Citi & BlackRock Unit Forge €15B Pact to Reshape EMEA Lending

LONDON – May 18, 2026 – In a landmark move signaling a strategic realignment in corporate finance, Citigroup and HPS Investment Partners, the private credit arm of asset management titan BlackRock, have announced a €15 billion Private Capital Program. The collaboration is set to inject significant liquidity into the European, Middle Eastern, and African (EMEA) markets over the next five years, providing direct lending solutions to a wide array of corporate and sponsor-backed companies.

This partnership is more than just a large-scale financing initiative; it represents the deepening convergence of traditional banking and the burgeoning world of private credit. Under the agreement, Citi will leverage its vast global network to originate lending opportunities, which will then be financed by capital from HPS. The program will target sub-investment grade debt instruments, a crucial financing segment for many mid-market and growing companies that may find traditional bank lending less accessible.

“To meet the increasing demand from our corporate and sponsor clients for tailored private credit solutions, we are excited to announce this collaboration with HPS, a part of BlackRock,” said John McAuley, Co-Head of Debt Capital Markets at Citi. “Together, we are creating a best-in-class offering to help our clients achieve their goals.”

A New Blueprint for Corporate Finance

The Citi-HPS alliance epitomizes a broader industry shift toward an “originate-to-distribute” model. Faced with stricter regulatory capital requirements since the 2008 financial crisis, global banks are increasingly seeking capital-efficient ways to serve their clients. Instead of holding loans on their own balance sheets, which ties up capital, banks are partnering with asset managers who have vast pools of investor money ready to be deployed.

This symbiotic relationship allows Citi to maintain its valuable client relationships and generate fee income from deal origination and structuring, while transferring the credit risk to HPS. For HPS, the partnership provides access to a high-quality, proprietary deal flow sourced by one of the world's preeminent banking institutions. This model is gaining traction across the industry, with competitors like Deutsche Bank pursuing similar strategies with its asset management arm, DWS, to capitalize on the private credit boom.

Matthieu Boulanger, Partner and Head of Europe at HPS, a part of BlackRock, highlighted the strategic fit, stating, “This collaboration will enable us to leverage Citi’s extensive network and origination pipeline in EMEA, further strengthening our ability to deliver tailored financing options to a broad range of borrowers.”

Fueling Growth in a Thirsty Market

The €15 billion program is launching into a European private credit market that is not just growing, but exploding. Market data shows that European private credit assets under management have surged from under $100 billion a decade ago to approximately €400 billion today, with some projections forecasting the market to approach €1 trillion by 2030. In 2024 alone, a record €68.7 billion was deployed in European private debt.

The demand is driven by several factors. As traditional banks have become more selective in their lending, a void has emerged, particularly for sub-investment grade borrowers. Private equity firms, a key driver of M&A activity, have also become heavily reliant on private credit funds to finance leveraged buyouts. This new capital pool from Citi and HPS is poised to provide a crucial alternative for businesses in Continental Europe and the UK, with plans for future expansion into the Middle East.

Investors are drawn to the asset class for its potential for higher, floating-rate yields that offer a hedge against inflation, as well as for portfolio diversification. The UK and Ireland, in particular, have been a hotbed for activity, accounting for nearly a third of all direct lending transactions across Europe in recent years.

BlackRock's Strategic Conquest in Private Credit

This partnership cannot be viewed in isolation; it is a critical piece of BlackRock's larger ambition to dominate the private credit landscape. BlackRock's acquisition of HPS in a $12 billion deal finalized in mid-2025 was a clear statement of intent, nearly tripling its private credit assets to over $220 billion and positioning it to challenge established leaders like Apollo, Blackstone, and Ares Management.

BlackRock CEO Larry Fink has publicly identified private markets, and private credit specifically, as a “primary growth driver” for the firm’s future. The collaboration with Citi is a textbook execution of this strategy. It allows BlackRock, through HPS, to plug into a world-class origination machine, ensuring a steady pipeline of opportunities to deploy its massive capital base. By providing the financial muscle for deals sourced by Citi, BlackRock solidifies its role as an indispensable capital provider in the global financial ecosystem.

Navigating the Watchful Eye of Regulators

While the private credit market offers lucrative opportunities, its rapid, unchecked growth has not gone unnoticed by regulators. Central banks, including the Bank of England (BoE), have begun to sound alarms about the potential for systemic risk. The BoE’s Financial Policy Committee has warned that the opaque and highly interconnected nature of the market could pose risks to broader financial stability, drawing parallels to the vulnerabilities exposed in the run-up to the 2008 crisis.

Concerns center on the potential for hidden leverage, valuation inconsistencies, and the unknown behavior of this market during a severe economic downturn. In response, the BoE has initiated system-wide stress tests to assess the resilience of both banks and non-bank lenders. The Prudential Regulation Authority (PRA) has also scrutinized banks’ exposures to the private equity sector, noting the difficulty many firms have in identifying their combined risks.

The Citi-HPS program, and others like it, will operate under this increasing regulatory scrutiny. While these partnerships are designed to move risk off bank balance sheets, regulators are focused on understanding where that risk ultimately resides and how it could ripple through the financial system in a crisis. The success of this new era of finance will depend not only on its ability to fuel economic growth but also on its capacity to manage risk in a way that ensures long-term stability.