(Bloomberg) -- Citigroup Inc. Chief Executive Officer Jane Fraser warned that there’s a risk to the growing number of insurers piling funds into direct lending opportunities. 

It’s one of many risks tied to the rise of the private credit industry that Fraser’s planning to discuss at an upcoming committee meeting of her company’s board, she said at an event hosted by the Basel Committee on Banking Supervision. She noted many players in the space are using insurance vehicles and the long-term capital they provide to invest in private debt. 

As regulators including the Basel Committee have clamped down on risky lending by deposit-taking institutions, it’s fueled the rise of the $1.7 trillion private credit industry where borrowers can get loans and other forms of debt from private investors rather than their bank. Now, some regulators worry that that’s just shifted those risks into other parts of the financial system.    

“The piece I’ve noticed a lot of late that does worry me is there’s an arbitrage between banking and insurance that is going on,” Fraser said. “We all need to keep an eye on that one.”

Private credit recently topped the list of favored assets in Goldman Sachs Asset Management’s annual survey of global insurance companies, the first time a fixed-income sector led that poll. 

Read more: Why Is Private Credit Booming? How Long Can It Last?

“We’re all aware of the risks,” Bill Winters, CEO of Standard Chartered Plc, said at the same event. “Like always, good things go too far and then correct. And the job of us as banks and the job of you as supervisors is to make sure we don’t get carried out when the tide goes away.”

Wednesday’s event marked the 50th anniversary since the Basel committee was established. Banking regulators around the world have been preparing to implement new standards known as Basel III that will force banks to hold more capital. 

Winters on Thursday said the myriad ways those rules are being rolled out make it hard for global banks to continue operating in so many different geographies. 

“Global banks will become extinct if we don’t get an element of harmonization,” Winters said. 

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