Speaking at National Bank’s financial services conference in Montreal on Tuesday, Peter Routledge, head of the Office of the Superintendent of Financial Institutions, said he is “reasonably confident the system will absorb” the rise in private credit, with any risk concentrations “isolated enough” not to threaten overall financial stability. (The Logic)

Talking point: Routledge said that while private credit is expanding rapidly—growing at 15 to 20 per cent annually versus roughly 3 to 4 per cent for banks, and driving a clear “market share transfer” away from traditional lenders—it does not resemble the 2007-2008 credit crunch. Still, he said that when risk grows quickly, hidden problems can emerge. While some assets may prove riskier, forcing losses to be “cycled through” investors, he said the adjustment will be “painful” but manageable. BMO chief risk officer Piyush Agrawal struck a similar tone. “Some of the news around private credit is probably overdone,” he said, arguing that “the market misunderstands” non-bank financial credit exposure. Agrawal said BMO’s exposure to the asset class is “very small,” and “not something that keeps [him] up at night.”