Energy industry

The energy business alone faces immense challenges and the overall economy may not bounce back until 2022, Stephen Steinour says.

Rather than selling off assets at a steep discount, the Dallas company is considering taking equity positions in energy firms struggling to make loan payments in the wake of collapsing prices.

Weak demand for oil and gas, brought on by the economic fallout of the coronavirus outbreak, has raised concerns of energy firms missing loan payments or even going bankrupt. Here’s how banks and regulators are trying to get ahead of potential problems.

Banks with the most exposure to oil and gas companies say they’ve added capital and changed their borrower mixes since the 2015 market fall. But skeptics question whether they can stave off losses if low prices endure.

Investors worry the drop in crude prices could spark a rash of defaults; the bank denies it opened accounts without customer permission to meet sales quotas.

The outbreak and a free fall of oil and stock prices are rattling bankers at this year's ICBA gathering in Orlando, Fla.

Goldman Sachs pledged in late 2019 to stop financing projects in coal and Arctic oil exploration. Activist groups and Democratic senators say other large institutions should do the same given the economic and environmental risks from climate change.

Activist investors say the lender's words on combating climate change have not matched its actions. But the company argues that requests to put climate resolutions to a shareholder vote amounts to micromanagement.

The timing couldn’t be worse for ag and energy lenders as well as global banks, which were all counting on the Chinese market to help bolster commercial lending and fee income.

Certain loan segments are showing signs of deterioration, but consumer lending and digital banking are bright spots. Meanwhile, bankers are eyeing opportunities to improve efficiency, add scale and take advantage of M&A disruption. Here's what to expect from smaller regionals in the year ahead.