Bank of America has retracted a sales note advising clients to bet against a basket of European financial stocks, admitting factual errors after facing criticism from companies like Deutsche Bank and Aegon.

The US bank pulled the recommendation following a review triggered by complaints about the basket's composition, which included firms with minimal private credit exposure. BofA cited inaccuracies in the analysis underpinning the short position, stating the views did not reflect the bank's broader research or stance. The move came swiftly after the Financial Times revealed the bank had warned clients that European stocks exposed to private credit faced a 30% downside risk compared to US rivals.

This incident highlights the heightened scrutiny and volatility in the multitrillion-dollar private credit sector. While European banks like Deutsche and Société Générale downplayed sector stress, asserting portfolio resilience, BofA's error underscores the risks of misjudging market dynamics. The episode serves as a cautionary tale for banks navigating the complex and sensitive private credit landscape.