HSBC LSE:HSBA is halting lending to riskier private credit clients after high-profile bankruptcies cast doubt on underwriting standards in the sector and pushed banks to cut their exposure, the Financial Times reported on Tuesday, citing three people familiar with the matter.
The bank has told some clients it will not renew their lending facilities after deciding to stop lending to private credit funds that did not offer sufficient returns to justify the risk, the report said. It will instead focus on lower-risk private credit funds, the report added.
HSBC did not immediately respond to a Reuters request for comment outside regular business hours.
Exposure to private credit lending has troubled Europe's biggest lender, adding to the market jitters around the sector. HSBC in May took a $400 million hit linked to the collapse of British mortgage lender Market Financial Solutions.