Investing.com -- Deutsche Bank shares fell 4% Thursday after the bank disclosed its exposure to the private credit market in its Annual Report 2025 and Pillar 3 Report 2025.

The German lender reported €25.9 billion in private credit exposure, up from €24.5 billion in 2024. The bank identified the rapid expansion and lack of transparency in private credit as a developing risk theme under heightened external scrutiny.

Approximately 73% of Deutsche Bank’s private credit portfolio consists of multi-asset lender facilities backed by diversified mid-market corporate loans in the U.S. and EU, with conservative advance rates of around 65% and almost entirely investment grade rated. The remaining exposure is spread across single and multi-asset lenders’ net asset value financing, single asset financing, non-bank commercial real estate lending, business development companies, and subscription finance.

The bank stated it applies conservative underwriting standards to private credit exposures, including assessment of sponsor and investor quality. Advance rates are linked to the overall risk profile of underlying exposure, with portfolios managed under dedicated risk appetite frameworks with regular stress testing.

The private credit exposures are primarily part of Deutsche Bank’s loans at amortized cost reported under the Financial and Insurance Activities Industry Sector, which totals €129.8 billion, while €2.5 billion is distributed across other categories.

The bank also flagged increasing concerns around technology sector valuations and the sustainability of AI-led capital expenditure as another risk theme, citing potential credit risk implications to clients.

The disclosure comes as the $1.8 trillion private credit market faces an exodus of investors amid recent default events.

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