By Joy Wiltermuth
Citigroup had the largest exposure, by outstanding loan balance, at about $19.4 billion as of the end of Q4 of last year, followed by Wells Fargo
Crude-oil prices have fallen to near $30 a barrel, after entering bear-market territory in February, as the global spread of the coronavirus and new travel bans add to pressure on oil-and-gas companies and their lenders.
Stock and bond prices of U.S. oil-and-gas producers have come under heavy selling pressure amid the tumult, with bond investors now expecting some shale producer go out of business.
See: Bond investors say some energy companies 'will not survive' oil rout slamming markets ()
Fallout from a sustained oil-market rout threatens not only to imperil corporate profits and jobs in the energy sector, but also potentially ratchets up pressure on its financial backers.
Here's a look at which U.S. bank have the highest loan exposure to energy companies from research firm CreditSights.
Citigroup Inc. (C) had the largest exposure, by outstanding loan balance, at about $19.4 billion as of the end of fourth quarter of last year, followed by Wells Fargo & Co. (WFC) Bank of America Corp.(BAC) and JP Morgan Chase & Co.(JPM), which had about $13 billion each during the same period.
But when looking at energy exposure as a share of a bank's overall loan book, Goldman Sachs Group Inc. (GS) came out on top in terms of exposure to oil and gas at 11.2% of its total loan book as of the fourth-quarter.
The caveat is that those totals don't include unfunded commitments banks have made to the energy industry, nor are the bank's reporting practices on energy sector exposure detailed or uniform.
"Disclosures are spotty and thin," wrote the CreditSights team in a report Thursday, adding that banks are expected to start offering investors a more detailed look at their exposures to energy as soon as the first quarter, as they did during the 2015-16 commodity crisis.
Oil futures dropped (Thursday after President Donald Trump imposed a ban on travel from Europe to the U.S. in an effort to contain the coronavirus pandemic, feeding concerns over the global economy and energy demand.
West Texas Intermediate crude for April delivery fell 6.2%, to $30.93 a barrel on the New York Mercantile Exchange in trading Thursday, while May Brent shed 7.3%, to $33.17 a barrel on ICE Futures Europe.
Gasoline futures took the biggest percentage hit, with prices trading below $1 a gallon for the first time since 2016.
"Frankly, that's like a big tax cut, not a little tax cut, for the consumer," said President Donald Trump, in a brief White House press conference with the Irish Prime Minister on Thursday. "So there is something about that, that I like."
Investors have taken a much different view of the broad-based selloff amid a near world-wide freeze on travel and goods, which has pummeled stocks and riskier bonds, including the high-yield or "junk bond" segment and its near 14% exposure to the oil-and-gas industry.
On Wednesday, S&P 500 tripped a circuit breaker after falling 7%, with the index trading about 8% lower in afternoon action, even after the Federal Reserve announced plans () to help shore up funding with a near $1.5 trillion increase of its short-term "repo" lending facilities.
See: Fed ramps up repo operations to address disruptions in Treasury market ()
Read: BlackRock thinks now's the time to dust off crisis-era lending programs (BlackRock%20thinks%20now%e2%80%99s%20the%20time%20to%20dust%20off%20crisis-era%20lending%20programs)
-Joy Wiltermuth; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
March 12, 2020 15:12 ET (19:12 GMT)
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