The German Süddeutsche Zeitung writes about it. The publication believes that the practice of “private debt placement” could be the trigger for a new global crisis. Under this term, the financial market understands loans to companies issued by so-called “non-banking financial institutions”. These include hedge funds, insurance companies, pension funds and private equity funds, commonly referred to as “shadow banks.” “They are much more loosely regulated than banks, and since the financial crisis they have been lending trillions. Yes, not billions. Trillions,” Süddeutsche Zeitung focuses on the scale of the problem.
An opaque market
The publication reveals the mechanism of such lending and explains why this has brought the world to the threshold of a new financial collapse. Because companies often pay very high interest rates on these private loans, this business is becoming increasingly lucrative. And firms such as Blackrock or Apollo are actively developing it.
At the same time, the private debt market is opaque, as supervisors constantly complain. No one has a full understanding of the amounts owed by certain companies to certain “shadow banks”. After all, loans are issued directly by funds, not by banks.
“This is painfully reminiscent of the global financial crisis of 2008. Back then, risky subprime real estate loans scattered by banks around the world caused the financial world to realize too late that it could lead to chaos. Some experts fear that a similar situation may repeat itself with private lending,” the article notes.
The key problem of the current situation is that real banks are actively financing “shadow banks”. Thus bypassing strict rules of risk analysis and prevention.
How this turns out is revealed in the article by Süddeutsche Zeitung. A feature of private credit funds is so-called leverage. Imagine this: large companies like Blackrock raise billions from institutional investors like pension funds. And then go to a bank and typically borrow in addition an amount that exceeds the equity capital raised by half or one and a half times. At least that is the case in the United States.
With this capital they go to the market and make loans to medium-sized unlisted companies, earning interest for doing so. As long as the companies repay the loans faithfully, it’s a profitable business. But if they stop paying, the leverage effect works in the opposite direction and leads to big losses.
So far, this is happening mostly in the US. But Mark Brunson, head of Germany’s Federal Financial Supervisory Authority (BaFin), warned that increasingly German banks are also getting involved. “Financial companies here in Germany are closely linked to foreign private debt markets,” Brunson was quoted as saying by the publication.
Moreover: if the market continues to grow and the global situation remains unstable, Brunson said, “sooner or later there will be an explosion.”
And this situation is starting to worry many people, warns Süddeutsche Zeitung.
Above all, the concern is that the regulated banks are financing shadow banks in their lending activities. “Banks act as lenders, business partners, service providers, and sometimes as a backstop for non-banks,” Pablo Hernandez, CEO of the Bank for International Settlements (BIS), warned in a speech in early March. He noted that traditional banks act as the main source of secured money market loans with which hedge funds implement their leveraged trading strategies. “As a result, banks become vulnerable to negative market shocks in these segments,” said the BIS director general.
Deutsche Bank is also “on board”
Deutsche Bank recently disclosed that its participation in the private credit market amounts to around €26 billion and announced increased control in this “segment”. As a result, the share price of Germany’s largest bank fell significantly for two consecutive days.
A recent risk report by the European Securities Markets Authority (ESMA) explicitly states that the private credit market is seen as a “systemic vulnerability” and “increasingly a source of risk”. It is “closely linked” to the traditional banking system. This is why concerns have been heightened, especially given the “possible analogies” to subprime loans that played a key role in the 2008 financial crisis.
Against this background, German and European financial regulators at BaFin and ESMA warn that problems in the private debt market could also have serious consequences for the banking sector: it is unclear what consequences the collapse of shadow banks would lead to.
In fact, regulators have sought to avoid just that. After the financial crisis, they tried to increase the safety of banks by tightening equity capital rules. As a side effect, risk and lending moved increasingly into the less regulated realm of shadow banks. What made banks safer created new risks elsewhere.
These first manifested themselves in 2025, notes Süddeutsche Zeitung. At that time, bankruptcies of large companies became more frequent, such as auto parts supplier First Brands in the US, which was forced to declare insolvency in September 2025. This prompted Jamie Dimon, chief executive of the world’s largest bank, J. P. Morgan, to issue a warning: “Where there is one cockroach, there are likely to be others.” What he meant: if a company that was doing poorly got the money, it’s likely that other, rather dubious companies got the money as well. They too may have trouble repaying their loans.
Mohamed El-Erian, chief advisor at Allianz, picked up on this point and recently said: “The key question for markets and the real economy is: are we only dealing with cockroaches …. or are we already dealing with termites?”. In other words, are we just talking about isolated cases lurking in loan portfolios – or perhaps there are forces at work that could undermine the entire system and lead to its collapse?
The first bankruptcies have led investors to begin withdrawing capital from Blue Owl, for example. In mid-February, this provider of private credit funds was forced to hastily sell $1.4 billion in assets to make funds available to its clients. In addition, Blue Owl has temporarily suspended payouts. This means that investors have lost access to their capital for a while.
And this company isn’t the only one. Other private credit fund providers such as Blackrock, Morgan Stanley and Blackstone have also recently limited or temporarily suspended payouts on individual funds. The fear that agitated investors would want to withdraw all their capital at once was too great.
It is impossible to predict how severely the secondary effects would affect the banking sector in such a scenario. This was a major problem during the 2008 subprime crisis. Banks were reselling “junk” real estate loans to each other. It was only when the first bank went bankrupt that it became increasingly obvious: virtually every major bank and even savings banks were involved directly or indirectly.
And so the regional problem with American real estate turned into a global financial crisis, concludes the Süddeutsche Zeitung.
