The FT has published a piece on large US BHC exposures in energy sector this weekend following three lenders reporting the impact to their books of the decline in oil and gas prices on Friday. It indicates that Citi has increased loan loss reserves by nearly $250mio to the pre-existing $280mio reserves set up last year while JPM has increased reserves by only $124mio but is closely monitoring the impact of this shock to other portfolios. Wells Fargo confirmed it has increased reserves while rival BoA previously announced $2bio of reserves largely for this sector. Morgan Stanley announced total exposure of nearly $16bio while Goldman announced over $10bio of oil and gas lending exposure, but in this case largely to investment grade quality risks. The FT also posits there may be a risk that as borrowers experience reduced access to the broader capital markets, drawing on bank lines are likely to accelerate impacting bank asset quality.
Comments
Post a Comment