Private credit moves in as banks retreat

Private credit has become a recognised asset class and is now a common part of institutional investment portfolios, amidst declining profits in Asia-Pacific banks, shifting valuations, and mounting competition from fintech players.

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Traditional universal banks are increasingly squeezed between nimble digital competitors and high-value niche players, Isaac Tan, a partner at Boston Consulting Group in Kuala Lumpur, told the Asian Banking & Finance and Insurance Asia Summit - Malaysia 2025.

"Private credit players are entering a space that banks traditionally serve. But because of regulation, banks are moving away," he pointed out to the attendees.

Nonbank lenders—typically credit fund managers who work directly with corporate borrowers—are now providing capital even to low-risk segments that were once the exclusive clients of regulated banks, he added.

To maintain a presence in these markets, some banks have opted to become investors or partners in private credit deals—a strategy that is becoming more common in markets such as India, Tan noted.

In a separate interview, a CEO of an India-based non-bank wealth management company told Asian Banking & Finance of how private investors and creditors are seeking private equity opportunities such as startups and late-stage investments.