Banks Need to Adapt to the Private Markets Boom, McKinsey Says

Investment banks risk being squeezed out of more lending activity unless they adapt to the rising challenge from private markets, according to consultancy firm McKinsey & Co.

Even as corporate and investment banks continue to report blowout earnings this year, the pace of growth outside traditional capital markets is overtaking them, McKinsey said in its annual report on the state of the industry on Thursday.

There are roughly 1,900 private capital companies that have raised over $1 billion in assets under management over the past decade, according to data from Preqin. McKinsey estimates that private credit accounts for roughly $4 ...