Private credit fears loom large over Europe’s banks this earnings season

european bank executives spent this earnings season trying to calm investors about private credit exposure. barclays revealed a £15 billion ($20.3 billion) private credit exposure in its first-quarter statement tuesday, part of a £66 billion total structured financing exposure to non-bank financial intermediaries. the bank took a £228 million credit hit after the collapse of specialist mortgage lender market financial solutions (mfs) in february. barclays ceo c.s. venkatakrishnan called the charge a "well-publicized, sophisticated fraud" in its securitized products business. santander's cfo josé garcía cantera said potential losses from mfs exposure were "fully covered" in q1, calling the wider private credit space "immaterial" at less than 1% of total exposures. santander's mfs exposure is believed to be between £200 million and £300 million. ubs ceo sergio ermotti acknowledged stress in the "semi-liquid" bdc space, where asset managers have restricted redemptions, but said ubs sees "no major dislocation" from its own private credit investments, which amount to 0.5% of its balance sheet. deutsche bank said its private credit exposure has incurred no losses. bofa's barnaby martin noted ig investors see bank and insurer exposure as "still a bit opaque," while distress in europe is emerging in the chemicals sector, not software.