North American banks increase fossil fuel financing as European lenders pull back

Regional North American banks have done more deals to lend money to the oil, natural gas and coal industries in recent years, while many European lenders have either scaled back fossil fuel financing or pledged to reduce their exposure to this sector.

As a result of the ongoing shift in financing transactions in the fossil fuel sector, North American banks are no longer competing with European lenders for oil and gas financing.

Regional banks Texas Capital Bank, Truist Securities Inc, FHN Financial, Cadence Bank, BOK Financial Corp and Canadian Western Bank grew the most fossil fuel loan deals in 2022 compared to 2016-2021, data compiled by Bloomberg showed on Tuesday.

At the same time, the banks that saw the biggest drawdown in the number of loan deals in the industry are France’s BNP Paribas, Natixis and Societe Generale, Spain’s BBVA and the Netherlands’ ING Groep, according to Bloomberg data.

North American regional banks are “active and hungry” for new deals in the fossil fuel industry, Marisol Salazar, senior vice president and manager of energy banking at BOK Financial, told Bloomberg.

As major European banks race to announce new policies that limit financing for oil and gas projects, smaller US regional banks have significantly increased their lending to oil and gas companies over the past two years.

US regional banks are also seeing an increasing number of clients in the fossil fuel industry. This comes as European banks are reassessing their oil and gas financing and energy-rich US states are waging an anti-ESG drive to blacklist large financial corporations and asset managers they believe are discriminating against the oil industry and gases.

US states with large fossil fuel industries, such as Texas, West Virginia, Louisiana, Montana and Oklahoma, have blacklisted funds managed by the world’s largest asset manager, BlackRock, and other major banks and financial institutions , which states say is boycotting the oil and gas industry.

By Charles Kennedy for Oilprice.com

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