The regional bank consolidation in the 1990 and the global financial crisis 2008-2009 reshaped the global credit market broadly. This paper analyzes potential direct lending risks based on the commercial banks retreatment from the European middle market loan segment. Fundamental characteristics of the private debt market development, like the intensified competition for deals, yield compression and deterioration of creditor protections and the potential shadow banking risks are analyzed. Furthermore, the lack of market information, delayed valuations and varying investment volumes are discussed in the context of challenging monitoring. In the conclusion the paper explains the importance for the European regulators to prepare for a drawdown of the private debt market, via three lines of defense to take care of the underwriting process, monitoring loans and restructuring expertise. Finally, the paper recommends conducting research on the European private debt deal structure and underlying investments for a regulatory monitoring