Financing for nonbank firms is helping banks prop up loan growth and drive trading revenue; non-banks

 


Lending to nonbanks, often through banks’ trading units. These can be loans to hedge funds, but also to credit funds or financial companies that are themselves making loans to businesses or consumers. 

The banks lend to the lenders, and sometimes also help them then sell those loans to the market in the form of a securitization.

By financing lenders, banks are often enabling their competitors, the giant alternative asset managers that offer private equity and private credit funds.

For the biggest banks, this trade-off can often be worth it. 

Loans to financial companies can be lower-yielding, but are also heavily collateralized. So they carry lower risk in regulators’ eyes. 

That frees up capital for higher-returning activities such as trading. 

Wall Street Journal  17 April 2025

https://www.wsj.com/finance/banking/todays-hot-banking-business-is-lending-to-lenders-51361036


Shadow Banks Are Too Big to Stay in the Shadows

https://englundmacro.blogspot.com/2025/04/shadow-banks-are-too-big-to-stay-in.html


Shadow banking — in the form of everything from repos and eurodollars to commercial paper and money market funds — grew, and the Fed continued to support all these shadow entities. 

https://englundmacro.blogspot.com/2022/09/15-years-on-from-great-financial-crisis.html






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