Debt funds chase bank lending market share

Nassar Hussain, managing partner of the real estate investment banking boutique, said banks are at risk of shedding more market share this year as funds set up to offer alternative access to credit upped efforts to lure one-time bank borrowers.

"There are some funds coming to market where managers who originally wanted to launch mezz (mezzanine finance) vehicles were asked by their investors to reduce the risk-return profile and launch senior debt funds instead," Hussain told Reuters.

"They are still in the structuring phase but they are likely to provide significant new sources of capital over time," he said.

After a tricky 2008, real estate debt funds and private equity-backed bank start-ups began to attract cash from investors from mid-2009, after asset values began to stabilise.

Last month, reports said Blackstone (BX.N) was mulling the launch of a new bank to plug the gap left by bailed-out banks such as Lloyds Banking Group and Royal Bank of Scotland.