The chef executive of Lloyds Banking Group has weighed in on the bubbling tension in the private credit market with a stark warning.
In a session with the House of Lords Financial Services Regulation Committee, Charlie Nunn said the UK needed to be “very careful not to make banks accountable for the risks of the non-bank sector”.
“As a bank we have much more transparency and clarity around the risks,” he said, adding the bank already holds “capital and funding for stressed scenarios.”
But Nunn warned such a move to hamper lenders with additional regulation would make the UK “less competitive”.
“I would be concerned for the future of the UK if it were to go down that path, especially in the international competitiveness environment we’re currently in,” he added.
Top banking chiefs have sounded the alarm on the sector’s competitiveness on the global stage in recent months, particularly surrounding the tax regime.
A study from banking industry body UK Finance and PwC revealed London lender’s total tax rate rose 0.6 per cent to 46.4 per cent in 2025.
This dwarfed that of overseas rivals and has spiked concerns about the City’s attractiveness on the global stage. In New York, the tax rate remained unchanged year-on-year at 27.9 per cent, almost two-thirds below that in London.
Private credit war of words heats up
It also comes as the government attempts to make big swings to appease the banking sector through tearing down regulation.
Chancellor Rachel Reeves launched her Leeds Reforms earlier this year, which she said would “rewire” the financial services system. However, analysts raised concerns the reforms would struggle to be “transformative,” particularly for the UK’s biggest banks.
Nunn said: “It would be absolutely right for regulators to determine how to manage risk directly through the sector, not through the banking sector”.
The banker’s remarks marked the latest in the war of words between the private credit and banking industry.
In a session with lawmakers last month, executives from alternative investment giants Blackstone, Ares and Apollo hit back at claims their industry had played a key role in the string of debt-related collapses in the US.
Daniel Leiter, global head of liquid credit strategies at Blackstone, who said “the system will be more stable whenever we do go through economic shocks, because now, away from just relying on the banking system, private credit can provide a source of financing through difficult times.”
“What is happening in private credit is safer… than on banks’ balance sheets,” he added.
Fears have spiked since the collapse of car parts maker First Brands and subprime auto lenders Primalend and Tricolor due to ballooning debts.
America’s most influential banker Jamie Dimon said there were likely more “cockroaches” in the private credit space following the collapse of First Brands.
The firm had over £20bn in debt linked to private credit funds – often referred to as ‘shadow banks’.