* Canadian buyers interested in loans -sources
* U.S. bank Wells Fargo among interested -source
* Europe banks shedding dollar assets amid euro crisis
By Lionel Laurent
PARIS, Jan 27 BNP Paribas,
France's largest listed bank, is aiming to sell up to $11
billion of loans to oil and gas companies and has received
interest from Canadian buyers, according to two banking sources
familiar with the situation.
The sale is the latest sign of retreat by European banks,
which have faced months of funding turmoil as a result of the
euro zone debt crisis and are pushing to offload dollar assets
to shrink their balance sheets and build precious capital.
The cutbacks are putting pressure on dollar-focused
industries such as energy, shipping and aerospace. Indonesian
tanker firm Berlian Laju is teetering on the brink of default,
while Swiss refiner Petroplus filed for bankruptcy on Tuesday.
BNP Paribas, which according to one banker opened its energy
loan-book up to potential buyers just over a month ago, has
whetted the appetite of several banks in North America,
particularly Canada, according to sources.
"The $11 billion figure was cited ... There is certainly
Canadian interest," one banker familiar with the deal said. "Our
feeling is that it is inevitably going to be broken down into
Another source said that in addition to Canadian buyers, BNP
had received interest from U.S. banks including Wells Fargo
and had been getting offers with a discount of less than
5 percent of the value of the loan.
"The cost of funding is killing BNP's margins so they want
to get out," the source said. The portfolio contains long-term
loans to energy companies that do not have the cash flow to fund
their own exploration or production activities, he added.
Although the oil and gas sector has been less hit by the
banking crisis than others, thanks to high energy prices, some
smaller companies have recently found banks more reluctant to
lend them money.
The sale was earlier reported by the Financial Times, which
cited people with knowledge of the situation as saying the
energy loan portfolio was on the market and BNP was talking to
at least three potential, unnamed buyers.
The portfolio contains loans with a face value of about $11
billion, of which only $4 billion has been drawn by the
borrowers, the sources told the FT.
BNP Paribas declined to comment.
One person close to the bank told Reuters that it was not
quitting the global energy business and remained committed to
lending money to strategic clients in the sector.
On Jan. 18, Reuters reported that BNP was to sell existing
assets and cut lending in any currency other than the euro for
the next 15 months as part of its plans to boost capital buffers
and wean itself off frozen funding markets, according to an
Rival Societe Generale has also told employee
representatives in a 245-page memo that it is to exit or
strongly reduce property, shipping and aircraft financing
activities, as well as energy trading in North America.
French banks are among the top ten providers of commodity
and trade finance, along with ING and German and
"Long-term structural issues remain with French banks,"
JPMorgan analysts wrote in a note on Friday. "(They) are still
over-leveraged and there is still 100 billion euros ($132
billion) of further deleveraging required on top of the
While banks tend to steer clear of funding oil exploration,
because of the risks involved, they often lend to companies that
have found oil and can prove commercial reserves. To protect
against a fall in oil prices, they often insist borrowers hedge
half or more of production at a price that guarantees a profit.
With the oil price around $110 a barrel, reserves-based
loans are likely to be of a good quality.
At 1225 GMT, shares of BNP were down 3.2 percent at 34.67
euros, underperforming a slightly lower STOXX Europe 600 bank