Tuesday, December 9, 2014

Moynihan not alarmed about falling oil prices

Bank of America CEO Brian Moynihan said Tuesday he does not see falling oil prices as a large threat to the Charlotte-based bank.

While the recent decline in oil prices has been good news for consumers, it could be bad for some banks. One concern is that dropping oil revenues could lead to losses on loans banks have made to the energy industry. As oil prices have fallen, investors have been wondering how the decline might impact the banks for which they hold stock.

Moynihan, speaking at an investor conference, said Bank of America issues loans to "strong companies." In addition, the bank's overall business is well-balanced, he said.

"We don't see a big problem" with where oil prices have fallen, he said. "We're very comfortable with the underwriting we've done."

So just how much in energy loans do the biggest U.S. banks have?

According to a report -- with the title "Large U.S. bank oil exposure: There won't be blood" -- which was issued last week by RBC Capital Markets, Citigroup has the largest percentage of outstanding loans tied to the oil industry: 6.82 percent.

Bank of America comes in at 2.3 percent. Wells Fargo has less, at 1.8 percent.

The average exposure based on all 20 big banks in the report is 2.4 percent.


Anonymous said...

Can anyone get much vager than that?