JPMorgan Chase reins in lending to private credit firms after marking down software loans

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Jamie Dimon, chief executive officer of JPMorgan Chase & Co., during the America Business Forum in Miami, Florida, US, on Thursday, Nov. 6, 2025.

Eva Marie Uzcategui | Bloomberg | Getty Images

JPMorgan Chase is reducing its exposure to the private credit industry by marking down the value of loans held by the bank as collateral, according to a person with knowledge of the moves.

The bank’s giant Wall Street trading division has reduced the value of loans — most of which were made to software firms — sitting within the financing portfolios of private credit clients, said the person, who declined to be identified speaking about the client interactions.

JPMorgan’s move indicates the biggest U.S. bank by assets wants to get ahead of potential turbulence involving private credit loans to software companies. CEO Jamie Dimon, who has guided his bank through multiple crises in his two decades atop JPMorgan, is known to constantly remind his executives about the risk that borrowers won’t be able to repay their loans.

Software firms have come under scrutiny in recent months as model updates from OpenAI and Anthropic drive concerns that some providers will be disrupted by AI. The worries have ignited a downcycle for private credit players as retail investors yanked funds in recent weeks, driving abnormally high redemptions at firms including Blue Owl and Blackstone.

The adjustments were made in JPMorgan’s financing business, where private credit firms borrow money to amplify fund returns in what’s known as “back-leverage.” The business is considered relatively risky because it layers leverage upon leverage — amplifying losses when the underlying loans sour.

By marking down the collateral for that leverage, JPMorgan is reducing the ability of private credit firms to borrow against their loans, and in some cases could even force firms to post more collateral.

The size of the loans impacted and the extent of the markdowns at JPMorgan couldn’t be determined.

JPMorgan is potentially the first major bank to take such steps, according to the FT, which was first to report the bank’s markdowns.

The moves are a preemptive step driven by changes in market valuations rather than actual loan losses, said the person with knowledge of the bank, who characterized the move as financial discipline, “rather than waiting until a crisis comes.”

JPMorgan previously pulled back leverage to the industry during the early days of the Covid pandemic, according to the person.

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