Key Takeaways
- • Andy Sieg, head of Citi Wealth, said the bank still recommends private credit to clients even as withdrawal requests at non-traded private credit funds run well above their typical 5% quarterly caps.
- • Requests at 11 of the 14 largest non-traded BDCs averaged 13.0% in the third quarter, down from 13.9% in the second quarter, according to preliminary Valuation Research data.
- • Many listed BDCs trade 10% to 20% below the reported value of their holdings, per Valuation Research data.
- • Citi wealth revenue rose 15% year over year, extending a 10-quarter growth streak, with a record $38 billion in net new investment assets in the quarter.
- • Net interest income rose 20% while noninterest revenue grew 5%, meaning deposit income drove more of the gain than investment fees.
Summary
Andy Sieg, who heads Citi's wealth management unit, said on CNBC's Halftime Report that the bank still recommends private credit and private equity to clients, describing them as long-term building blocks rather than trades. He said clients invest over 10 to 30 years and that the key test is whether a diligence team vets each manager. Sieg cited client satisfaction with returns, quoting clients as having "been happy with the returns that they've had."
The recommendation comes as redemption pressure builds in the non-traded BDC segment. Business development companies hold multiyear loans but permit only periodic withdrawals, so some investors cannot cash out in full. Preliminary Valuation Research data show requests at 11 of the 14 largest non-traded BDCs averaged 13.0% in the third quarter, down from 13.9% in the second quarter but still well above the typical 5% limit. Separately, many listed BDCs trade 10% to 20% below the reported value of their holdings, according to the same data.
The International Monetary Fund, in an October blog, flagged private credit as a possible amplifier of market stress, noting that borrowers could draw on committed direct-lending credit lines if conditions tighten, which could strain fund liquidity.
Citi's wealth franchise continues to expand. Wealth revenue has grown for 10 consecutive quarters, with the third-quarter gain at 15% from a year earlier. The bank recorded a record $38 billion in net new investment assets, which Citi calls net new investment assets, during the quarter, with existing clients supplying most of the inflows by shifting more holdings to the bank, according to Sieg's memo. Net interest income rose 20% while noninterest revenue grew 5%, per Family Wealth Report data, so deposit income contributed more to the gain than investment fees. Sieg said organic flow growth, which excludes market gains, topped 10%, while acknowledging market tailwinds.
How clients respond to capped withdrawals may indicate whether private markets remain core holdings across wealth platforms.
The recommendation comes as redemption pressure builds in the non-traded BDC segment. Business development companies hold multiyear loans but permit only periodic withdrawals, so some investors cannot cash out in full. Preliminary Valuation Research data show requests at 11 of the 14 largest non-traded BDCs averaged 13.0% in the third quarter, down from 13.9% in the second quarter but still well above the typical 5% limit. Separately, many listed BDCs trade 10% to 20% below the reported value of their holdings, according to the same data.
The International Monetary Fund, in an October blog, flagged private credit as a possible amplifier of market stress, noting that borrowers could draw on committed direct-lending credit lines if conditions tighten, which could strain fund liquidity.
Citi's wealth franchise continues to expand. Wealth revenue has grown for 10 consecutive quarters, with the third-quarter gain at 15% from a year earlier. The bank recorded a record $38 billion in net new investment assets, which Citi calls net new investment assets, during the quarter, with existing clients supplying most of the inflows by shifting more holdings to the bank, according to Sieg's memo. Net interest income rose 20% while noninterest revenue grew 5%, per Family Wealth Report data, so deposit income contributed more to the gain than investment fees. Sieg said organic flow growth, which excludes market gains, topped 10%, while acknowledging market tailwinds.
How clients respond to capped withdrawals may indicate whether private markets remain core holdings across wealth platforms.
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