# Dimon Was Right. More Cockroaches Arrive. UK Lender MFS Collapses - $2.5B Across 12+ Global Banks.

Published: 2026-05-18

UK lender MFS collapsed in February with $2.5B exposure across 12+ global banks - Barclays $308M, HSBC $400M, Atlas/Apollo $508M, Santander $267M, Elliott $254M, Wells Fargo $182M. £2.4B loan book, fraud and double-pledging allegations. £230M verified collateral against £1.16B owed (80% shortfall). Affiliated lending chain: HSBC > Apollo Atlas > Zircon Bridging > MFS.

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## Tags
portfolio-quants

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## Full analysis transcript (extracted from source)

_Text below was extracted from the canonical source (Claude Design HTML or typst). The deck image above is the visual; this is the text-format version for AI agents._

*TIGZIG · Private Credit Note · 18 May 2026*

> "When you see one cockroach, there are probably more."
> — Jamie Dimon, October 2025

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## MFS · £2.4B UK lender → fraud, gone

**What happened.** UK specialty-property lender, Mayfair. *February 25, 2026 insolvency.* Same properties **double-pledged** across multiple banks. **£230M verified collateral vs £1.16B owed — an 80% shortfall.**

### Disclosed exposure by lender

| Lender | Exposure |
|---|---|
| Atlas (Apollo) | $508M |
| HSBC | $400M |
| Barclays | $308M |
| Santander | $267M |
| Elliott | $254M |
| Wells Fargo | $182M |
| Jefferies | $135M |
| SMBC | $127M |

Plus Avenue Capital $124M, Castlelake $89M, IKB $39M, Macquarie <$63M.

Sources: ["Why a small UK lender has major U.S. credit firms on edge"](https://www.cnbc.com/2026/05/18/mfs-private-credit-insolvency-banks-failure-collapse-barclays-mortgage.html), CNBC, 18 May 2026; ["The opaque private-lending deals that left HSBC with a $400M hole"](https://www.msn.com/en-us/money/other/the-opaque-private-lending-deals-that-left-hsbc-with-a-400-million-hole/ar-AA22wUFP), WSJ, 5 May 2026. Totals not strictly additive; back-leverage chains overlap (e.g. HSBC routed via Apollo's Atlas).

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## The pattern, stacked

- **Frauds.** First Brands (Sep 25). Tricolor (Sep 25). DOJ probes both.
- **Overvaluations.** 0.78x median BDC market price / NAV.
- **Exposure.** Up to approximately **$1.57T** US banks. **$2.4T** US life insurance.
- **Redemptions.** Unprecedented surge in redemptions and gatings.

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## Default outlook

> "We expect direct lending default rates to reach **8%**, approaching Covid peak levels."
> — **Morgan Stanley** (Joyce Jiang · [CNBC, March 17, 2026](https://www.cnbc.com/2026/03/17/private-credit-shakeout-matching-covid-losses-coming-morgan-stanley-says.html))

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## Further reading

**Analysis: [tigzig.com/analysis](https://www.tigzig.com/analysis)**

- Red Flag in US Life Insurance
- Private Credit, Ghosts of 2008
- US Banks NDFI Exposure

**Tools: [tremor.tigzig.com](https://tremor.tigzig.com)**

- US Banks and Credit Unions
- US Life Insurance
- Global Macro Indicators

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*Amar Harolikar · Decision Sciences & Applied AI · [tigzig.com](https://www.tigzig.com)*