent market commentary pointing to redemption pressure at some large funds and fresh debate over transparency, valuations and spillover risk.