British bank Natwest cuts lending to oil and gas sector

2 minute read

Signage for NatWest bank in London February 14, 2012. REUTERS/Luke MacGregor

Register now for FREE unlimited access to Reuters.com
  • Bank cut lending 21% to 3.25 bln stg in 2021
  • Withholds 500 mln stg from firms with weak climate plans
  • Plans to limit lending to UK-based companies

LONDON, Feb 18 (Reuters) - British bank Natwest (NWG.L) cut lending to clients in the oil and gas sector by 21% in 2021 and aims to limit it further as part of efforts to decarbonise its loan book and reach net-zero emissions, it said on Friday.

Financial firms around the world are increasingly committing to the net-zero target as part of efforts to contain global warming, although most have yet to put firm plans in place, particularly over the shorter-term. read more

The figures were announced in the first update by Natwest since it warned in 2020 it planned to cut off financing for larger oil and gas companies if they failed to have a credible plan to transition to net-zero.

Register now for FREE unlimited access to Reuters.com

Natwest said its lending to oil and gas companies fell a fifth to 3.25 billion pounds ($4.43 billion) last year, and total lending to the sector now made up 0.7% of its total loan book.

“Finance is a key enabler in the drive to Net Zero and we are acting to ensure that we are helping to end the most harmful activity while championing climate solutions and accelerating the speed of transition to the zero-carbon economy," Chief Executive Alison Rose said in a statement.

The bank said it was further restricting lending, and from Jan. 1 would only lend to upstream oil and gas companies where the majority of their financed assets are UK-based, and where the company reports emissions by end-2023.

A review of large oil and gas companies and those with more than 15% of their activities in thermal or lignite coal, including mining, power generation and trading, which together accounted for 1.4 billion pounds in financing, found many did not have a good enough climate transition plan.

As a result, the bank said it would stop lending and underwriting to firms accounting for 967 million pounds of the total.

The climate update was issued alongside the lender's full-year results, which showed a jump in pretax profit to 4 billion pounds. read more

($1 = 0.7336 pounds)

(This story corrected to clarify companies set to lose future funding, paragraphs 7,8)

Register now for FREE unlimited access to Reuters.com
Reporting by Simon Jessop Editing by Mark Potter

Our Standards: The Thomson Reuters Trust Principles.