Indirect private credit linkages pose risks for APAC banks

It could create counterparty and liquidity risks, said Fitch’s Tania Gold.

Whilst APAC banks are not heavily exposed to private credit, indirect exposures could weigh on the financial system, said Fitch Ratings in an October 2026 podcast.

Private credit is becoming increasingly intertwined with the banking system, even if it doesn't always sit on banks' balance sheets, Tania Gold, senior director and head of Fitch’s South and Southeast Asia banks ratings, said in the podcast “APAC Financial Institutions’ Exposure to Private Credit.”

In the podcast, Gold said that the real question is how private credit stresses could travel through the financial system tomorrow.

“Stress in private credit could create counterparty and liquidity risks,” Gold said.

Banks provide fund finance facilities, warehouse lines, and lending to private credit managers, she said. Many banks also distribute private credit products to wealth management clients, opening them up to reputational risks.

“More broadly, a severe downturn could tighten funding conditions and expose risks that aren't always obvious during the good times,” Gold said.

Direct exposure to private credit is relatively small, with disclosures from markets such as Japan, South Korea, and Singapore indicating that it is mainly less than 1% of the balance sheet, Gold said.

“Direct exposure is small, so I'm less concerned about large immediate credit losses.,” Gold said.