Wall Street, Manhattan, New York.Andrey Denisyuk | Moment | Getty ImagesWall Street banks may finally be getting a long-awaited opening to claw back market share from private credit lenders.After a decade in which private credit lenders grew rapidly and took over a large share of financing for leveraged buyouts, signs of strain in that sector, along with easing bank rules, may now be shifting the balance. “This is an opportune time for banks to regain market share from private credit funds,” Moody’s chief economist Mark Zandi told CNBC in an email.”Interest rates have declined and banking regulation has eased. Private credit lenders are also struggling with the fallout from their previously aggressive lending,” he highlighted.Private credit’s rapid ascent was fueled in part by banks’ retreat. Following the Federal Reserve’s aggressive rate hikes and the 2023 banking crisis, lenders tightened underwriting and pulled back from riskier deals. Borrowers, particularly private equity firms, increasingly turned to direct lenders offering faster execution and looser terms.The tug of war is just starting. The rules have been relaxed, so it’s only natural that banks want to get back some of their market share in private credit.Jeffrey HookeJohns Hopkins Carey Business SchoolAt its peak, the shift was dramatic. According to PitchBook data, banks’ share of buyout financings above $1 billion fell to just 39% in 2023, down from about 80% in the five years prior. That share has since recovered to just over 50% in 2025.And the tide may be turning further.Private credit is facing mounting challenges. Years of aggressive lending are starting to backfire, as higher interest rates make it harder for heavily indebted borrowers to repay loans and increase default risks. Investor demand for liquidity is also rising, with some clients seeking to pull money after years of locking up capital.Moody’s Zandi expects the sector to “experience more credit problems in the coming months,” citing fallout from geopolitical tensions, higher borrowing costs and structural pressures in industries such as software. Consumer and healthcare borrowers may also come under s …
