Private credit has become one of the fastest-growing segments of global finance, raising an important question in Thailand: Will private credit compete with banks or strengthen the financial system by complementing them?
While headlines sometimes portray the two as rivals, global experience points to a different reality. Banks remain the backbone of national credit systems, while private credit has emerged as a specialised partner that can step in with capital during periods when banks — due to regulatory limits, risk-control requirements or slower approval cycles — are unable to provide full financing.
As Thailand enters the early stages of developing its private-credit ecosystem, the relationship between banks and private credit is already shifting toward coordination rather than competition, shaped by their different mandates, capital sources and regulatory environments.
COMPLEMENTARY ROLES
Banks and private credit both serve corporate borrowers, but their operating models differ fundamentally.
Banks operate with deposit-funded balance sheets under Basel III/IV rules that prioritise financial stability and risk-weighted capital discipline. These regulations enable banks to deliver competitively priced loans across the economy but also impose strict constraints — sector caps, single-obligor limits, collateral standards and internal credit policies — that may restrict lending during periods of elevated uncertainty. Banks excel at:
- Competitively priced term loans
- Revolving credit facilities and working capital
- Capex financing for established businesses
- Long-term corporate lending relationships.
Private credit funds, by contrast, deploy committed institutional capital from pension funds, sovereign wealth funds, insurers and endowments. Their mandate is to generate stable, risk-adjusted returns through deep underwriting, structural protection and bespoke terms.
Because they do not rely on public deposits or face daily liquidity obligations, private credit funds can assume risk in transitional, complex or time-sensitive situations where banks may temporarily step back.
This creates complementary — not competitive — lending roles globally.
Bloomberg in 2024 documented the same pattern in the US and Europe. For example, Blackstone Credit funded early-phase expansion for Superstruct Entertainment, and banks refinanced once the company’s performance stabilised. Similarly, KKR Credit provided transitional financing for the healthcare analytics firm Cotiviti before banks stepped in later with cheaper capital.
We are of the view that Thailand is now following this same structural evolution.
BRIDGING THE GAP
Thai corporates often encounter financing challenges precisely when business risk temporarily increases, such as:
- Construction and project-development phases
- Acquisition integration
- Asset repositioning or turnaround
- Early-stage expansion prior to achieving stable cash flow.
Banks may adopt a phased or cautious approach, approving initial facilities but waiting for operational visibility before committing to full funding.
Private credit fills this gap by providing “last-mile financing” during the higher-risk phase. This capital helps unlock:
- Construction progress
- Acquisition completion
- Project stabilisation
- Liquidity until operations nor- malise.
Once cash flow strengthens and uncertainty declines, banks typically step in with lower-cost refinancing.
This creates a win-win cycle:
1. Private credit supports companies during the most uncertain phase.
2. Banks refinance once risk stabilises.
3. Borrowers secure full-cycle financing without disruption.
Bloomberg notes this sequencing across the US and Europe: private credit funds shoulder early-phase complexity, and banks later refinance with cheaper capital. We are of the view that Thailand is now following the same structural evolution.
WORKING SIDE BY SIDE
Globally, banks and private credit increasingly operate as part of the same financing ecosystem. Banks benefit because private credit:
- Supports clients when banks face regulatory or risk constraints
- Absorbs high-complexity or transitional exposures
- Enhances borrower resilience through disciplined structuring
- Protects banking relationships by preventing project delays or failures.
- Private credit benefits because banks:
- Provide natural refinancing exits
- Offer operational facilities that complement private-credit term loans
- Maintain corporate-banking relationships essential for long-term support.
Global private-credit funds also operate under strict institutional governance frameworks that include:
- Independent collateral valuations
- Comprehensive due diligence, legal structuring and enforceability reviews
- Rigorous ESG, compliance and anti-money laundering processes
- Recurring monitoring and reporting
- Cross-border oversight from global limited-partnership institutions.
These standards introduce additional rigour into mid-market lending environments where transparency can vary. This strengthens — not weakens — the resilience of the broader financial ecosystem. Why? Private credit is not a substitute for bank lending. It is a structural complement — each lender type has strengths the other cannot replicate. Banks provide:
- Competitively priced, long-term financing
- Working capital and operational credit
- Long-term client support and monitoring
- Stability anchored in prudential regulation.
Private credit provides:
- Execution speed and certainty
- Bespoke, covenant-controlled structures
- Capital for higher-risk or transitional phases
Flexibility.
For borrowers, this means:
Banks support ongoing operations and long-term needs
Private credit unlocks special situations funding required for growth, turnaround or complex phases
Refinancing becomes predictable once risk stabilises
Capital access increases without eroding risk discipline.
Thailand’s financial system should become stronger because two complementary forms of institutional capital — prudential banking capital and flexible private credit — operate together, each addressing different stages of the credit lifecycle.
We are of the view that as Thailand’s private-credit market develops, private credit will increasingly operate alongside banks. Borrowers who understand how to use both sources strategically will gain a competitive advantage. And Thailand’s economy will be more resilient because flexible institutional capital and prudential banking capital operate in coordination rather than competition.
Rewin Pataibunlue is a Founding Partner and Group CEO at PrimeStreet Group, an investment banking, strategic management consulting and alternative fund management firm based in Bangkok. This is the fifth in a five-part series.
