Natixis Exits Shale Financing Weeks After Hit From Oil Loans

(Bloomberg) -- Natixis SA said it plans to stop financing projects linked to shale oil and gas, just weeks after the French bank reported bad-debt provisions tied to the energy industry as crude plunged.

The Paris-based lender cited environmental reasons as it announced the policy change, which will also see it pull support from firms developing new capacity in coal-powered electricity generation or thermal coal mining. Natixis said it won’t finance companies whose activity relies more than 25% on shale energy projects.

“The current Covid-19-related crisis should be an opportunity to step up the energy transition in order to limit global warming,” Natixis Chief Executive Officer Francois Riahi said in a statement Monday.

As pressure from environmental groups mounts, financial firms from fund giant BlackRock Inc. to lender Barclays Plc have said they’re moving away from doing business with the most polluting industries. However, aside from changing perceptions of environmental ethics, the oil and gas business has hit Natixis in the pocketbook as well.

Earlier this month, the bank set aside 193 million euros ($210 million) for credit losses, mainly relating to loans to oil and gas companies, as it reported a first-quarter loss. Energy producers, including the U.S. shale industry, are reeling from the collapse in oil demand sparked by the coronavirus pandemic. The price of crude had already tumbled as Saudi Arabia and Russia flooded the market in a price war.

H2O Asset Management, the asset manager majority owned by Natixis, also suffered some record one-day losses across its funds during the March coronavirus rout. Bets that soured included wagers that oil prices would rise in March.

The growing popularity of socially responsible investing plays to the strengths of active managers like Natixis, such as analysis and nimble decision-making, according to Jean Raby, CEO of Natixis Investment Managers.

“Those are not characteristics you really see in most passive asset managers or in most passive products,” Raby said in a Bloomberg TV interview on Tuesday.

©2020 Bloomberg L.P.

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