Real Estate Investing Videos

Why European Banks Are Retreating (and Private Credit Is Stepping In)

The episode examines why European banks are pulling back from lending and how private‑credit funds, especially real‑estate focused managers like Zenzit Capital, are filling the gap. Host Max Wy interviews co‑founder and CIO Thomas Lloyd Jones, who explains the structure of private credit, the dominance of direct‑lending strategies, and the distinct dynamics in Europe versus the United States. Jones highlights that roughly 80% of private‑credit capital raised between 2022 and 2026 has flowed into direct‑lending, leaving asset‑backed credit – real‑estate, infrastructure, specialty finance – under‑represented. He points to recent stress in U.S. BDCs, where retail investors’ mass redemptions created a “non‑bank bank run,” a phenomenon less pronounced among institutional investors. Key examples include the contrast that about 80% of European real‑estate loans are bank‑originated versus roughly 80% non‑bank in the U.S., and the Basel III/IV “output floor” which raises banks’ capital requirements, prompting them to retreat from riskier, smaller‑ticket deals. Only 14% of European bank lending is cross‑border, underscoring regulatory and cultural fragmentation. The discussion implies a sizable opportunity for private‑credit managers willing to navigate Europe’s regulatory maze and build pan‑European origination networks. Sophisticated investors are already shifting toward higher‑yielding private‑credit products, as illustrated by the Fundrise Income Fund’s strong returns, signaling a broader reallocation of capital away from traditional banks.