BofA warns of 30% downside to European lenders over PE exposure - FT

Wed, 18th Mar 2026 19:38

(Alliance News) - Bank of America Corp said Deutsche Bank AG and Partners Group Holding AG are among the European lenders "most exposed to private credit shocks," the Financial Times reported on Wednesday.

BofA has told clients that European stocks exposed to private credit had 30% "downside risk" compared with US peers because their shares had not fallen as sharply amid the sell-off in the sector, FT reported.

Shares in major US private capital groups Blue Owl Capital Inc and Blackstone Inc have lost 38% and 26% year-to-date.

The sell-off began after Blue Owl said it would permanently gate one of its funds, blocking investors from redeeming their holdings, amid fears over the threat posed to software firms by artificial intelligence.

In response, BofA has created a basket of 17 European financial stocks for clients to short, FT reported. It includes Deutsche Bank and Partners, as well as insurers Axa SA, Legal & General Group PLC and Aviva PLC, and pensions group Aegon NV.

Despite uncertainty in the sector, BofA last month said it would commit USD25 billion to private credit loans.

On Wednesday, BofA analysts accused the media of being "still obsessed with private credit," and "focused on low-value data points".

The team said that sentiment was driving a "fire sale buying opportunity".

This after Deutsche Bank last week disclosed a EUR26 billion exposure to private credit. Chief Executive Christian Sewing said the lender had not lost "one cent" in its more than 10 years in the space.

"I think we are a very solid underwriter in that business," Sewing said. "I look at the portfolio, the transparency we have...and I don't think that is for us a particular risk."

Partners Chair Steffen Meister told the FT last week that private credit default rates could double in the next few years, but noted room for returns given the group's stringent underwriting practices.

BofA shares traded 0.9% lower at USD46.88 on Wednesday afternoon in New York.

By Aidan Lane, Alliance News reporter

Comments and questions to newsroom@alliancenews.com