US resists EU demands for private credit data sharing

European financial supervisors seeking a clearer picture of banks' exposure to private credit markets are running into resistance from the U.S. Treasury, widening a transatlantic divide over the oversight of one of the fastest-growing corners of global finance.

The standoff, reported by Reuters on Thursday, centers on European authorities' demands for detailed information about the underlying assets, borrowers, valuations, and guarantees behind private-credit investments held by institutions they oversee. U.S. Treasury officials have pushed back, arguing that the information is confidential and that additional disclosure requirements would impose unnecessary burdens on firms.kfgo+1

"We feel some resistance from some supervisors around the world," Bundesbank board member Michael Theurer told Reuters. "There are arguments that they are not allowed to share — they have legal restrictions. And then there is the general criticism that these are new reporting requirements, a new bureaucratic burden."kfgo

A $3.1 Trillion Blind Spot

The dispute plays out against rising anxiety about the roughly $3.1 trillion private credit industry, much of it concentrated in the United States. European Central Bank data estimates that euro area banks hold €62.5 billion in private credit exposure globally — just 0.2% of total assets — but officials say such aggregate figures no longer suffice.ecb.europa+2

"There are cascades of different investment layers — collateralised loan obligations, leveraged lending, asset-intensive reinsurances — and it is possible to combine all of them," Theurer said. "That makes the underlying risks opaque."kfgo

The discussions have taken place within the Financial Stability Board, which in May published a report flagging data gaps and differing national definitions as key obstacles to assessing private credit risks globally. A spokesperson for the U.S. Securities and Exchange Commission said it takes confidentiality and legal restrictions on information-sharing seriously.fsb+2

European Watchdogs Step Up Scrutiny

The data impasse comes as European institutions sharpen their focus on the sector. On Wednesday, the European Systemic Risk Board adviser Richard Portes said the watchdog is examining private credit's potential to spread or amplify financial shocks and may recommend that EU regulators be granted greater direct oversight powers.reuters+1

"We want to know where the interconnections are. And honestly, not much is yet known about that," Portes told Reuters.reuters

The Bank of England said in its financial stability report this week that systemic risks from private credit were increasing. Some European officials have warned that without better data, they may be forced to impose stricter capital requirements on supervised banks to cover potential losses. The Financial Stability Board's report has signaled that regulatory action could follow within 12 to 24 months.bankofengland+3