US banks have lent nearly $300 billion to private credit providers as of June, with total lending to non-depository financial institutions reaching $1.2 trillion. This represents a significant shift in banking strategy, with loans to NDFIs now comprising 10.4% of US banks' total lending portfolio, up from just 3.6% a decade ago.

Wells Fargo leads the market with $59.7 billion in private credit lending, followed by Bank of America at $33.2 billion, PNC at $29.5 billion, Citigroup at $25.8 billion, and JPMorgan Chase at $22.2 billion. Moody's Ratings attributes this trend to banks seeking new partnerships with alternative asset managers to diversify income and manage risk.

The recent bankruptcy of Tricolor Holdings highlights the potential risks, as banks face losses when lending to NDFIs. While some argue there's a distinction between fraud and poor credit performance, Moody's warns that "asset quality challenges may surface" as this lending strategy continues to evolve.