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Bank of England Sounds Alarm as First Brands and Tricolor Expose Private Credit Risks

Investors look to bank results to gauge whether the stress is isolated or spreading.

Overview

  • JPMorgan disclosed a $170 million charge-off tied to Tricolor’s bankruptcy, while Fifth Third reported a $178 million loss linked to the same lender.
  • Bank of England governor Andrew Bailey flagged "worrying echoes" of 2008 and his deputy said the central bank will run a war-game exercise to map private-credit linkages.
  • The U.S. Department of Justice has opened an inquiry into the First Brands collapse, and creditors are arranging about $1.1 billion in debtor-in-possession financing to keep it operating.
  • Regional banks remain under scrutiny after Zions booked a $50 million fraud-related charge-off and Western Alliance sued an alleged borrower, with sector indexes sliding before a partial rebound.
  • Markets have calmed after last week’s jitters, as investors reassess exposures in opaque financings and debate whether the failures are one-offs despite Jamie Dimon’s "cockroach" warning.