trending Market Intelligence /marketintelligence/en/news-insights/trending/cXHmzRRzfP-aLaTI4kfm4g2 content esgSubNav
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us
In This List

European bank provisions likely to rise in 2016 due to energy exposures, Moody's says

Banking Essentials Newsletter December Edition Part 2

Banking Essentials Newsletter - November Edition

University Essentials | COVID-19 Economic Outlook in Banking: Rates and Long-Term Expectations: Q&A with the Experts

Estimating Credit Losses Under COVID-19 and the Post-Crisis Recovery


European bank provisions likely to rise in 2016 due to energy exposures, Moody's says

Moody'ssaid April 6 that large European banks have only moderate exposures to theenergy sector but provisions in 2016 due to the ongoing oil price slump willlikely weigh on profitability.

AlessandroRoccati, a senior vice president in Moody's financial institutions group, alsowrote in a note that bank profitability could be hit should energy firms, whichface a weak operating environment, begin booking losses.

Thegross energy exposures (which includes loans, commitments and tradingexposures) of 19 large European banks amounted to €270 billion at the end of2015, according to the rating agency. Most of European bank's exposures areconcentrated in the large integrated oil firms, which Moody's considers to beless risky than upstream and midstream oil companies.

Moody'ssaid banks' energy-related provisions in 2015 were modest, but will likelyincrease in 2016. The rating agency estimated that the average negative impactof the banks' energy exposures to their common equity Tier 1 ratio would beapproximately 10 basis points in a moderate stress scenario and about 30 basispoints in an adverse stress scenario.

Moody'ssaid BNP Paribas SA,ING Groep NV,HSBC Holdings Plc andCrédit Agricole SAheld the highest absolute exposures to the energy sector, Thomson Reuters' IFR reported the same day.