DB Shares Drop 7% Following Disclosure of Almost $30 Billion in Private Credit Holdings

Deutsche Bank Faces Investor Concerns Over Expanding Private Credit Exposure

Deutsche Bank AG saw its stock drop by almost 7% after revealing that its private credit holdings had grown to €25.9 billion (approximately $30 billion) in 2025. This increase, highlighted in the bank’s latest annual report, marks a 6% rise from the previous year and places Deutsche Bank among the most exposed institutions in the rapidly growing private credit market.

While Deutsche Bank maintains a cautious approach to underwriting and insists it does not currently face major direct risks, it admits there could be indirect credit threats stemming from interconnected portfolios and counterparties within the broader private credit landscape.

The bank’s exposure to the technology sector, especially software-related loans, is also on the rise. In 2025, its tech loan portfolio reached €15.8 billion ($18.2 billion), up from €11.7 billion ($13.5 billion) the year before.

Private Credit Market Expansion and Associated Risks

The global private credit market has ballooned to nearly $2 trillion, attracting institutional investors with the promise of higher returns. However, worries about weak underwriting practices, limited transparency, and increasing borrower leverage have intensified. Some funds have struggled with redemption demands, and several lenders have reported loan devaluations and concerns over credit quality.

Recently, JPMorgan marked down certain private credit loans, especially those tied to software, and has tightened lending against these assets. This move reflects growing caution among banks regarding the reliability and liquidity of private loans, particularly as sectors vulnerable to AI disruption and economic uncertainty come under pressure.

Challenges in the Alternative Asset Sector

Other major players in the alternative asset industry, such as BlackRock and Blackstone, are also facing challenges. BlackRock recently restricted withdrawals from a leading private credit fund due to a surge in redemption requests. Meanwhile, Blackstone raised its redemption cap from 5% to 7% after experiencing increased investor demand. These developments illustrate how quickly investor confidence can be shaken when many seek to withdraw funds simultaneously.

Deutsche Bank’s Strategy Moving Forward

Despite highlighting the risks associated with private credit, Deutsche Bank intends to further expand its presence in this sector. The bank aims to grow its business by targeting selective regional markets and launching new investment products and digital solutions through its private banking division.

Deutsche Bank Stock Performance and Zacks Rank

Over the past year, Deutsche Bank’s shares have risen 21.5% on the NYSE, while the industry as a whole saw a 38.1% increase.

Source: Zacks Investment Research

Currently, DB holds a Zacks Rank #3 (Hold).