- The partnership reflects a new trend where traditional banks compete with non-banks in the private lending market.
- This program comes as private credit faces increased scrutiny from institutions like the IMF.
Citigroup and Apollo have launched a $25 billion private credit and direct lending program in collaboration with Abu Dhabi’s Mubadala Investment Company and Apollo’s annuity unit, Athene, Reuters reported.
The partnership between the two firms highlights a new trend in the private credit space: traditional banks are partnering with non-banks to access the lucrative $2 trillion private lending market.
Additionally, this new program reportedly demonstrates how financial giants are looking beyond conventional banking to meet the changing needs of borrowers and investors alike. More banks are now working with private credit firms, which have become a key financing source for high-risk borrowers and companies seeking large buyouts.
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A Private Credit Move
Private credit has gained traction because it offers speed and flexibility, often catering to borrowers who cannot secure funding from traditional banks. These loans are reportedly processed more quickly, bypassing the stricter regulatory barriers that conventional banking must navigate.
Over recent months, partnerships between private credit firms and banks have flourished. Initially perceived as competition, these firms have now found synergy in their collaboration. For Citi, teaming up with Apollo allows the bank to leverage its existing customer relationships and generate fees without assuming direct lending risk.
The Citi-Apollo program will initially focus on North America, with plans to expand to other regions. Demand and partnership opportunities are expected to drive the program’s growth beyond the initial $25 billion goal.
Private credit, traditionally the domain of specialized non-bank entities, has seen increased scrutiny as it expands. The International Monetary Fund (IMF) recently called for a closer market examination, citing its interconnected nature and potential systemic risks.
This deal is not Citi’s first foray into private credit collaboration. Earlier this year, Citi partnered with alternative investment manager LuminArx Capital to launch another private lending program.
