The bank suspends high-risk private credit financing following major insolvencies and fraud allegations in the sector.
HSBC has halted high-risk private credit financing after recent corporate failures exposed weak underwriting standards. The bank will not renew facilities for funds failing to deliver sufficient returns, shifting focus to more stable investments while reducing leverage for certain clients.
The pullback follows the £2bn collapse of bridging lender Market Financial Solutions amid fraud allegations. HSBC took a $400m charge due to exposure via Apollo’s Atlas SP unit, while Barclays provisioned £228m for related losses. Regulators have warned about risks in the sector after similar US bankruptcies.
Other institutions, including Barclays, have also tightened lending to structured finance counterparties, forcing private credit funds to seek alternative financing.