JPMorgan seeks to offload risk tied to more than $4bn in loans to private‑equity funds. The New York bank is negotiating a transfer that would let investors absorb the first loss on net‑asset‑value (NAV) loans while the bank keeps the loans on its books. The move targets a sector mired in a slow exit cycle.

NAV loans, backed by a fund’s market value, have surged as private‑equity firms chase cash or growth leverage. Analysts warn that a lack of exits and AI‑driven valuation shocks could squeeze returns, turning what banks view as low‑risk diversification into a hidden lever. The global market for these loans sits near $100bn today.

Under the proposed structure, JPMorgan would shift up to 12.5% of the NAV loan pool, retaining the balance while investors earn low‑teens returns on first‑loss exposure. The deal would spread risk across North America, Europe and the Middle East, where dozens of loans feed private‑equity portfolios hungry for liquidity.

The move mirrors similar risk‑transfer talks by Mitsubishi UFJ, underscoring a broader banking trend to offload exposure to a market that regulators flag as “leverage over leverage.” For investors, the transaction offers a chance to tilt exposure toward high‑yield private‑equity collateral, while banks trim potential losses amid a tightening funding environment.