LONDON (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.