Bank of England to stress test private credit firms as concerns grow

The central bank said it has launched a new exercise to stress-test the resilience of the market.

The Bank of England will begin testing how private credit and equity firms would deal with a financial shock after warnings about their potential threat to the wider economy.

The central bank said it has launched a new exercise to stress-test the resilience of the market.

Total assets in private credit and equity funds have increased from around three trillion US dollars (£2.25 trillion) to 11 trillion dollars (£8.23 trillion) over the past decade.

They now play a major role in financing UK companies, with funding supporting around two million jobs, according to the Bank.

Private credit is a form of lending where businesses do not go to banks but to a private company and negotiate a deal.