Key Takeaways
- • ASIC is investigating Sydney-based property developer Bathla, a conglomerate of more than 500 companies that entered voluntary administration on August 25 owing creditors a reported $3.4 billion, and is also examining the private credit lenders involved in its collapse.
- • The article argues that post-GFC bank capital rules pushed risky lending toward largely unregulated non-bank private credit lenders, which have grown rapidly in Australia and now account for about 2.5% of all business debt, according to the author's chart.
- • ASIC has issued six interim stop orders against private credit practices since September, with commissioner Simone Constant saying the regulator will hold the sector accountable for persistent poor practices.
- • The author contends that private credit sits outside APRA's prudential supervision, which covers banks, super funds and insurers, leaving a regulatory gap in which ASIC, the general company regulator, has primary oversight.
- • The commentary suggests better-supervised banks may be best placed to provide private credit, and notes Bathla's exposure to more than 40 lenders as a possible factor in its collapse.
Summary
ASIC has announced it is investigating Bathla, a Sydney-based property developer whose corporate group comprises more than 500 companies. The group entered voluntary administration on August 25 with a reported $3.4 billion owed to creditors. According to the Crikey column, the regulator is also examining the range of private credit lenders that financed the developer and their role in its collapse, although it has not yet launched a formal investigation into the private credit sector.
The author attributes the growth of private credit to post-global financial crisis regulation. Stricter capital requirements made banks less willing to make risky loans, and the rules focused on globally systemically important banks, leaving smaller non-bank lenders largely outside the framework. The article cites a Reserve Bank of Australia statement from 2014 that 29 institutions had been identified as G-SIBs, and a 2025 Bank for International Settlements analysis arguing that riskier firms may turn to non-bank lenders when bank credit becomes more expensive. Private credit in Australia has grown from a small base to tens of billions of dollars in lending within a few years, and now represents 2.5% of all business debt, a share the author says points to prevalence among smaller borrowers.
The column notes that Commonwealth Bank reported realised home loan losses of 0.00% last year and a net write-off of 0.07% across its roughly A$1 trillion in gross loans and acceptances. The author argues that private lenders fill the gap by taking risks banks will not, and warns that the sector operates with limited oversight of prudential practices and interlinkages with the broader financial system. Some major superannuation funds now invest in private credit.
APRA supervises banks, super funds and insurers, while ASIC oversees the remaining financial firms, including many private credit lenders. ASIC commissioner Simone Constant said this week that the regulator had issued six interim stop orders since September, adding that the evidence showed practices had not improved and that the focus would be on holding the sector accountable. The author concludes that private credit should be permitted but supervised, and suggests that tightly regulated banks may be better placed to serve the market, while observing that Bathla's reliance on more than 40 lenders may have contributed to its failure.
The author attributes the growth of private credit to post-global financial crisis regulation. Stricter capital requirements made banks less willing to make risky loans, and the rules focused on globally systemically important banks, leaving smaller non-bank lenders largely outside the framework. The article cites a Reserve Bank of Australia statement from 2014 that 29 institutions had been identified as G-SIBs, and a 2025 Bank for International Settlements analysis arguing that riskier firms may turn to non-bank lenders when bank credit becomes more expensive. Private credit in Australia has grown from a small base to tens of billions of dollars in lending within a few years, and now represents 2.5% of all business debt, a share the author says points to prevalence among smaller borrowers.
The column notes that Commonwealth Bank reported realised home loan losses of 0.00% last year and a net write-off of 0.07% across its roughly A$1 trillion in gross loans and acceptances. The author argues that private lenders fill the gap by taking risks banks will not, and warns that the sector operates with limited oversight of prudential practices and interlinkages with the broader financial system. Some major superannuation funds now invest in private credit.
APRA supervises banks, super funds and insurers, while ASIC oversees the remaining financial firms, including many private credit lenders. ASIC commissioner Simone Constant said this week that the regulator had issued six interim stop orders since September, adding that the evidence showed practices had not improved and that the focus would be on holding the sector accountable. The author concludes that private credit should be permitted but supervised, and suggests that tightly regulated banks may be better placed to serve the market, while observing that Bathla's reliance on more than 40 lenders may have contributed to its failure.
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