Bank of America is making a massive play for a piece of the private credit pie. The Wall Street giant has committed $25 billion to private credit deals, according to an internal memo seen by Reuters, signaling an aggressive push into one of finance’s most lucrative—and increasingly crowded—arenas.
This move by BofA is the latest sign of a seismic shift in corporate lending. In the years following the 2008 financial crisis, tighter regulations made it harder for traditional banks to lend to riskier borrowers. This opened the door for private credit providers—non-bank lenders like Apollo and Blackstone—to step in and fill the void, offering quick, flexible financing for companies and mega-buyouts.
Now, the traditional banks are fighting back. BofA’s $25 billion war chest is designed to compete directly with these alternative asset managers, who often operate under lighter capital requirements. It follows a similar pattern set by its rivals: JPMorgan Chase has allocated a staggering $50 billion from its own balance sheet to private credit, and Goldman Sachs has restructured to create a dedicated division for the market.
For Wall Street, the appeal is clear. Private credit offers higher returns than traditional lending, but it also comes with higher stakes. The loans are typically made to companies deemed too vulnerable for conventional bank financing, which inherently carries more risk.
Those risks are coming into sharper focus. The same day BofA’s internal memo was revealed, the broader private credit market showed signs of strain. Shares of major alternative asset managers, including Apollo, Blackstone, and KKR, fell sharply—between 4% and 6%—after Blue Owl Capital, a private capital firm, permanently halted redemptions in one of its funds and sold off assets to manage debt.
The selloff underscores a growing anxiety about credit quality in the sector, particularly regarding exposure to software companies vulnerable to the rise of artificial intelligence. As banks like BofA dive deeper into these waters, they are not just chasing profits; they are also navigating a market where the shadow of risk is growing longer.
This isn’t the first major partnership between a traditional bank and the private credit world. In 2024, Citigroup and Apollo teamed up for a $25 billion private credit and direct lending program. But BofA’s move is a direct deployment of its own capital, marking a significant escalation in the battle between the old guard and the new kings of lending.
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