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Goldman Sachs Aims for $300 Billion Private Credit Portfolio

Goldman Sachs

Goldman Sachs Asset Management is reportedly planning a major expansion of its private credit portfolio.

The Wall Street giant aims to grow that portfolio to $300 billion in five years, up from $130 billion, a senior executive told Reuters Tuesday (March 12).

“It’s a huge opportunity,” said Marc Nachmann, Goldman Sachs’ global head of asset and wealth management. 

According to the report, Goldman has loftier goals than other banking titans. For example, Morgan Stanley is planning to double its private credit portfolio to $50 billion, while JPMorgan Chase has set aside at least $10 billion for private credit. 

Nachmann told Reuters that of the $40 billion to $50 billion Goldman wants to raise for alternative investments this year, at least a third will be used to support private credit strategies.

The report noted that non-bank lenders, so-called “shadow banks,” have stepped up their lending in recent years as they faced fewer regulatory hurdles than traditional banks.

PYMNTS noted this trend last month in the wake of the Federal Reserve’s January survey of senior loan officers at banks. 

Those lenders, the survey said, “reported tighter standards and weaker demand for commercial and industrial (C&I) loans to firms of all sizes over the fourth quarter.” 

Banks also reported having tightened most queried terms on C&I loans to firms of all sizes over the fourth quarter. Respondents said that there were higher premiums charged on the cost of funds, on credit lines and they also reported more stringent collateralization requirements.

“The reasons for the tougher loan terms?” PYMNTS wrote. “Macro uncertainty and some concerns about their own liquidity positions.”

However, recent weeks have also seen non-bank lenders come under more scrutiny from regulators. For example, Bank of England Deputy Governor Sarah Breeden has called for more research into these lenders to prevent a “credit crunch.”

And Michael Hsu, acting Comptroller of the Currency, said recently that loosely regulated lenders were leading banks to make lower-quality and higher-risk loans.

“We need to solve the race to the bottom,” Hsu said. “And I think part of the way to solve it is to put due attention on those non-banks.”

Reuters news follows a report from last year that Goldman was reshuffling senior executives as it prepared to double the size of its private credit business.