Analysts - European firms face $27bn energy losses

European banks face potential loan losses from energy firms of $27bn, or about 6% of their pretax profit over three years, according to analysts at Bank of America.

'We believe European banks with large exposures to energy and commodities lending will be increasingly challenged over these positions by shareholders', analysts Alastair Ryan and Michael Helsby wrote in a note to clients on Tuesday. 'While long-term oil- and metal-price forecasts are well above current levels, we expect the equity market to continue to stress exposures to current market prices and deduct potential losses from the earnings multiple of the banks'.

Bloomberg News reports that the $27bn estimate is “potentially a smaller figure than is implied in the share prices of a number of banks,” and lenders’ potential losses aren’t a threat to the capitalization of the banking system or its ability to provide credit to the economy, they wrote.

To access the complete Bloomberg News article hit the link below:

Europe Banks May Face $27 Billion Energy-Loan Losses, BofA Says

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