JPMorgan Chase is reducing its exposure to private credit by marking down loans held as collateral, mainly those lent to software firms.

The move is a preemptive measure amid concerns that AI-driven disruptions could hurt borrowers and trigger turbulence in the private credit market.

By lowering the collateral value, JPMorgan limits how much private credit firms can borrow, and in some cases may require additional collateral.

The adjustments affect the bank’s back-leverage financing business, where layered borrowing can amplify losses if underlying loans sour, CNBC has reported.

JPMorgan appears to be the first major bank taking such steps, emphasizing financial discipline rather than reacting to actual loan defaults.