Big losses force banks to rethink energy lending
Unfunded loans and exposures to suppliers worry credit risk managers
Banks are being forced to rethink their approach to oil and gas lending after two years of twists, turns and stomach-churning plunges in energy prices. A sharp drop in revenues coupled with unsustainable debt burdens has contributed to a dramatic rise in borrower defaults and bankruptcy filings among energy companies – with banks setting aside huge reserves to cover potential losses.
Moody's estimates Bank of America, Citigroup, Goldman Sachs, JP Morgan and Morgan Stanley may see combined losses
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