LONDON, June 2 (Reuters) - Europe's biggest bank HSBC ( HSBC )

will inject $4 billion into its private credit funds,

amid a wider push by banks into the booming market as profits

from traditional lending have come under pressure.

HSBC ( HSBC ) said it will invest the cash into HSBC Asset

Management's (HSBC AM) alternative credit funds, with the aim of

attracting additional capital from external investors to build a

$50 billion credit fund within five years.

The fast-growing $2 trillion global private credit market

provides lending to companies outside the more highly-regulated

banking system, and is dominated by private equity giants like

Blackstone and Ares Management ( ARES ).

Banks have been trying to muscle in, with some such as Citi

and UBS partnering with existing players Apollo

and General Atlantic. Others like Deutsche Bank

and HSBC ( HSBC ) have moved to build their own ventures.

"It's an arms race," Nicolas Moreau, CEO of HSBC AM, told

Reuters, adding that having greater HSBC ( HSBC ) group backing for its

private credit funds would help the firm attract external money.

While small in the context of HSBC's ( HSBC ) $3 trillion balance

sheet, the move is part of CEO Georges Elhedery's strategy to

drive up revenue in higher-returning areas like private credit

rather than relying on low-returning bank loans.

Reuters first reported in April that HSBC ( HSBC ) was exploring

options to accelerate growth in private credit.

HSBC AM's private credit unit is playing catch up against

more-established players. It has deployed $7 billion across 150

transactions since launching in 2018.

The new funds will be invested globally, with an initial

focus on areas including direct lending in the UK and Asia,

Moreau added.