(Reuters) -Citigroup has appointed Aashish Dhakad as the head of its private credit origination division in North America, according to an internal memo seen by Reuters on Monday, as banks vie for a larger share of the lucrative private credit market.

Dhakad, with an industry experience spanning two decades, will join the third largest U.S. lender in October. He most recently worked at investment manager Ares Management.

Private credit refers to loans provided by non-bank lenders that are not subject to the same level of regulations as banks. These loans are typically extended to riskier borrowers or companies pursuing large buyouts with debt.

Once seen as a threat to banks, private credit firms have increasingly partnered with traditional lenders over the past year to gain more customers. Banks help them source customers more easily and earn a fee without putting their own capital at risk.

In September 2024, Citi and investment firm Apollo Global partnered for a $25 billion private credit and direct lending program.

Dhakad, who has also worked at Bank of America for a decade, will be based in New York in the new role with Citi.

"The growth in corporate direct lending beyond traditional acquisition financing presents a massive opportunity and we are uniquely situated to seize it," the Citi memo said.

The move marks the Wall Street bank's effort to expand its presence in the private credit market.

Private credit firms have also widened their focus in recent years, moving beyond traditional buyout financing to areas such as investment-grade corporate lending, asset-backed deals and sports-related investments.

(Reporting by Manya Saini in Bengaluru and Tatiana Bautzer in New York; Editing by Shinjini Ganguli)