Bank of America has announced a substantial commitment of $25 billion to private credit loans, marking its intensified effort to compete with non-bank lenders in a sector experiencing growing scrutiny over credit quality and liquidity. The decision reflects the bank’s strategic approach to adapt to the changing needs of corporate and private equity clients, as highlighted by Bruce Thompson, the vice-chair and head of enterprise credit. He noted that this investment not only aims to meet client demands but also aims to deliver robust returns for shareholders.
This announcement coincides with a period of increased concern regarding the credit quality of private loans, particularly following high-profile defaults and anxieties surrounding the exposure of private capital to software companies perceived as vulnerable to disruptions brought on by artificial intelligence. Recently, Blue Owl, a private credit group, sparked further unease by declaring it would impose a permanent restriction on investor withdrawals from its premier private retail debt fund.
Bank of America’s move aligns with similar actions taken by other prominent Wall Street financial institutions. For instance, JPMorgan last year allocated $50 billion towards lending to higher-risk companies that have backing from private equity firms, as part of a broader strategy to strengthen its position in the credit market. Other banks, such as Citigroup and Wells Fargo, have formed partnerships with asset managers like Apollo and Centerbridge to expand their influence in private credit. Additionally, firms like Goldman Sachs and Morgan Stanley have established dedicated funds within their wealth and asset management services to leverage opportunities in this sector.
In conjunction with its new private credit commitment, Bank of America has also announced key personnel changes. Veteran Anand Melvani has been appointed as head of private credit within the bank’s global capital market division, while also continuing his role as head of Americas leveraged finance. Scott Wiate has also been named head of private credit, focusing on structuring and underwriting, and will report directly to Thompson. These leadership updates were earlier reported by Bloomberg, signifying a structured approach to execute the bank’s ambitious credit strategy.
