Ranesh Ramanathan Interviewed by Bloomberg TV on Banks Seeking Entry into Direct Lending Market

Akin special situations & private credit practice co-leader Ranesh Ramanathan was interviewed by Bloomberg Television and quoted by Bloomberg News for its article “Wall Street Couldn’t Beat Private Credit. Now It Wants a Cut.”  The TV segment and article analyze a variety of strategies that big banks are using to enter the direct lending market without putting their capital at risk for long periods of time.

“Banks will try to find a way in which they can earn fees without having to lend their own money,” said Ranesh. “Leveraged finance is such a core part of their business model that if they don’t succeed and don’t recapture that market, it will be a big hit to their profitability.”

On Bloomberg TV, Ranesh said, “We’re seeing this at its very nascent stage right now. Banks are trying to figure out how they want to play in this market. This is a situation where banks are trying to replace the fees that they lost in their leveraged lending business as private credit has become a more dominant player. Navigating that space and finding a way where they don’t have to deploy their own capital because banks have a significantly higher capital charge assessed on these riskier assets. At this point it’s very much a ‘throw spaghetti against the wall’ approach and see what sticks.”