Royal Bank, CIBC and Scotiabank each added 9 oil and gas firms to watch lists in recent quarterly earnings
In releasing their latest quarterly earnings, Royal Bank, CIBC and Scotiabank each added nine oil and gas firms to their loan watch lists, the latest sign of trouble in the oilpatch. (Larry MacDougal/Canadian Press)
In releasing their latest quarterly earnings, Royal Bank, CIBC and Scotiabank each added nine oil and gas firms to their loan watch lists, the latest sign of trouble in the oilpatch. The names of those companies are kept confidential.
Gordon Sick, a finance professor at the Haskayne School of Business at the University of Calgary, said many energy companies are struggling and likely behind in their loans.
“There’s a lot of them who are potentially in default,” said Sick. “The banks in Canada are potentially looking at some hits.”
Royal Bank’s watch list grew after it did a name-by-name stress test on its oil and gas portfolio, said chief risk officer Mark Hughes.
“Following this stress test, we’ve seen a small increase to our oil & gas watch list for closer monitoring,” Hughes said in an email.
One step before ‘impaired’
The watch list has the banks keeping a close eye on the companies, and is one step before impaired status when a bank considers the loan at risk of default.
Scotiabank said five per cent of its energy portfolio was on the watch list and it moved four loans to impaired status in the first quarter. CIBC said it impaired one loan.
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